36 Healthcare Management Forum Gestion des soins de santé

poll tax is defined as one where everyone pays a fixed amount,regardless of age, sex, income or wealth. There is a proposition ineconomics that states that a poll or head tax (also called capitation) isthe most efficient tax. It does not interfere with market processeswhich are responsible for delivering goods and services to theconsumer, and it is incentive-free.

The poll tax does not coincide with everyone’s view of “fair”; rich andpoor pay the same amount. Despite this, it has been used twice in theUnited Kingdom – by John of Gaunt in the 14th century and MargaretThatcher in the 20th. The poll tax was not wildly popular in eithersituation; it led to the Peasant’s Revolt in 1381, and it was replaced bya slightly different tax in England in 1992.

When it comes to incentives, the capitation payment to health regions has somesimilarities to the poll tax. The region receives a payment that is based on, butcannot be affected by population characteristics of the region, including age, sex andincome. This payment provides the financial resource with which regions pay forhospital care, public healthcare and some continuing care. How services are used(for example, the resulting hospitalization rates and lengths of stay) will not beaffected by the capitation rate. The capitation rate is considered to be “fair”, butit does not address resource movement, and hence efficiency, in any way.

The Regional Health Authorities (RHAs) were introduced into Canada in the mid1990s, and indeed in many countries about that time, as look-alikes to theAmerican Health Maintenance Organization model. There was a hope that thenew payment system would encourage regions to spend more on healthmaintenance and public health activities, with associated benefits to populationhealth status, and perhaps result in some savings due to lower utilization. Butthere is no component of the Canadian capitation formula that will bring thisabout. The regional capitation payment is merely a poll tax in reverse. At the sametime, the Canadian capitation payment is very different from its Americancounterpart, the forerunner of this type of payment system. In the United States,the capitation payment is a competitive tool; Health Maintenance Organizations tryto attract new members by lowering their costs (e.g., reducing hospitalizationsand stays) and adjusting their rates. But the environment in Canada under whichcapitation payments are made is totally different from that in the United States.The Canadian payment system does not seem to have brought on efficiencies –nor should we have expected that it would – and the healthcare system is nowfaced with long waiting lists, a problem shared by many countries with primarilygovernment systems.

There is a movement in Canada towards a primary care model that integratesphysician, nursing and other care into an extension of the Canadian capitationmodel. It is hoped by those who propose it that such a system will bring aboutmore prevention and better health. However, no explicit incentives that will bringabout these virtuous outcomes exist in the new primary care model. It is thereforedifficult to see how this change will affect our fundamental healthcare problems,any more than did the capitation system. Northern European countries that havemoved much further along the road towards this model are faced with the sameproblems as we are. If problems associated with shortages are to be solved in anyway other than more money, incentives, public or private, will have to be recognized.

MEMBERS SPEAK OUT

Incentives and Regional Paymentsby Philip Jacobs

Philip Jacobs, BCom, DPhil,is an economist andaccountant, and aprofessor in the Departmentof Public Health Sciencesat the University of Alberta.His research is in theareas of healthcarefunding and the economicevaluation of healthservices and programs. A

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