Changing Prescriptions

If Canada needs an “adult conversation” on health care (read, a frank appraisal and an open-minded consideration of options), that discussion appears to be well launched—at least among the chattering classes. Last year we had assessments of the performance and the sustainability of Canada’s current model of healthcare delivery and finance from two leading public finance economists—David Dodge and Don Drummond. This year, Canada’s pre-eminent healthcare journalist—André Picard of The Globe and Mail—delivered a Conference Board of Canada lecture on the same theme. And now Picard’s estimable Globe colleague Jeffrey Simpson has entered the fray with Chronic Condition: Why Canada’s Health Care System Needs to Be Dragged into the 21st Century.

These are important, reasoned, well-grounded politically centrist contributions, and they deserve a wide audience. While not of one view about the options to be considered, they all present a case along the following lines: the model of public health insurance that Canadians adopted in the mid 20th century, and have clung to ever since, is a high-cost system that delivers mediocre results and that threatens to crowd out other public priorities as costs continue to escalate. Canadian medicare needs to be brought down from its public policy pedestal and substantially re-examined.

Simpson’s is the most thorough and the most biting of these critiques. He zooms in on various points: beginning by letting his readers shadow Jeff Turnbull, chief of staff at the Ottawa Hospital, and at another point visiting a private for-profit clinic in Montreal. He pans across to show how Canada compares with other countries. And he provides an engaging account of the history that led to the establishment of public hospital and medical insurance in the 1950s and ’60s to show that there was nothing inevitable about the choices made. But those choices, he argues, have given Canadians a system that is now “the worst of both worlds.” It requires that physician and hospital services be funded almost exclusively by government, and assigns all other services to an “American-style” realm of mixed and uneven public and private finance and limited regulation. This division creates problems of timely access (wait times) for physician and hospital services, problems of financial access (affordability) for some members of the population for all other services and problems of continuity of care as patients move from one realm to the other. Meanwhile, health costs are among the highest in the world, relative to the size of our economy and population, and are growing faster than either.

This portrait needs some shading. Canada is not among the very top spenders in the Organisation for Economic Co-operation and Development (the group of advanced countries with which we normally compare ourselves), but it does rank with several countries whose total (public and private) per capita spending on health care is about 25 percent above the OECD average. (Leave aside the United States in these comparisons, as does Simpson, as a distracting outlier.) Canada’s public healthcare spending per capita, however, is very close to the average. In addition, the seemingly inexorable rise of health care as a share of the economy and of public budgets has been called into question by a recent slowdown in the rise of healthcare spending across the OECD (including Canada). This may be in part because a number of widely prescribed drugs are coming off-patent and hence becoming cheaper, and in part because governments are restraining payments to providers under austerity agendas. Nonetheless, until we understand better the reasons for this slowdown, we should expect the previous trend to resume soon—as it did after other episodes of cost constraint in the past.

As for what the Canadian system delivers for this spending, not all measures of performance are equally important. Canada generally ranks better on measures of improved health “outcomes” (the function of health care, after all) than it ranks on measures of “process,” such as wait times for treatment. We do well in international comparisons of cancer survival rates, for example, and survival rates are less uneven across regions in Canada than in most other countries. On broader outcome measures, such as reductions in deaths from causes that are amenable to medical treatment, we are as much as 20 percent better than the OECD average, although we are still outperformed by countries such as France and Australia, which spend somewhat less. But on important measures of process—not only timeliness but also equity of access, continuity of care and more—we do significantly worse than countries that spend comparable sums or less.

So—what is to be done? Do we need to rethink the fundamental design of the system, as might be implied by Simpson’s “worst of both worlds” tag (which, to be fair, he takes from an OECD study of Canada)? The tag overstates the case. There is much to be said for funding a central core of essential services exclusively from public sources, while paying for other services through a mix of public and private finance. This is the way a number of countries finance health care, in practice if not in law. In Britain, for example, where about 83 percent of health spending is public (in contrast to Canada’s 70 percent), all highly complex hospital treatment and almost all “primary” (first-contact and family) care is paid for publicly, while there are private alternatives for elective surgery and limited copayments for drugs by higher-income groups. In Holland, an exclusively publicly financed segment comprising long-term care and treatment for many chronic diseases sits alongside a compulsory, highly regulated and publicly subsidized system of private insurance for acute care.

Canada’s uniqueness lies not in having an exclusively publicly financed core of services but rather in what we do, and do not, include in that core. If it is provided by a physician, or on physician’s orders in a hospital, government and only government picks up the tab. If it is provided outside the hospital by someone other than a physician, then depending on the province you live in, your age or your income, you may be on your own for at least some portion of the charge. Periodic health checkups for young healthy adults, long regarded by expert medical opinion as of very limited value, are in the public basket. Insulin for diabetics is not. Some rethinking of these anomalies in light of current technology is surely required. As Simpson notes, this means that Canadians might pay at least some portion of the charge for things that are now free at the point of delivery, but that other things for which they now pay would be fully covered by public insurance.

The ultimate effects of such a sorting exercise are likely to be marginal. For a broad range of “core” services there is little to be gained and much to be risked by introducing private finance options such as user charges. True, countries such as France and Sweden make quite extensive use of user charges, but in France these are fully incorporated within an integrated and tightly regulated system of public and private insurance, and Sweden’s user fees exist in the context of a highly redistributive tax system. Australia has built parallel private alternatives and user fees into its healthcare financing models without such extensive European-style safeguards, and its citizens bear a higher portion of out-of-pocket costs than do Canadians and are much more likely to report that they do not seek health care because of cost. (This despite the facts that social assistance recipients are exempt from such charges and that Australia operates a more extensive program of public coverage for drugs than does Canada.) Simpson points to evidence of the negative effects of user fees in causing some people to wait too long to seek care, and to further evidence that once the gravely and chronically ill and those on low incomes are exempted, user fees are not a significant source of revenue for the system.

What about private delivery of services, paid for by the public purse? Here Simpson engages one of the liveliest debates in Canadian health care. It is a truism among health policy wonks that most publicly financed health care in Canada is already privately delivered—by hospital or regional health authority corporations organized on a not-for-profit basis, and by physicians and other health professionals organized as private practitioners. So far, so non-controversial. The debate arises when the subject turns to privately capitalized clinics, owned by physicians or other investors, providing elective surgery and diagnostic services outside the hospital setting under contract with public payers. Proponents of these models argue that, by focusing exclusively on a limited range of procedures, they can develop higher levels of staff expertise and be more efficient in the use of facilities than is possible in a full-service hospital. Opponents argue that alleged “efficiencies” are gained by cost cutting through the use of non-unionized staff and other measures threatening the quality of care. The ideological overtones of “business” versus “labour” perspectives here seem inescapable. Looking for evidence (Canada has some, but limited, experience with such models) Simpson turns to Sweden and Britain.

Simpson highlights an example of privately capitalized, publicly funded care in each of these countries: family practices organized by for-profit corporations in Sweden and private surgical and diagnostic clinics in Britain. His readers might infer that these examples loom larger in each system than they do. Two thirds of family practice clinics are still owned by county councils in Sweden overall (although in Stockholm about half are private). In Britain, private clinics accounted for about 5 percent of publicly funded elective surgery in Britain last year, and reforms aimed at expanding their role have been hugely controversial. Nonetheless, the British and Swedish examples serve to make Simpson’s point that even these two historical poster children for government-run healthcare systems have been willing to experiment with private delivery, and may offer some hard-won lessons about how to write and monitor contracts.

It is tempting, of course, to seek a painless solution to these challenges: keeping people healthy to reduce demands on the system in the first place. Hence the “wellness agendas” aimed at obesity and other factors leading to chronic disease. But, citing international studies, Simpson shows that effective strategies are costly in themselves: targeted interventions for at-risk individuals by healthcare teams of physicians, dieticians and others have much more impact than mass education campaigns or even taxation of unhealthy products. And the most important social determinants of health are inequalities in income and education, well beyond the scope of programs aimed at individual behaviour.

In the end, having surveyed a range of options in Canada and elsewhere, and despite rhetoric that seems aimed at a more transformative response, Simpson sensibly settles on a few key adjustments to the Canadian system. Bring family physicians and other primary care providers together in practices providing 24-7 access under contracts that blend payment on a per-enrolled-patient basis with some fee-for-service. Pay hospitals on the basis of the volume of service they deliver, not through historically based global budgets. Provide some publicly funded services through contracts with private clinics. Expand and improve home care programs, and increase the number of long-term care beds through public-private partnerships.

Simpson also makes a couple of suggestions that are more novel in the Canadian context. Make drug coverage compulsory, through employer-based plans together with a complementary “social insurance” plan based on mandatory contributions and government subsidies (rather like the Canada Pension Plan/Quebec Pension Plan/Old Age Security model for pensions). Quebec has pioneered a version of this model. I myself have advocated such arrangements, which would bring in new public revenue while improving coverage. I am less persuaded of another of Simpson’s suggestions, which is that hospitals be allowed to use slack operating room capacity to offer elective surgery to privately paying patients off-hours—a modest nod in the direction of allowing parallel private alternatives to publicly funded services. He makes a key proviso, that such usage would not reduce the availability of publicly funded services. But that reduction could well happen: even if operating room time is available, there is very little slack capacity for post-operative care in Canadian hospitals, and care for privately paying patients could squeeze out publicly funded care. Although Simpson does not mention it, a version of his suggestion already exists in Canada: workers’ compensation boards contract with hospitals for off-hours diagnostic imaging and elective surgery to provide expedited access for injured workers. We do not know what effect if any this has on access under public insurance, and it would be worth investigating those effects before embarking on such a change.

Most of the other changes Simpson suggests are already underway, on different scales and at different speeds across provinces—but in general they have been marginal and v‑e‑r‑y slow. Why haven’t we made more progress on these eminently sensible updates to our system? It is not that it “ain’t broke”: as international comparisons show, there is much room for improvement. Looking for explanations, Simpson points to medicare’s status as a national icon—which polls have shown to rank with the flag and hockey among symbols of Canadian identity. However, the British veneration of their National Health Service—witness its prominence in the opening gala for the London Olympics—has not kept the United Kingdom from making dramatic, albeit controversial, changes to the system while maintaining its universality.

What will it take to accelerate change in Canada? This book will have a well-deserved audience among opinion leaders, and that should help. But even if broader public discussion motivates politicians to move faster, change will have to involve the central power structure of the system—especially the medical profession. The unique Canadian model binds doctors and government into an exclusive, monopolistic relationship in each province. So far that relationship has acted as a brake. Simpson argues, rightly, that for Canada’s “chronic condition” to be ameliorated, doctors (and nurses) will have to “show more flexibility in how they work” and temper their demands for remuneration. This may seem to be a pipe dream, but Simpson, intentionally or not, gives us at least one inkling that seeds of change are being sown. In profiling Jeff Turnbull, he highlights one of the small but important number of medical leaders who understand what needs to be done to improve the performance and sustainability of the Canadian system while preserving its core values, and have the credibility to advance their views. As president of the Canadian Medical Association, Turnbull led a public discussion of a roadmap for reform that pointed in some of the directions presented by Simpson himself—such as activity-based funding (instead of global budgets) for hospitals, universal coverage for prescription drugs through a combination of mandates and subsidies—as well as others such as changing the way doctors (or teams of health professionals) are paid to reward high-quality performance. True, the CMA also regularly aligns itself with provincial medical associations in their remuneration battles with governments. But if the vagaries of medical politics turn up leaders such as Turnbull and his ilk, change could be afoot.