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Friday, July 24, 2009

From 1983: Health Care Reform in Canada

This is an article on health care reform in Canada from February 15, 1983. As the article explains, "The Canadian health system is really nothing more than an insurance plan for all citizens. The Federal Government and each of the 10 provincial governments put up the money, which comes from income taxes, sales taxes and, in the case of three provinces, premiums. Doctors bill the province for medical services." The issue the Canadian system faced was that some doctors had begun charging the government insurance plans more than the mandated fees, something many saw as a movement toward a private or two-tiered system and hence a threat to public health care in Canada. I was struck by how many similarities there are in the arguments to what we are hearing today. It's also interesting to look back and determine which of the scary stories about the future have come true:

Health Care in Canada: Popular System now Rocked by Criticism, by Douglas Martin, NY Times, 2/15/1983: Toronto - When Tommy Douglas was a boy, a Winnipeg doctor told him that he was suffering from a bone disease called osteomyelitis and that his leg would have to be cut off. Only because a brilliant young orthopedic surgeon decided to use the young charity patient for a teaching demonstration was he lucky enough to avoid the amputation. ''Had I been a rich man's son,'' Mr. Douglas says, ''the services of the finest surgeons would have been available. As an iron molder's boy, I almost had my leg amputated before chance intervened and a specialist cured me without thought of a fee.'' Mr. Douglas grew up to become the Premier of Saskatchewan, head of one of the first socialist governments in North America. In 1962, his party established a comprehensive medical insurance system, providing, in his words, ''complete medical care without a price tag.'' By 1971, such a system, administered by individual provinces and financed partly by the Federal Government, had been extended to cover every Canadian.

But now this comprehensive medical insurance system - which provides health care at substantially lower cost than the American system and has been closely watched by United States policy makers as a possible model for imitation - is confronted by wrenching pressures. The Canadian medical system lies somewhere between the American entrepreneurial approach and British nationalization.

A growing number of critics say that Canadian medicine has become bloated and inefficient, and they assert that the Federal and provincial governments no longer have effective control. Doctors point to mounting evidence of inadequate financing, including yearlong waits for operations, hospitals so overcrowded that beds and obsolete equipment jam hallways. Most visibly, the physicians ... complain that they are not paid enough and have gone on strike in several provinces to demand higher fee scales. And patients are increasingly asked to pay amounts above the insured fee, a contradiction to the system's founding philosophy.

At issue, analysts say, is the whole public nature of the system and how much of a new or expanded role, if any, private enterprise should play. ''We have a great chance of losing our health system the way we know it,'' said Ginette Rodger, executive director of the Canadian Nurses Association.

The Canadian health system is really nothing more than an insurance plan for all citizens. The Federal Government and each of the 10 provincial governments put up the money, which comes from income taxes, sales taxes and, in the case of three provinces, premiums. Doctors bill the province for medical services. The theory behind the system is that the healthy, not the sick, should pay for medicine.

Differences From U.S.

Canada's public monopolization of medical insurance, and the guarantee of medical care to all, are the chief differences from the United States, where Government-financed health programs are limited to veterans, the elderly and the poor. Most analysts agree that national health insurance has been a dead letter in Washington for nearly a decade. There have been new expressions of interest in recent months, however, because 10 million Americans have lost health coverage since 1981 as a result of losing their jobs.

The relevance of Canada's health system to Americans appears to be its success in providing what analysts and doctors generally agree is good care for less money. Canada spends roughly 8 percent of its gross national product for medical services, as against the United States' 10 percent. If the United States could reduce its proportion to 8 percent, the saving would be about $60 billion. Analysts say much of Canada's lower cost stems from the absence of a complex maze of private insurers who have to earn a profit to stay in business.

''Almost nobody thinks that for our 10 percent we're getting value for our money,'' said Theodore Marmor, a professor of political science at Yale who has extensively studied the Canadian health apparatus. ''In Canada, some do, some don't.''

 National Approach

Health as a political issue is coming to a head in Canada with the recent introduction in the national legislature of a bill proposed by the Government of Prime Minister Pierre Elliott Trudeau. Called the Canada Health Act, it would consolidate most existing programs. More important, it would limit doctors' ability to charge more than the insurance rates. The proposal has met strong response:

''We're going to be in for a dog-eat-dog confrontation,'' said Dr. Marc Baltzan, president of the Canadian Medical Association. But in pointing out that the system is now badly underfinanced, the medical association says lives are already being jeopardized. ''And as people die on waiting lists, governments are going to catch the heat,'' says Dr. Baltzan. They point to South Saskatchewan Hospital in Regina where 45 patients considered ''urgent'' candidates for open-heart surgery faced six-month waits; to patients with chest pains who would normally be treated immediately but who have been turned away from Western Regional Medical Centre in Yarmouth, Nova Scotia, because the halls are already crowded with patients on stretchers, and to Moncton Hospital in New Brunswick, where 30 beds are kept empty to save costs, despite a surgical waiting list of 1,400 patients.

Doctors Feel Underpaid

The doctors' position is that such failings indicate governments' unwillingness to pay enough for hospital maintenance, expansion and improvements, not to mention their fees. More and more doctors, particularly specialists who feel they are not being adequately reimbursed, are charging patients directly for amounts in excess of those set by provinces.

Strikes have been another response. Over the last two years, physicians have struck in British Columbia, Alberta, Newfoundland, Ontario, Quebec and Manitoba. In almost all, the settlement was more generous than the government's original offer.

''Certainly we have a cheap system,'' Dr. Baltzan said. ''The question is can you afford to run a system at that level for ever and ever.''

Opponents counter that the doctors' real concern is their own incomes. As the number of physicians increased, the number of Canadians served by each declined, to 535 in 1981 from 808 in 1962, and the trend appears to be continuing. The dwindling ratio of patients to doctors makes it hard to increasing income by treating more patients, giving the doctors a powerful impetus for charging more per patient.

Threat to System Seen

The principal complaint against the extra charges, which so far make up less than 5 percent of total billings, is that they will gradually erode the public nature of health financing, a criticism also levied against the supplemental charges hospitals assess for private rooms and food. Some critics see a two-tier health system coming, one for the rich and one for the poor.

Despite the crowded hospitals, many in Canada believe the health system is financed adequately. They say the problem is that too many people are in hospitals who have no business there; that many medical problems could be treated at lower cost by nurses and other professionals rather than by doctors, who are the only individuals now reimbursed; that doctors spend too much money on fancy new equipment whose value has not yet been proven, and that doctors and hospitals have no intrinsic interest in controlling costs.

These assertions are often made by liberal economists. Robert G. Evans, one of Canada's most influential health economists, argues that a financial crisis is almost inevitable in a system under which physicians basically control how much billing will occur. Each province only controls the budgeting of overall hospital expenditures and the setting of a fee scale used to reimburse the independent doctors.

''We are now experiencing the consequences built into the way we designed our system,'' Mr. Evans said. ''We presupposed the discretionary decision by physicians wouldn't break the bank.''

Mr. Evans says the answer lies in more research to learn which proven medical methods are least costly. He argues that provinces should be told to find such cost-saving measures and then to require the medical profession to adopt them. ''Where's the evidence that what an individual doctor determines is necessary is really necessary?'' he asked.

Doctors Prefer Independence

Physicians counter that such proposals strike at the core of their professional integrity. The more independence they are granted, they say, the healthier their patients will be. As a result, they tend to reject the very idea of economic analysis as unsuited to their basic mission.

''Most people would be very reluctant to take the position that their being alive rather than dead constitutes a marginal benefit,'' Dr. Baltzan said.

The medical profession has proposed that the poor receive free medical care, while more prosperous patients pay more. That plan would answer the question of accessibility, but would not erase fears of the two-tiered medical system.

The question of health insurance reform is further complicated by the perennial issue of Federal-provincial conflicts. Although grateful for the Federal money that pays about half the cost of health care, the provinces jealously cling to their autonomy over health matters, particularly while budgets are strapped by the recession. The fact that the Liberal Party rules nationally but does not control a single provincial legislature makes matters even more acrimonious.

Despite all the criticism and pressures for change, a recent Gallup poll indicated that four-fifths of all Canadians are satisfied with their medical insurance plan. Doctors and hospitals, although they want more money for their services, generally do not want to scrap the system. One of its virtues, they say, is that they do not have the problem American doctor's problem of trying to collect from people who will not pay their bills.

''You'll never persuade the Canadian people to go back,'' to free enterprise medicine, Mr. Douglas said. ''They wouldn't stand for it.''

    Posted by on Friday, July 24, 2009 at 04:42 PM in Economics, Health Care | Permalink  Comments (18)


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