I INTERNATIONAL PERSPECTIVES FORUM I

Health Care Reform: Lessons From CanadaAlthough Canadian health I Raisa Berlin Deber, PhD

care seems to be perenniallyin crisis, access, quality, andsatisfaction in Canada are rel- TO AMERICANS, CANADA HEALTH SYSTEMS AND 3. You enter a hospital emer-

atively high, and spending is resembles the girl next door- THE LlMITS TO MARKETS gency roam with a ruptured ap-

relatively well controlled. The familiar but often taken for pendix but no maneJo Should

Canadian model is built on a granted. Despite flurries of inter- Most markets distribute goods you be treated anyhow?recognition of the limits of est in the Canadian he8lth care on the basis of supply and de- 4. You win free open-heart sur-markets in distributing med- system whenever the United mand, with price signals used to gery in the hospital of yourically necessary care. States contemplares implement- affect production and consump- choice, which must be per-

Current issues in financing .. al h alth.. d .. Wh ." d .thin th xt 12mg urnvers e msurance, tion eClSlons. en pnce lonne Wl e ne

and delivering health care in. ...C d d tt t .II mISunderstandings about lts na- drops, demand should mcrease, months. Do you accept?ana a eserve a en lon. .-ey dilemmas include intergovern- ture abolindo Indeed, there 18 no Wlth a near-mfinite demand for

mental disputes between the Canadian system; instead, there free goods. Conversely, with AlthOUgh the first 2 scenarios

federal and provinciallevels of are a set of publicly financed, fixed supply and high demand, fit the predictions of economic

government and determining provincially run insurance plans price should rise until enough models, the next two do noto

how to organize care, what to covering alllegal residents for people get priced out of the Most people agree that the taxi

pay for (comprehensiveness), specified service categories, pri- market to balance supply driver need not take you, thusand what incentive structures marily "medica1ly necessary" against this new (lower) leveI of pricing you out of the taxicabto put in place for payment. physician and hospital care. Nei- demand at the new equilibrium market. Yet most also agree that

Lessons for the United ther does Canada have socialized price. Yet health care markets the hospital must treat your ap-States include the importance uld b h .

medicme; these servIces are de- stubbornly refuse to follow pendix, and they wo e om.of universal coverage, the ad-. ...

f . I d livered by pnvate proVlders. In these econOmIC laws. Econo- fied were you turned away for fivantages o a slng e payer, anthe fact that systems can be all industrialized nations, health mists have debated why this is nancial reasons. In economic

org~nized on a subnational care seems to be perennially in so and whether they can force tenns, however, this means that

basis. (Am J Public Health. crisis; however, access and qual- health care to behave in accor- you cannot be priced out of the

2003;93:20-24) ity in Canada are relatively high, dance with theory. If the dis- market for appendix care; at-

spending relatively well con- crepancies result only from tempting to incorporate market

trolled, and satisfaction high, al- "asymmetry of infonnation" (be- forces means that we have set uI

though declining. Canadians re- cause the person who provides aneconomic model in which

main devoted to their system, services algO detennines which there is a "floor price" (whatever

but they are increasingly worried services must be purchased), charity or govemment wi11 pay)

that it may not survive. providing better infonnation can but no ceiling price, because any

Recent1y, severa! provincial produce better-infonned con- one priced out falls back into th(

commissions investigated health sumers and allow market forces publicly funded tier.

care and weighed in with their to prevail. Yet most health econ- Although this model is attrac-

recommendations,l-3 while the omists, particularly outside the tive for providers, who are en-

Kirby Senate Committee4 and United States, recognize that the sured that they wi11 get at least

the national Romanow Royal key problem instead rests with the floor price, with any addi-

Commission5 are completing ex- "need." Consider the following tional private charges as a bonus

tensive research and consultation scenarios6: 2 disquieting consequences fol-

activities and readying their final low. First, market forces are less

reports. What wi11 emerge is un- 1. You want a taxi to take you to able to achieve cost controlo Sec-

clear, but Canadians have loudly a destination across the city but ond, deterioration ofpublicly

indicated their hopes and fears have no maneJo Should you be funded services is likely because

for the future. Although the taken there anyhow? there would be no reason for

Canadian model per se is un- 2. You win an all-expenses-paid consumers to pay extra for care

likely to be adopted in the week for two to a destination of unless the publicly funded tier is

United States, it can provide your choice, which must be inadequate (or perceived to be

clear lessons for its neighbor- taken within the next 12 months. inadequate). Accordingly, Cana-

both positive and negative. Do you accept? dian health policy analysts have

20 I International Perspectives Forum I Peer Reviewed I Deber American Journal of Public Health I January2003, Vai 93, No.

I 1NTERNATIONAL PERSPECTIVES FORUM I

vehemently defended the princi- avoid a large proportion of provincial insistence that their ju- 1. Public administration. This fre-pIe of "single-tier" publicly health expenditures, often mak- risdiction be respected. quently misunderstood conditionfunded medicine for "medically ing high risks uninsurable. Can- Financing the Canadian health does not mandate public deliverynecessary" services, not only on ada retains a widespread consen- care system accordingly evolved of health servires; most care isthe usual grounds of equity but sus that a single payer should be incrementa1ly within individual privately delivered. lt representson the grounds of economic effi- retained for core services; the provinces, as they responded to a reaction to the high overheadsciency. Multiple payers are seen debates are over what counts as market failure, with national gov- associated with privare insurancenot only as diminishing equity core services and how muro fi- emment involvement through a when the system was intro-but also as increasing the burden nancing is required. series of programs to share costs duced,16 and it requires that theon business and the economy to Systems a1so vary according to with the provinces. lnitially, Ot- health care insurance plan of apay those ex1ra oosts. how care is organized and deliv- tawa provided funding for partic- province "be administered and

Similarly, although most peo- ered What is the role of the hos- ular programs, such as public operated on a non-profit basis bypIe would be eager to take free pital? How wil1 different sectors health, hospital construction, and a public authority appointed ortrips, few wish open-heart sur- be coordinated? How muro au- training health personnel. ln designated by the govemment ofgery unless they need it. Cana- thority rests with physicians? 1957, the Hospital Insurance the province"15 and its activitiesdian health policy has rejected Finally, systems must pay at- and Diagnostic Services Act subject to audit This administra-the language of consumer sover- tention to how resources wil1 (HIDS)13 was passed with all- tion can be delegated, as long aseignty in favor of the language of flow from those paying for care party approval; it paid approxi- accountability arrangements areneed. However, balancing con- to those delivering it This di- mately half the cosi of provincial in place.sumerism against need is an on- mension, which we have termed insurance plans for hospital- 2. Comprehensiveness. Coveragegoing tension. Most recent re- allocation, incorporares the incen- based care, as long as the plans must include "alI insured healthfonIl documents-in Canada and tives guiding the behavior of pro- complied with specified national services provided by hospitaIs,abroad-pay deference to both viders and care recipients. conditions. The 1966 Medical medical practitioners or dentists,the language of patient rights Care Act14 cost-shared provincial and where the law of the prov-and the language of evidence- FEDERALlSM AND insurance plans for physician ser- ince so permits, similar or addi-based medicine, with little atten- HEALTH CARE vices under similar provisions. tional services rendered by othertion to how thes~potentially con- By 1971, all provinces had com- health care practitioners."15 (ln-flicting concepts are to be Because Canada's 1867 con- plying plans insuring their popu- sured dental services are definedreconciled. stitution assigned most health lations for hospital and physician as those that must be performed

All health systems must per- care responsibilities to provincial services. Because provinces have within hospitaIs; practically, lessfonIl similar functions. Mecha- jurisdiction,8 Canadian health jurisdiction, one size does not fit than 1 % of dental services sonisms must be in place to deter- policy is inex1ricably intertwined alI; there are considerable varia- qua1ify.)mine how care wil1 be financed with federal-provincial relation- tions within Canada. ln addition, 3. Universality. The plan mustPolicymakers must determine ships. Canada is a federation of although the financing arrange- entitle "one hundred per cent ofwhich costs wil1 remain the re- 10 provinces plus 3 sparsely pop- ments were changed in 1977 to the insured persons ofthe prov-sponsibility of individuaIs and ulated northem territories. These a mixture of cash and tax points ince to the insured health ser-which wil1 be socialized across provinces vary enormously in (reducing the federal tax raies to vices provided for by the plan onmany potential recipients. This both size and fiscal capacity, allow the provinces to take up uniform terms and conditions."15risk spreading can occur on a ranging from the Atlantic prov- the resulting "tax room"), the 4. Portability. Provisions must bevoluntary basis or can be ince of Prince Edward Island, same national terms and condi- in pIare to cover insured peoplemandatory. However, the distri- with a 2001 population of tions initiallyintroduced in when they move betweenbution of risks is not uniform-a 135000, to the industrial heart- HIDS were reinforced in the provinces, and to ensure orderlyvery small number of individuaIs land of Ontario, with 11.4 mil- 1984 Canada Health Act.15 The (and uniform) provisions as towil1 account for a very large pro- lion. The history of the often system accordingly reflects a when coverage is deemed toportion of health expen~tures: contentious evolution of the sys- hospital! doctor-centered view of have switched. The details areAccordingly, almost all nations tem (and the reactions by physi- health care as practiced in 1957, worked out by interprovincialexcept the United States have cians) has been told eIse- which is becoming increasingly agreements. Although there arerecognized that voluntary risk where.9-12 From the outset, it inadequate. some irritants, in general, out-of-pooling within a competitive represented an attempt to bal- ln order to receive federal province care incurred duringmarket for financing is un1ikely ance the desire of Canadians for money, the provincial insurance short visits (less than 3 months)to work, precisely because insur- national standards of service plans had only to comply with remains the responsibility of theers need only avoid a small against the differing fiscal capaci- the following national terms and home province, which can seinumber of potential clients to ties of the various provinces and conditions: limitations (e.g., refuse to cover

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elective procedures). Out-of-coun- public sources, putting it among which led to a significant reduc- care. Although it is not clear theiJy care is reimbursed at the rates the least publicly financed of in- tion in the cash portion of the extent to which waiting lists arepayable in the home province. dustrialized countries.!8 transfer. In turn, provincial gov- an actual problem (this varyingSince these rates are considerably For decades, delivery was emments chopped budgets to considerably by procedure andless than what would be charged largely unaffected by public fi- hospitaIs, which in turn led to geographic area), they remain ain the United States, Canadians nancing. Most hospitaIs were pri- considerable growth in day sur- highly potent and symbolicleaving the couniJy are strongly vare, not-for-profit organizations gery, reduction in hospital bed issue.advised to have supplementary with independent boards. Re- numbers, and instability in the Another key dilemma is com-traveI health insurance. cently, alI provinces except On- nursing employment market. 23 prehensiveness, spoken of in

5. Accessibility. Provincial plans tario subsumed hospitaIs into in- They aIso attempted to squeeze terms of "defming the basket ofmust "provide for insured health dependent (or quasi-independent) physician fees. The result was services." Although provincesservires on uniform terms and regional health authorities, which that provincial expenditures per are free to go beyond the fed-conditions and on a basis that were given responsibility for de- capita for health care, inflation eral conditions-which establishdoes not impede or preclude, ei- livering an assortment of ser- adjusted, were lower in 1997 a floor rather than a ceiling-inther directly or indirectlY' vices.!9,20 (Ontario retains private than they had been in 1989.6 practice, many prefer to cutwhether by charges made to in- not-for-profit hospitaIs, although The search for efficiency pro- taxes. As care shifts from hospi-sured persons or otherwise, rea- the provincial govemment has ceeded apare, to the point where tais, it can shift beyond thesonable access to those servires become increasingly obtrusive, most hospitaIs were running at boundaries of public insurance.by insured persons."!5 Other pro- especialIy for those hospitaIs run- 95% occupancy or greater, and Patients being treated in a hos-visions require that hospitaIs and ning deficits.) Physicians are pri- most providers felt that they pital have fuIl coverage for suchhealth providers (usualIy physi- vate smalI businessmen, largely were overworked and necessities as pharmaceuticaIs,cians) receive "reasonable com- working fee-for-service, and mov- underpaid.24 physiotherapy, and nursing.pensation," although the mecha- ing only slowly (and voluntarily) Under the rubric of "sustain- Once they are discharged, thesenisms are not defined. from solo practice into various ability," the pent-up demand for costsneed no longer be paid for

forms of groups. In some prov- restoring funding (and incomes) from public funds!5 SomeIn practice, this balancing act inces, provincial govemments to previous levels has dominated provinces still pay for such care;

means h1at the federal govem- have been attempting to encour- recent health policy discussions. others do noto The ongoing de-ment cannot act as decision- age the move toward rostered Advocates of privatization claim bate as to what should be "in"maker, although it may occasion- group practice paid on a capi- that this increased spending can- or "out" of the publicly financedalIy attempt to influence policy tated basis, with remarkably little not be met from public sources, servires, and the role (if any)directions through providing success to date!! Individual pa- while health reformers argue for user charges, has focus~dmoney or attempting to suggest tients have free choice of physi- that if the issue is the ability to largely but not exclusively onguidelines. However, the compre- cians. Bills are usualIy submitted meet total costs (rather than the "pharmacare" (coverage for out-hensiveness definition gives Ot- directly to the single payer, more political question of who patient prescription drugs) andtawa a major influence on what which means a decided lack of will bear them), a single payer home care.servires must be insured by paperwork for either patient or should be retained. Some busi- The "first law of cost contain-provincial govemments. The provider. Indeed, in 1991, the US ness leaders, recognizing that ment" states that the easiest wayCanadian Institute for Health In- General Accounting Office esti- the search for altemative to control costs is to shift them toformation estimates that approxi- mated that, if the United States sources of revenue may repre- someone else. These issues havemately 99% of expenditures for could get its administrative costs sent a greater burden on pay- flowed over to massive disputesphysician servires, and 90% of to the Canadian leveI, it could af- roll, support a single payer. Oth- between levels of govemmentexpenditures for hospital care, foro tocover the entire unin- ers retain an ideological (particularly the federal andcome from public sector sources. sured population!2 objection to govemment in- provincial govemments) and be-Insurance coverage for such ser- volvement. Providers voice sup- tween provincial govemmentsvires is not tied to employment. ISSUES ARISING port in theory for public pay- and providers, including someHowever, other sectors (espe- ment, but only if it guarantees work stoppages by physicianscialIy pharmaceuticals, chronic Financing the System that they will receive the re- and nurses in certain provinces.care, and dental care) are muro In the mid-1980s, Canada sources they require to provide These disputes in turn are oftenmore heavily funded from the faced a deficit trapo To avoid it, the leveI of servires they reei is resolved by sizeable reimburse-privare sector, including reliance they squeezed supply. The fed- necessary. The public agrees; ment increases, which in turn in-on employment-based benefits.!7 eral govemment unilaterally they are highly supportive of a creases pressure on other prov-Overall, about 70% of Canadian changed the formula for transfers single payer, but not if this inces to match the enrichedhealth expenditures comes from to the provincial govemments, means they would be denied contracts.

22 I International Perspect!ves Forum I Peer Reviewed I Deber American Journal of Public Health I January 2003, Vai 93, No. 1

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Delivery gionally based Community Care siderably, reaching 9.2% by pluralistic funding approaches.There has been strong pres- Access Cen1res, whichin turn are 2000.) Canada has universal coverage,

sure to modernize delivery and expected to contract out publicly excellent health outcomes, mini-eliminate "silos," which are seen funded services on thebasis of LESSONS FOR THE mal paperwork, and high publicas impeding smooth delivery and "best quality, best price." The UNITED STATES satisfaction, althOUgh coverage orefficient use of resources. The US competing providers (both for- reimbursement decisions do tendexperience with managed care profit and not-for-profit) respond Size to become political. One key ad-and the UK experience with gen- to each request for proposals; the A common Cear about univer- vantage is the avoidance of riskeral practitioner fundholders are expectation is that competition sal health insurance is that it re- selection; no one is uninsurable.frequently cited examples of willlead to efficiencies (which quires a large and cumbersome In a pluralistic system, govem-what should or should not be usually translate into a down- bureaucracy. In that connection, ment often ends up with theachieved, depending on the polit- ward pressure on the wages, skill it is important to recognize both worst risks, and the high costs as-ical and managerial preferences mix, and working conditions of that single-payer systems yield sociated with them. A singleafilie observer. The push for in- the nurses, rehabilitation work- administrative efficiencies and payer aIlows thesecosts to betegration has been expressed in ers, and homemakers employed that Canada's model is organized spread more equitably. Canadianmany ways, including establish- by these agencies)!6,27 Alberta at the provincial (state) leveI. health policy largely accepts theing regional health authorities wants to use competition and for- Canada's 2001 population was limitations of markets in healthand the ongoing attempt to profit delivery to encourage simi- 30 million (vs 284.8 million in care, at least for the portionsachieve primary care reformo lar efficiencies in the delivery of the United States); the largest deemed medical1y necessary.Physicians within the Canadian clinic services. Some academics provincial plan (Ontario's) served lt is striking that there areclinical workforce are unusual in suggest setting up competing in- 11.4 million. In contrast, the more people in the United Statesthe degree of autonomy they tegrated delivery models!8 largest US insurance plan, Aetna, without health insurance thanhave enjoyed with respect to Considerable attention has served 17.2 million health care the entire population of Canada,where they will work and in the been paid to benchmarking, members, 13.5 million dental with many more in the Unitedvolume and mix of servires they quality assurance, "report cards," members, and 11.5 million group States underinsured. Even inchoose to deliver.12~st other and other mechanisms of im- insurance customers. A US 1998, the United States wasclinicians must be hired by a proving accountability. Those model organized at the state (or spending more per capita fromprovider organization and are ac- seeking major reform tend to even substate) leveI would aIlow public funds for health care thancordingly subject to labor market point with glee to any intema- for flexibility to account for local was Canada, in addition to theforces in determining whether tional evidence that Canada is no circumstances and would proba- considerable spending from pri-(and where) employment is avail- longer the best system. In that bly result in a less bureaucratic vate sources.18 Hospitais, physi-able. The question of whether connection, the fact tlíat the system than at present. cians, and patients are faced withthis state of affairs should be World Health Ürganization, using Another feature of size is the considerably less administrativecontinued or not is an ongoing a controversial methodology that recognitión that most CÍlnadian costs ~an in the United States,source of dispute. adjusted health system perform- communities are not large although this savings may algo

ance for the educational attain- enough to support competition translate into considerably lessAllocation ment of the population, ranked (particularly for specialized ser- administrative data. The one

Two opposing 1rends have Canada 30th received consider- vices), even should this be con- component in Canada that doesbeen evident. Some provinces, ably more attention than Can- sidered desirable.31 Small size use a US mix of public and pri-for some sectors, have moved to- ada's preadjustment ranking of algo leads to problems in risk vate financing-outpatient phar-ward thé planned end of the aIlo- 7th in the same document 29 pooling, sinçe one expensive case maceuticals-is the one part of

cation continuum, usuallyaccom- Similarly, considerable attention may place the entire plan at fis- the system where costs havepanied by rhetoric about the was paid to Canada's high leveI cal risk. Single-payer models en- been rising most quickly, and ac-need for integrated services, bet- of health spending as a propor- couraging cooperation are likely cess is seen as most problematic.ter planning, and more effi- tion of gross domestic product to be particularly applicable tociency.19 For other sectors, there (GDP) (10.1 % in 1992), but less the more rural portions of the Jurisdictionhas been a movement toward to the fact that this reflected the United States. Another lesson is that federal-more mari:Cet-oriented ap- relatively poorer performance of .ism imposes difficulties. Healthproaches to aIlocation, usually the economy, with actual spend- Universal Coverage policy has been damaged by thelinked to attempts tq encourage ing in US dollars per capita being A major advantage of a single- pitched battles between the na-competition. For example, On- muro lower.3o (Indeed, as the payer system is that one can at- tional and provincial govem-tario assi~ed budgets for home economy did better, the fatia of tain universal coverage at a ments, which have algo under-care services to a series ofre- spending to GDP dropped con- lower cost than is attained by mined public confidence in the

January 2003, Vai 93, No. 1 I American Journal of Public Health Deber I Peer Reviewed I International Perspectives Forum 123

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system. The balance between im- References 12. Tuohy CH. AccidentalLogics: The Hetdth and Care in Canada. Don MiIIs,

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About Uie AuUior 8. The Canstitution Acts, 1867 to bons, House of Representahves. Washing-

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Raisa B. Deber, PhD, Deportment of sians 1hat Created lhe Canadian Health Health Aff (Millwood). 1999;18(3):9-26.Health Policy, Ma~t, and Evalua- Insurance System and Their Outcomes.tian, 12 Queens Park Crescent ~ 2nd 2nd ed. Kingston, Ontario: McGilI- 24. Annstrong P, Annstrong H: ..Roor, Toronto, Ontano M5S lA8, Can- Queen's University Press; 1981. Coburn D, eds. Unhetdthy 1im~. Pohh-

ada (e-mail: misa.deber@utoronto.ca). cal Economy Perspectlves on Health and

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ance in Canada and the United States. ..'Comp Palito 1997;29:411-432. 25. .~illiams AP, Deber.RB, Baranek

P, Gildiner A. From Medicare to home

Acknowledgrnents 11. Naylor CD. Private Proctice, Public caTe: globalization, state retrenchment

I thank the organizers and participants in Poyment: Canadian Medicine and lhe Pol- and the profitization of Canada's health

the Rekindling Refornl conference, par- itics of Health Insumnce 1911-1966. care system. In: Annstrong P, Arm-

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