(Update6)

Canada's highest court struck down a ban preventing Quebeckers from buying private health insurance, paving the way for private clinics and threatening Canada's universal health-care system.

The Supreme Court of Canada today voted 4-3 to overturn a lower court ruling, saying the ban violates Quebec's constitution by denying people vital health care and endangering their lives.

"This is the end'' of Canada's universal health-care system, John Williamson, federal director of the Canadian Taxpayers' Federation, a lobby group that has pushed for private health care, said in a telephone interview. "It's also the beginning of better care.''

The decision paves the way for lawsuits to be filed in Canada's other provinces and puts the country of 33 million people on a path to a two-tier health-care system prevalent in most European countries, Williamson said. Prime Minister Paul Martin has resisted efforts in British Columbia and Alberta to let private clinics provide services covered by the government- funded system.

George Zeliotis, a 73-year-old Quebec businessman, filed the suit in 1997 after waiting a year for hip-replacement surgery. His case underscores the deterioration of the public health-care system, which suffered from government cuts to health spending in the 1990s.

Waits Increased

The average wait for procedures such as magnetic resonance imaging in Canada increased to 17.9 weeks last year from 9.3 weeks in 1993, according to the Fraser Institute, a Vancouver- based public policy institute. The problems have led provincial leaders such as Alberta Premier Ralph Klein to call for services such as private clinics to help Canadians get care faster.

"Today's decision represents a stinging indictment of the failure of governments to respond to the mountains of studies and years of research with real action for our health care system,'' the Canadian Medical Association said.

Martin has threatened to cut federal funding to provinces that violate the Canada Health Act by allowing private clinics, concerned they would undermine the public health-care system.

Last September, Martin promised to spend C$4.5 billion over the next six years to help reduce the waiting lists for surgery and other treatments. Martin told reporters in Ottawa today that increased funding for the public system will result in better service.

"We're not going to have a two-tier health care system in this country -- nobody wants that,'' Martin said after a cabinet meeting. "What we want to do is to strengthen the public health care system.''

All Canadian residents are entitled to free health insurance, which covers visits to hospitals and doctors, under the Canada Health Act. The insurance is administered by the provinces, which also may offer services such as physiotherapy and dental care under individual plans.

`No Solution'

Critics of private clinics argue they will only benefit wealthy Canadians who can afford to pay for health insurance.

"Private insurance and private payment is no solution to the wait-list problem,'' said Adam Natsheh, co-chairman of the New Health Professionals Network, a lobby group that supports government-funded health care. A private system "would only mean that the few Canadians who can afford it will buy their way to the front of the line.''

Quebec courts had ruled that although the law violated the constitution it had to remain in place to protect public health care.

The Supreme Court ruling may increase private health- insurance sales in Canada as U.S. and Canadian companies start offering coverage, John Graham, director of health-care studies at the Pacific Research Institute in San Francisco, said in a telephone interview. That could spur the construction of private hospitals that specialize in areas such as heart surgery, Pacific Research President Sally Pipes said in an interview.

U.S. Insurers

"We continually look for opportunities to build upon and expand our business, including looking at markets outside the U.S.,'' Jim Kappel, a spokesman for Indianapolis-based WellPoint Inc., said in a telephone interview.

WellPoint, the biggest U.S. health-insurance provider, sells policies only in that country. Kappel declined to say whether the company will pursue Canadian sales.

Sun Life Financial Inc., Canada's No. 2 insurer, is reviewing the ruling to see what opportunities may arise, spokeswoman Susan Jantzi said. She declined to elaborate.

The decision also may deter U.S. politicians who have lobbied to adopt a system based on the Canadian model, Graham said. About 45 million Americans don't have health insurance, or 16 percent of the population, according to an August 2004 report from the U.S. Census Bureau.

California

Graham, a Canadian who moved to San Francisco in the past six weeks to take the job at the think tank, said the decision also may affect a bill passed by California's Senate, which guarantees health coverage to every resident of the state through a publicly funded system. The legislation must pass the lower house and be approved by Governor Arnold Schwarzenegger.

"Canada's looked towards as an example,'' Graham said. "This really is a signal to the United States that this kind of attempt is not appropriate.''

Quebec will ask the Supreme Court to delay the implementation of the decision, while politicians consider their options, provincial Justice Minister Yvon Marcoux said in a televised news conference today.

The Supreme Court usually allows six months to two years for rulings that change legislation to take effect, and that's what Quebec will request, Marcoux said.

The case is Jacques Chaoulli v Attorney General of Quebec, Supreme Court of Canada, Ottawa, Case No.: 29272.