It is the summer of dysfunction in Canada. As the returning consumer, liberated from the lockdown if not from the pandemic itself, runs into the unready supplier, the result is chaos: shortages, lineups and soaring prices.
And then there is health care. Not a day goes by without some new headline about the crisis in Canadian health care: overrun emergency rooms, lengthening wait times for surgeries, shortages of staff. The system in recent days has been described as “collapsing,” on “the verge of collapse” or just flat-out “collapsed.”
Some of this, to be sure, can be blamed on the pandemic, as case loads once again begin to rise in front of the seventh (or it is the eighth?) wave. But here’s the thing: Health care was in crisis long before the pandemic. In 2019, the last full year before the pandemic hit, wait times were already at historic highs: just shy of 11 weeks from appointment to treatment, according to the Fraser Institute’s annual Waiting Your Turn survey of surgical wait times across the country – nearly twice what they were in the early 1990s.
This, though spending on health care was at or near record levels – again, well before the pandemic, and the extra surge in spending that went with it. Governments collectively spent about $5,000 per person on health care in 2019, according to the Canadian Institute for Health Information – 52 per cent more than they spent on each person in 1990, even after adjusting for inflation. Measured against GDP, that’s a rise from 6.5 per cent to 8.1 per cent.
It isn’t that increased spending has no effect on wait times. As the chart shows, wait times rocketed higher during the relative austerity of the late 1990s, as governments grappled with monster deficits, then fell in the early 2000s, as the spending taps were turned on again. But by now governments were having to spend ever higher amounts just to keep wait times from rising. Merely maintaining health care spending at all-time record levels, as governments have broadly done since 2010, was enough to lit the fuse under wait times again.
This is unsustainable. Even before the pandemic, provincial spending on health care had reached a record 48.6 per cent of own-source revenues – the money provinces would have to fund their constitutional responsibilities were their revenues not supplemented by federal transfers. The pandemic has already popped this north of the 50-per-cent mark, but it is unlikely to recede much, as population aging rolls inexorably on.
So whereas the airports will eventually get themselves sorted out, the passport offices will be relieved, and inflation will one day return to its cage, the health care crisis will be with us for the long haul. That’s unless we get serious, at long last, about health care reform.
There’s a popular notion that “no one knows what to do” about health care. That’s not the case. The broad strokes of reform have been widely understood for decades. Emphasize prevention over care. Move doctors, to this end, from fee-for-service to a flat per-patient payment (called capitation), and from sole practitionerships to multidisciplinary teams of providers. Require every patient to enroll with one of these teams, who are responsible to either treat them for whatever ails them or refer them to hospitals for surgery. They might even pay the hospitals out of their budgets, becoming the purchasers of care on their patients’ behalf.
Finally, move hospitals from traditional “global” budgets to a system based on payment per treatment, called activity-based funding. That’s useful from a number of perspectives, but most important, it makes it possible to open up the system to competition: Once it is known how much it costs hospital X to perform a tracheotomy, the way is open for hospital Y or private clinic Z to underbid them. Saskatchewan’s adoption of competitive contracting resulted in one of the rare recent success stories in Canadian health care, a 75-per-cent drop in average wait times from 1999 to 2015 (they’ve since rebounded somewhat).
None of the foregoing involves the kind of hot-button “reforms” that consume much of political, media and even legal attention: user fees, or parallel private insurance systems. The consensus reforms would, that is, achieve as much or more of the savings these outlier reforms would, at a fraction of the controversy – savings that would take some of the pressure off the system, allowing more patients to be treated sooner without bankrupting provincial governments.
And yet, beyond the odd pilot project or piecemeal reform, little of what I’ve described has actually been put in place. Health care in Canada is organized and run, depressingly, much as it was 20 years ago. The system is hurtling toward the rocks, yet its operators remain grimly lashed to the wheel, seemingly unable to change course.
This is a common refrain in public policy circles – “It’s not that we don’t know what to do. It’s that we don’t know how to get it done” – and for much the same reasons. The gains from health care reform are spread across the public, each of whom may see their personal stake in the issue as slight. The costs, however, are concentrated – among doctors, disinclined to accept a different role or incentive system; among hospital administrators, who have enough trouble on their hands with their unionized staff without having to face competition from private clinics; and so on.
Caught in the middle are the hapless elected officials, the ones who are supposed to drive reform. You see the problem. As the economist Ake Blomqvist argues in a recent paper for the C.D. Howe Institute, “for politicians with a time horizon that depends on the election cycle, trading off short-term controversy for widely diffused and uncertain long-term gains does not look like an attractive proposition.”
It is time, then, to give up. The system, as such, cannot be reformed: the past 25 years are proof enough of that. It is simply impossible to expect elected politicians to drive the kinds of detailed reforms described above, however much evidence there may be behind them. It might be possible, however, to outsource the job to health care consumers.
Mr. Blomqvist outlines a process that begins with setting up, not a parallel private system, but a parallel public one: one built on more modern lines. Consumers would be given the option of sticking with the current, unreformed plan or enrolling in the new one, taking their share of public funding with them.
In time, as people got used to the idea, it might be possible to open the competition to private plans, but under the same rules as the public plans: open enrolment, no user fees, no discrimination on the basis of prior conditions etc., the system known elsewhere in the world as “managed competition” – competition, that is, on the basis of who can manage resources more efficiently, not who can exclude the hard-to-treat or the down-at-heel or otherwise game the system.
Sound like a non-starter? A hard sell, politically? You got a better idea?
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Andrew Coyne