The Health Care 'Discord'

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Appeared in the Winnipeg Free Press, February 23, 2003
Canadians seem to think that our politicians should be responsible for running a transparent and accountable health-care system. However, the first ministers cannot even run a transparent and accountable one-day meeting, namely the First Ministers’ Accord on Health Care Renewal.

According to the prime minister, he’ll be transferring almost $35 billion to the provinces and territories over the next five years. According to the premiers, the amount is only $27 billion.

The numbers don’t really matter, because they will be re-negotiated with the next prime minister. Nor is it likely that the accord will make Canadian health care much better, because more taxpayers’ money is not the answer to our health system’s woes. And there are areas where it is likely to make it worse.

One is home care. It is now conventional wisdom that people should be kept out of the hospital, when possible, and cared for at home, where care is often given by relatives. The accord aims to socialize this by introducing a compassionate care benefit through the Employment Insurance Program and job protection through the Canada Labour Code, for those who need to temporarily leave their job to care for a gravely ill or dying child, parent or spouse.

It’s hard to envision what sort of bureaucracy runs a program that will send you a cheque for taking care of an ill relative. Currently, because unemployment is low, the EI program is not chewing up the federal surplus. However, this new entitlement, which does not appear to have any actuarial analysis behind it, has the potential to demand new taxes quickly, as well as to build up a huge, unfunded liability for the future needs of aging citizens. The federal government will find it difficult to wriggle out of this commitment, requiring it to take funds away from other necessities like newer medical equipment and prescription drugs.

EI is run by Human Resources Development Canada, a department historically out of control. In January 2000, HRDC gained infamy for the billion-dollar boondoggle of disappearing money for job grants. Auditors reported that the department’s paper trail was grossly unsatisfactory, and accusations of political interference kept the scandal in the news for the rest of the year. Be prepared for an epidemic of home-care fraud headlines soon after this program takes off. Once the program collapses, the public-sector unions will wade in with demands that home care only be provided by regulated and unionized workers. Another problem is the proposed common-drug review and catastrophic-drug insurance. Although it is tempting to approve of the common-drug review’s aim of managing the cost of generic drugs, which some evidence shows are comparatively expensive in Canada, letting governments decide the value of any medicine is hazardous to your health. It already takes Health Canada many months longer than regulators in other developed countries to approve medicines for sale. A program that allows provincial Pharmacare managers to collude in denying access to new drugs threatens to repeat the costly experience of British Columbia’s Reference Drug Program, under which the government erroneously thought it could contain costs by restricting subsidies to newer, nominally more expensive drugs.

Canadians in some smaller provinces fall through the cracks when struck with illnesses that demand very expensive prescription drugs. However, this is when private insurance should kick in, coverage that is not forbidden by the Canada Health Act and which pays about a third of Canada’s prescription drug costs already. Instead of a new public program, governments should be working with private health insurers to guarantee a competitive market for properly designed insurance against catastrophic drug costs.

Chances are slim for primary-care reform, whereby family doctors reorganize their practices to include other health-care professionals such as nurse practitioners. Ontario has been trying to create these primary-care networks for a few years now with little success, and an order from on high that half of all Canadians will be enrolled in them is not going to change anything. Because the networks move doctors away from fee-for-service practice, they generally fear that they will lose income and autonomy.

How did the first ministers get the notion that 50 per cent of us want such a reform, anyway? The best way to find out how people want their primary health care delivered is to hand over the primary-care budget to patients, and let the doctors and other health professionals organize to compete for them.

A broader problem is the removal, apparently forever, of the ceiling on equalization payments which, though not related directly to health, were in the Accord anyway. Equalization gives incentives to less-well-off provincial governments to misbehave economically, because the more productive provinces give them a cushion. The ceiling prevents equalization payments from growing out of control if the needs of provinces are greater than the national economy’s ability to feed the federal government. For 2002-2003, the federal government was to make equalization payments of about $10 billion to eight provinces. Equalization needs to be wound down, not ramped up.

In sum, the first ministers’ accord is at best a puff of steam, at worst an expensive blunder in the twisted history of Canadian government health care.

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