Canadian Medical Association Journal 1995; 153: 285-289
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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