Fraser Institute
Australia’s universal health-care system outperforms Canada on key measures including wait times, costs less and includes large role for private hospitals
The Role of Private Hospitals in Australia’s Universal Health Care System
From the Fraser Institute
by Mackenzie Moir and Bacchus Barua
In the wake of the COVID-19 pandemic, provincial governments across Canada relied on private
clinics in order to deliver a limited number of publicly funded surgeries in a bid to clear unprecedented
surgical backlogs. Subsequently, surveys indicated that 78% of Canadians support allowing more
surgeries and tests performed in private clinics while 40% only support this policy to clear the
surgical backlog. While a majority of Canadians are either supportive (or at the very least curious)
about these arrangements, the use of private clinics continues to be controversial and raise questions
around their compatibility with the provision of universal care.
The reality is that private hospitals play a key role in delivering care to patients in other countries with universal health care. Canada is only one of 30 high-income countries with universal care and many of these countries involve the private-sector in their health-care systems to a wide extent while performing better than Canada.
Australia is one of these countries and routinely outperforms Canada on key indicators of health-care performance while spending at a similar or lower level. Like Canada, Australia ranked
in the top ten for health-care spending (as a percentage of GDP and per capita) in 2020. However, after adjusting for the age of the population, it outperforms Canada on 33 (of 36) measures of performance.
Importantly, Australia outperformed Canada on a number of key measures such as the availability of physicians, nurses, hospital beds, CT scanners, and MRI machines. Australia also outperformed
Canada on every indicator of timely access to care, including ease of access to after-hours care, same-day primary care appointments, and, crucially, timely access to elective surgical care and specialist appointments.
Australia’s universal system is also characterized by a deep integration between the public and private sectors in the financing and delivery of care. Universal health-insurance coverage is provided through its public system known as Medicare. However, Australia also has a large private health-care sector that also finances and delivers medical services. Around half of the Australian population (55.2% in 2021/22) benefit from private health-insurance coverage provided by 33 registered not-for-profit and for-profit private insurance companies.
Private hospitals (for profit and not for profit) made up nearly half (48.5%) of all Australian hospitals in 2016 and contain a third of all care beds. These hospitals are a major partner in the delivery of care in Australia. For example, in 2021/22 41% of all recorded episodes of hospital care occurred in private hospitals. While delivering a small minority of emergency care (8.2%), private hospitals delivered the majority of recorded elective care (58.6%) and 70.3% of elective admissions involving surgery.
Private hospitals primarily deliver care to fully funded public patients in two ways. The first is contracted
care, either through ad hoc inter-hospital contracts or formal programs. Fully publicly funded episodes of care occurring in private hospitals made up 6.4% of all care in private hospitals, while representing 2.6% of all recorded care. The second way is privately delivered care paid for through the Department of Veterans’ Affairs. A full 73.5% of care paid for by the Department of Veterans’ Affairs occurred in private hospitals.
It would be easy, however, to underestimate the significance of this public-private partnership by examining only the delivery of care that is fully publicly funded. Privately insured care is also partially subsidized by the government, at a rate of 75% of the public fee. Therefore, in order to understand the full extent of publicly funded or subsidized care in private hospitals, it is helpful to examine private hospital expenditures by the source of funds. In 2019/20, 32.8% of private hospital expenditures came from government sources, 18.2% of which came from private health-insurance rebates. This means that a full
third of private hospital expenditure comes from a range of public sources, including the federal government.
Overall, private hospitals are important partners in the delivery of care within the Australian universal healthcare system. The Australian system outranks Canada’s on a range of performance indicators, while spending less as a percentage of GDP. Further, the integration of private hospitals into the delivery of care, including public care, occurs while maintaining universal access for residents.
Authors:
More from this study
From the Fraser Institute
By Tegan Hill and Jake Fuss
From 2014 to 2022, inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by C$34 billion. During the same period, after adjusting for inflation, business investment declined by a total of $3,748 per worker
According to the recent federal budget, the Trudeau government plans to increase the inclusion rate from 50 per cent to 66.7 per cent on capital gains over $250,000 for individuals and on all capital gains realized by corporations and trusts. Unfortunately, this tax hike will be the final nail in the coffin for business investment in Canada, which likely means even harder economic times ahead.
Canada already faces a business investment crisis. From 2014 to 2022, inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by C$34 billion. During the same period, after adjusting for inflation, business investment declined by a total of $3,748 per worker—from $20,264 per worker in 2014 to $16,515 per worker in 2022.
While business investment has declined in Canada since 2014, in other countries, including the United States, it’s continued to grow. This isn’t a post-COVID problem—this is a Canada problem.
And Canadians should be worried. Businesses investment is key for strong economic growth and higher living standards because when businesses invest in physical and intellectual capital they equip workers with the tools and technology (e.g. machinery, computer programs, artificial intelligence) to produce more and provide higher quality goods and services, which fuels innovation and higher productivity. And as firms become more efficient and increase profits, they’re able to pay higher wages, which is why business investment remains a key factor for higher incomes and living standards.
The Trudeau government’s policies—increased regulation, particularly in the energy and mining sectors (which makes Canada a relatively unattractive place to do business), higher and uncompetitive taxes, and massive federal deficits (which imply future tax increases)—have damaged business investment.
Unsurprisingly, weak business investment has correlated with a weak economy. In the fourth quarter of 2023, real economic growth per person ($58,111) officially fell below 2014 levels ($58,162). In other words, Canadian living standards have completely stagnated. In fact, over the last decade economic growth per person has been the weakest on record since the 1930s.
Instead of helping fix the problem, the Trudeau government’s capital gains tax hike will further damage Canada’s economy by reducing the return on investment and encouraging an exodus of capital from the country. Indeed, capital gains taxes are among the most economically-damaging forms of taxation because they reduce the incentive to invest.
Once again, the Trudeau government has enacted a policy that will deter business investment, which Canada desperately needs for strong economic growth. The key takeaway for Canadians? Barring a change in policy, you can expect harder times ahead.
Authors:
From the Fraser Institute
By Jake Fuss and Grady Munro
Per-person federal spending is expected to equal $11,901 this year. To put this into perspective, this is significantly more than Ottawa spent during the global financial crisis in 2008 or either world war.
The Trudeau government tabled its 2024 budget earlier this month and the contents of the fiscal plan laid bare the alarming state of federal finances. Both spending and debt per person are at or near record highs and prospects for the future don’t appear any brighter.
In the budget, the Trudeau government outlined plans for federal finances over the next five years. Annual program spending (total spending minus debt interest costs) will reach a projected $483. billion in 2024/25, $498.7 billion in 2025/26, and continue growing in the years following. By 2028/29 the government plans to spend $542.0 billion on programs—an 18.4 per cent increase from current levels.
This is not a new or surprising development for federal finances. Since taking office in 2015, the Trudeau government has shown a proclivity to spend at nearly every turn. Prime Minister Trudeau has already recorded the five highest levels of federal program spending per person (adjusted for inflation) in Canadian history from 2018 to 2022. Projections for spending in the 2024 budget assert the prime minister is now on track to have the eight highest years of per-person spending on record by the end of the 2025/26 fiscal year.
Per-person federal spending is expected to equal $11,901 this year. To put this into perspective, this is significantly more than Ottawa spent during the global financial crisis in 2008 or either world war. It’s also about 28.0 per cent higher than the full final year of Stephen Harper’s time as prime minister, meaning the size of the federal government has expanded by more than one quarter in a decade.
The government has chosen to borrow substantial sums of money to fund a lot of this marked growth in spending. Federal debt under the Trudeau government has risen before, during and after COVID regardless of whether the economy is performing relatively well or comparatively poor. Between 2015 and 2024, Ottawa is expected to run 10 consecutive deficits, with total gross debt set to reach $2.1 trillion within the next 12 months.
The scale of recent debt accumulation is eye-popping even after accounting for a growing population and the relatively high inflation of the past two years. By the end of the current fiscal year, each Canadian will be burdened with $12,769 more in total federal debt (adjusted for inflation) than they were in 2014/15.
You can attribute some of this increase in borrowing to the effects of COVID, but debt had already grown by $2,954 per person from 2014 to 2019—before the pandemic. Moreover, budget estimates show gross debt per person (adjusted for inflation) is expected to rise by more than $2,500 by 2028/29.
As with spending, the Trudeau government is on track to record the six highest years of federal debt per-person (adjusted for inflation) in Canadian history between 2020/21 and the end of its term next autumn. Why should Canadians care about this record debt?
Simply put, rising debt leads to higher interest payments that current and future generations of taxpayers must pay—leaving less money for important priorities such as health care and social services. Moreover, all this spending and debt hasn’t helped improve living standards for Canadians. Canada’s GDP per person—a broad measure of incomes—was lower at the end of 2023 than it was nearly a decade ago in 2014.
The Trudeau government’s track record with federal finances is one for the history books. Ottawa’s spending continues to be at near-record levels and Canadians have never been burdened with more debt. Those aren’t the type of records we should strive to achieve.
Authors:
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