Transcript Current and future roles of public and private medicine in

Current and future roles of public
and private health care in Canada
Chris Smith
Sabina Nagpal
(Meds class of 2007)
Overview of this session
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
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
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
Private-parts

Private funding and private
delivery are the two main aspects
of “privatization”

Funding
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
Who pays the deliverers
Delivery
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Who owns the capital and infrastructure
responsible for providing care
Paying the bill
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Public spending is mainly in the
form of statutory health insurance
Private spending is divided into 2
main groups
1.
2.
Private Health insurance
Out-of-pocket payments
Arrangements of private health
insurance
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Private health insurance can play 5 main
roles
1.
Dominant (e.g. USA)

2.
Compulsory (e.g. Switzerland)
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3.
It provides coverage that would otherwise be
available from the state
Complementary (e.g. Canada)
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5.
It is the main method but is not voluntary
Substitutive (e.g. Netherlands)

4.
It is the main method but is voluntary
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)
Splitting the bill: Out-of-pocket

Individuals can contribute to the
cost of health care at the point of
use in three broad forms

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Direct payments
Cost-sharing/user fees
Co-payment (fixed fee)
 Co-insurance (fixed proportion)
 Deductible (fixed ceiling)
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Informal payments (“under-the-table”)
Delivering the goods
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Delivery of health care can be
divided into 4 main groups
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Public
1. State
2. Public

but non-state
Private
1. Not-for-profit
2. For-profit
Discussion point #1
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Estimate the percentage of total
payments that each form of funding
contributes.
What forms of delivery are
presently at work in Canada?
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)
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
Quebec is now open for supplementary
forms
Out-of-pocket expenses account for
17% of total health expenditure
Wide spectrum of systems for health
care funding across OECD countries
% Private
Insurance
% Public
Funding
Less
0%
44%
US
Mex
Swi
NL
Aus
Aust
Canada
Nor
Slo
Cze
Ice
Hun
Jap
Mex
71%
Spa
Ita
Ire
Fin
Ger
Fra
Hun
Jap
NZ
Den
Ice
Nor
Lux
Slo
Cze
More
% Out-ofpocket
8%
Lux
NL
Fra
Ger
Cze
Slo
Ire
0%
Ita
Den
Lux
Fin
Spa
NZ
Aust
Aus
76%
Nor
US
NZ
Canada
Den
Ice
Jap
7%
17%
Ire
Swi
Aus
Aust
Fin
Hun
Ita
Spa
Swi
Mex
Canada
Ger
Fra
NL
US
91%
14%
35%
52%
Canadian delivery
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Our hospitals are predominantly privately
owned not-for profit institutions
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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 selfemployed (private businesspeople)

Depending on province, may have restrictions
or determents from practicing outside of the
public system
Provincial Regulation of Privately Financed Hospital
and Physician Services
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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
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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
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Source: Flood and Archibald 2001
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
Why have we been talking about
change for 20 years?
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Historical arguments for changing
healthcare delivery have been
driven by two main concerns:
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Financial sustainability
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Perception that the aging population and
evolving medical expectations are going
to overwhelm funding capacity
Decreasing access and/or quality
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Perception that wait times, health
outcomes, and health system resources
are reaching unacceptable levels
Sustainability: the age factor
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In next 25 years,
population aged 65+
will grow by 70 million
in OECD countries
while working age will
only grow by 5 million
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Increased proportion
of elderly to use
services
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
Use 3X amount of
health services as
younger population
Decreased proportion
of working age
population to pay
taxes
Evolving medical expectations
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Education and literacy rates have risen
and citizens are increasingly aware of
options for treatment
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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
Four models of sustainability
1.
2.
3.
4.
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.
Model 1: Health costs will require
a greater share of GDP
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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
Model 2: Rising health care costs
will be manageable
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Large increases in provincial and
territorial health expenditures remain
fairly consistent in terms of share of GDP
over the period to 2026
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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
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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
Model 3: Efficiency will offset
increased demands
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Increasingly integrated delivery system
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Increased information technology
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Using advanced directives
Increasing patient responsibility
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Sharing of timely information
Reduction of spending on care in last year
of life
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An important element is the removal of doctors
from a fee-for-service remuneration system
Reducing waste and misuse
Increasing health research
Model 4: Compression of morbidity
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“Rectangularization” of the survival curve
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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
Discussion point #2
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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?
Canadian views on sustainability
The other concern: our present
accessibility and quality of health care
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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
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Only recently have there been concerted
efforts to objectify these categories
 2004: Wait times Alliance- Canada
 2004: Minimum Data Set- EU
Wait times
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First Minister’s Commitments on Wait
Times, September 2004
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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
Health outcomes
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Data used most frequently in the past:
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Infant mortality and life expectancy rates
Potential years lost life (PYLL) for selected causes
Research ongoing into using other measures
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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)
Health System Resources
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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
Why haven’t we changed health care
delivery much in 20 years?
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The main arguments against
changing the structure of the
publicly funded system have been
of two main types:
1.
2.
Values based
Based on the lack of evidence
definitively supporting either side of the
public/private argument
The CHA represents Canadian values
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Canadians support the 5 principles laid out in the CHA:
1.
2.
3.
4.
5.
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
Discussion point #3
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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?
Recent fuel to the fire
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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
Private “extended-stay nonhospital
surgical facilities” in Alberta
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For-profit facilities will be reimbursed by
the government, using public funds
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A manner previously reserved for not-for-profit
institutions.
The facilities may provide "enhanced" nonmedical services for which the patient may
elect to pay
Additional charges for routine care are
proscribed
Nation split on the issue
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50% Support; 47% Oppose, as of April, 2000
Private health insurance for publicly
funded services in Quebec
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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
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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
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52% support; 44% oppose, as of July, 2005
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.
The perceived shift in the CMA’s
opinion on public/private health care
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CMA resolution at its general council
meeting August 2005:
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“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!)
Discussion point #4
1.
2.
3.
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)
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Write down why
Now that there is debate, what are the
questions and the options?
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Many Canadians think of the argument as
a public/private dichotomy
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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
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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
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Leaves Canada in a unique situation
The key issues at the public:private
interface
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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
Public Funding
Public
Delivery
Private Funding
De-insurance &
reinsurance
Safety
valve
Private
Delivery
Contractingout
Quality
P3s
capital
MD
regulatory
framework
What to take from this seminar
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After leaving this seminar, we hope that we have
provided you with the tools to answer these
questions for yourself as a future physician:
1.
2.
3.
4.
5.
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
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