Matters of Life and Death. André Picard
and no shortage of physicians, and patients have access to the latest and greatest drugs and technologies. And indeed, that may well be true—for a tiny, well-to-do minority. But for all the problems we have in delivering health care in Canada, embracing a profit-driven health system as the United States has done is not the solution because it does not serve consumers well. For a growing number of Americans, health care—any health care—is increasingly inaccessible and unaffordable. In 2015, the average annual premium for a single person was $6,251, and for a family of four the premium was $17,545. Moreover, insurance rates are soaring and coverage is shrinking. Employers are capping what they spend on health, meaning employees have to absorb all premium increases. Insurers are also tightening the services they will pay for and capping payouts so people with chronic illnesses simply run out of coverage. Since 2005, US health premiums have increased more than 25 percent, and deductibles have soared by 67 percent.
Compare that with Canada, where we take health insurance for granted, to the point where we have developed a deeply rooted sense of entitlement: everybody is entitled to be treated now, or sooner. Everyone is entitled to the most recent, most expensive drug, even if the drug is of dubious or marginal benefit. Everyone is entitled to state-of-the-art techniques and equipment, regardless of cost. If we don’t get it, we’re going to sue. It has reached the point where politicians and policy-makers dare not say no, lest they be publicly eviscerated. And, oh yes, we think our taxes—taxes that pay for the medicare system—are too high.
Canada’s medicare system is not perfect. Far from it. But health-care services in Canada are excellent. The system is cost-efficient—at least compared with the United States. Americans spent just over US$10,000 per capita on health care in 2016, compared with Canadians, who spent C$6,299. Put another way, if we spent at the same rate as Americans, our annual health tab would exceed $340 billion, up from the current $228 billion. Canada’s medicare system is also largely accessible and equitable. The care is there when you need it—with very few exceptions—regardless of where you work, where you live, the colour of your skin, and your income. We should be proud that our medicare system makes care affordable to all, but we should not use that as an excuse for its flaws, such as unbearably long wait times.
The predicament of the American “working poor” provides some important perspective. For Canadians, it is unimaginable to spend 25 percent or more of our income on health care. But with the costs of private care and out-of-pocket expenses creeping up, especially for prescription drugs, we can’t be too self-righteous. Like the house-rich, cash-poor who stretch their finances to pay for housing, the “insured poor” are barely hanging on to their coverage. “Eventually, many probably will lose the battle, joining the forty-five million Americans without medical coverage,” Costello wrote. (That figure is now at twenty-nine million, but will likely jump again if President Donald Trump follows through on his promise to dismantle Obamacare.)
In the United States, routine health matters—the birth of a baby, heart disease, depression, arthritis—can have catastrophic consequences. Medical bills are the primary cause of personal bankruptcy, affecting more than two million families a year. Notably, all those affected began with private health insurance but soon exhausted it. Illness can also result in job loss, and along with it health insurance just when it is needed most.
Dr. David Himmelstein, an associate professor of medicine at Harvard University and the study’s lead author, put it this way: “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy.”
Funding overhaul is needed to cure our ailing hospital system
Hospitals are the cornerstone of our health system. We rush to hospital in emergencies; we go there for life-saving surgery and for treatment of serious illness; and, increasingly, chronic illnesses are managed through hospital-based clinics. Hospitals are also powerful symbols. Most Canadians are born in hospitals, and most still die there. A community without a hospital is viewed as a place without a heart or a soul.
Hospitals are the single biggest expense in our health system. Of the $228 billion Canadians spent on health care in 2016, $66 billion went to hospitals, compared with $36.5 billion for drugs and $34.9 billion for physician services. Yet the public knows surprisingly little about how the nine hundred or so hospitals in this country are administered or funded.
Dr. Brian Day, past president of the Canadian Medical Association, said in 2007 that one of his priorities was to change how hospitals were funded. He decried block funding, the transfer of set budgetary amounts from provincial coffers to individual hospitals. What he wanted to see instead was “patient-focused funding,” where the money follows the patients and hospitals are allocated money based on the number of patients treated, the procedures performed and the timeliness of care. While discussing the pros and cons of such an approach can be useful, it’s also important to examine the issue of block funding and place it in some context. (Day’s vision never did come to pass, but a number of jurisdictions have experimented with variations on patient-focused funding.)
Medicare, a state-administered health insurance program, began because people could not afford hospital care. A heart attack, traumatic injury or complicated childbirth could instantly impoverish a family. When governments began to offer “free” hospital care—beginning with Saskatchewan in 1947, fifteen years before physician services were also covered and medicare was born—hospital budgets were reviewed line by line by provincial health officials. By the late 1960s, this process had become onerous, so hospitals were allocated global budgets. The starting point was the previous year’s budget, adjusted for inflation and growth—but almost always with a cap. New programs were funded separately for a few years, then rolled into the global budget. From a government point of view, block funding was very successful because it was an effective way to contain costs. For the past forty years, hospitals’ share of spending as a percentage of total health expenditures has fallen steadily.
But the shortcomings of block funding are many. Stated bluntly, hospitals on fixed budgets have a perverse incentive to do less to keep costs down. That’s why we have surgical floors shutting down during the holidays despite wait-lists. And block funding is, more often than not, inequitable. It is not responsive to increases in the volume of care; nor does it take into account the characteristics of the patient population. Further, block funding doesn’t create incentives for cost-effective care. The result is a constant game of catch-up and hospitals with chronic deficits.
But the rigid, bureaucratic block funding of yore no longer exists. Governments have introduced all manner of programs to supplement core budgets. Increasingly, we are seeing regionalization, which allows more sensible funding of programs regardless of where they are delivered (be it hospitals, long-term care facilities, clinics or the community). Governments are also moving to multi-year budgets for hospitals and adopting incentive programs to reward efficiency and quality care. The goal, ultimately, is to ensure that hospitals that provide comparable services receive comparable funds. Budgets also need to take into account the characteristics of the patient population—meaning that hospitals in low-income areas need more money than those in high-income areas. One of the biggest challenges is having budgets and facilities that keep pace in hospitals in communities with explosive growth, like those in parts of Alberta and Southern Ontario. There is also the thorny issue of what to do with hospitals that underperform; few politicians dare shut down a hospital.
In a health system like Canada’s, where 90 percent of funding comes from state coffers, overall budget control must remain with the state. We can probably all agree that, in the twenty-first century, block funding is not the way to do it properly. But we must be careful not to trade one set of problems for another. Performance-based funding, while it would introduce the so-called discipline of the marketplace by having hospitals compete with each other for patients, would also cause widespread carnage. Programs, and even entire hospitals, could shut down. Care could be fragmented. Administrative costs would likely increase and so too would overall costs. And while patients might have more choice, would it be meaningful choice?
Regardless, we should be having the discussion, vigorously and publicly. Hospitals are just too important and too expensive to simply accept the status quo and not strive to