Jeffrey Simpson has been the national affairs columnist for the Toronto Globe and Mail for almost three decades. Since the turn of the new century, Simpson has written numerous critical columns on the state of health care in Canada. He has not only been a reliable weathervane for the changing critique of medicare but, as a leading mainstream journalistic voice in English Canada, he also shapes the views of his readers. It is not surprising, therefore, that considerable attention has been lavished on his latest book, Chronic Condition.
The good news is that the book goes beyond simply rehashing Simpson’s past critiques. More space is devoted to the facts – the statistics and individual stories on which Simpson builds an argument for major change. The bad news is that on the basis of these facts Simpson ends up drawing some very questionable if not erroneous linkages, and this puts into serious question both his diagnosis and his policy cure for what ails Canadian medicare.
Since the 1990s, a stream of books and think tank essays have criticized the Canadian model of universal, tax-financed medicare. At first the critics argued for more private delivery of government-financed medicare services. This was always a red herring given that in Canada the vast majority of doctors and their clinics are private for-profit operators. And while it is historically true that most hospitals in Canada were owned by religious orders, charities and municipalities and hence were not-for-profit, they were not owned by provincial governments. This has changed somewhat with the introduction of regional health authorities in the 1990s, but in some provinces, such as Ontario, hospitals remain private not-for-profit organizations separate from government. In any event, there is nothing in the Canada Health Act that prevents provincial governments from allowing the private delivery – for-profit or not-for-profit – of medicare services
By the 2000s, the brief against medicare had shifted to the single-payer model of funding. This became most obvious in the 2005 Chaouilli decision by the Supreme Court of Canada. A slim majority held that the government of Quebec could not hold a “monopoly” on funding health services if it permitted wait times for surgery that might put patients at risk. In such situations, provincial residents should have the right to purchase private health insurance permitting them to obtain more timely health services. Although Chaoulli was not the killer punch to medicare that proponents had hoped, other cases have been launched that strike at the heart of the Canadian model of medicare.
In fact, the antimedicare coalition has become ever more vocal since Chaoulli. And its activists are willing to back up their beliefs with hard cash: they conduct expensive litigation and fund think tanks such as the Fraser Institute, which has led the charge in favour of private delivery and private health insurance. Recently, Dr. Brian Day – the medical profession’s most outspoken critic of medicare – and his Cambie Surgeries Corporation in Vancouver have sued the government of British Columbia on the grounds that its single-payer administration of medicare (and therefore all provincial and territorial models of medicare) is a violation of sections 7 (individual right to life, liberty and security) and 15 (individual right to equal protection and equal benefit) of the Canadian Charter of Rights and Freedoms. The case will be winding its way through the B.C. courts to the Supreme Court over the next two to three years and will no doubt trigger further debate on the Canadian model.
I have no argument with Simpson’s basic contention that Canada has slipped on a number of health and system performance indicators in the last two decades. At the same time, other facts demonstrate the situation to be not nearly as dire as Simpson has presented. This is not to defend the status quo – far from it. In almost everything I have written in the past decade, I have argued that we can and should do better, but we have got some things right, and we should build from these strengths. At the same time, we need to identify the institutional impediments to progress and be prepared to make major changes irrespective of those interests that are vested in the status quo.
Is the system fiscally sustainable?
Let me start with the issue of fiscal sustainability. Simpson is correct that health care has been eating up an increasing proportion of provincial government budgets in the years following the fiscal retrenchment in the mid-1990s. This has put considerable fiscal strain on the provinces.
However, since 2000, governments have chosen to reduce taxes and, at least in the case of the federal government, increase tax expenditure subsidies. In other words, they have reduced the denominator even as the numerator needed to increase – after a half decade in the mid-1990s during which Canadian governments drastically restricted health spending. Putting the revenue issue aside, where does Canada sit, comparatively speaking, on the expenditure side of the equation? Is Canadian spending on health care truly unsustainable relative to similar OECD countries?
Figure 1 plots per capita growth in public health expenditure against per capita growth in GDP for all OECD governments spending more than US$2,000 on health care in 2008. Only in Germany and resource-rich Norway did health spending not grow more rapidly than per capita GDP during this decade. In fact, Canada lies slightly below the trend line (defined by regressing growth rates of per capita health expenditures on growth rates of per capita GDP). On the basis of this evidence, Canada could hardly be considered profligate in its government health spending.1
Simpson’s diagnosis is that health spending will continue to rise because in “the self-absorbed world of health care, it is just assumed by those employed in the field and by the experts that marginal government dollars, if they are available, should go into health care” thereby trumping every other government program. While health care envelopes did receive preferential treatment in provincial budgets from the late 1990s, governments are now pushing back. Public sector health expenditures in Canada grew at a nominal rate of 7 per cent from 2000 until 2010; this growth rate has dropped considerably since 2010. The nominal 2011–12 growth rate of provincial and territorial health spending plummeted to 2 per cent.
Physician remuneration has been the most inflationary sector of health care in the last six years, outstripping even prescription drug spending, which had been the fastest-growing sector in health care since the 1970s.2 Few government leaders have failed to realize that fee schedules and other forms of doctor remuneration were spinning out of control. Which explains why, in the past year, Ontario and Alberta have confronted their medical associations. Likewise, the halcyon days of overly rich collective agreements with nurses’ unions are over. Provincial governments are finally implementing cost control on generic drugs in a country that pays among the highest prices in the world for pharmaceuticals.
Putting aside the self-interest of providers for the moment, Simpson seems to have little confidence in governments’ ability to contain costs and in the general public’s ability to elect governments that will act in its best long-term fiscal interests: “Dreams permeate Canadians’ thinking about medicare, and no politician wants to shatter them.” He sees the relationship between the two as codependent: the public demands that governments provide as much “free” health care as possible while governments hide the true cost, scrambling every year at budget time to rob other programs and services to pay for mounting health care budgets. In this narrative, both are responsible for building a Ponzi scheme that will inevitably collapse. On the basis of figure 1, I can only assume that Simpson would apply the same narrative to all OECD countries, with the possible exceptions of Germany and Norway.
I suggest an alternative narrative, one that gives Canadians and their governments a little more credit for intelligence. Although Canadians receive first-dollar coverage for medically necessary hospital and physician services, they do understand that many of these services are very expensive and they (mostly) want their governments to get as much value as possible for every dollar spent. For the many health services outside the medicare basket, Canadians are already paying more out of pocket or through employment-based private insurance than the citizens of most OECD countries.
Provincial governments demonstrated their ability to contain costs in the mid-1990s, and as public resources become tighter they will do so again. They are already starting. However, having learned a few lessons from the last time they applied the brakes, provincial governments will be more careful to find savings that will actually improve the efficiency of the system, not simply reduce public health-care costs in the short run by shifting costs from public to individual pockets. Contrary to Simpson’s view, provincial governments may reexamine the revenue side of the picture, and raise taxes in a careful manner. Voters realize that you cannot have European-style social benefits at American tax rates. As for health providers, of course they will continue to seek higher remuneration (as we all do), but we can expect provincial governments beyond Ontario and Alberta to be more aggressive in ensuring that increases for health providers no longer outstrip gains in the rest of the public sector.
Health outcomes: From the burden of disease to amenable mortality
Scattered throughout Simpson’s book are references to the fact that some OECD countries spend less money on health care yet have better health outcomes than Canada. Unfortunately, without endnotes or a proper list of references I cannot trace his data sources. No matter. Let me turn to the most recent and reliable comparative analysis on the burden of disease, published in The Lancet, one of the most prestigious medical journals in the world.3
There are three striking results. The first is that all OECD countries have seen improvements in terms of the burden of disease. Any change in ranking is the result of how fast countries have improved. The second is that in this 19-country comparison, Canada has extremely good health outcomes as measured by the roll-up measure of health-adjusted life years (HALE).4 Finally, it is worth noting that Canada has slipped from second position in 1990 to fifth in 2010. Canada still stands up well relative to the United Kingdom (12th), the United States (17th) and most northern European countries, including Nordic countries such as Norway (16th), Denmark (18th) and Finland (19th). While a decline in rank of three positions in two decades might not seem precipitous, the HALE result obscures a more troubling trend. We can see this in terms of Canada’s rank decline for life expectancy at birth.
Unfortunately, burden of disease statistics can tell us little about the performance of the health care system. It is extremely difficult to assess the precise contribution of programs, policies and medical interventions to health outcomes. Simpson too readily uses simple indicators such as life expectancy as evidence of poor health system performance in Canada.
To create a more direct linkage, health system researchers have defined the concept of amenable mortality (AM) to isolate the impact of the health system from the other determinants of health. Amenable mortality refers to death from selected diseases where death would not occur if those individuals had access to timely and effective care. By isolating where death could be avoided and the condition in question treated, amenable mortality seeks to capture the extent to which a health system has or has not been effective. The index itself is based on a host of age-standardized AM death rates per 100,000 that are aggregated into a single scale.
On the basis of an amenable mortality index developed by Ellen Nolte and Martin McKee,5 Canada ranked sixth (after France, Japan, Australia, Spain and Italy) among 19 high-income OECD countries in 2002–03. In contrast, the United Kingdom ranked 16th and the United States 19th. A subsequent OECD study based on the Nolte and McKee approach showed roughly similar results for a larger sample of 31 OECD countries. The results? France was again at the top; Canada was 11th, the United Kingdom 19th and the United States 24th, near the bottom.6 While Canada’s ranking is respectable, it does show some slippage, and we should be working toward a better performing system.
Canada’s poor performance in primary care
So what is preventing better performance? Simpson points to a scattering of causes but considerable evidence suggests that the poor quality of primary care in Canada is a major cause. In any event, primary care forms, or should form, the spine of most health systems. Poor performance in this sector has a potentially large impact on other sectors. As in Britain (but not the United States), primary care physicians in Canada act as gatekeepers in terms of referrals to specialists and further diagnostic tests. In addition, primary care physicians are responsible for prescribing the majority of prescription drugs.
Simpson relies heavily on a group of comparative studies of OECD countries conducted by the New York–based Commonwealth Fund to make his case that health care in Canada performs poorly. These studies, based on the self-reported perceptions of patients and physicians, are important evidence, but I think they are mainly informative about the state of primary care. Canada had the poorest outcomes in terms of access to a doctor or nurse and, consequently, greater reliance on the use of hospital emergency departments.7 The 2011 survey of sicker patients reflected poor coordination between primary care physicians and consultants. Canada’s middling performance in terms of coordination – at least as perceived by patients – stands in stark contrast to, for example, the United Kingdom’s much more positive outcome on this indicator.8
So, why does Canada compare so poorly to other OECD countries in terms of primary care? There are at least two institutional reasons. The first can be traced back to the initial introduction of universal medical care coverage (as opposed to hospital coverage) by Saskatchewan in 1962. At the time, the majority of provincial physicians opposed introduction of a universal single-payer scheme for all medically necessary services provided by physicians. They were joined in their opposition by organized medicine throughout Canada as well as the American Medical Association. A 23-day doctors’ strike ensued, which was only brought to an end with a compromise that protected the status of all doctors as independent contractors paid through fee-for-service. This compromise – known as the Saskatoon Agreement – subsequently became the social compact for universal medical care insurance in the rest of Canada.9
Fee-for-service has encouraged volume-driven, transactional practice not generally suited to primary care, which requires time to assess, diagnose and treat patients, to discuss and evaluate patient histories, and to encourage patients in illness prevention and health promotion activities and behaviours. In addition, since fee-for-service reimbursement was restricted to doctors, it has made it very difficult for provincial ministries to finance a team-based and interprofessional approach to primary care.
By the beginning of the 21st century, the lack of progress on primary care reform was obvious to experts and governments in Canada.10 Primary care was identified as a national priority by federal, provincial and territorial governments in 2000 and 2003, and the federal government provided money to provincial governments and organizations initiating reform. In 2004, in return for a long-term commitment for federal transfers for health care, the premiers signed a 10-Year Plan to Strengthen Health Care, agreeing to work on ensuring that at least 50 per cent of Canadians would receive 24-hour-a-day, seven-day-a-week access to team-based primary care by 2011. This goal was not achieved, an unsurprising result given the lack of agreement on how to achieve it and the institutional interests committed to the status quo that provinces would have to confront.
While experiments in primary care reform have been scaled up, no provincial government has changed the fundamental governance of primary care. The vast majority of physicians remain independent contractors with the provincial ministries of health, and despite major payment reforms, in Ontario for example, most family doctors in Canada continue to receive most of their remuneration as fee-for-service payments. Regional health authorities are being held responsible for administering most health services, but have no effective control over, or responsibility for, the crucial component, namely primary care physicians.
Like Simpson, I think that there is considerable room for improving both coverage and cost containment for prescription drugs. To achieve this goal requires major structural change. I have previously argued in this magazine for a national pharmacare program,11 with which Simpson seems to have some sympathy. Here, there could be a real role for the federal government given its constitutional foothold in administering patent law, in determining whether drugs can be marketed on the basis of safety considerations, in regulating patented drug prices and in monitoring generic drug prices.
At the same time, provincial governments cannot realize sufficient scale economies to exert effective bargaining leverage with the pharmaceutical industry. They face a phalanx of interest groups, including the disease groups that target governments to place drugs with a questionable cost-benefit ratio on their respective formularies. Provinces are easily played off against one another as new drugs or me-too drugs enter the market. As a result Canadians are paying among the world’s highest prices for generic drugs. While the retail prices of branded prescription drugs are more in line with OECD averages, we rarely take advantage of bulk purchasing discounts, a common practice in the United States. Many Americans with good health plans pay far less than retail for their drugs, leaving the poor and uninsured paying the highest drug prices.
In other words, we could readily increase value for money if our federal and provincial governments could agree on Ottawa’s taking on this responsibility. The problem is that neither the Harper government nor the preceding Martin government has seen any advantage to taking on the risk of funding, administering and managing a national pharmacare program. Still, this change should be put on the policy agenda by a motivated general public and a perceptive opposition party.
Is medicare really the problem?
The evidence on fiscal sustainability, the burden of disease and overall system performance as measured by amenable mortality demonstrate that Canada is doing better than Simpson argues. At the same time, I agree with him that we could be, and should be, doing much better. But what exactly should we be doing?
Simpson believes the main problem is the self-destructive, even deceptive, behaviour of governments and the Canadian public. Presumably, he wrote in order to persuade governments and the general public to think more clearly and honestly about the issues, the implication being that the behaviours of both will change for the better once they syop hiding from the “truth.” However, Simpson’s fundamental truth seems to be that medicare itself is fundamentally flawed: by offering health care free at the point of service, we encourage excessive demand. He raises questions throughout – although his arguments are more implicit than explicit – about universality and single-payer administration.
In contrast, I believe single-payer administration has been a strength of the Canadian system. While medicare is narrowly delimited to medically necessary hospital, diagnostic and medical services, single-payer administration keeps overhead costs to a minimum compared to the options of private and social health insurance. This is a great advantage, which we should hang on to and potentially expand to services such as pharmacare.
When we launched medicare in the 1960s, we got the universality right. To move to targeted benefits would not only cost more (as our provincial prescription drug programs demonstrate) but would undermine a key value that Canadians see as part of their identity. Simpson doubts the viability of first-dollar insurance, but basing access on medical need rather than ability to pay, though currently restricted to medicare, is a laudable and sustainable goal. While there is some potential for abuse, most individuals do not want to go to the hospital or submit to diagnostic tests, and will not do so unless advised by a physician. If there is overuse, it lies more with physicians than patients, and it cannot be addressed through patient user fees. As for primary care, we should encourage individuals to use this relatively inexpensive upstream service in order to reduce downstream hospital and institutional care. Easy access to primary care is not what needs to be changed.
However, we do need to revisit one important dimension of medicare. The Saskatoon Agreement has outlived its usefulness. According to the Commonwealth Fund surveys, Canada has among the poorest primary care outcomes in the OECD. To move up the ranking we must change the governance, accountability and payment regimes for primary care physicians.