Canada

PHONE CONVERSATION WITH Serge Lafond- Policy Branch of Health Care Department in Canada

1. How Much is the Federal Government’s Share of H.C. Funding ?

- it is difficult to give a firm contribution level - ranges from 20%-35% depending on the agency and situation-in 1990's both Federal and Provincial Governments had considerable fiscal deficits - they were forced to control spending and reduce the contributions to Health Care. However, Provinces were given permission to move funds from education and other social expenditures to health care. By the end of 1999's they realized the error of this and have increased contributions. In the last agreement on Health Care in Feb. 2003 the Federal government increased spending by 35 billion to Provinces over the next 5 years. The plan now is to have the federal government pay 50% and the Province 50%.

-there is a new round of discussions and a new agreement being worked on to get more Federal funds transferred by the end of the summer but it has been difficult to come to an agreement. The Prime Minister will meet with the Provincial Premiers at the end of the summer and they hope to come out of those meetings with an agreement.

There has been much discussion of the Romanow Report which was commissioned by the Government to Review Health Care - it is recommending that the Federal Government contribute 25% to the Provinces in cash and then Provinces can access revenues through Federal Income Tax and Sales tax to use for Health Care. Each province will contribute 50% from provincial taxes. The report also recommends creating National Standards to provide basic essential services to all Canadians at an equal level. The Romanow plan recommends including all prescription drugs and home care, they want to keep people in their homes since it is more cost efficient, under the Medicare System. Most Long Term Care (Nursing Homes ) are public .

Medicare provides 75% of the total care including acute care, prescriptions, vision, preventative etc. 25% is private insurance -(usually through employer coverage)-for such things as over the counter drugs, personal health supplies, orthodics, etc.- covers some dental, vision usually for younger citizens- not seniors or the poor - they are all covered under Medicare. Private insurance has increased since the 60's for dental insurance from 20-60% but he sees that leveling off now.

REDUCED WAITING LINES - still significant pressure on facilities- it will take 2 years to see the result of the increased money they are putting into the system. There is also a study being conducted to discover better management techniques.

Canadian Health Care

During the 1990's, federal and provincial governments in Canada were facing considerable fiscal deficits. In order to help provinces deal with these pressures, they were given permission to reallocate federal funds from post-secondary education and other social programs to health care. However, by the end of the 1990's, it was increasingly evident that new federal funding was required to help provinces fulfil their obligation to provide health care to their residents. As a result, the federal government committed new funding for health care.

In early 2003, the federal government committed an additional CAD$35 billion over five years in new federal funding for health care. This new money is available to provinces to fund: home care, access to pharmaceuticals, primary care, new technology (MRIs, etc), and to help reduce waiting lists. Canada's spending on health care is about CAD$120 billion ($97 billion US) a year or about CAD$3,800 per capita ($2,900 US). One of the reasons for waiting times in Canada has been a shortage of physicians, but the increase in federal funding will help train more physicians and hire more doctors from foreign countries. A new round of discussions, separate from the one that led to the CAD$35 billion commitment, is currently underway and a new agreement is being worked on to increase federal funding to the provinces. It is expected this new agreement will be in place by the end of 2004. Provincial and federal governments are working on a 10-year plan.

Canada's Medicare is a universal program that provides coverage for hospital care (hospitals are not-for-profit or public in Canada) and physician care for all Canadian residents. Provincial governments also pay for other services not covered under the Medicare program. Private insurance complements public health care insurance. It is usually paid for through employer plans, and provides coverage for extended healthcare benefits. These include; certain prescription drugs, dental care, vision care, private hospital room, etc. The poor and elderly are covered (publicly) for dental and vision.

Up to the mid 1970's, the federal government used to pay 50 percent of all Medicare costs. This percentage has decreased over time as a result of a decision to convert about half of federal cash transfers into tax transfers (i.e., tax points), and to reduce cash transfers in the 1990's. The objective of the federal government in the future is to fund 25 percent of a provincial's health care cost through cash transfers, and the other 25 percent with tax points and direct health expenditures. The provinces will pay for the remaining 50 percent of the costs through their own tax revenues (e.g., income tax and sales tax).

While Canada is trying to improve the management of its public health care system, the United States can't come to grips with its system, because it has no viable system. Think how absurd our system is with the many HMOs and private insurance companies, and the many different public programs like the VA, Medicare, Medicaid, Military, and Workers Compensation. We can't even deal with fraud or portability let alone the many other things wrong with our system.

Our health care system is in crisis, and we can learn a lot from our neighbor to the north. Canada has around 31 million people; think how much we can save with 288 million under one-risk pool for essential care. Canada is lucky to have their system.

Canada is trying to come up with national standards to provide essential service to all Canadians on an equitable basis, and to ensure that the health care system will remain sustainable in the long term. Medicare is one of Canada's cherished social programs and they definitely don't want any part of the American financial system. It may take two years to see the results (e.g., reduced waiting lines) of the new money, but Canada can be assured that they will have a system that is more efficient and more just than our American system. Canada is committed to having the best health care in the world.

Brief History of the Canada Health Act

The Canadian health care system has evolved into its present form over four and a half decades. Saskatchewan, in 1947, was the first province to establish public, universal hospital insurance, and 10 years later, the government of Canada passed legislation to allow the federal government to share in the cost of provincial hospital insurance plans. By 1961, all 10 provinces and two territories had public insurance plans that provided comprehensive coverage for in-hospital care.

Saskatchewan again pioneered in providing insurance for physicians' services outside hospitals, beginning in 1962. The federal government enacted medical care legislation in 1968, and by 1972, all provincial and territorial plans had been extended to include doctors' services.

A health services review was undertaken in 1979 by Justice Emmett Hall. He reported that health care in Canada ranked among the best in the world, but warned that extra-billing by doctors and user fees levied by hospitals were creating a two-tiered system that threatened the accessibility of care.

In response to these concerns, Parliament passed the Canada Health Act in 1984 to discourage hospital user charges and extra-billing by physicians. The Act provides for an automatic dollar-for-dollar penalty if any province permits such charges for insured health services.

Canada developed their health care system over time. The United States missed a great time to reform its health care system. Now the situation is much worse in America; drug prices have skyrocketed, health care cost have gone through the roof, and employers can’t afford the costs and still compete with other countries that have a national health plan. People are going without their medicine, people are dying because of poor health care, our emergency rooms are being flooded with patients that are uninsured and have no primary doctor, and we are lacking in preventive medicine.  These are problems in America that you don't see in Canada

President Bush says, The "Market" Is the solution. The market can solve anything he says.  See; "What's Wrong with Market-based health care?"  You may wonder how he could come to this conclusion.

Maybe the forces of competition could lead to better outcomes if quality were the issue, but with cost and profits as the motivators, ‘the market’ in health care has led to:

•  An increase in the uninsured, 45 million and another 50 - 90million      underinsured (exact figures are difficult to compute).

• Increasing amounts of money going for administration, marketing, and profits, with less money going for patient care.

• A decrease in quality care and an increase in medical errors as cost saving became the main priority.      

• A failure to deal with some of the more pressing—but less profitable—aspects of health care, such as mental health and public health.

• An expansion of for-profit HMOs

• Millions of dissatisfied Americans.

• Insurance company meddling in physician’s decisions and the amount of time a physician can spend with a patient.

The History of Canada’s Health Care System

Canada’s health care system was similar to the United States free market system up until 1948 when things began to change. It took until 1970 for Canada to get a country wide National Health Care System which today is called The Canada Health Care Act. The new system is a public administered, universal, comprehensive, portable, and accessible (to all) health care program.

The need for a new health care system was needed because many people were uninsured and couldn’t afford the rising cost of health care. Tommy Douglas, who later became a minister and then the premier of Saskatchewan set out to overcome the failure of his province’s health care problems. Tommy was born in Scotland and when he was a young boy he developed osteomyelitis from a bad cut in his leg. A doctor operated on his leg on a kitchen table, but the operation was not successful. Tommy’s family immigrated to Canada, and Tommy found himself in a charity ward facing the amputation of the infected leg.

Seeing the opportunity for a useful teaching project a surgeon got permission to operate on Tommy’s leg. The operation was such a success it even surprised the surgeon. Later when Tommy thought about his boyhood operation, he realized that the same kind of services he got by a stroke of luck should have been available to every child in that ward.

In 1944 Tommy Douglas became the premier of Saskatchewan. In the aftermath of depression and war, there was in Canada and elsewhere "a mood of rebellion" against the risks of unemployment and sickness, disability and old age, widow-hood and poverty. People understood that these risks were not the fault or responsibility of individuals.

In 1946 Tommy Douglas’s government introduced North America’s first universal hospital insurance scheme in Saskatchewan a poor province that was heavily in debt and had a rapidly growing hospital admission rate as well as a severe shortage of hospital beds, doctors, and nurses. The government had no model to follow and limited data on actual costs.

By January 1^st 1947 everyone in the province was covered by a provincial hospital insurance with no limit on the number of days of a hospital stay as long as it was deemed medically necessary. The only payment was $5 single/$30 family per capita tax. No one was allowed to opt-out and no one was refused care. Military service, disability, poverty, old aged, all were covered and those that were previously covered were not required to pay.

The premiums paid by residents were supplemented by general tax revenues. Hospitals were paid by size of the institution and the number of patients. The number of hospital beds grew rapidly and so did their utilization, explained by the backlog. Public hospital insurance was cheaper than private insurance, and did so without the creation of individual financial hardship. The world flocked to see the Saskatchewan plan in action. A better life was possible after the sacrifices of war.

In 1948 Tommy Douglas is re-elected as premier of Saskatchewan. Tommy demonstrated to all Canadians that it was possible to base health care provision on shared responsibility and planning, rather than on luck. The same year that Tommy cut his leg, Abraham Flexner toured Canada and the United States medical schools and was not very pleased with what he found. He offered a wide range of Recommendations. Flexner’s report marked a turning point in Medical education and in hospital practices. Science became the basis for medicine, and care became increasingly hospital based. In 1920 quality and standards in hospitals had improved significantly across North America. New technologies and treatments were too expensive for most individual doctors to purchase on their own. It made more sense to deliver them within Institutions where equipment and personnel could be shared.

The Great Depression! Many could not afford hospital care. Hospitals and care providers faced severe financial difficulties. Blue Cross emerged during this period as a major institution for insuring hospital care. Still due to high unemployment and low wages many remained without coverage for hospital care, particularly this was the case for the elderly and the disabled. In Canada almost half the population was not covered under the private system.

Today health care services are very similar on both sides of the border. Hospitals form the core of the systems. Most hospitals are owned by non-government organizations. It’s difficult to identify which doctors are Canadian and which are American. The majority of doctors are paid on a fee-for-service basis. Medical care is governed by agencies primarily made up of peers, intended to protect both patients and providers. Specialties are very similar and so are medical techniques. Research is freely shared and even jointly conducted across the border. Most of the actual patient care is provided by nurses of various kinds.

If health care is so similar in both countries, why is there such a strong preference for the Canadian system across the border and in the United States? An explanation can be found mainly in the five principles on which Canadian health care delivery is based, which are; universal, comprehensive, accessible, portable, and publicly administered. And these are related to the single-payer system and insistence on a one-tier delivery.

In the early years of Canada’s experiment in public administered health care with hospitals some other provinces adopted the system. Canada’s cost did rise but not rising faster than costs in provinces without any government plans. Government plans were already controlling costs. British Columbia contained cost and utilization rates much better than Ontario and Ontario was enjoying a much better economic growth. Ontario had a system like the free market U.S. system. When insurance did not provide coverage, government was increasingly expected to assume the burden.

1954 - The Taylor Report found that private insurance added significantly to hospital expenditures:

Although the insured went more often to hospitals than the uninsured, the uninsured stayed much longer. More research showed that in spite of their better health higher income groups received more care. The same kind of pattern was evident among rich and poor provinces.

In April 1957 the House of Commons and Senate unanimously voted for a national health care program (a public hospital insurance plan). The difference is in the billing. Governing structures of hospitals were left in place. Hospital and Diagnostic Services Act required that they meet certain standards; most had been doing so already.

No rush to hospitals occurred. The annual rate of increase declined, compared to hospitals in the United States the decline was even greater. The sharp increase in hospital use in both Canada and the United States had begun before public insurance. Few people really want to get into a hospital simply because it is free. When there is no profit to be gained for hospitals by filling up wards with patients who do not need care and when funding is stabilized there is also less incentive for hospitals to actively seek patients.

The government ignored the advice of The Canadian Hospital Association that might have further reduced hospital use in the long run. The organization suggested that the plan cover nursing homes, home care, homes for the aged, and convalescent homes which now they do.

Doctors in charge of hospital admissions and use could base their decisions on medical need, and they could do so with less paper work. With doctors fee-for-service practices untouched they did not have to consider the patients income when ordering hospital care. Female providers rarely in a position to bill patients directly were now in a better position with secure funding and more secure employment. They were in a better position to demand better wages and work conditions. The number of jobs for women in hospitals grew dramatically. In 1946 registered nurses in Quebec worked 54 hours/week with no paid vacation, maternity leave, or vacation. By 1966 they worked 36.25 hours per week, 4 weeks vacation a year, maternity leave and pensions.

When commercial insurance companies and non-profit companies allow individuals to deduct premiums from their taxes, this is simply another way of providing government financing. Only in this method the government has less say about how the money is spent and who gets care. Private insurance companies in Canada are not allowed to cover those services covered under the public plan. But they could cover those that are not. Today all provinces included at least some dental, some prescription drugs as outpatients, and some supplementary coverage for care provided outside of Canada.

By 1961 all provinces had public hospital insurance in place and almost all Canadians were covered by a public plan. Hospital services became more equal across Canada for individuals. Now it’s time for Tommy Douglas to take on medicine next.

In theory, doctor’s incomes were unlimited, but patients could not or would not pay and insurance companies often had fee schedules and maximums on payouts. Doctor’s incomes varied enormously in terms of what any individual might earn in a given year and in terms of what different doctors earned. Few doctors had guaranteed jobs or payments. But many doctors feared a public plan would undermine their power.

Costs of "Research and Development" Drives Our Higher Drug Prices.

The drug companies claim that it costs them over $800 million to bring a new drug to market. This number is grossly exaggerated. Creative accounting--akin to the type used by Enron—has been used to inflate the true costs. They include such items as "lost-opportunity costs" in doing there calculations. Other experts who have examined the data come up with much lower figures for R&D. Their estimates are closer to $100 million, a huge difference. They spend tens of millions on advertising. They get huge tax subsidies, and the use of government research and development for free (the government spent $20 billion on research and development last year). Yet drug prices are much higher in America than in any other country—about 60 percent higher, on the average, than the prices in Canada and the U.K. Because of our lack of a National Health Care Plan we can’t even bargain for lower prices. To derail efforts at making pharmaceutical benefits and integral part of Medicare, some of the pharmaceutical companies spent tens of millions of dollars on an advertising campaign ("the bus to Canada") to discredit the Canadian system, and even created a organization, "Citizens for Better Medicare," to try to lend credibility to their efforts. Some of the questionable, and often illegal, ploys used by some of the pharmaceutical industry may include: 

• Are they manipulating patent law to keep cheaper generic products off the market?
• Are they Paying off smaller pharmaceutical companies not to manufacture cheaper versions of their drugs?

Canadian Health Care

"I challenged those advocating radical "private" solutions for reforming health care—user fees, medical savings accounts, de-listing services, greater privatization, a parallel private system—to come forward with evidence that these approaches would improve and strengthen our health care system." From the Commission on the Future of Health Care in Canada. The evidence has not been forthcoming. "I have also carefully explored the experiences of other jurisdictions with co-payment models and with public-private partnerships, and have found these lacking." "There is no evidence these solutions will deliver better or cheaper care, or improve access (except, perhaps, for those who can afford to pay for care out of their own pockets."

Support of Canadians for their health care system is not given freely. It is given in exchange for a commitment that their governments will ensure that high quality care is there for them when they need it. The grave risk we will face is pressure for access to private, parallel services-one set of services for the well off, another for those who are not. Canadians don’t want this.

Is it a left wing or a right wing agenda to want to provide American businesses with comparative advantages in the global marketplace? Is it a left wing or a right wing agenda to opt for an approach to delivering services that any detached, objective examination of the evidence shows to be more efficient, more affordable and more equitable?

Administrative costs in market-driven U.S. health care system are far higher than in Canada’s Single-Payer system. Bureaucracy in the health care system accounts for about a third of total U.S. health care spending. "Hundreds of billions are squandered each year on health care bureaucracy, more than enough to cover all of the uninsured, pay for full drug coverage for seniors, and upgrade coverage for the tens of millions who are under-insured.  Americans spend almost twice as much per capita on health care as Canadians, who have universal coverage and live two years longer. Canada also has a lower infant mortality rate. The cost per capita for just health care administrative in the United States is over $1200 dollars and in Canada it is just over $300 dollars. A national health insurance could save about $286 billion dollars in administrative costs. In Canada, doctors bill a single insurance plan, using a single simple form, and hospitals receive a lump sum budget, which cuts down on excessive administration costs. In the U.S. "republicans are pushing to move seniors into HMOs, whose overhead is three times higher than Canada’s Medicare.

Canada Health Care

Canadian Health Care has taken a Bad Rap.

Health Affairs

May/June 2002

The cross-border flow of care-seeking patients appears to be very small. This study was undertaken to quantify the nature and extent of use by Canadians of medical services provided in the United States. Our telephone survey of likely U.S. providers of wait-listed services strongly suggested that very few Canadians sought care for these services. Hospital administrative data from states bordering Canadian population centers reinforce this picture. The vast majority of services provided to Canadians were emergency or urgent care, presumably coincidental with travel to the United States for other purposes. Additional findings from the current study showed that a small amount of cross border use was related to proximal services, primarily in rural or remote areas where provincial payers have made arrangements to reimburse nearby US providers. Finally, information from a sample of "America’s Best Hospitals" revealed very few Canadians being seen for the magnet referral services they provide.

These findings from a U.S. data are supported by responses to a large population-based health survey, the NPHS, in Canada undertaken during our study period (1996). As noted 0.5 percent of respondents indicated that they had received health care in the United States in the prior year, but only 0.11 percent (20 of 18,000 respondents) said that they had gone there for the purpose of obtaining any type of health care, whether or not covered by the public plans.

Support of Canadians is given in exchange for a commitment that their governments will ensure that high quality care is there for them when they need it. And the grave risk we will face is pressure for access to private, parallel services—one set of services for the well off, another for those who are not. Canadians do not want this.

Forty years ago, when visionary men and women came together to create Medicare, we had private medicine in Canada. You paid out of pocket to receive medical services if you could afford them, or relied on the dole if you couldn’t. If you needed an operation, you cashed in your savings, mortgaged your home, or sold your farm so you could pay, or you simply did without. Many of the so-called "new solutions" being proposed for health care-pay-as-you-go, user and facility fees, fast-track treatment for the lucky few, and wait-lists for everyone else-are not new at all. We’ve been there! They are old solutions that didn’t work then, and were discarded for that reason. And the preponderance of evidence is that they will not work today.

Creating A National Health Care System for Canadians—Nov. 20, 2002—Roy Romanow, Commissioner—I challenged those advocating radical "private" solutions for reforming health care:

To come forward with evidence that these approaches would improve and strengthen our health care system. The evidence has not been forthcoming. There is no evidence these solutions will deliver better or cheaper care, or improved access (except, perhaps, for those who can afford to pay for care out of their own pockets). More to the point, the principles on which these solutions rest cannot be reconciled with the values at the heart of Medicare or with the tenets of the Canada Health Act that Canadians overwhelmingly support. "Medicare is the most beloved social program of Canadians".

United States cost for paper work $294 billion in 1999. Between 1969 and 1999, administrative and clerical personnel in the United States grew from 18.2 percent to 27.3 percent. In Canada personnel grew only 3 %. Harvard/Public Citizen Report finds National Health Insurance would save $286 billion on administration in 2003. "Republicans are pushing to move seniors into HMOs whose overhead is three times higher than Medicare’s. National health insurance could cover everybody without any increase in costs."

Canada accounted for 10% of the global new medicines discovered, despite representing only 1.8% of the world pharmaceutical market. The total pharmaceutical market in Canada is approaching $10 billion in sales (31 million population, 288 U.S. population).

The United States total prescription drug expenditures in 2004 (U.S.$200 billion, Canada $11.8 billion). 50% of brand name drugs are sold in the United States.

The Pharmaceutical industry comprises brand-name, research-dependent companies, which are largely foreign-owned multinationals, as well as Canadian-owned bio-pharmaceutical firms and Canadian and foreign-owned generic manufactures. Canada provides patent protection for innovation product such as brand-name pharmaceuticals for 20 years. Once patents no longer protect the product, generic firms can proceed to develop and market their versions of the brand-name product. Canada’s brand-name pharmaceutical industry spent almost $1 billion on R&D. About 20% of this was on basic research conducted in company research facilities as well as across Canadian universities, hospitals and laboratories, and about 65% went to clinical research.

First of all there is no privatizing of necessary services in Canada. There is very little in administrative costs and no private company profits to contend with. Everybody has a primary doctor (one of their choice), no going to the expensive emergency room for routine services. Prescription drug cost are about one-half the cost to the U.S patients. Doctor’s fees are fair but not excessive. Malpractice insurance cost is only about a median of $4,000 compared to something like $80,000 in the United States. Hospital and Clinics are given a global budget in which to operate, waste is better regulated. There is a lot less fraud in Canada.

France

France’s National Health Care System

Organized labor is not perceived as a "special interest" in France. Rank and file workers continue to identify unions as defending their interests.

In the United States organized labor can join hands with the Medicare movement, maintain their own programs, and force Congress to enact a national health care program. Labor—joined with the tens of millions of retirees loyal to the Medicare program—would become a formidable political base that could develop, promote, and lobby for enactment of a national health program that almost everyone in United States would support. Peoples rage against insurance carriers, drug companies, and their bought-and paid-for politicians would oppose any effort these special interest could muster to defeat a national health care plan for the U.S. To do this the labor movement must change their attitude toward national health legislation and see the federal government as a friend in this struggle. In France labor endorses the French National Health Care Plan.

France’s health care system is a hybrid public/private system. It is a system that does not cost patients anything out-of-pocket. There are no limits on health services for people. Most physicians are in private practice and most hospitals are within the public sector. Private health insurance is not outlawed, but it is not popular. France’s system is truly universal and jointly controlled by labor and employers’ organizations.

In France, organized labor, through its Mutuelle Funds, has its own health programs. In France, 80% of the funding and benefits are covered by the main national health security fund (CNAMTS, loosely translated as National Fund for Employed Workers’ Health Insurance). These are employed citizens. Employer organizations and the labor movement jointly administer the CNAMTS. Two other funds cover the self-employed and agricultural worker. Some industries like mining, electrical, railways, transit—the Paris Metro—have special arrangements wherein union-led entities called "Mutuelles" run the full system within a framework of strict government regulation. For example, the RATP, Metro union supports fully controlling their own health programs.

The labor movement is going along with employers, not only a joint leader of the national system, but also the sole leader of the Mutuelles. They exercise policy power in these Mutuelles to make sure that services that are provided reflect the needs of their membership. They even set up and run health services programs such as community and mental health clinics, vision care, dental care and other community services.

All legal residents, employed or not, are covered by public health insurance. In January 2000, the final part of this all-inclusive system was enacted to cover 100% of all legal residents. This public supplementary insurance program (CMS ) ensures health care for the poor. It is means tested and about 10% of the population is eligible. Health professionals are not allowed to charge more than the public tariff or the lump sum for CMU beneficiaries, which means that in principle, access to care is free of charge. This means that this population can see general practitioners and not wait at hospitals. Political action on the part of labor-led Mutuelles and the labor movement made this legislation possible.

Doctors don’t bill their patients but receive their reimbursement from the national system and the patient’s Mutuelle. This system is entirely automated. Perhaps a unique feature of the French system is doctors’ home visits. In France, the cost of these home visits are covered jointly by the CNAMTS and, where applicable, the Mutuelle. The National Social Security System thus provides the basic package of services with labor-run Mutuelles paying most of the rest.

The public health insurance system covers about 77% or total expenditures, the rest is covered by patients out-of-pocket payments (11%) (The 11% is for dental and vision care expenses largely not covered by the national health scheme, and Mutuelles (12%).

All European health care systems have strict government regulation, which is necessary so that one special interest group can not dominate the system. In America a good example is the domination of for-profit health care and the prescription drug industry in health care decisions. The labor unions can help with their increase involvement and influence in a national health care system.