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HAH 6260 – Health HAH 6260 – Health Services Organization and Services Organization and

PolicyPolicyClass 1: History and overview Class 1: History and overview

of the system, funding, of the system, funding, delivery, legislation, etc.delivery, legislation, etc.

Professor Monique Bégin

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Five dimensions to exploreFive dimensions to explore Defining the Canadian health care Defining the Canadian health care

system(s).system(s). Origins: constitution, history, Origins: constitution, history,

legislation.legislation. Financing, delivery, allocation of Financing, delivery, allocation of

resources.resources. Health care spending and outcomes.Health care spending and outcomes. Issues. Issues.

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1. Defining the health care 1. Defining the health care system(s)system(s)

In reality, there are 13 systems, with In reality, there are 13 systems, with both common features and variations both common features and variations between and within the 10 provinces between and within the 10 provinces and 3 territories.and 3 territories.

The federal government has basic The federal government has basic national standards/rules and national standards/rules and contributes $$$.contributes $$$.

The provinces oversee, plan, manage, The provinces oversee, plan, manage, etc., and pay the lion’s share.etc., and pay the lion’s share.

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The system(s) is made of:The system(s) is made of: What Canadians used to call “medicare”: the 2 What Canadians used to call “medicare”: the 2

old historical agreements between the feds and old historical agreements between the feds and the provinces to cover for all hospitals costs and the provinces to cover for all hospitals costs and doctors’ visits – and nothing else.doctors’ visits – and nothing else.

But with time, we came to say “medicare” or “the But with time, we came to say “medicare” or “the health care system” to refer to all things “health” health care system” to refer to all things “health” undertaken by each of the province, EXCEPT undertaken by each of the province, EXCEPT pharmacare, homecare and denticare. “Medicare” pharmacare, homecare and denticare. “Medicare” is in need of a redefinition.is in need of a redefinition.

In addition to the governments, there are many In addition to the governments, there are many other players: professional associations, other players: professional associations, industries (pharmaceutical, medical devices), industries (pharmaceutical, medical devices), service agencies, NGO’s, and…service agencies, NGO’s, and…

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……also world players, for also world players, for example:example: World Health Organization (WHO) World Health Organization (WHO)

(Geneva). The Director General is Dr. (Geneva). The Director General is Dr. Gro Harlem Bruntland, former Prime Gro Harlem Bruntland, former Prime Minister of Norway.Minister of Norway.

Regional components of WHO:Regional components of WHO: Pan American Health Organization (PAHO) for the Americas Pan American Health Organization (PAHO) for the Americas

(Washington)(Washington) Regional Office for Europe (Copenhagen), etc.Regional Office for Europe (Copenhagen), etc.

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and even other players with and even other players with broad mandates:broad mandates:

Organization for Economic Cooperation Organization for Economic Cooperation and Development (OECD) (Paris): also and Development (OECD) (Paris): also studies health systemsstudies health systems

World Bank (Washington, Paris, Tokyo)World Bank (Washington, Paris, Tokyo) International Monetary Fund (Washington)International Monetary Fund (Washington) International Labour Office (ILO) (Geneva)International Labour Office (ILO) (Geneva)

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This is why WHO says that This is why WHO says that health systems matter:health systems matter: “ “Health systems consist of all the people and Health systems consist of all the people and

actions whose primary purpose is to actions whose primary purpose is to improve health. They may be integrated improve health. They may be integrated and centrally directed, but often they are and centrally directed, but often they are not. (…) They have contributed enormously not. (…) They have contributed enormously to better health, but their contribution could to better health, but their contribution could be greater still, especially for the poor. be greater still, especially for the poor. Failure to achieve that potential is due more Failure to achieve that potential is due more to systemic failings than to technical to systemic failings than to technical limitations. It is therefore urgent to assess limitations. It is therefore urgent to assess current performance and to judge how current performance and to judge how health systems can reach their potential.”health systems can reach their potential.”Source: The World Health Report 2000, WHO, Geneva, 2000, p.1

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The “system” is the sum total The “system” is the sum total of…of…… … the interactions between all the players the interactions between all the players

in Canada, three in particular: Health in Canada, three in particular: Health Canada and the federal government; the Canada and the federal government; the provincial Ministries of Health and their provincial Ministries of Health and their respective governments; and organized respective governments; and organized medicine. No one really is “in charge” of medicine. No one really is “in charge” of the system, which rests on the constantly the system, which rests on the constantly renegotiated equilibrium of these key renegotiated equilibrium of these key players. players.

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It is also a formidable It is also a formidable “business” proposal…“business” proposal… $ 100 + billion (public + private)$ 100 + billion (public + private) 4 – 5 % annual growth4 – 5 % annual growth 350,000 workers350,000 workers 30+ regulated professional groups30+ regulated professional groups

228,000 nurses228,000 nurses 57,000 practicing physicians57,000 practicing physicians 2,275 health executives2,275 health executives

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The one player that is The one player that is missing:missing: The PATIENT and the public in general, The PATIENT and the public in general,

both as citizens and as taxpayers. The both as citizens and as taxpayers. The only “voice” they have is through a only “voice” they have is through a general election.general election.

This is a major imbalance in the power This is a major imbalance in the power structure, the dynamics of reforms, and structure, the dynamics of reforms, and the accountability mechanisms of our the accountability mechanisms of our health care system. health care system.

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2. Origins: constitution, history, 2. Origins: constitution, history, legislation.legislation.

The Constitution of 1867, by default so to The Constitution of 1867, by default so to speak, makes speak, makes HEALTHHEALTH a a PROVINCIAL PROVINCIAL responsibility. This did not change with the responsibility. This did not change with the 1982 patriation of the Constitution.1982 patriation of the Constitution.

History and “the spending powers” (given History and “the spending powers” (given by constitution to the feds) involved the by constitution to the feds) involved the federal government, as well as their direct federal government, as well as their direct responsibility for veterans’ and Natives’ responsibility for veterans’ and Natives’ health, for drugs’ administration, etc.health, for drugs’ administration, etc.

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Important notice!Important notice! So health care is of provincial jurisdiction.So health care is of provincial jurisdiction.

But we should not forget that the But we should not forget that the Constitution (1982), under its Constitution (1982), under its equalization provisions*, obliges the equalization provisions*, obliges the provinces to provide “reasonably provinces to provide “reasonably comparable levels of public service for comparable levels of public service for reasonably comparable levels of reasonably comparable levels of taxation”. taxation”.

* Through federal taxes, the richer provinces help the poorer ones, for a level playing field.

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Where does medicare come Where does medicare come from?from? Beginning of the XXth century: our immigrants Beginning of the XXth century: our immigrants

from countries of Europe (Germany: 1 million) from countries of Europe (Germany: 1 million) bring with them a political culture and a union bring with them a political culture and a union movement experience with a sense of the movement experience with a sense of the common good. (Bismarck -1815-1898 -, common good. (Bismarck -1815-1898 -, Germany: first health care system) Germany: first health care system)

1919: further to the 11919: further to the 1stst World War, on the World War, on the platform of the Liberal Party of Canada.platform of the Liberal Party of Canada.(…)(…)

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……the 2the 2ndnd World War, and World War, and after:after: 1945: the Reconstruction Conference (fed-1945: the Reconstruction Conference (fed-

prov). The Minister of Health of Canada, prov). The Minister of Health of Canada, Brooke Claxton, proposes the National Health Brooke Claxton, proposes the National Health Grants Program. Opposed by Ontario (George Grants Program. Opposed by Ontario (George Drew) and Quebec (Maurice Duplessis).Drew) and Quebec (Maurice Duplessis).

1948: re-submitted by the new Minister of 1948: re-submitted by the new Minister of Health of Canada, Paul Martin, Sr. The Health of Canada, Paul Martin, Sr. The provinces approve! (Seed money towards a provinces approve! (Seed money towards a comprehensive health insurance program.) comprehensive health insurance program.)

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In the meantime, In the meantime, Saskatchewan’s CCF Saskatchewan’s CCF government…government… 1947: Premier T.C. (Tommy) Douglas 1947: Premier T.C. (Tommy) Douglas

decides to go it alone and passes decides to go it alone and passes The The Saskatchewan Hospital Services Plan.Saskatchewan Hospital Services Plan.

1957-58: the federal Liberal gov. (Paul 1957-58: the federal Liberal gov. (Paul Martin, Sr.) follow with a 50-50 offer, Martin, Sr.) follow with a 50-50 offer, and it’s accepted by all! and it’s accepted by all! Hospital Hospital Insurance and Diagnostic Services Acts Insurance and Diagnostic Services Acts (HIDS)(HIDS)(…)(…)

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... and then the second ... and then the second step:step: 1962: Saskatchewan pioneers again, despite a 1962: Saskatchewan pioneers again, despite a

dramatic doctors’ strike: dramatic doctors’ strike: The Saskatchewan Medical The Saskatchewan Medical Care Insurance Plan.Care Insurance Plan.

1964: Mr. Justice Emmett Hall’s Commission, set up by 1964: Mr. Justice Emmett Hall’s Commission, set up by Diefenbaker, reports to the Pearson government: Diefenbaker, reports to the Pearson government: recommends a national medicare program.recommends a national medicare program.

1966:1966: the feds create the feds create The Health Resource Fund The Health Resource Fund to to help build hospitals and purchase equipment.help build hospitals and purchase equipment.

1967: the federal Minister of Health, Allan McEachen 1967: the federal Minister of Health, Allan McEachen (Liberal), succeeds with (Liberal), succeeds with The Medical Care Act.The Medical Care Act.

By January 1971, all provinces have “medicare” By January 1971, all provinces have “medicare” (despite a bitter specialists’ strike (1970) in Quebec).(despite a bitter specialists’ strike (1970) in Quebec).

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The last 30 years are about:The last 30 years are about: Changing the funding mechanisms, from Changing the funding mechanisms, from

cost-sharing (50-50) (CAP) to block funding cost-sharing (50-50) (CAP) to block funding (EPF).(EPF).

Re-enforcing the 5 old conditions by the Re-enforcing the 5 old conditions by the Canada Health Act (1984) Canada Health Act (1984) (which replaced (which replaced HIDS and the Medical Care Act).HIDS and the Medical Care Act).

Modifying the transfer of funds: the Modifying the transfer of funds: the Canada Canada Health and Social Transfer (1996Health and Social Transfer (1996) replaced ) replaced EPF and CAP.EPF and CAP.

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3. Financing, delivery, 3. Financing, delivery, allocation of resourcesallocation of resources

FinancingFinancing: who pays for what services?: who pays for what services?

DeliveryDelivery: who delivers what services?: who delivers what services?

AllocationAllocation: how are resources allocated : how are resources allocated to those delivering services?to those delivering services?

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We keep speaking of our We keep speaking of our “public” health care system, “public” health care system, but…but…If we look at the three components:If we look at the three components: financing/fundingfinancing/funding deliverydelivery allocation of resources allocation of resources we must ask the question:we must ask the question:

Which exactly are public? (Which exactly are public? (What is the status What is the status of those who do it and with whose money?)of those who do it and with whose money?)

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In clarifying this point,In clarifying this point, we recognize that health care we recognize that health care

systems are not uni-dimensional;systems are not uni-dimensional; we contribute to a better public we contribute to a better public

debate, with less emotion;debate, with less emotion; we will correctly diagnose where and we will correctly diagnose where and

what the problems are, coming up, what the problems are, coming up, hopefully, with effective solutions.hopefully, with effective solutions.

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Health care system models:Health care system models: National Health ServiceNational Health Service (Beveridge (Beveridge

model): universal coverage for residents, model): universal coverage for residents, financed by general taxation, with financed by general taxation, with national ownership/control of factors of national ownership/control of factors of production.production.

Social InsuranceSocial Insurance (Bismarck model): (Bismarck model): universal coverage within social security, universal coverage within social security, financed by employer/employee, with a financed by employer/employee, with a combination of public/private ownership.combination of public/private ownership.

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and, finally…and, finally… Private InsurancePrivate Insurance (Consumer (Consumer

Sovereignty model): individual or Sovereignty model): individual or employer-based purchase of private employer-based purchase of private health insurance coverage, financed health insurance coverage, financed via individual and/or employer via individual and/or employer contributions, with private ownership contributions, with private ownership of factors of production.of factors of production.

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In the 29 OECD countries In the 29 OECD countries (Europe +),(Europe +),The diverse health care systems are The diverse health care systems are

remarkably similar in objectives and remarkably similar in objectives and incentives.incentives.

Health care systems are not recipes Health care systems are not recipes that can be imported/exported. They that can be imported/exported. They are the product of particular history are the product of particular history and political culture.and political culture.

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Health care system models:Health care system models:Public Public

FinancingFinancingPrivate Private

FinancingFinancingPublic Public DeliveryDelivery

National National Health Health Service: Service: U.K.U.K. , , SwedenSweden, etc., etc.

------------------------------------

Private Private DeliveryDelivery

Social Social insurance, insurance, like like CanadaCanada

Various Various private private insurance insurance regimes, regimes, USAUSA

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Reality check:Reality check: We have to speak of “private” We have to speak of “private” deliverydelivery of of

services in Canada because physicians are services in Canada because physicians are “individual entrepreneurs” – not civil servants, “individual entrepreneurs” – not civil servants, and so on (nurses are hospital employees, and so on (nurses are hospital employees, which are corporate entities separate from which are corporate entities separate from their provincial governments, etc.). their provincial governments, etc.).

It remains that medicare is It remains that medicare is entirely paid for entirely paid for with public fundswith public funds, even if hospital food, , even if hospital food, laundry or lab work are done in the private laundry or lab work are done in the private sector.sector.

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Why?...Why?... Because of the general taxation base Because of the general taxation base

we use for funding the system,we use for funding the system,andand Because we don’t directly Because we don’t directly controlcontrol all all

the factors of production. the factors of production.

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N.B.: Despite the words N.B.: Despite the words used, Canada is more of a:used, Canada is more of a:

BEVERIDGE model country BEVERIDGE model country than one of Social Insurance than one of Social Insurance

model one.model one.

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Financing of health care in Financing of health care in Canada:Canada: General taxation (personal income, General taxation (personal income,

corporation, sales, VAT)corporation, sales, VAT) Specific taxes (payroll taxes, excise Specific taxes (payroll taxes, excise

taxes on specific goods)taxes on specific goods) PremiumsPremiums User charges (co-payments, User charges (co-payments,

deductibles)deductibles) Charitable contributionsCharitable contributions

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and allocation of and allocation of resources…resources… The provincial government allocates The provincial government allocates

The budgets for hospitalsThe budgets for hospitals … … for continuing carefor continuing care … … for public health for public health … … for mental health, rehab servicesfor mental health, rehab services ……the the globalglobal budget for physicians’ fees budget for physicians’ fees

(each provincial medical association (each provincial medical association allocates it in turn by specialty, etc.)allocates it in turn by specialty, etc.)

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In closing: Merit goods vs. In closing: Merit goods vs. Market goodsMarket goodsIt is our political culture, not our socio-It is our political culture, not our socio-

economic organization as a country, that economic organization as a country, that distinguishes us from our neighbour to distinguishes us from our neighbour to the South, the United States.the South, the United States.

This is most reflected in our attitude This is most reflected in our attitude towards health care: they consider towards health care: they consider “health” as a market commodity, while “health” as a market commodity, while we consider health as a common good.we consider health as a common good.

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4. Health care spending 4. Health care spending and outcomesand outcomes

$ 100 + billion in total (2001)$ 100 + billion in total (2001)

$ ??? billion in 2005, 2010, 2015, $ ??? billion in 2005, 2010, 2015, etc.etc.

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Dividing the Dividing the totaltotal health care $ health care $$$$$

Doctors13%

Other prof.12%

Hospitals33%

Drugs15%

Other inst.9%

Capital4%

Other14%

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The total bill is split The total bill is split between:between: Public spending:Public spending:

73% in 2001, i.e. 73% in 2001, i.e. $73,000,000,000.$73,000,000,000.

Federal government, Federal government, provincial/territorial provincial/territorial governments, governments, Workers’ Workers’ Compensation Boards, Compensation Boards, social security/social social security/social assistance programs.assistance programs.

Private spending:Private spending: 27% in 2001, i.e. 27% in 2001, i.e. $27, 000,000,000.$27, 000,000,000.

Private insurance Private insurance plans (mostly plans (mostly employment-employment-based),based),out-of-pocket.out-of-pocket.

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Public/private by categories:Public/private by categories:

0102030405060708090

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Public Sector Private Sector

Physicians

Hospitals

Capital Expenditures

Other Institutions

Drugs

Other HealthProfessionals

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OECD countries spending on OECD countries spending on health care:health care: Since 1980, the Since 1980, the medianmedian for these nations’ health for these nations’ health

care expenditures as % of GDP stayed around 7-8%. care expenditures as % of GDP stayed around 7-8%. In 1999, it was 7.9%. That year, Canada was the the In 1999, it was 7.9%. That year, Canada was the the fourth highest spender at 9.3%, equal with France.fourth highest spender at 9.3%, equal with France.

Exceptions are:Exceptions are: those below this benchmark: UK, Spain, Finland and Japanthose below this benchmark: UK, Spain, Finland and Japan those above: Canada/France, Germany, Switzerland, the those above: Canada/France, Germany, Switzerland, the

USAUSA

In 1999, the USA were at 12.9% of GDP.In 1999, the USA were at 12.9% of GDP.

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Are health expenditures Are health expenditures rising?rising? At first glance, yes.At first glance, yes. With the private share increasing With the private share increasing

faster than the public sector of faster than the public sector of health expenditures.health expenditures.

But, taking a closer look…But, taking a closer look…

(Cf. graph distributed)(Cf. graph distributed)

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What if we take inflation and What if we take inflation and population growth into population growth into account?account? Then, if we adjust for inflation and Then, if we adjust for inflation and

population growth, health population growth, health expenditures have decreased a bit.expenditures have decreased a bit.

(Cf. graph distributed)(Cf. graph distributed)

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5. Issues5. Issues What do Canadians think of medicare?...What do Canadians think of medicare?...

Consistently the most cherished government Consistently the most cherished government program of all; it serves them well.program of all; it serves them well.

Also the most worrisome right now: should be Also the most worrisome right now: should be at the top of the public agenda.at the top of the public agenda.

48% consider that medicare’s five principles 48% consider that medicare’s five principles are not respected. are not respected.

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……and what do others think and what do others think of us? of us?

Canada has a narrower Canada has a narrower universal coverage base universal coverage base than OECD countries than OECD countries

Is one of the biggest Is one of the biggest spenders on health care spenders on health care (OECD)(OECD)

Very good on life Very good on life expectancy (WHO)expectancy (WHO)

Very poor on efficiency: Very poor on efficiency: we ranked overall 30we ranked overall 30thth in 2000 (WHO)in 2000 (WHO)