Canadian medicare: prognosis guarded
C. David Naylor, MD, DPhil, FRCPC; Catherine Fooks, MA; J. Ivan
Williams, PhD
Canadian Medical Association Journal 1995; 153:
285-289
Reprints are not available.
Abstract
Résumé
Introduction
National signposts
Maintaining and monitoring medicare: seven
suggestions
Postscript
References
Abstract
Beset by unprecedented fiscal pressures, Canadian medicare has
reached a crossroads. The authors review the impact of recent
cuts in federal transfer payments on provincial health care
programs and offer seven suggestions to policymakers trying to
accommodate these reductions. (1) Go slowly: public health care
spending is no longer rising and few provinces have the necessary
systems in place to manage major reductions. (2) Target
reductions, rewarding quality and efficiency instead of making
across-the-board cuts. (3) Replace blame with praise: give health
care professionals and institutions credit for their
contributions. (4) Learn from the successful programs and
policies already in place across the country.
(5) Foster horizontal and vertical integration of services. (6)
Promote physician leadership by rewarding efforts to promote the
efficient use of resources. (7) Monitor the effects of cutbacks:
physician groups should cooperate with government in maintaining
a national "report card" on services, costs and the health status
of Canadians.
Résumé
Assaillie par des pressions budgétaires sans
précédent, l'assurance-maladie au Canada est
parvenue à une croisée des chemins. Les auteurs
examinent l'impact que les compressions récentes des
paiements de transfert fédéraux ont sur les
programmes provinciaux de soins de santé et
présentent sept suggestions aux décideurs qui
essaient de faire face à ces compressions. 1) Aller
lentement; les dépenses publiques consacrées aux
soins de santé n'augmentent plus et peu de provinces ont
les systèmes nécessaires pour gérer des
compressions majeures. 2) Cibler les réductions,
récompenser la qualité et l'efficience au lieu
d'imposer des compressions générales. 3) Remplacer
le blâme par des louanges : donner aux professionnels et
aux institutions de la santé le crédit de leurs
contributions. 4) Tirer des leçons des programmes et
politiques couronnés de succès qui existent
déjà au Canada. 5) Favoriser l'intégration
horizontale et verticale des services. 6) Promouvoir le
leadership des médecins en récompensant les efforts
de promotion de l'utilisation efficiente des ressources. 7)
Suivre les répercussions des compressions : les groupes de
médecins devraient collaborer avec le gouvernement pour
maintenir un «bulletin scolaire» national sur les
services, les coûts et l'état de santé des
Canadiens.
Introduction
In its 1995 budget the federal government reduced cash transfers
to the provinces by $7 billion over the next 3 years, a plan that
has generated intense debate about the survival of medicare in
Canada. Comprised of separate provincial and territorial plans,
Canadian public health insurance has always resembled a quilt
more than a uniform blanket covering the nation. However, this
patchwork was stitched tightly by federal cost-sharing conditions
that required provincial plans to be publicly administered,
universal, comprehensive, accessible without charge at the point
of delivery and portable by residents who travel to other
provinces.
Each provincial system has worked by universally insuring private
fee-for-service medicine and by providing global funding for
nonprofit hospitals. Provincial variations on the national theme
have long included differences in per-capita expenditures, the
classification of services as insured or noninsured,
physician-population ratios and the availability of advanced
technologies and specialist care.(1) Quebec alone moved early toward stronger
regional planning and the integration of ambulatory medical and
social services in community-based agencies.
Cuts to federal health care funding have given rise to fears that
growing interprovincial disparities will unravel the national
patchwork. Although many people perceive that these cuts began in
the early 1990s, in fact they began more than a decade ago.
Transfer payments to the provinces for health care and
postsecondary education currently flow through Established
Programs Financing (EPF); 75% of these funds is designated for
health care. Since 1982, six federally initiated changes made to
EPF have resulted in a total decrease in funding of almost $49
billion. In the last 3 years shifts in funding have been taking
place at the provincial level as legislators recognize that their
provinces can no longer absorb the federal cuts. Now, major cuts
in transfer payments are being passed on to health care
providers. For example, the growth rate in spending by the
Ontario Ministry of Health has changed from 11.5% in 1987-88 to
12.0% in 1990-91, 0.8% in 1992-93 and -0.6% in 1994-95.(2)
The worst is not over. Although several provinces have delivered
balanced budgets, none is seriously paying down the principal of
its debt. Ontario and Quebec, where 60% of the country's
population reside, are still running major deficits. The federal
government's most recent budget was only a small step toward
balancing the national books; more cuts in federal programs and
transfers are inevitable.
It is therefore not surprising that health care delivery is being
restructured across Canada. Alberta, Saskatchewan and New
Brunswick have consolidated hospitals under regional boards, and
similar steps are being taken in British Columbia and Nova
Scotia. Various budgetary rollbacks have accompanied these
initiatives. It is more difficult to get new drugs onto public
plans, and some provinces have delisted various drugs and
formulations. Caps and clawbacks for professional fees are the
norm. Experimentation with alternative payment plans for
physicians is still limited, but pressure is being exerted inside
and outside the profession in favour of blended compensation
models. Last, although Canadians have spent enormous energy
studying health care since the 1960s, policymakers and interest
groups are engaged in more soul-searching than ever before.
Medicare has reached a crossroads.
National signposts
What signposts have been erected at the crossroads by the federal
government? Prime Minister Jean Chrétien and Health
Minister Diane Marleau have upheld the Canada Health Act and
criticized provinces that permit extra billing or the imposition
of user fees and private-clinic facility fees.(3),(4) At the same time,
the prime minister has called for the elimination of dental and
eyeglass benefits (which in fact are not covered currently) and
suggested medicare cover only "the basics."(5) He has also
proposed that Canada reduce its spending on health care from 10%
of gross domestic product to less than 9%, in line with "European
levels."(6),(7),(8)
What supports this view that Canadian health care spending is
profligate? Some commentators have emphasized the influence of a
thin, green book that synthesizes the findings of the
Queen's-University of Ottawa project on Cost-Effectiveness of the
Canadian Health Care System.(9) Indeed, the press release announcing the
report's publication stated that "Canada's cost control record
still ranks well behind [that of] most European health care
systems" and claimed that $7 billion per year (i.e., 15% of
public health expenditures) could be cut from health care without
compromising health outcomes.(10),(11), (12)
The project report begins by asking why, despite growth in health
expenditures, has there been "so little improvement in measured
health outcomes such as life expectancy (at birth), infant
mortality and potential years of life lost?"(9) This kind of
thinking is common among those who favour budget cuts for acute
care services. It is true that individualized medical care, as
opposed to broad changes in living conditions or public health
interventions, contributed little to the improvement of
population health in industrialized nations from 1850 to 1950.
But policymakers then leap to an erroneous assumption that the
cuts currently being made to personal services will be harmless.
In fact, from 1951 to 1991 life expectancy at birth rose from
66.4 to 74.6 years for men and from 70.9 to 81.0 years for women.
More tellingly, average life expectancy at age 65 years rose
about 2 years for both men and women from 1971 to 1991 alone.
Although the rate of death from cancer has increased, survival
rates among elderly people have improved, largely due to a
dramatic decline in the rate of death from cardiovascular
causes.(13) The
importance of the social determinants of health status should not
blind us to the fact that recent reductions in cardiovascular
mortality owe much to modern medicine.(14) For that matter,
the greatest contributions of modern medical services are
reflected poorly by mortality statistics. Most clinical
interventions are aimed at improving quality of life, and only
limited gains in survival rates are expected. Thus, to determine
the impact of providing more or less health care, one has to
measure both the quantity and quality of life of population
cohorts at diverse ages in the face of a higher or lower
intensity of service. And, to determine specifically the damage
inflicted by cutbacks, the same types of analyses are needed.
Unduly negative views of the health care system can also derive
from the use of outdated information. For example, the
Queen's-University of Ottawa project found that medical billings
per patient increased by 153% from 1979-80 to 1989-90 - a
phenomenon taken as evidence that physicians have escaped the
full impact of economic controls.(9) Yet it is since 1990 that most provinces
have capped the sums available for the fee-for-service pool and
flatlined hospital budgets. Rising utilization ends up being a
bargain, not a boondoggle: more services are provided from a
fixed pool of funds, as physicians in several provinces know to
their chagrin.
In the same vein, the Queen's-University of Ottawa report uses
Ontario data from 1989-90 to develop cost-saving scenarios for
the hospital sector. A savings of almost $1 billion per year is
projected in a scenario that envisages a 20% reduction in the
number of acute care beds and a 20% reduction in length of
hospital stay.(9)
As Fig. 1 [not available] shows, this reduction in length of
stay has already occurred. In Ontario about 8000 acute care beds
-- over 20% of capacity -- have been taken out of use. This fact is
belatedly noted in an appendix to the report(9) as follows: "This
not only confirms the viability of this scenario we developed,
but also presents the challenge of moving the 'markers' even
further ahead." There is no acknowledgement that this achievement
rests on the shoulders of thousands of Canadians who work in
health care, and there is not the slightest hint that the next
10% or 20% might be more difficult to achieve without
compromising access or quality of care.
That being said, it is still possible to make the public health
care system more efficient. Despite our serious reservations
about certain aspects of the Queen's-University of Ottawa report,
its analysis of continuing care sensibly highlights the need to
integrate community-based and residential services with each
other and with the acute care sector.(9) Here, the extent
to which the restructuring of health care provision and an aging
population have already placed an enormous burden on the informal
caregiving sector is acknowledged. No one has adequately measured
the losses in productivity that result from this shifting of
costs to families.
Fig. 1:
Utilization trends in acute care hospitals in Ontario from fiscal
years 1982 to 1993. Admission rates (ovals), length of hospital
stay (triangles) and overall days of care (squares) are shown as
a percentage of baseline (100%), which is derived from data for
general hospitals for 1982. Analyses are based on hospital
discharge abstracts compiled by the Canadian Institute for Health
Information (CIHI, formerly Hospital Medical Records Institute)
and performed by the Institute for Clinical Evaluative Sciences
(ICES) for years to 1993 inclusive.
Above all, the Queen's-University of Ottawa group deserve credit
for trying to generate a national view of the health care system
and to encourage cooperation among the provinces. The need and
the opportunity for mutual learning have never been greater.
Funding pressures in the early 1990s led most provinces to
achieve substantial gains in health service efficiency without
fundamental restructuring. Ontario exemplifies this: thousands of
beds were taken out of the system, but not a single hospital was
closed. In the mid-1990s the deepening fiscal crisis broke a
25-year-old mould for provincial health service provision. New
models for funding and organizing care are springing up.
Intelligent use of tendering to private enterprise has brought
increased efficiency in public facilities without compromising
the basic principles of medicare. Various strategies for
regionalization have been implemented, and utilization management
at the hospital level is expanding and improving. So far, we know
little about the real benefits, costs and harms of these changes.
A pressing need remains for a national interchange of research
findings, guidelines, policy analyses and program evaluations so
that the provinces can learn from one another.
Maintaining and monitoring medicare:
seven suggestions
Canadians have reached the limit of their willingness to pay
personal income taxes, and governments have reached the end of
their borrowing capacity. In response to reductions in public
funding, some physicians favour options such as user fees,
deductibles (wherein the first $200 to $500 of annual medical
bills are paid out of pocket), Oregon-style restrictions on
benefits within Medicare, and private hospitals with user-pay
provisions. Moreover, if public funding is cut far enough,
middle-class Canadians may press for the elimination of
restrictions that prevent private insurers from covering services
insured under provincial plans. This would allow a truly parallel
private system to emerge. Yet, as experience in the United
Kingdom suggests, even with a low level of public funding (less
than 6.5% of gross domestic product) the private sector would be
something of a sideshow. The National Health Service in the
United Kingdom still provides the bulk of services to the
over-whelming majority of the populace; the same will be true in
Canada.
We therefore have seven suggestions for policymakers faced with
the task of restructuring medicare in Canada.
1. Go slow. Public funding should be decreased gradually. The
cost of servicing our debt has caused a serious affordability
crisis, but medical care costs in Canada are not wildly out of
control. On the contrary, our analyses indicate that the
percentage of gross domestic product spent on health care over
the last year has declined. Precipitate moves will do damage that
may take years to reverse, and few provinces have the necessary
management structures and information systems to cope with
radical funding reductions.
2. Target reductions. Across-the-board cuts falsely assume an
equal need for cuts in all areas of health care and should be
replaced by innovative mechanisms that reward quality and
efficiency and reallocate resources to optimize health
outcomes.
3. Replace blame with praise. Morale is understandably low. The
continuing strengths of the system and, above all, the
improvements that health care professionals and hospital workers
have effected in difficult circumstances should be
acknowledged.
4. Learn from others. We need a national clearinghouse of
information on the best practices, programs and policies. Ten
provincial experiments are under way, and change can occur
rapidly (see, for example, Fig. 2). We need
to learn from each other, as well as from the experience of other
countries. Needless reinventing of the wheel continues at the
level of hospitals, regions, agencies and provinces.
5. Foster integration. Horizontal integration of different
levels of acute care institutions will foster efficiency and
improve coordination of care. Vertical integration will link
acute care centres to chronic care and rehabilitation hospitals,
as well as to nursing homes and home care programs.
6. Promote physician leadership. We need compensation models
that will allow physicians and surgeons to be rewarded more
consistently and appropriately for their efforts to promote the
efficient and effective use of scarce public resources while
maintaining a high quality of care.
7. Monitor the effects of cutbacks. We need to keep careful
records of where and how access and quality are being impeded,
maintained or improved. Research into the effects of cuts and
restructuring should be encouraged and funded. Above all, Ottawa
and the provinces should cooperate on a national health care
"report card" that profiles health services and health status
province by province. Measures of quality, access and costs
should be updated continually.
Fig. 2: Percentage
change in utilization rates of selected surgical procedures in
Ontario. Fiscal years 1991-93 are compared to baseline fiscal
years 1989-91. (Fiscal year 1991 is included in both periods so
that the rates will be stabilized and the analysis of change will
err on the side of underestimation.) Analyses are based on
hospital discharge abstracts compiled by the CIHI and performed
by the ICES technical team, who used the coding system of the
clinical modification of the International Classification of
Diseases, 9th revision(15) as reported in the ICES Practice Atlas.(16)
Postscript
Although much progress has been made, public health care still
has the potential to do more with less. Levels of efficiency and
mechanisms to promote useful reallocation of resources vary from
one province to the next. Even in provinces that are
regionalizing the administration of hospitals and other
health-related services, problems of incomplete horizontal and
vertical integration and the inadequate involvement of physicians
remain. In any event, it will now be even harder to extract the
fat from health care provision without starving the sinew and
muscle - and there are already areas, such as dialysis provision
and hip and knee arthroplasty in Ontario, where more, not less,
funding is needed.
How much funding does health care need? No one knows. For the
current fiscal year, we project that national health expenditures
will be near "European levels" (i.e., just above 9%), given
modest economic growth, the budget caps and cuts in most
provinces and the still-limited extent of passive
privatization.
Will Canadian medicare survive in some form? Yes - thanks to
thousands of professionals, health care workers and
administrators who are investing enormous energy to maintain
medicare despite shrinking real resources. Their initiative,
creativity and good will remain the greatest strength of our
threatened public health care system. The prognosis is guarded,
but medicare, in our view, is far from moribund.
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CMAJ August 1, 1995 (vol 153, no 3)
/ JAMC le 1er août 1995 (vol 153, no 3)