HAH 6260 – Health Services Organization and Policy

1. HAH 6260 – Health Services Organization and Policy Class 1: History and overview of the system, funding, delivery, legislation, etc. Professor Monique Bégin

2. Five dimensions to explore • Defining the Canadian health care system(s). • Origins: constitution, history, legislation. • Financing, delivery, allocation of resources. • Health care spending and outcomes. • Issues.

3. 1. Defining the health care system(s) • In reality, there are 13 systems, with both common features and variations between and within the 10 provinces and 3 territories. • The federal government has basic national standards/rules and contributes $$$. • The provinces oversee, plan, manage, etc., and pay the lion’s share.

4. The system(s) is made of: What Canadians used to call “medicare”: the 2 old historical agreements between the feds and the provinces to cover for all hospitals costs and doctors’ visits – and nothing else. But with time, we came to say “medicare” or “the health care system” to refer to all things “health” undertaken by each of the province, EXCEPT pharmacare, homecare and denticare. “Medicare” is in need of a redefinition. In addition to the governments, there are many other players: professional associations, industries (pharmaceutical, medical devices), service agencies, NGO’s, and…

5. …also world players, for example: • World Health Organization (WHO) (Geneva). The Director General is Dr. Gro Harlem Bruntland, former Prime Minister of Norway. • Regional components of WHO: • Pan American Health Organization (PAHO) for the Americas (Washington) • Regional Office for Europe (Copenhagen), etc.

6. and even other players with broad mandates: • Organization for Economic Cooperation and Development (OECD) (Paris): also studies health systems • World Bank (Washington, Paris, Tokyo) • International Monetary Fund (Washington) • International Labour Office (ILO) (Geneva)

7. This is why WHO says that health systems matter: “Health systems consist of all the people and actions whose primary purpose is to improve health. They may be integrated and centrally directed, but often they are not. (…) They have contributed enormously to better health, but their contribution could be greater still, especially for the poor. Failure to achieve that potential is due more to systemic failings than to technical limitations. It is therefore urgent to assess current performance and to judge how health systems can reach their potential.” Source: The World Health Report 2000, WHO, Geneva, 2000, p.1

8. The “system” is the sum total of… … the interactions between all the players in Canada, three in particular: Health Canada and the federal government; the provincial Ministries of Health and their respective governments; and organized medicine. No one really is “in charge” of the system, which rests on the constantly renegotiated equilibrium of these key players.

9. It is also a formidable “business” proposal… • $ 100 + billion (public + private) • 4 – 5 % annual growth • 350,000 workers • 30+ regulated professional groups • 228,000 nurses • 57,000 practicing physicians • 2,275 health executives

10. The one player that is missing: • The PATIENT and the public in general, both as citizens and as taxpayers. The only “voice” they have is through a general election. • This is a major imbalance in the power structure, the dynamics of reforms, and the accountability mechanisms of our health care system.

11. 2. Origins: constitution, history, legislation. • The Constitution of 1867, by default so to speak, makes HEALTH a PROVINCIAL responsibility. This did not change with the 1982 patriation of the Constitution. • History and “the spending powers” (given by constitution to the feds) involved the federal government, as well as their direct responsibility for veterans’ and Natives’ health, for drugs’ administration, etc.

12. Important notice! • So health care is of provincial jurisdiction. • But we should not forget that the Constitution (1982), under its equalization provisions*, obliges the provinces to provide “reasonably comparable levels of public service for reasonably comparable levels of taxation”. * Through federal taxes, the richer provinces help the poorer ones, for a level playing field.

13. Where does medicare come from? • Beginning of the XXth century: our immigrants from countries of Europe (Germany: 1 million) bring with them a political culture and a union movement experience with a sense of the common good. (Bismarck -1815-1898 -, Germany: first health care system) • 1919: further to the 1st World War, on the platform of the Liberal Party of Canada. (…)

14. …the 2nd World War, and after: • 1945: the Reconstruction Conference (fed-prov). The Minister of Health of Canada, Brooke Claxton, proposes the National Health Grants Program. Opposed by Ontario (George Drew) and Quebec (Maurice Duplessis). • 1948: re-submitted by the new Minister of Health of Canada, Paul Martin, Sr. The provinces approve! (Seed money towards a comprehensive health insurance program.)

15. In the meantime, Saskatchewan’s CCF government… • 1947: Premier T.C. (Tommy) Douglas decides to go it alone and passes The Saskatchewan Hospital Services Plan. • 1957-58: the federal Liberal gov. (Paul Martin, Sr.) follow with a 50-50 offer, and it’s accepted by all! Hospital Insurance and Diagnostic Services Acts (HIDS) (…)

16. ... and then the second step: • 1962: Saskatchewan pioneers again, despite a dramatic doctors’ strike: The Saskatchewan Medical Care Insurance Plan. • 1964: Mr. Justice Emmett Hall’s Commission, set up by Diefenbaker, reports to the Pearson government: recommends a national medicare program. • 1966:the feds create The Health Resource Fund to help build hospitals and purchase equipment. • 1967: the federal Minister of Health, Allan McEachen (Liberal), succeeds with The Medical Care Act. • By January 1971, all provinces have “medicare” (despite a bitter specialists’ strike (1970) in Quebec).

17. The last 30 years are about: • Changing the funding mechanisms, from cost-sharing (50-50) (CAP) to block funding (EPF). • Re-enforcing the 5 old conditions by the Canada Health Act (1984) (which replaced HIDS and the Medical Care Act). • Modifying the transfer of funds: the Canada Health and Social Transfer (1996) replaced EPF and CAP.

18. 3. Financing, delivery, allocation of resources • Financing: who pays for what services? • Delivery: who delivers what services? • Allocation: how are resources allocated to those delivering services?

19. We keep speaking of our “public” health care system, but… If we look at the three components: • financing/funding • delivery • allocation of resources we must ask the question: Which exactly are public? (What is the status of those who do it and with whose money?)

20. In clarifying this point, • we recognize that health care systems are not uni-dimensional; • we contribute to a better public debate, with less emotion; • we will correctly diagnose where and what the problems are, coming up, hopefully, with effective solutions.

21. Health care system models: • National Health Service (Beveridge model): universal coverage for residents, financed by general taxation, with national ownership/control of factors of production. • Social Insurance (Bismarck model): universal coverage within social security, financed by employer/employee, with a combination of public/private ownership.

22. and, finally… • Private Insurance (Consumer Sovereignty model): individual or employer-based purchase of private health insurance coverage, financed via individual and/or employer contributions, with private ownership of factors of production.

23. In the 29 OECD countries (Europe +), The diverse health care systems are remarkably similar in objectives and incentives. Health care systems are not recipes that can be imported/exported. They are the product of particular history and political culture.

24. Health care system models:

25. Reality check: • We have to speak of “private” delivery of services in Canada because physicians are “individual entrepreneurs” – not civil servants, and so on (nurses are hospital employees, which are corporate entities separate from their provincial governments, etc.). • It remains that medicare is entirely paid for with public funds, even if hospital food, laundry or lab work are done in the private sector.

26. Why?... • Because of the general taxation base we use for funding the system, and • Because we don’t directly control all the factors of production.

27. N.B.: Despite the words used, Canada is more of a: BEVERIDGE model country than one of Social Insurance model one.

28. Financing of health care in Canada: • General taxation (personal income, corporation, sales, VAT) • Specific taxes (payroll taxes, excise taxes on specific goods) • Premiums • User charges (co-payments, deductibles) • Charitable contributions

29. and allocation of resources… • The provincial government allocates • The budgets for hospitals • … for continuing care • … for public health • … for mental health, rehab services • …the global budget for physicians’ fees (each provincial medical association allocates it in turn by specialty, etc.)

30. In closing: Merit goods vs. Market goods It is our political culture, not our socio-economic organization as a country, that distinguishes us from our neighbour to the South, the United States. This is most reflected in our attitude towards health care: they consider “health” as a market commodity, while we consider health as a common good.

31. 4. Health care spending and outcomes $ 100 + billion in total (2001) $ ??? billion in 2005, 2010, 2015, etc.

32. Dividing the total health care $$$

33. Public spending: 73% in 2001, i.e. $73,000,000,000. Federal government, provincial/territorial governments, Workers’ Compensation Boards, social security/social assistance programs. Private spending: 27% in 2001, i.e. $27, 000,000,000. Private insurance plans (mostly employment-based), out-of-pocket. The total bill is split between:

34. Public/private by categories:

35. OECD countries spending on health care: • Since 1980, the median for these nations’ health care expenditures as % of GDP stayed around 7-8%. In 1999, it was 7.9%. That year, Canada was the the fourth highest spender at 9.3%, equal with France. • Exceptions are: • those below this benchmark: UK, Spain, Finland and Japan • those above: Canada/France, Germany, Switzerland, the USA • In 1999, the USA were at 12.9% of GDP.

36. Are health expenditures rising? • At first glance, yes. • With the private share increasing faster than the public sector of health expenditures. • But, taking a closer look… (Cf. graph distributed)

37. What if we take inflation and population growth into account? • Then, if we adjust for inflation and population growth, health expenditures have decreased a bit. (Cf. graph distributed)

38. 5. Issues • What do Canadians think of medicare?... • Consistently the most cherished government program of all; it serves them well. • Also the most worrisome right now: should be at the top of the public agenda. • 48% consider that medicare’s five principles are not respected.

39. …and what do others think of us? • Canada has a narrower universal coverage base than OECD countries • Is one of the biggest spenders on health care (OECD) • Very good on life expectancy (WHO) • Very poor on efficiency: we ranked overall 30th in 2000 (WHO)