Thursday, May 17, 2012

A (very wonkish and very economics based) post on how healthcare might be better structured in Canada

Let me preface this post with the following:

This is a very wonkish health policy post - and reflects personal opinion only.

The healthcare system in Canada is incredibly complex and the challenges that will emerge over the decades to come are significant. It is clear that the current system, as it has evolved over the past several decades has many strengths to it, but also many weaknesses. It is also clear that meeting the challenges will require colloboration and mutual respect between healthcare providers, patients, and government. Facilitating those changes might be better achieved if the very structure of how healthcare in Canada is funded and organized was changed to reflect the reality of what the healthcare system is and what it sets out to achieve for Canadians.

Currently, healthcare in Canada is funded via general tax revenues (provincial and federal) and in some provinces (like BC) per-capita premiums (like MSP) that may be waived for low-income individuals. Provinces each administer their own health care system - so in effect there are 10 provincial health care systems in Canada.

As a result of this structure, there are some significant weaknesses (well-known) that result.

1. Provinces compete against each other for resources and tend to out-bid each other in sequential rounds of bargaining with health care provinces.

2. There is wide variation in terms of the health care services that are accessible to Canadians based on their province of residence. There are procedures that might be "insured services" in one province but not in another. The wait time for access varies widely across the country. In general the province with the most resources to devote to health care services has the best health services available in terms of what is covered by the public system and wait times for access.

3. Governments tend to be hesitant to raise taxes in response to rising demands for healthcare services. As a result health services are either underfunded or other areas of public services are restrained to pay for the services provided in the health care system.

4. There is no relationship between what an individual pays towards the healthcare system and their health care needs or their controllable health behaviours. If you make a lot of money, you pay high income tax and contribute high amounts towards the health care system. It is a myth that health care is "free" in Canada, income=health care premiums in Canada - it is only "free" if you happen to be so poor as to not pay any taxes at all.

5. There is limited flexibility in the types of services that can be accessed in Canada. Services that are not publicly provided as insured health services are supplied via the private health industry - these are things like cosmetic surgery, sterilization reversals, dentistry, etc. Services that are publicly insured and provided often lack choice - there are few "frills" in the Canadian system, a patient generally cannot choose to access services faster (but pay for the privledge) nor can they choose to access services that might be qualitatively different (ie. a surgical delivery versus a vaginal delivery when not medically indicated) and pay for the difference in resource use. In general, a patient also cannot "choose" a nicer facility for a price for a publically provided service. Generally, facilities do not compete against one another for market share. If a Canadian wants choice or frills for a 'publicly insured' health service, they often must pay for that service completely out of pocket and access that service abroad.

6. There is a lot of administrative duplication and inefficiency that results from the running of 10 different health systems.

7. The system tends to be prone to politicization. Decisions regarding what is or isn't covered or how resources are allocated or even what information on the system is provided to the public are often political in nature.

That's not to say the system is without it's advantages.

It is a tremendous advantage that there is no problem of "uninsured" Canadians - every Canadian has health insurance and access to health services. They might not be the best health services that are technologically feasible. They might be services in older facilities. Canadians might have to wait a long while to access those services.

So how might Canada retain the current advantages of the existing system while correcting some of the disadvantages?

While there are likely many different ways to do this, I think that one way to do it would be to do the following:

First, create a Public Health Insurance Agency of Canada (PHIAC) that provides mandatory basic health insurance to all Canadians and pays for those services via a combination of individual premiums that are based on income, age, and health behaviours that are under the control of the individual and a government grant from corporate taxes. Risk associated with genetic predispositions or accidents could and should be pooled accross the entire population. The amount of premiums needed to be paid would be based on the health services needed. Health premiums would be separate from taxes - but mandatory and collected in a similar fashion to how taxes are collected. All Canadians of legal age would be shareholders in the PHIAC.

Second, create an independent organization (the Healthcare Senate) with a fixed-term appointed board with nominations from health care providers, provincial governments, patients, and PHIAC that can make binding decisions on the insurer and facilitate collaboration between patients, health care providers and the insurer. This organization would set compensation levels and make decisions regarding resource allocation, determine which services are covered, undertake quality improvement and review initiatives, collect and analyse data on health service use and outcomes, and report to the public.

Third, open the door to optional private insurers and private payment for services not covered under PHIAC and for 'frills' such as expedited access to services, nicer facilities, and patient choice.

No doubt there would also pitfalls to this kind of system, but it does provide "some food for thought" - and I would tend to think that such a system may retain many of the advantages of the current system while remedying some of the disadvantages. I am also curious if there is any health sytem in the world that is structured in this way and if so, what are its results?

No comments:

Post a Comment