Comprehensive measures of performance indicate that Canada routinely lags behind its international peers on key metrics of how its health-care system performs— despite ranking amongst the most expensive universal health-care systems in the developed world. It is, therefore, unsurprising that a growing proportion of Canadians seem open to the possibility of fundamental reform of health care in Canada. However, major hurdles exist as a result of faulty perceptions about how other countries with universal health-care insurance coverage provide and finance their health-care systems.

This study—the third in the series, Understanding Universal Health Care Reform Options—documents the presence of mechanisms for cost-sharing by patients in 28 universal health-care systems; and evaluates the feasibility and desirability of introducing similar policies in Canada.

Patients in Canada are currently fully covered for the costs of insured medical services; that is, patients are not directly billed for any portion of their care.

Economic theory suggests that the distorting effects of such first-dollar insurance coverage can lead to excess demand for medical care accompanied by loss of social welfare. In Canada, the rationing of services through long wait times is one such by-product of excess demand. Economic theory also offers a set of tools to mitigate the magnitude of this social-welfare loss through cost-sharing mechanisms. These include deductibles—an amount up to which individuals are exposed to the full cost of treatment, after which insurance covers expenses; co-insurance payments—a certain percentage of the cost of each unit of treatment that is to be borne by the individual; and co-payments—a fixed amount paid by the patient per unit of treatment.