The Impact of Universal Medicare on the Previously Insured Poor and Nonpoor

Abstract

Universal, comprehensive, first-dollar coverage, zero-copayment, publicly financed medical care insurance ("Medicare") was introduced in Nova Scotia in 1969. Before that, two subsets of the Nova Scotia population had comprehensive medical care insurance coverage comparable to that provided by Medicare. The first subset consisted of persons who were eligible for, or were dependents of persons who were eligible for, Provincial Social Assistance benefits. One of these benefits was comprehensive medical care insurance coverage through a publicly financed, "targetted" medical care insurance plan. This subset of the Nova Scotia population is referred to in the study as "the previously insured poor". The second subset--called "the previously insured nonpoor"--consisted of a broad cross section of Nova Scotia families which were covered by privately financed comprehensive medical care insurance, through employer group plans or individual insurance contracts.

The existence in Nova Scotia of these subsets is not remarkable in itself; comparable situations presumably existed elsewhere before the introduction of a publicly financed, universal and comprehensive medical care insurance plan. What makes the Nova Scotia "natural experiment" of interest is that, by chance, complete medical care claims data from the pre-Medicare period were preserved for both previously insured populations. This made it possible to study the impact which the introduction of Medicare had on these groups, as reflected by changes in their medical care utilization rates. Changes in those rates among cohorts of persons from each of the two populations were analyzed over a six-year period which included one pre-Medicare year and the first five years after Medicare was introduced.

The relevance of evidence from this "natural experiment" in Nova Scotia goes far beyond interest in the history of the evolution of Canada's national health insurance system for its own sake. Evidence from Nova Scotia's experience may help to predict some of the consequences of introducing a universal public health insurance plan in other countries in which subsets of the population are already covered by comparable insurance either through "targetted" public health insurance plans or by private health insurance plans. There may also be more general lessons to be learned, beyond the health services sector of the economy, about the relative effectiveness of "targetted" and "universal" public programs.