Lecture 6 - Canadian Health Care System and health policy

Also about Government intervention and regulation

Canadians think they have"good government" Americans distrust their government Canadians are comfortable with price controls in the health sector Price controls in the health sector yield lower costs Unlike other economic sectors unfettered market competition does not lower costs

Values

Community welfare Social contract Health care system is the most popular social program in Canada

Roy Romanow 2002

"Medicare is as sustainable as Canadians want it to be"

Canada Health Act Coverage

- covers "medically necessary" physician and hospital services - dependent on federal government transfers - Additional principles recommended: - accountability - Sustainability

Jurisdictional History

1867 British North America Act Division of health responsibilities: Provinces: financing, management and delivery of health services Federal: Health protection, disease prevention, health promotion Health services delivery to veterans, native Canadians living on reserves, military personnel, inmates of federal penitentiaries, and the RCMP

Medicare History

1947: Saskatchewan introduces public insurance for hospital care 1957: Canada implements Hospital and Diagnostic Services Act 1961: All provinces and territories have public insurance plan for hospital care 1961: Federal Royal Commission on Health Services 1961: Saskatchewan introduces comprehensive medical insurance plan 1962: Saskatchewan doctors' strike 1964: Hall Commission recommends comprehensive and universal medicare system including physician care and prescription drugs 1967: Canada implements Medical Care Act 1972: All provinces/territories have expanded public insurance plans to include physician services 1977: Federal government abandons commitment to pay 50% of health care costs 1980: Second Hall Commission recommends abolishing extra-billing and user fees 1984: Canada Health Act 1987: All provinces/territories had banned extra billing 1995: Canada Health and Social Transfer introduced 1990s: Federal spending reduced 2000: Federal government agreed to provide new funds 2003: Federal government again increased funding to provinces 2004: 10-year plan, mainly directed at wait times and Pharmacare

Commissions

1994-1997: National Forum on Health 2000: Alberta, Saskatchewan, & Quebec Commissions 2002: Kirby Committee & Romanow Commission

Why does the US health system cost so much?

Administration accounted for the largest share of this difference (39%), Payments to MDs and hospitals accounted for (31%) of the next most important variables explaining difference More intensive provision of medical services accounted for the was the third most important variable in explaining the difference (14%).

Universality

All insured persons must be covered for insured health services "provided for by the plan on uniform terms and conditions" (Section 10). This definition of insured persons excludes those who may be covered by other federal or provincial legislation, such as serving members of the Canadian Forces or Royal Canadian Mounted Police, inmates of federal penitentiaries, and persons covered by provincial workers' compensation. Some categories of resident, such as landed immigrants and Canadians returning to live in Canada from other countries, may be subject to a waiting period by a province or territory, not to exceed three months, before they are classified as insured persons; this waiting period arises from the portability provisions.

Portability

Because plans are organized on a provincial basis, provisions are required for covering individuals who are in another province. The conditions attempt to separate temporary from more permanent absences by using three months as the maximum cut-off. As the above-mentioned summary clarifies, "Residents moving from one province or territory to another must continue to be covered for insured health care services by the "home" province during any minimum waiting period, not to exceed three months, imposed by the new province of residence. After the waiting period, the new province or territory of residence assumes health care coverage." The portability provisions are subject to inter-provincial agreements; there is variation in what is considered emergency (since the portability requirement does not extend to elective services), in how out-of-country care is covered (since there is no 'receiving' province), in how longer absences are dealt with (e.g., students studying in another province), whether the care will be paid for at home province or host province rates, and so on. all Canadians are covered under public health care insurance, even when they travel within Canada or move from one province to another;

How Doctors Bill in Canada

Billing is straightforward but lots of variation across provinces as each takes care of its on billing Doctor must be registered as a practitioner in the province Doctor must have a billing number - and not automatic Doctor must be eligible and qualified to bill for the specific code indicated: ex. neurologist won't be paid for doing an appendectomy. The amount billed must be for the amount allowed by the fee schedule (Medical Services Plan) Bills are submitted electronically on forms online through the web or via a direct connection to the MSP office - daily or weekly- and 98% reimbursed The provincial payer organization sends payment twice monthly directly to the MD and pay interest on reimbursements that are delayed more than 30 days. Ease of billing is a big plus in Canada and doctors who have billed in both US and Canada are in agreement on this: "One insurer, one fee schedule, rarely any question of eligibility and no incentive to withhold payment - its heaven compared to the US".

Why do the 2 countries differ as to health system preferences?

Culture - maybe but USA and Canada are converging; media, proximity, culture diffusion, geographic mobility and immigration History - Yes - More distrust of government in US - More emphasis on individual liberty Form of government - yes Presidential system in the USA - Roots in the constitution - Designed to require incremental policy rather than comprehensive policy Parliamentary system in Canada - Good at implementing comprehensive change quickly and efficiently - Responsible party model - Important role for party leadership

Services Outside of the Canadian Health Act

Dental care Home care Long-term care Prescription drugs Physiotherapy

Canada allows Euthanasia

False: Some US states have laws permitting euthanasia but non of the provinces in Canada do

In Canada the bureaucracy wastes precious health care resources?

False: The % of $ used for administration is much lower in Canada than in the USA Billing is straightforward and electronic with 95% of requested reimbursements completed

Is Canada a "single payer" system?

False: it is 10 payer provincial health systems with "portability"

In Canada the government controls prices?

False: the government sets a budget, the doctors sets the payment rates in most provinces

Canadians ration care by age, need, and SES

False: there are no policies that restrict care on the basis of age, need, or socioeconomic status. Such discrimination is illegal

Payments in Canada

Fee for service for most primary care and specialists - bills sent to the province Extra-billing of patient is NOT permitted No individual bills are prepared for patients Hospitals (largely private nonprofit) are paid on global budget system with funds sent by the province; some regional health authorities obtain population-based funding (west) (HiT 2004) Payment for pharmaceuticals varies by province and formularies are set up at the provincial level

Accessibility

Finally, the insurance plan must provide for "reasonable access" to insured services by insured persons, "on uniform terms and conditions, unprecluded, unimpeded, either directly or indirectly, by charges (user charges or extra-billing) or other means (age, health status or financial circumstances);" (Section 12.a). This section also provides for "reasonable compensation for...services rendered by medical practitioners or dentists" and payments to hospitals that cover the cost of the health services provided. Note that neither reasonable access nor reasonable compensation are defined by the CHA, although there is a presupposition that certain processes (e.g., negotiations between the provincial governments and organizations representing the providers) satisfy the condition. The CHA allows for dollar-for-dollar withholding of contributions from any provinces allowing user charges or extra-billing to insured persons for insured services. As noted below, this provision was effective in 'solving' the extra-billing issue.

High US insurance overhead Insurance-related administrative costs

Fragmented payers + complexity = high transaction costs and overhead costs McKinsey estimates adds $90 billion per year* Insurance and providers - Variation in benefits; lack of coherence in payment - Time and people expense for doctors/hospitals

Wait Times

Historically this has been the Achilles heel of the Canadian system - Result of budget cuts 1990's - Today the situation is much improved But the U.S. also has a "waiting times" problem, but for different reasons In the US we wait because of cost..... In Canada patients because of scarcity

Recommendations

Improve coverage for prescription drugs and home care Reform primary care delivery Develop better information services Maintenance and expansion of public funding Varied in emphasis on embracing the role of the private sector

Pillars of the Canadian Health Act

Public administration Comprehensiveness Portability Universality Accessibility

Contemporary Design

System predominantly publicly financed and privately delivered Defining feature: universal and publicly financed health insurance for medically necessary hospital and physician services No user fees or extra-billing 14 interlocking systems

Future

Tension between private and public forces Pushing for Phase 2 of Medicare: Focus on "preventive medicine" Including homecare, long-term care, community care, pharmacare, social determinants of health

Comprehensiveness

The health care insurance plans must cover "all insured health services provided by hospitals, medical practitioners or dentists" (Section 9). The Act lists, in the Definitions (Section 2), what is meant by insured services - in general, this retains the restriction to hospital and physician services arising from the earlier legislation. The provinces are allowed, but not required, to insure additional services. medically necessary hospital and doctor services are covered by public health care insurance;

Public Administration

The health insurance plans must be "administered and operated on a non-profit basis by a public authority, responsible to the provincial/territorial governments and subject to audits of their accounts and financial transactions." (Section 8). This condition is the most frequently misunderstood; it does not deal with delivery, but with insurance. However, it does reduce the scope for private insurers to cover insured services (although they are still able to cover non-insured services, and/or non-insured persons). requires provincial and territorial health care insurance plans to be managed by a public agency on a not-for-profit basis. (This principle says nothing about the ownership structure of a health service delivery institution.)

Romanow: "building on values"

There are two competing visions and guiding values about health care. Each would take our nation down a fundamentally different path. One view, high on rhetoric but low on evidence and masquerading as something new, is based on the premise that health care is a commodity - that medical needs ebb and flow with markets, and they determine who gets care, when, and how. The other vision, rooted in our narrative as a nation, backed by evidence and public opinion, strongly believes that health care is a "public good." It believes that democratically elected governments, as representatives of the public, not corporate bottom lines, should define common needs, provide equitable services, and a reasonable allocation of resources. Fairness, equity, compassion, and solidarity: these are the values that were adopted and nurtured throughout Canada's history of shared destiny. These values gain their expression in our core belief that everyone should have access to our health care system on the same terms and conditions, and that this access is ultimately a right of Canadian citizenship. These values are manifested through our view that Medicare is a truly national program - a nation-defining and nation-building enterprise.

Americans and Canadians on Access and health Outcomes

Very poor Americans are in poorer health than their Canadian counterparts Wealthy Americans and Canadians - equally healthy Little difference between insured Americans and Canadians as a whole -- on access to health care and health status Americans without health insurance are - different, with low access to health care and more "unmet health care needs"

US COMPARISON Living and Working in the Canadian System

With few exceptions, Canadians NEVER worry about incurring health care expenses Nor do Canadians have to submit claims to insurers Providers have ONE payer to submit claims to: the provincial government Canadian system is largely funded by general tax revenue - 25-50% federal

the Canadian government controls the health system top-down

false: federal-provincial authorities negotiate the basics; for ex. privatization

The Canadian health system is "socialist"?

false: most providers do not work for the government but are rather paid by a piece rate system and hospitals are not owned by the government

Each province is like one big HMO?

true