Current and future roles of public and private health care in Canada

1. Current and future roles of public and private health care in Canada Chris Smith Sabina Nagpal (Meds class of 2007)

2. Overview of this session • The current state of Canadian health care funding • Historical forces pushing for and against change in Canadian health care • Recent events leading to increased debate about the roles of public and private in health care • Options for future change

3. Private-parts • Private funding and private delivery are the two main aspects of “privatization” • Funding • Who pays the deliverers • Delivery • Who owns the capital and infrastructure responsible for providing care

4. Paying the bill • Public spending is mainly in the form of statutory health insurance • Private spending is divided into 2 main groups • Private Health insurance • Out-of-pocket payments

5. Arrangements of private health insurance • Private health insurance can play 5 main roles • Dominant (e.g. USA) • It is the main method but is voluntary • Compulsory (e.g. Switzerland) • It is the main method but is not voluntary • Substitutive (e.g. Netherlands) • It provides coverage that would otherwise be available from the state • Complementary (e.g. Canada) • It provides coverage for services excluded or not fully covered by the state • Supplementary (e.g. UK) • It covers the same range of services as the state (double coverage)

6. Splitting the bill: Out-of-pocket • Individuals can contribute to the cost of health care at the point of use in three broad forms • Direct payments • Cost-sharing/user fees • Co-payment (fixed fee) • Co-insurance (fixed proportion) • Deductible (fixed ceiling) • Informal payments (“under-the-table”)

7. Delivering the goods • Delivery of health care can be divided into 4 main groups • Public • State • Public but non-state • Private • Not-for-profit • For-profit

8. Discussion point #1 • Estimate the percentage of total payments that each form of funding contributes. • What forms of delivery are presently at work in Canada?

9. Paying in Canuck Bucks • Private insurance funding makes up 11% of our total health care funding • Larger proportion than in other countries with parallel private delivery systems (Aus: 7%, UK: 3%, NZ: 6%) • The role of private health insurance has historically been complementary (by law in most provinces) • Quebec is now open for supplementary forms • Out-of-pocket expenses account for 17% of total health expenditure

10. Wide spectrum of systems for health care funding across OECD countries % Private Insurance % Public Funding % Out-of-pocket Less 0% 44% 8% 0% 71% 14% 76% 7% 17% More 91% 35%

11. Canadian delivery • Our hospitals are predominantly privately owned not-for profit institutions • Alberta: allows private for-profit “extended-stay non-hospital surgical facilities” • There are an estimated 50-60 private clinics in Canada, mostly for minor surgeries • Our physicians are predominantly self-employed (private businesspeople) • Depending on province, may have restrictions or determents from practicing outside of the public system

12. Provincial Regulation of Privately Financed Hospital and Physician Services • In every province, physicians are free to opt out of the public plan. • In all but 3 provinces, opted-out physicians can charge whatever fee they want • MB, NS and ON— physicians are prohibited from charging fees greater than the amounts payable under the public plan. • AB, BC, NB, QC, SK, and PEI explicitly prevent the public sector from subsidizing the privately financed sector • In NL opted-in physicians may not extra-bill, but opted-out physicians are free to bill patients whatever they wish • the patients of opted-out physicians are entitled to public coverage up to the amounts set out in the public tariff • there is no prohibition on private insurance covering the kinds of services the public sector is meant to cover Source: Flood and Archibald 2001

13. Why have we been talking about change for 20 years? • Historical arguments for changing healthcare delivery have been driven by two main concerns: • Financial sustainability • Perception that the aging population and evolving medical expectations are going to overwhelm funding capacity • Decreasing access and/or quality • Perception that wait times, health outcomes, and health system resources are reaching unacceptable levels

14. Sustainability: the age factor • In next 25 years, population aged 65+ will grow by 70 million in OECD countries while working age will only grow by 5 million • Increased proportion of elderly to use services • Use 3X amount of health services as younger population • Decreased proportion of working age population to pay taxes

15. Evolving medical expectations • Education and literacy rates have risen and citizens are increasingly aware of options for treatment • Have higher expectations about what the system should provide for them. • This begs the question as to whether health care will behave as a luxury good, whereby the rate of increase in spending will exceed the rate of increase in income. • Evolving medical technology has potential to be a cost-driver • Could potentially be a cost-reducer instead, depending on how it is used

16. Four models of sustainability • As a result of population aging, total health costs will increase significantly and will require an increased relative share of GDP. • Total health costs will increase, but only gradually, and this increase will be absorbed by GDP growth and reallocations from other sectors. • Population aging will result in an increase in the demand for health care, but we will be able to contain costs by delivering health care more efficiently. • Demand for health care will decrease because the future population, and in particular the future elderly population, will enjoy better health status.

17. Model 1: Health costs will requirea greater share of GDP • Just to maintain the current level of health care costs as a percentage of GDP during the next 25 years, the rate of growth of health care costs in Canada must be kept from 0.5% to 0.75% below the rate of growth in earnings

18. Model 2: Rising health care costswill be manageable • Large increases in provincial and territorial health expenditures remain fairly consistent in terms of share of GDP over the period to 2026 • Based on consensus forecast of nominal GDP growth and the assumption that the current pattern of utilization will continue in the future • Increases predicted to be offset elsewhere in the budgetary framework • The overall increase for all budgetary items combined will be at about the rate of growth in the population and below the rate of growth for GDP

19. Model 3: Efficiency will offsetincreased demands • Increasingly integrated delivery system • An important element is the removal of doctors from a fee-for-service remuneration system • Increased information technology • Sharing of timely information • Reduction of spending on care in last year of life • Using advanced directives • Increasing patient responsibility • Reducing waste and misuse • Increasing health research

20. Model 4: Compression of morbidity • “Rectangularization” of the survival curve • The population is living in better health until their last few years • This will continue to improve with increased focus on healthy living and preventative medicine

21. Discussion point #2 • In your groups, discuss which of these 4 futures you think is most plausible and why. • Are there any other ways that could help sustain our current system? • Are there any other factors that are making the system unsustainable?

22. Canadian views on sustainability

23. The other concern: our present accessibility and quality of health care • Wait times, health outcomes, and health system resources are the popular “measures” • Much of the discourse has so far been based on anecdotal evidence that doesn’t say much about the quality of the system • Only recently have there been concerted efforts to objectify these categories • 2004: Wait times Alliance- Canada • 2004: Minimum Data Set- EU

24. Wait times • First Minister’s Commitments on Wait Times, September 2004 • Evidence-based benchmarks for medically acceptable wait times released December 31, 2005 • Multi-year targets expected by December 31, 2007 • No definitive evidence that private insurance alters overall wait times • Australia - as numbers taking private insurance have increased, wait times in the public system have decreased • UK- areas with the highest number of private insurance users have the longest wait times

25. Health outcomes • Data used most frequently in the past: • Infant mortality and life expectancy rates • Potential years lost life (PYLL) for selected causes • Research ongoing into using other measures • EU Minimum Data Set has identified other outcomes that should be monitored: • Mortality and PYLL for causes of death amenable to health care • Disability adjusted life expectancy • Changes in the prevalence of risk factors linked to health behaviors • Also identified some quality of care measurements: • Preventive care (vaccination and cancer screening rates)

26. Health System Resources • Canada trails behind almost all developed countries in the availability of MRIs, CT scanners, the number of physicians, and the number of acute care beds per population

27. Why haven’t we changed health care delivery much in 20 years? • The main arguments against changing the structure of the publicly funded system have been of two main types: • Values based • Based on the lack of evidence definitively supporting either side of the public/private argument

28. The CHA represents Canadian values • Canadians support the 5 principles laid out in the CHA: • Universality: all eligible residents are entitled to public health insurance coverage on uniform terms and conditions • Accessibility: reasonable access by insured persons to medically necessary hospital and physician services must not be impeded by financial or other barriers • Portability: benefits must be portable from province to province • Comprehensiveness: all “medically necessary” medical and hospital services must be covered • Public administration: the health insurance plan of a province or territory must be administered on a non-profit basis by a public authority

29. Discussion point #3 • Discuss in groups specific ways of how privatization could potentially support or oppose each of the 5 fundamental principles of the CHA • What would you add or remove? • Are these the right set of principles?

30. Recent fuel to the fire • 2000: Alberta Health Care Protection Act (Bill 11) • June, 2005: Chaoulli v. Quebec Supreme Court ruling • August, 2005: perceived shift in CMA’s view on private health care

31. Private “extended-stay nonhospital surgical facilities” in Alberta • For-profit facilities will be reimbursed by the government, using public funds • A manner previously reserved for not-for-profit institutions. • The facilities may provide "enhanced" non-medical services for which the patient may elect to pay • Additional charges for routine care are proscribed • Nation split on the issue • 50% Support; 47% Oppose, as of April, 2000

32. Private health insurance for publicly funded services in Quebec • Dr. Chaoulli challenged the constitutionality of both s.11 of the Quebec Hospital Insurance Act and s.15 of the Quebec Health Insurance Act that prohibit private health insurance in Quebec • Argued that they violated both the Canadian Charter of Rights (s.7) and Freedoms and the Quebec Charter of Rights and Freedoms (s.1) • The only definitive ruling (4:3) was that these acts violated the Quebec Charter • Decision permits sale of private health insurance for otherwise publicly funded services in Quebec • Nation also split on this decision • 52% support; 44% oppose, as of July, 2005

33. Historical context of CMA resolution 1961–Tommy Douglas’ plan for public funding of all medically necessary HOSPITAL services adopted by the federal government and all provinces 1962-Saskatchewan introduced public funding for medically necessary PHYSICIAN services 1962 – Doctors in the province strike, withholding services for 23days Early 1970s – all provinces adopt plan for public funding for all medically necessary hospital and physician services Since then changes to federal funding to provinces for health care spending has been altered numerous times.

34. The perceived shift in the CMA’s opinion on public/private health care • CMA resolution at its general council meeting August 2005: • “The Canadian Medical Association supports the principle that when timely access to care cannot be provided in the public health care system, the patient should be able to utilize private health insurance to reimburse the cost of care obtained in the private sector.” • Resolution passed with a 2:1 vote after a heated debate and much opposition from CAIR • CFMS abstained its vote at the time citing that they did not know the opinion of their constituents (you!)

35. Discussion point #4 • Does this resolution imply that the CMA believes that a private sector for health care should be created? • Was this resolution passed (2:1) in the best interest of patients or doctors? • Now pretend you are the CFMS representative at the CMA general council meeting and you MUST take a stand on this resolution: make a decision as a group whether you are for or against it (as it is written) • Write down why

36. Now that there is debate, what are the questions and the options? • Many Canadians think of the argument as a public/private dichotomy • The spectrum of combinations of public and private contributions to health care is more of a continuum • Many Canadians are worried that with introducing private funding, we will eventually become like the US • Our political structure and societal values are much more aligned with Europe/Scandinavia • But The EU has placed large restrictions on the way Europe can regulate its private market • Leaves Canada in a unique situation

37. The key issues at the public:private interface • Safety valve to provide recourse against excessive wait times • Defining the basket of publicly-insured services • Increasing capacity/throughput through public:private partnerships (P3s) • Improving performance measurement and quality assurance in both public and private delivery • Ensuring a regulatory framework that strikes the right balance between professional autonomy and social responsibility

38. What to take from this seminar • After leaving this seminar, we hope that we have provided you with the tools to answer these questions for yourself as a future physician: • Where does Canada currently stand in its use of private and public healthcare? • Is our current system sustainable? • What issues of funding and delivery need to be discussed and resolved sooner rather than later? • What is your opinion on the Chaoulli court decision, and what do you expect the impacts to be? • What should the stance of the CFMS be on all these issues? • We would appreciate your feedback on this question in particular

39. Moving forward • If you have any suggestions on how to better inform medical students about health policy issues in the future, we would love to hear them