Over the next 10 years, the health care system in Canada will undergo significant change. In fact, it is not an exaggeration to say that a genuine transformation is in the offing.
Governments across the country have been grappling with how to respond to these relentless winds of change. Recent pronouncements in Alberta, British Columbia and Quebec— some of which are in direct response to the Chaoulli decision last June by the Supreme Court— are strong indications of the search for innovative strategies. The willingness of provincial governments to examine significant health care reforms that are “outside” the traditional health care box is cause for optimism.
I have no doubt that Canada’s health care system can be changed so that it provides more timely service while remaining fiscally sustainable over the long term. However, it will not get there of its own devices. We need to carve out a coherent and feasible strategy to manage this change. Canadians— all Canadians, not just politicians and policy wonks— must face up to the hard choices that confront us all.
There are two main drivers of change— lengthy waiting times and increasing health care costs— and these are closely connected.
Long waiting times are a result of the rationing of services that every provincial government must address. As it is currently constituted, our system allows governments and providers to shift the consequences of excessive waiting times onto the backs of patients and their families. This gives them a “cost-free” way to control costs. Patients suffer; governments do not— at least not immediately.
While Canadians understand that they have to wait for certain services and treatments, they are willing to endure only so much. At the same time, a major impetus for change has come from the fact that we have a Charter of Rights and Freedoms that guarantees Canadians the right to life, liberty and security of the person.
The Chaoulli decision by the Supreme Court in June 2005 drew these threads together. This decision obligates governments to provide timely service for medically necessary treatment or, if they are not willing— or able— to provide timely service, then the Court said governments must stand aside and not prevent individuals from paying personally for the service.
Although, strictly speaking, the Chaoulli decision is directed only at the province of Quebec, in my view it would be politically impossible for other provincial governments to ignore the requirement for timely service imposed by the Court. To try to do so would leave us with an extreme form of what has frequently been called a “two-tier” system. In this version of a two-tier system, Quebecers would have the right to timely service while this same right was denied to all other Canadians.
The Chaoulli decision and public attitudes explain why the wait-time issue has moved to the top of the health policy agenda. In general, health care costs are increasing at a rate that the system as it is currently structured cannot sustain. This was the conclusion of the Senate Standing Committee on Social Affairs, Science and Technology’s 2002 report, and numerous studies done subsequently— up to and including the recent Aon Consulting report on health care costs in Alberta— have made it clear that the situation has, if anything, deteriorated further in the past four years. Regardless of the immediate fate of the Alberta Health Policy Framework— the so-called Third Way proposal— the issue of how to respond to health care costs that are growing uncontrollably will not go away. Despite the economic boom and the wealth it has generated in Alberta, the provincial government has shown the good sense to realize that, without reforms, health care costs will nonetheless become unsustainable.
On a national scale, the level of increasing costs is equally staggering. According to the Canadian Institute for Health Information, in 1995 all levels of government spent just under $53 billion on health care; by 2005 that had nearly doubled to $98.8 billion per year. Over that same decade the amount spent on prescription drugs more than doubled from $10 billion to $24.8 billion. These rates of increase are not sustainable: health care costs are now 11 percent of GDP compared with 9 percent only a decade ago.
Governments are being forced to ask where the additional funds needed to cover increasing health care costs will come from. While some of these costs can be managed by achieving greater efficiencies, there is no question that additional funds will be required to keep pace with the rapid growth of health care spending.
At the same time, governments now understand that simply dumping large amounts of money (even $41 billion) into the current system does not yield improved services. What it does do, however— as the September 2004 federal-provincial health accord shows all too clearly— is allow governments and service providers to delay confronting the most important structural weakness in Canada’s health care system: the lack of incentives to increase efficiency and productivity. This issue will have to be tackled directly— and immediately— if waiting times are to be shortened and health care costs contained.
The single most significant change to the dynamics of the health care system in the next few years will be the adoption of a wait-time guarantee. The idea of a wait-time guarantee was first proposed by the Senate committee in its October 2002 report. The new Conservative government in Ottawa has made it one of its top five priority issues. As well, in responding to the Chaoulli decision, the Quebec government has gone further than anyone in working out a practical wait-time guarantee for those procedures with the longest waiting times, notably hip and knee replacements.
In the Chaoulli decision, the Supreme Court concluded, as had the Senate committee two years previously, that (contrary to popular belief) Canadians do not have a guaranteed Charter right to medically necessary care. However, the Senate committee argued, and the Supreme Court agreed, that Canadians do have the right to not be prevented from solving the access problem on their own, if the system is unable to provide them with timely care.
In other words, both the Supreme Court and the Senate committee said that if governments cannot meet reasonable service standards, then they must allow patients to pay for the service they require using their own money, or to have the service paid by a privately funded insurance policy. To fail to do so violates a patient’s section 7 rights.
The Court ruled that patients’ section 7 Charter rights— the right to life, liberty and security of the person— are violated when a government does not provide timely access to services, while simultaneously preventing patients from accessing the care they need outside the publicly funded system. This was the argument that I and 10 other senators made as intervenors in the Chaoulli case, and it was supported by the Supreme Court.
In the past few years, health appeals tribunals in both Quebec and Ontario have also ruled on cases where patients have sought treatment outside their home jurisdictions in order to get treatment in a timely manner. These appeal tribunals have rightly forced governments to pay patients’ costs of obtaining the service they require in another province or country. That is, the tribunals adopted precisely the same remedy that the Senate committee proposed with its wait-time guarantee. Unfortunately, in these cases, patients had to wait to be reimbursed for the cost of treatment in another country, adding a further element of anxiety to their already stressful situations.
The Supreme Court said that governments, as the monopoly funders of an essential service, have a legal obligation to ensure that reasonable service standards are met. The wait-time guarantee defines precisely what a reasonable service standard is for each patient.
As proposed by the Senate committee, a wait-time guarantee would involve the determination of evidence-based maximum waiting times for each procedure as well as a system for measuring the urgency with which each individual patient needs to be treated. If the health of a patient is in danger of serious deterioration, and the government cannot provide care in its own jurisdiction, then the government must pay for treatment to be provided immediately in another jurisdiction, either within or outside Canada. Thus, the wait-time guarantee will transfer the cost of excessive waiting times from where it now resides, with the patient, to governments and service providers, who pay for and manage the service delivery system.
It was the committee’s desire to put in place an accountability mechanism for governments that led us to recommend the wait-time guarantee. The guarantee places the blame for the waiting list problem where it belongs— on governments for not funding the system adequately, and on providers of health services for not developing clinical, needs-based waitlist management systems.
The bite of this guarantee lies in the requirement that governments pay for treatment wherever it is available (including outside the country) if the maximum waiting time is exceeded and a patient’s health is in danger of deteriorating. To deter them from continuing to download the consequences of excessive waits onto patients, governments must incur a penalty— the cost of sending the patient for treatment in another jurisdiction— for their excessively tight rationing of the supply of health care services. Under the wait-time guarantee, governments would be forced to ask themselves if they prefer to send patients outside their jurisdiction for treatment at a greater cost— and greater pressure from voters— than if the requisite care had been available at home.
The central objective of our publicly funded health care system must be to ensure that Canadians have timely access to the high-quality care they need. Those who are responsible for funding and delivering the care must be held accountable for meeting that objective. Until the Chaoulli decision, a means of holding governments accountable was not available. This is why it was easy for governments to cut back on health care funding during the 1990s without first implementing the changes that would allow the system to meet reasonable wait times with less money by increasing productivity.
During the 1990s governments closed hospital beds and reduced the number of doctors and nurses being trained. What they did not do was increase the number of less expensive home and community-based beds. Nor did they tackle scope-ofpractice rules so as to permit nurse-practitioners, nurses, counsellors and other health professionals to provide services to the full extent of their competencies. The result was that waiting times lengthened and Canadians became increasingly disillusioned with their health care system.
There are many people now involved in the health care system who are opposed to the wait-time guarantee. Some who are skeptical about a care guarantee, including Roy Romanow, have suggested that it is not a practical proposal, and that it will create public expectations that cannot be fulfilled. The Senate committee believes that it is both practical and realistic to set clinically determined maximum waiting times for each patient for all major procedures and key diagnostic tests. A great many specialists agree.
Other critics are concerned that having a wait-time guarantee in place will make it clear to the public which provincial health systems are the best organized and most efficient. While it may be embarrassing for service providers to be held publicly accountable for the timeliness of their service, this is no reason not to implement a wait-time guarantee. Indeed, it is an extremely strong argument for a guarantee, since providers of any public service should be held publicly accountable for their performance. Provincial systems which are less well organized and funded should be publicly exposed.
Another criticism of the waittime guarantee is that it will increase provincial health care costs. While costs will no doubt increase somewhat, the exact amount will depend on how successful service providers are in making their health system operate more efficiently. Moreover, these costs can be phased in over a number of years in order to minimize the burden on cash-strapped governments.
More important, increased cost is not a valid reason for opposing a wait-time guarantee. Not only has the Supreme Court said that Canadians are entitled to timely service, but repeated public opinion polls have shown that Canadians are prepared to pay higher taxes in order to ensure that they receive timely health care. Thus, even if it requires a tax increase, governments must meet their obligations as monopoly funders and suppliers of an essential service.
It cannot be stressed enough that the measures put in place to ensure greater accountability must function with as little bureaucracy as possible. Provincial governments have tried various mechanisms to hold hospital boards and CEOs accountable for their performances. While their objective of improved accountability is sound, the usual means employed to achieve it— top-down control by provincial bureaucrats of highly complex service delivery institutions— make the institution less rather than more efficient. Nothing as complex as a hospital can ever be managed from afar, nor can it be managed by provincial health bureaucrats.
Accountability, with a minimum of bureaucracy, requires two things: first, an independent body with the means and ability to monitor the performances of governments and health care providers; and, second— and most important— appropriate incentives to obtain the desired results.
With regard to the first requirement, we are pleased to note that there is considerable agreement that the Health Council of Canada should be responsible for reporting to Canadians on the overall performance of the health care system. But this is not enough. Accountability cannot be based entirely on periodic reports or press releases, important as these are.
Decisions, made daily, that expedite or impede access to high-quality care crucially affect the health of patients. Accountability for such decisions requires more immediate and meaningful mechanisms. Strong incentives must be introduced— positive ones that reward good performance and negative ones that punish poor performance. The waittime guarantee provides such an incentive to government. In an earlier IRPP publication, Senator Wilbert Keon and I described the incentives that are necessary to induce appropriate changes in behaviour among service providers. I will not repeat them here.
I turn now to the most important issue raised by the Chaoulli decision. The Supreme Court has clearly ruled that excessive wait times are unacceptable, but it did not prescribe a specific policy solution to the wait-time issue. Nor should it have. The role of the Court is to describe the standard that public policy must meet, not the means required to get there.
Reducing wait times to acceptable levels will require more money. This is certain, even if all the changes to the structure and funding of the system that the Senate committee recommended are made. Substantially shorter wait times— like health care services in general— are not a free good!
Therefore the issue of where this additional funding will come from is the most difficult issue facing health care policy-makers. There are only two ways of raising this money. It can come either from individuals paying directly out of their own pocket for at least some services, or from individuals in the form of increased taxes paid to governments.
Choosing the private funding option would lead to a subset of the Canadian population paying the additional funds that are needed, while if a public pay option is chosen, it is all taxpayers who will foot the bill. However, the private pay option comes with the additional baggage of introducing a degree of inequity— of some kind— into the system.
There are two private pay options that must be distinguished. The first involves introducing modest user fees for visits to a doctor or a hospital emergency room. Proponents argue that a moderate user fee would raise needed money and simultaneously discourage frivolous use of the health care system, thereby saving the system money. If the fees are not too steep and there are sufficient exemptions, the argument goes, no one who truly needs care will be dissuaded from obtaining it.
In its 2002 report on the acute health care system, the Senate committee categorically rejected user fees, because they are, quite simply, a tax on the sick. People who have the misfortune of falling ill should not bear an extra burden of responsibility for funding the health care system.
User fees also tend to discourage people from seeking care early on in an illness when it is often more easily treated. This leads some patients to wait until their condition has deteriorated to the point that more costly care is required than if they had gone sooner to a hospital or doctor.
Moreover, user fees are expensive to collect and administer. If they are set at a low enough level to cause minimal deterrence to people seeking care, the experience in Sweden has shown that the administrative costs will eat up most if not all of the money raised.
The second private pay option involves allowing people to pay personally for some or all of the medically necessary services they require. In other OECD countries this invariably involves allowing people to purchase insurance to cover the cost. Canada is the only OECD country which outlaws parallel private insurance for medically necessary services.
As well, in every OECD country (except the United States), the reliance by part of the population on private insurance to pay for health care service that would otherwise be paid for by government has proven to be entirely compatible with maintaining publicly funded coverage for the entire population. The only OECD country without universal coverage is the US.
There is not a single country in the world that has a perfect health care system. Moreover, every country is struggling with similar problems— an aging population, paying for expensive new technology and drugs, training enough health care workers and so on. No one has all the answers, nor can one ever be sure that what works in one country will work elsewhere. Health care systems are too tied to the particularities of each country to allow for the wholesale transfer of practices from one country to another.
However, the overall evidence is clear. All the other OECD countries except Canada and the US have found ways, imperfect no doubt, of making private insurance systems coexist with universal coverage. Moreover, in comparable rankings among countries, the Canadian health care system ranks well below that of many other OECD countries, each of which includes some form of private insurance system alongside a publicly funded universal system.
Despite what groups such as the Canadian Healthcare Coalition and the NDP assert, Canada’s choice is not between the status quo or going to an American-style system. Canada will never go the American route. But Canadians need to consider seriously what we can learn from health care systems in OECD countries other than the United States. There are many ideas and varying approaches from which to choose.
With this in mind, let us consider a health care system that would allow individuals to buy insurance to pay for some high-volume, relatively routine services, particularly those services that currently have the longest wait times and that could be performed more efficiently in specialized clinics than in full-service hospitals.
These services would be supplied by doctors, done in clinics and paid for by an insurance company. To ensure that doctors continued to work the major part of their time in the publicly funded health care system, they would have to be restricted by law from taking private pay patients until they had treated a specified number of patients in the publicly funded system. A system that allows doctors to “moonlight” in this way must be structured in such a way as to prevent a massive flight to the private system. Such systems have existed for many years in other OECD countries, including Britain and Australia.
Some Canadians have argued that a system that requires doctors to work primarily in the publicly funded system, while moonlighting in a privately funded parallel system, will automatically lead to the deterioration of the public system. These critics claim that resources (doctors, clinics, etc.) would be certain to be drained from the public pay system by private pay patients. They make this claim with dogmatic certainty in spite of the experience in countries such as Britain and Australia. There is, however, one criticism made of this option that is widely shared by most Canadians, including members of the Senate committee. This is that it is unfair to allow people to buy their way to the head of the queue for medically necessary services. I agree that this is a valid criticism of the system I have described.
Given these criticisms of allowing doctors— under some circumstances— to practise in both the public and private pay systems, why do I still suggest that this is an option that ought to be considered? I do so because a way must be found to increase the supply of services. A key implication of the Chaoulli decision is that the current excessively tight rationing of the supply of certain services must stop, and money to pay for this increased supply of services must come from somewhere.
We must not allow preconceived biases to stifle public policy debate. All options— especially those that have a proven track record elsewhere— must be carefully and rationally considered. We must find the appropriate balance, in the Canadian context, between the least expensive option overall, the one that is fairest and the one that is most efficient. We must find a way of loosening the rationing constraints on the supply of health care services, particularly those with the longest wait times; we must enable specialists to do more procedures.
Currently, the income of specialists is capped in most provinces. Sometimes it is capped by an absolute maximum amount a specialist can earn. This is the case in some of the Atlantic provinces, and it was the case in Ontario until the most recent contract negotiated with the Ontario Medical Association. In other provinces, specialists’ income is capped by restricting their access to equipment or operating room time.
Capping specialists’ income in these ways has been used across the country as a means of controlling health care expenditures. The practical impact of this capping has been to ration the supply of services— the number of procedures a specialist can perform. This, in turn, has increased wait-times. The wait-time problem cannot be solved unless specialists are paid to do substantially more procedures than they do now.
Under the system I have described, however, doctors could take private pay patients once they had worked up to their cap in the public system. In this way, they could see more patients and do more procedures. This would, in turn, lead to shorter wait times in the publicly funded system because patients treated privately would no longer remain on the publicly funded wait list.
Since all specialists would be required to work up to their capped income in the publicly funded system, there would be no reduction in the supply of services to the publicly funded system. The new procedures would be over and above what doctors are currently permitted to perform, while not costing the public system anything. As well, should a wait-time guarantee be in place, patients who relied on the public system would be assured of receiving timely care.
Such a system would closely resemble the British and Australian health care systems. In Britain, for example, a doctor must first fulfill his contract with the National Health Service before taking private pay patients. In many cases, this means that the doctor treats private pay patients only on weekends.
Let me give you two real-life examples, which illustrate why maintaining the ban on doctors taking both public and private pay patients is an inefficient use of health human resources. In provinces that ration the supply of specialists’ services by capping their income, it is common for a cardiologist to reach his or her income cap by working only three and a half days a week. I am personally aware of a specific case in which a cardiologist spends the other day and a half a week at home with his young family.
What a waste of highly trained, very expensive talent! Surely it would be better to allow— indeed encourage— this cardiologist to see patients that extra day and a half a week. If the province in question is unwilling to pay for his time, then it makes sense to remove the rationing constraint and let the cardiologist take private pay patients for the remaining day and a half a week.
The second example is an orthopedic surgeon in a province which rations the supply of health care by restricting the number of operating room hours available to the surgeon, thus rationing the number of procedures the surgeon can do. Over the past decade or so, this surgeon has had his operating room hours reduced from approximately 22 hours per week to about 8 hours per week. Clearly wait times would improve if the rationing of this surgeon’s services was eliminated by allowing him to take private pay patients once he had completed his maximum eight hours per week in the operating room treating publicly funded patients.
To maintain the rationing constraint makes no sense! It is a colossal waste of human resources and exacerbates the waiting times for procedures such as hip and knee replacements. These examples illustrate why— if provinces continue to ration the supply of doctors’ services as tightly as they do now— Canadians may well agree to support allowing doctors to take both public pay and private pay patients under the conditions described above.
However, in my view, if doctors are allowed to practise in both the public pay and private pay systems, a second condition is required in addition to one that doctors be legally required to work their maximum amount within the public system. This second condition is that there be a wait-time guarantee. The presence of a wait-time guarantee would ensure that patients who relied on the publicly funded system would always receive timely care. If patients are guaranteed service within the public system within clinically determined wait times, then those who pay privately for faster service will, in effect, be paying for the kind of upgrade in service that those who currently pay for a private room in a hospital receive.
Some provincial governments have proposed similar, although not identical, ways of dealing with these issues. For example, Quebec has proposed a care guarantee but has rejected the idea of allowing doctors to practise in both the private and public systems. In Alberta, the Health Policy Framework— the Third Way— would require doctors to work only a limited amount of time in the public system before being allowed to take private pay patients. For the reasons I have given, I am opposed to this Third Way idea because it would undercut the public system and weaken it substantially, unless it was accompanied by the conditions I have outlined: that is, a wait-time guarantee and the requirement that doctors work up to the maximum allowable time in the public system before taking private pay patients.
However, even under the conditions described above, allowing doctors to practise in both the public pay and private pay systems would give some people quicker access to some services; it would allow some people to buy their way to the head of the line. Many Canadians would regard this as sufficient reason to reject this option. Should they do so, Canadians would then have rejected both of the private pay options, and the only remaining alternative would be to rely exclusively on the publicly funded system to provide timely service.
This will mean two things. First, capacity will have to expand in the public system. Second, where the capacity does not exist within a given jurisdiction, patients will have to be transported to another jurisdiction at public expense if that is what is required for them to receive timely care. Both of these things will cost taxpayers more money.
Here again, it is vitally important to understand the implications of the Chaoulli decision. We cannot continue as before. It is no longer permissible simply to muddle through, and to allow some people to wait, and wait, and wait, for service. Pre-Chaoulli that was possible, although it was never right. Post-Chaoulli there is no longer any choice. People must be given timely service within the publicly funded system, or they must be allowed to purchase it for themselves. Rejecting the private pay option means taxpayers must realize that they will have to pay higher taxes to fund their health care system.
Unfortunately, Canadians have come to think of health care as a free good. This is because most of the time there is no visible connection between the services Canadians receive from doctors and hospitals and the taxes they pay to their provincial and federal governments. We just walk into the doctor’s office and hand over our health card, and care is provided for “free.” Health cards are like a societywide collective credit card for which no individual ever receives the bill.
The Senate committee argued that establishing a National Health Insurance Premium would create a direct link between personal taxes paid and health services supplied, and hence would help to dispel the notion of health care as a “free good.” The Quebec government’s recently announced health care improvement fee has the same objectives as the Senate committee’s National Health Insurance Premium.
It is only when Canadians realize that they are the ones who collectively pay for health care that a sense of responsibility and involvement will prevail. Federal and provincial governments have been very successful in encouraging Canadians to feel a sense of ownership of their health care system, but they have done a poor job of helping Canadians come to terms with the financial obligations that accompany ownership.
I believe that establishing a direct link between taxes paid and health services supplied is so important that governments should consider reducing personal income taxes and replacing the lost revenue by a health insurance premium that would raise an equivalent amount of money. Then, as health care costs rise in the future, income taxes could remain fixed, while the health insurance premium could be increased to cover the growing cost of health care. In this way, whatever tax increase is required to implement a wait-time guarantee and to ensure that the conditions of the Chaoulli decision are met would be highly visible for all Canadians to see.
In summary, the toughest health care issue for Canadians is where the money will come from to meet the obligations of the Chaoulli decision and to reduce wait times. Will the money come from individuals directly out of their own pockets into the health care system, thus creating a parallel private system in Canada? Or will the money come from individuals in the form of higher taxes to governments? The time has come for a national debate on these two choices.
Adapted from the E. Garner King Lecture at the University of Alberta on May 15, 2006.
