The Real Dope

A new book explodes many myths about the Canadian healthcare system

Talk about superb timing. Judging from her preface, Katherine Fierlbeck, a professor of political science at Dalhousie University, has been working on this book off and on for at least 20 years. Yet her big book makes its grand appearance this year, right smack in the middle of a fierce, decade-long political and policy debate. It could not have come at a better time, just as federal transfers to the provinces for health care and the future federal role are being renegotiated. Providing a definitive understanding of the institutions and actors, including the rules of the federal-provincial game in which medicare in particular is played, Fierlbeck cuts like a knife through the confusing and misleading (sometimes purposely so) commentary in the media.

The three-part organization of the book is eclectic yet effective. The chapters in the first part deal with the structure of the system from funding and administration to federal–provincial-territorial relations and the role of judicial interpretation. The second part focuses on some of the most vulnerable areas of the delivery system, including human resources, public health, mental health and prescription drugs. The third part opens up into the larger world, comparing Canada’s health system to those in other countries, from social health insurance systems and mandated private insurance systems to other tax-based health systems. Throughout, Fierlbeck explains the reality underneath some of the popular myths perpetuated about our health system, three of which I would like to highlight.

The Canada Health Act is legally binding on the provinces. No, it is not. As Fierlbeck points out, the provinces have a choice. They can either agree to accept the five conditions of the Canada Health Act (public administration, comprehensiveness, universality, portability and accessibility) and receive their cash share of the Canada Health Transfer, or they can forego the cash and administer hospital and medical services in any way that they want. And the cash is not what it used to be. In the old days, before cost sharing was replaced by a block grant in 1977, the federal government used to put in 50 percent of the provincial cost of hospitals and doctors. This went down to 25 percent in a quid pro quo that saw the federal government transfer the extra tax room to the provinces so that they could raise more revenues on their own. In 2010, the Canada Health Transfer to the provinces and territories was $25.4 billion. While this sounds like a lot of money—and it is—this amounts to just a tad more than 20 percent of all provincial and territorial spending on health care and about 33 percent of all (public and private) spending on hospitals and physicians last year.

Some provincial governments (namely Alberta) could easily give up 20 cents on the dollar. The only reason this has not happened is fear of an electoral backlash. The truth is that most Canadians, including the residents of Alberta, want the principles of the Canada Health Act to endure. As a deputy minister in the Saskatchewan government in the 1990s, I remember when Ralph Klein would alternate between paying lip service to the principles of the act and then threatening to break with the principles—the latter always followed by an outcry by Alberta residents that would force a grumpy but quick retreat by the Alberta premier. Either incredibly persistent or a slow learner, Klein went through the same routine, over and over, with exactly the same result each time.

Canada’s public insurance monopoly on medicare leads to lengthy wait times, and allowing private insurance for medicare will shorten wait times. This was the canard accepted by the Supreme Court of Canada in its Chaoulli decision in June 2005. Despite receiving abundant evidence that countries such as Britain, Australia and New Zealand, which have parallel public and private insurance systems and have at least as lengthy wait times as Canada, the court chose to ignore such evidence. Instead, the court compared Canada to countries such as Germany and the Netherlands with fundamentally different funding, pooling and administrative social health insurance systems that can be traced back to Bismarck in the late 19th century. It is true that most SHI systems do tend to have shorter wait times than tax-based systems, but this is a product of the medical overcapacity such systems both encourage and pay for (these are high-cost countries) and the greater emphasis they place on medical services over all other health services, including public health.

In fact, as Fierlbeck explains, allowing parallel private insurance in countries with systems similar to Canada’s funding and administrative arrangements—again, for example, Britain, Australia and New Zealand—has actually lengthened public waiting lists. This happens for the very good reason that some of the more experienced and qualified doctors, nurses, laboratory technicians and others tend to migrate to the private system, pulled in by higher remuneration and (perhaps) better working conditions. Moreover, those working on the public side of the street in the morning and the private side in the afternoon have strong incentives to increase waiting times on the public side so that more patients move to the private side over time.

Increasing the number of doctors is the first essential step in fixing health care in Canada. But according to Fierlbeck there is no evidence that more doctors per population results in either better health outcomes or better health care. In fact, in countries with very high doctor–population ratios, health status and mortality results are sometimes considerably worse than Canada, with its much lower doctor–population ratio. In reality, countries can be roughly grouped into two categories—those in which nurses play a more central role in health care (for example, primary care in urban clinics and medical care services in rural and remote areas) and those in which doctors still play the dominant role in delivering these types of care in all settings. Canada, along with the United States and Britain, is in the first category, while Germany, France and the Nordic countries are in the latter category. As a consequence, it is much more useful to look at physician- and nurse-population ratios in tandem to get an idea of where Canada sits relative to other countries in the Organisation for Economic Co-operation and Development.

Once this is taken into consideration, then it may be possible to say Canada does or does not have enough doctors relative to some OECD standard (again making the dubious assumption that the standard is more likely to achieve better healthcare outcomes). At this point, we need to consider the implications on fiscal sustainability since doctors are central to determining demand in the system—they have a virtual monopoly on writing prescriptions, they determine whether further diagnostic tests are needed and based on their medical expertise, they (not non-clinical managers) often decide whether newer and more expensive equipment or medical devices are needed in hospitals. In the jargon of economists, this is known as supplier-induced demand because the patient with his or her limited knowledge of medical science delegates most of the decisions concerning treatment to doctors with specialized knowledge and expertise.

The fact is that doctors, far more than patients, determine medical demand, and the more doctors you have in such a system, the more expenses this will inevitably generate. Thus, in Fierlbeck’s view, the introduction of user fees in Canada for hospital and physician services, long advocated by conservative think tanks and opinion editorialists, is a policy change doomed to fail because it attempts to choke demand in the wrong place—patients rather than doctors. Where user fees exist, they do so for historical reasons (“we have always had them”) or for cultural reasons (“we think everyone who can afford to do so should make at least a small financial contribution to the cost of their care at the time they receive it”). I would add the fact that the cost of collecting user fees is so large—in part because of the fact that some portion of the population is always being exempted and therefore tracked—that they are hardly worth the time and effort. Worse is the fact that even modest fees will deter precisely the people that most need care, and their unwillingness to get more “upstream” care only means that far more public dollars will be spent “downstream” to treat conditions that could have been mitigated or avoided if caught early enough.

Supplier-induced demand by doctors is perhaps most problematic when it comes to prescription drugs because of the power of the pharmaceutical industry in Canada and its relationship with the medical profession, a topic to which Fierlbeck devotes considerable attention. Pharmaceutical companies play a direct role in educating physicians about the therapeutic uses of drugs, but they also encourage physicians to write prescriptions by offering free samples as well as other freebies, including gifts in the form of meals, travel to (as well as accommodation at) glittery conferences and even golf club memberships.

These days, it seems that everyone has an opinion on health care in Canada but few have Fierlbeck’s deep understanding of the actual system we have—and do not have. While critics of Canadian medicare would greatly benefit from taking the time to read this book, I am almost sure they will not do so. I think there are two reasons for this. One is obvious. Some have come to a conclusion shaped solely by beliefs rather than hard evidence. To put it bluntly, the folks in this camp are not interested in the facts. If someone assumes that as a matter of principle private-for-profit businesses are always more efficient in delivering all goods and services than the public sector (or the voluntary sector for that matter), then it is no good presenting that person with evidence on the effectiveness of public and private non-profit health organizations relative to commercial operators. The evidence will simply be dismissed or ignored.

The second reason is that even most of those who are prepared to move beyond belief into the realm of evidence are more concerned with defending their interests or strengthening their policy advocacy case. Rarely do they use evidence to test their own assumptions and raise questions that would challenge their own interests and advocacy. Since we are all to some extent guilty of this, it is critical that scholars, journalists and other professional observers develop a more critical and evidence-based mindset, one that is constantly testing the weaknesses of current explanations and is open to new ones.

That said, it is hardly surprising that evidence is regularly ignored or abused in public policy debates in general when the stakes are so high and self-interest so great. The real question is why it has become so pronounced in healthcare policy. Ted Marmor, a prominent health policy expert from Yale University, has one explanation. In the last 30 years, the advanced industrial world has gone through a polarized debate on the merits and demerits of the welfare state that emerged in the decades immediately following the Second World War. The hardest edge of this debate has settled on public health care, in large part because, unlike social assistance and programs, health entitlements and programs have not been dropped or curtailed to the same extent. As a consequence, public–sector health spending has continued to grow and, in the typical manner of a superior good—reflecting the fact that we are willing to spend more of the extra dollars we make as individuals and societies on improving our health and prolonging our lives—public and private health costs have grown faster than economic growth.

This has generated a growing angst about the fiscal sustainability of health care in all advanced industrial countries and, along with it, the notion that as long as we drive some of these costs from the public purse to private pockets, we will fix the problem. Of course, it is not that simple. In fact, there are no real cost controls in the private sector, and for the past 50 years, the growth in private healthcare spending has consistently outstripped the growth in public spending. But to get at the heart of the issue, it is essential to dig down into the deeper causes of the conflict.

Here is my theory. Those most antagonistic to medicare in Canada really object to the fact that it redistributes wealth from the rich and well to the poor and sick and that the principle of universality dictates that everyone has access on “the same terms and conditions”—there is no business class. They are therefore willing to grab any argument or example in an effort to weaken the legitimacy of this redistributive and egalitarian policy. Of course, they rarely say this directly. Instead, they argue that the current system is no longer sustainable, not bothering to state the obvious alternative—that a much more private system will be based on ability to pay rather than need.

Evidence is never enough in a debate that involves such basic desires and values. But to the extent that evidence and an actual understanding of the evolution and nature of the health system in Canada can influence the debate in the next couple of critical years, this book can and should make a very positive difference.