Health Care Series of Commentaries

Canada’s health care system could become an unsustainable tax burden in the future if changes are not enacted in the near term


The purpose of this project was to inform policy debates by compiling and communicating a series of health policy projects by esteemed researchers. The project tackled such themes as, “Will the Boomers Bust the Health Budget?” and “Managing Medicare: The Prerequisite to Spending or Reform.” Following the publication and communication of the research, policy round-table discussions were held in Calgary, Toronto, Halifax, Vancouver, and Edmonton. The project resulted in widespread coverage of the reports in the mainstream media, including Maclean’s Magazine, the Calgary Herald, The Globe and Mail, The National Post, and the Ottawa Citizen.

Grant Outputs

Funding Public Provision of Private Health: The Case for a Co-payment Contribution through the Tax System –

This report proposes leveraging up to 3% of family income tax – based on how much or how frequently the health care system is used – in order to make financing the health care system more fair. Under this system, families would pay a percentage of their income tax only if they accessed the Medicare system. For families living in extreme poverty – earning less than $10,000 per year – no fee would be paid. The report suggests that approximately 63% of Canadians would pay the full 3% levy, but people who accessed the health care system very little or not at all, would not be expected to pay for services that they did not use. The authors hypothesize that if this scheme had been in place in 2000, $6.3 billion government dollars would have been saved, which could have been reinvested into the healthcare system. This report concludes that with financial incentives in place, more patients would pursue preventative health measures, decreasing waiting times and removing some of the operating pressure from the existing system which would improve services for those in need.

Canadian Health Care in a Global Context: Diagnosis and Prescriptions –

This report tackles some of the systemic problems facing the Canadian medicare system by outlining improvements that have been implemented in other jurisdictions including the United States, Sweden, and the United Kingdom. As problems, it identifies too much centralization of decision-making, too little innovation, a lack of consumer choice, and poor integration of services between hospital care, physician practices and drug provisioning. The report deems federal-provincial cost sharing for health services counterproductive because it clouds accountability. This report concludes that some reforms that had been successful in other national contexts could be applied to Canada, such as the use of rostering (allowing patients to only see the doctor whose list they were registered on in any given contract period) and capitation (where doctors received a fixed sum of payment for each patient registered to them, regardless of the number of visits by the patient.)

Integrating Canada’s Dis-Integrated Health Care System: Lessons from abroad –

This report targets the issue of Canada’s poorly integrated health care system. The authors suggest a number of potential reforms that would encourage competition between institutions and better link the various levels of care based on patient needs. The report makes four specific recommendations: giving regional health authorities more discretion over their spending, converting hospitals into independently funded enterprises with enhanced powers over staffing and a mandate to compete to provide regional services, putting more funds into the hands of primary care doctors, and putting funds in the hands of health care consumers to make them more active participants in cost-benefit decisions.

Managing Medicare: The prerequisite to spending or reform –

This commentary suggests that the first step to any health care reform should be to review the cost-benefits of the range of medical treatments. It recommends program budgeting and marginal analysis (PBMA), which could be used by regional health authorities to identify where finite health care funds should be directed. This economic system would consider every medical process on a cost-benefit basis, limiting costly services that do not result in sufficiently significant medical outcomes in order to redirect funds elsewhere. The report concludes that health care funding allocation will always be finite relative to the areas where spending could be increased.

Towards a Consensus on Continuing Chaos –

This commentary addresses the issue that healthcare spending has increased much faster than the national economy, creating pressures on governments. Faced with deficits, governments have curtailed funds allocated for healthcare in uneven and uncoordinated ways, resulting in intergovernmental tensions. This report suggests three steps to more effective joint partnership in funding and managing the existing health care system. The first would be to develop a more constructive partnership between provincial and federal governments. The second would be to improve performance and service quality by developing a governance philosophy that empowers health service personnel while maintaining expectations of high performance. The final step would be to develop a long term plan based on the assumption of increased future financial investments in healthcare. This final step would require governments to explicitly determine a method for dealing with unanticipated requirements in excess of assumptions, including making only one of the parties accountable for increases over the projected budget.

The Charter and Health Care: Guaranteeing Timely Access to Health Care for Canadians –

This commentary examines the possibility that the current functioning of the medical care system is vulnerable to a constitutional challenge. The current medical system seeks to provide medically necessary services through the publicly funded system, and simultaneously prevents through legislation the purchase of equivalent services outside of that system. The report consideres the possibility that under section 7 of the Charter of Rights and Freedoms, which protects the right to life, liberty and security of the person, that the failures and wait times experienced in the universal health care system may represent a constitutional violation. The report concludes that Canadians are forced to wait for medically necessary services to the detriment of their health, and are legally deterred from pursuing private health care alternatives elsewhere. Consequently, the future of the existing system may rely on either tax increases and greater investment in health care, or the development of a two-tiered system, as wait times may be shown to violate the constitutional rights of Canadians.

For the Good of the Patients: Financial Incentives to Improve Stability in the Health Care System –

This commentary reviews four healthcare proposals that have been put forward since 1970 to improve healthcare service delivery by introducing a free market. These proposals suggested placing a special tax on health care benefits, establishing a deduction from taxable income, developing a credit against taxes payable or the development of a medical savings account (MSA) system. The commentary suggests that historically, efforts to improve the Canadian healthcare system have been directed at leveraging more funding for the system and developing administrative and organizational reforms. It argues that the focus should not be on increasing funding alone, but also on narrowing the gap between spending levels and performance. The report recommends introducing a credit against which health costs could be charged for tax purposes, along with a modest corridor of private health service delivery.

Will the Baby Boomers Bust the Health Budget? Demographic Change and Health Care Financing Reform –

This commentary provides a possible means for dealing with the long term pressure on the healthcare system that will be caused by the aging baby boom generation. It first considers the fact that populations in different provinces have different demographics, meaning that some will have a greater burden than others. It suggests that this will result in ad hoc financial transfers between Ottawa and the provinces, resulting in a less sustainable long term system. To avoid this, the report recommends that Canadians start pre-paying for future health care costs by revising some existing Canadian Health and Social Transfer (CHST) payments. The proposed system would pay provinces $3,000 per person over 65 (the rate would be indexed to inflation), so that provinces with the most quickly aging population would receive the proportionally necessary funds.

Saving for Health: Pre-Funding Health Care for an Older Canada –

This commentary suggests that the demographic changes that will occur in the coming half represent an unfunded liability in terms of health-sector costs and service utilization amounts. It suggests that costs could rise to 50-80% of the national GDP and put undue pressure on the younger generation to support the health costs of the baby boom generation. To avoid a situation where tax payers in the future are contributing more to the health system than the baby-boomers saw fit to contribute themselves, this report suggested three possible prefunding measures. These included implementing a federal senior’s health grant, developing a one-time initial investment that would prefund the entire provincial health budget, or a prefunded drug program geared to age. These three possible systems, while costly in absolute terms, represent possible health investments that Canadians might be willing to invest in the future.

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