Health Care Reform from the Cradle of Medicare Janice Mackinnon JANUARY 2013
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MEDICARE’S MID-LIFE CRISIS Health Care Reform From the Cradle of Medicare Janice MacKinnon JANUARY 2013 A Macdonald-Laurier Institute Publication True North in Canadian Public Policy Board of Directors Advisory Council CHAIR Purdy Crawford Rob Wildeboer Former CEO, Imasco, Counsel at Osler Hoskins Chairman, Martinrea International Inc., Toronto Jim Dinning Former Treasurer of Alberta MANAGING DIRECTOR Brian Lee Crowley Don Drummond Former Clifford Clark Visiting Economist Economics Advisor to the TD Bank, Matthews Fellow in at Finance Canada Global Policy and Distinguished Visiting Scholar at the School of Policy Studies at Queen’s University SECRETARY Brian Flemming Lincoln Caylor International lawyer, writer and policy advisor Partner, Bennett Jones, Toronto Robert Fulford Former editor of Saturday Night magazine, columnist TREASURER with the National Post, Toronto Martin MacKinnon CFO, Black Bull Resources Inc., Halifax Calvin Helin Aboriginal author and entrepreneur, Vancouver DIRECTORS Hon. Jim Peterson John Beck Former federal cabinet minister, Partner at Chairman and CEO, Aecon Construction Ltd., Fasken Martineau, Toronto Toronto Maurice B. Tobin Erin Chutter The Tobin Foundation, Washington DC President and CEO, Puget Ventures Inc., Vancouver Navjeet (Bob) Dhillon Research Advisory Board CEO, Mainstreet Equity Corp., Calgary Janet Ajzenstat Keith Gillam Professor Emeritus of Politics, McMaster University Former CEO of VanBot Construction Ltd., Toronto Brian Ferguson Wayne Gudbranson Professor, health care economics, University of Guelph CEO, Branham Group, Ottawa Jack Granatstein Stanley Hartt Historian and former head of the Canadian Chair, Macquarie Capital Markets Canada War Museum Les Kom Patrick James BMO Nesbitt Burns, Ottawa Professor, University of Southern California Peter John Nicholson Rainer Knopff Former President, Canadian Council of Academies, Professor of Politics, University of Calgary Ottawa Larry Martin Rick Peterson George Morris Centre, University of Guelph President, Peterson Capital, Vancouver Christopher Sands Jacquelyn Thayer Scott Senior Fellow, Hudson Institute, Washington DC Past President, Professor, Cape Breton University, William Watson Sydney Associate Professor of Economics, McGill University For more information visit: www.MacdonaldLaurier.ca Table of Contents Executive summary ...............................................2 Cost saving and interprovincial co-operation ....13 Sommaire ..............................................................3 Changing the way medicare is funded ................15 Introduction ..........................................................4 Conclusion ..........................................................17 History of medicare in Canada .............................4 About the author ................................................18 Comparisons between Canadian and Endnotes .............................................................19 Western European health care models .................6 References ..........................................................20 Changing the medicare model ..............................7 The author of this document has worked independently and is solely responsible for the views presented here. The opinions are not necessarily those of the Macdonald-Laurier Institute, its Directors or Supporters. Executive summary s the oldest of the baby boomers turn 67 In Canada, a co-payment could be implemented this year, the “fiscal squeeze” looms larger whereby individuals would pay for services used, A and larger. Providing health care for all Ca- up to a ceiling of 3 percent of income. The income nadians while encouraging a robust economy will tax system would be used to collect the revenue; require a more efficient health care system with thus, the administrative costs and complexity better methods of funding. would be reduced and the sick should not be de- terred from using the system since no fees would Changing the health care system to make it more be collected when care is accessed. affordable and effective will require addressing the three main structural problems built into the Health care has been like a car with federal and original design of the system: the focus on hospi- provincial governments vying for control of the tals and fee for service doctor services; a funding steering wheel. The federal government provides model in which there is no relationship between funding and sets standards, and the provinces users of the system and its costs; and the extent to have the power to design and administer the sys- which federal-provincial structures and tensions tem and control spending. Controlling costs and have made reform more difficult. making structural changes is complicated by the A better medicare system requires changing the complexity of federal-provincial relationship. In- traditional 1960s hospital model by funding hos- terprovincial co-operation will also be key to re- pitals differently, diverting patients to alternative ducing costs. facilities, and focusing more on a holistic, integrat- More use of private clinics, home care, and long- ed approach to health. An emphasis on prevention term and chronic care facilities would produce and health promotion would save lives and money in the future. The current full coverage of hospi- more appropriate and affordable care than hos- tals and doctors does not leave funding for these pitals. The health department established the Sas- areas, and furthermore, it diverts resources from katchewan Surgical Initiative in 2010 to reduce areas like education and income support, which wait times. Comparing the total cost of perform- are crucial to supporting a healthy lifestyle and ing 34 procedures in the clinic versus the health environment. department hospital reveals that it is 26 percent less expensive to use clinics than hospitals, and in Most Western European countries have less ex- all cases the clinics were less expensive. pensive health care systems with better outcomes. Significant differences include linking patients and Preserving the noble ideal of universal health care taxpayers to the costs of health care through user will require making fundamental changes in Cana- fees or co-payments; paying doctors a salary; and of- da’s health care system. The changes suggested in fering broader coverage for services like home care, this paper will make Canada’s health care system physiotherapy, and prescription drugs. Additional- more affordable and open the door to investments ly, health care is seen as one of many social services in other services and programs that are more im- and is subject to reform, like the reforms Canada portant in promoting the overall health of the used in the 1990s to change other social programs. population. 2 Health Care Reform From the Cradle of Medicare Sommaire lors que les premiers baby-boomers attein- ont été effectuées par le Canada dans les années 1990 à dront 67 ans cette année, le spectre du l’égard de différents programmes sociaux. A « resserrement fiscal » prend de plus en plus Au Canada, on pourrait instaurer une formule de par- d’ampleur. Fournir des soins de santé à tous les Ca- ticipation aux coûts des services en vertu de laquelle les nadiens tout en favorisant une économie vigoureuse utilisateurs assumeraient une partie de ces coûts jusqu’à nécessitera un système de soins de santé plus efficace concurrence de 3 % de leurs revenus. L’infrastructure tirant parti de meilleures méthodes de financement. mise en place pour l’impôt sur le revenu pourrait servir Pour transformer le système de santé en vue de le ren- à recueillir ces frais de participation, ce qui limiterait les dre plus abordable et plus efficace, il faudra régler les coûts administratifs et la complexité du système et évit- trois principaux problèmes structuraux du système erait ainsi de dissuader les malades d’utiliser le système depuis sa conception : l’accent mis sur les hôpitaux et de santé, puisqu’aucuns frais ne seraient recueillis au la rémunération des médecins à l’acte; le modèle de moment de la prestation des services. financement en vertu duquel il n’y a pas de corrélation entre les utilisateurs du système et les coûts rattachés Les soins de santé sont comme une voiture dont les au système; et la mesure dans laquelle les tensions et gouvernements fédéral et provinciaux se disputent le les structures fédérales-provinciales ont compliqué la volant. Le gouvernement fédéral fournit le financement réforme. et établit les normes, alors que les provinces exercent le pouvoir de concevoir et d’administrer le système et de Pour améliorer le système d’assurance-maladie, il faut contrôler les dépenses. La nature même des relations modifier le modèle hospitalier traditionnel des an- fédérales-provinciales augmente la complexité du con- nées 1960 en finançant les hôpitaux de manière différ- trôle des coûts et de la mise en œuvre des changements ente, en redirigeant certains patients vers des installa- structurels. La coopération interprovinciale sera égale- tions répondant mieux à leurs besoins et en favorisant ment la clé pour réduire les coûts. une approche holistique et systémique à la santé. Si l’on mettait l’accent sur la promotion de la santé et la Il faut que les options comme les soins de longue durée, prévention, cela pourrait sauver des vies et économiser les cliniques privées, les soins à domicile et les établisse- de l’argent. À l’heure actuelle, le financement intégral ments de soins prolongés soient offertes pour garantir des hôpitaux et des