The Fiscal Sustainability of Universal Health Care in Canada
Gregory P. Marchildon, Ph.D.Canada Research Chair in Public Policy and Economic History
Johnson-Shoyama Graduate School of Public Policy, University of Regina, CANADA
Fiscal Space and the Financing of Universal Health Care Systems in the AmericasPAHO/WHO Regional Workshop, Washington, D.C., November 29-30, 2007
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The Many Worlds of Fiscal Sustainability
• Originates from Latin: to hold or support• Achieving balance by not depleting or destroying
existing resources• Having a sufficient and dependable revenue
stream to finance expenditures• Romanow Commission (2002): sufficiency of
resources necessary to provide citizens with timely access to quality health services Long-term Evolving health needs
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Universal Health Care
• Balance of resources necessary to fund a basket of public health care services available to all citizens on the same terms and conditions
• Resources = $ + L + K (= $ ?)• Categorical versus universal• Benefit entitlements versus citizen rights• Definition of public health care• Definition of same terms and conditions
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5
Organization of the Public System in Canada
Constitution Act, 1982
Provincial and Territorial Governments Federal GovernmentCanadian Institutes
for Health Research
Statistics Canada
Minister of HealthRegional Health
Authorities
Ministries of Health
Mental Health and Public Health
Home Care and
Long-Term Care
Single Payer
Hospital, primary care and physician Services
Canada Health Act,
1984
Health Canada
Public Health Agency of Canada
Patent Medicine
Prices Review Board
Provincial and Territorial Prescription Drug Subsidy Programs
Federal-Provincial-Territorial Advisory
Committees and Councils
Transfer payments
Canada Health
Infoway
Canadian Agency for Drugs and
Technologies in Health
Health Council of
Canada
Canadian Institute for
Health Information
Canadian Blood
Services
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Public, Mixed and Private Systems of Health Care
Funding Administration DeliveryPublic Canada Health Act services (hospital and physician services plus) and public health services
Public Taxation Universal, single-payer provincial systems. Private self-regulating professions subject to provincial legislative framework
Private professional, private not-for-profit, private-for-profit and public arm’s-length facilities and organizations
Mixed goods and service, including most prescription drugs, home care and institutional care services
Public taxation, private insurance and out-of-pocket payments
Public services that are generally welfare-based and targeted, private services regulated in the public interest by governments
Private professional, private not-for-profit and for-profit, and public arm’s-length facilities and organizations
Private goods and services including most dental and vision care as well as over-the-counter drugs and alternative medicines
Private insurance and out-of-pocket payments including full payments, co-payments and deductibles
Private ownership and control; private professions, some self regulating with public regulation of food, drugs and natural health products
Private providers and private for-profit facilities and organizations
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Overview of Canadian Health System: Expenditure Perspective
Private Sector30.4%
Private Health Insurance
12.2%
Other3.2%
Dental and vision care, complimentary and alternative medicine, and some
long term care and home care
Out-of-Pocket Expenditures
14.4%
Commercial Insurance Firms
Not-for-Profit Insurance Firms
Public Sector69.6%
Provincial GovernmentSector63.3%
Hospitals
Long-term Care
Other Public Sector6.3%
Federal Direct4.2%
Municipal(Public Health)
0.7%
Community Care
Social Security Funds1.4%
Quebec Drug Insurance Fund
Physician Remuneration
Provincial Drug Plans
Home Care
Regional Health Authorities
Total Health Expenditures 2005$142 Billion
Worker’s Compensation
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Public, Mixed and Private Systems of Health Care
Funding Administration DeliveryPublic Canada Health Act services (hospital and physician services plus) and public health services
Public Taxation Universal, single-payer provincial systems. Private self-regulating professions subject to provincial legislative framework
Private professional, private not-for-profit, private-for-profit and public arm’s-length facilities and organizations
Mixed goods and service, including most prescription drugs, home care and institutional care services
Public taxation, private insurance and out-of-pocket payments
Public services that are generally welfare-based and targeted, private services regulated in the public interest by governments
Private professional, private not-for-profit and for-profit, and public arm’s-length facilities and organizations
Private goods and services including most dental and vision care as well as over-the-counter drugs and alternative medicines
Private insurance and out-of-pocket payments including full payments, co-payments and deductibles
Private ownership and control; private professions, some self regulating with public regulation of food, drugs and natural health products
Private providers and private for-profit facilities and organizations
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Universal Health Expenditures in as a Share of Total Health in Canada, 2007
Private Sector $47.1b 29.4%
Other Public Sector $3.5b 2.2%
Federal Direct$5.7b3.6%
Provincial/Territorial $103.8b 64.8%
CHA$
61.3%
Non-CHA$31.9B 31.7%
Medicare$67b
41.8%
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Trends in Health Expenditures, 1976-2005
Five-Year Averages 1976-1980
1981-1985
1986-1990
1991-1995
1996-2000
2001-2005
Total health expenditure (THE) as % of GDP 7.0 8.0 8.5 9.6 9.0 10.0 Canada Health Act (CHA) services as % of THE 58.1 56.7 55.4 51.7 46.2 43.3 CHA services as % of GDP 4.1 4.5 4.7 5.0 4.2 4.3 Non-CHA services as % of THE 41.9 43.3 44.6 48.3 53.8 56.7 Non-CHA services as % of GDP 2.9 3.5 4.7 4.6 4.9 5.7 Mean annual growth rate in THE 12.8 12.4 8.9 4.0 5.8 7.7 Mean annual growth rate in CHA services 11.6 12.2 8.2 1.8 3.8 6.8 Mean annual growth rate in non-CHA services 14.6 12.7 9.8 6.3 7.5 8.4 Mean annual growth rate in GDP 12.6 9.1 7.0 3.6 5.8 4.8 Mean real annual growth rate in THE 3.3 4.2 4.0 1.6 4.0 5.2 Mean real annual growth rate in CHA services 2.2 4.0 3.3 -0.5 2.1 4.3 Mean real annual growth rate in non-CHA services 4.9 4.5 4.8 3.9 5.7 5.9 Mean real annual growth rate in GDP 3.6 3.1 2.3 2.0 4.3 2.5
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Real Growth Trends, 1976-2005
Average Growth Rate(in percent per year)
Medicare 2.6 %
Non-Medicare 5 %
GDP 3 %
Total Health care expenditures as a share of GDP in Canada and selected countries, 1960 to 2002
0
2
4
6
8
10
12
14
1619
60
1970
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
% o
f GD
P
AUST CAN FR SWE UK US
Public Health Care Expenditures as a share of GDP in Canada and selected countries, 1960 to 2002
0
1
2
3
4
5
6
7
8
919
60
1970
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
% o
f GD
P
AUST CAN FR SWE UK US
Comparative Health Status Indicator Rankings (OECD rankings in brackets)
Life Expectancy at
Birth(1999)
Potential Years of LL per 100,000
(1997)
Perinatal Mortality per
100,000 (1999)
DPT Immunization% of Children
(1997)
Measles Immunization% of Children
(1998)
SWEDEN 1 (4) 1 (1) 2 (7) 1 (2) 1 (6)
CANADA 2 (5) 2 (8) 3 (13) 4 (22) 2 (7)
AUSTRALIA 3 (7) 3 (9) 1 (3) 6 (25) 5 (18)
FRANCE 4 (8) 5 (15) 4 (17) 2 (8) 6 (19)
UK 5 (18) 4 (10) 5 (18) 3 (18) 4 (15)
USA 6 (20) 6 (22) 6 (20) 5 (23) 3 (13)
Comparative Disease Indicator Rankings (OECD rankings in brackets), 2000
Malignant Neoplasms
(2000)
Cerebro-vascular
Diseases (2000)
RespiratorySystem
Diseases(2000)
IschaemicHeart
Diseases(2000)
SWEDEN 1 (2) 5 (11) 1 (4) 4 (16)
CANADA 4 (15) 1 (2) 3 (10) 3 (12)
AUSTRALIA 2 (8) 4 (5) 4 (12) 2 (11)
FRANCE 5 (18) 2 (3) 2 (8) 1 (3)
UK 6 (20) 6 (18) 6 (25) 6 (22)
USA 3 (14) 3 (4) 5 (22) 5 (21)
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Comparatives Trends in real PUHE, PRHE, and THE, cumulative % change, 1990-2001
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Nature of Regionalization Reforms
• Had been urged for decades before by policy experts
• Fiscal crisis of early 1990s finally pushed most governments to act
• “Big bang” structural change• Little idea of actual consequence: i.e. a
high level of uncertainty
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Stated Policy Goals: Regionalization
• Better align resources with population needs• Integrate planning and management of services• Shift emphasis to illness prevention and health
promotion (from acute care)• Improve service quality and EBP• Provide accountability for “system”• Increase public participation
Source: Lewis and Kouri (2004)
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Current Debates
• Fiscal sustainability• Federal-provincial conflict• HHR shortages and wait time pressures• Public-private boundaries
– Chaoulli decision in Supreme Court and role of private health insurance
– Private delivery and contracting out
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Underlying Fiscal Sustainability Challenges
• Transformation of primary health care• Effective management and policy/program
experimentation at RHA level• Prescription drugs: major cost driver
Countervailing powerPrescription and utilization behaviour
• Electronic (patient) health records
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2001 - % Excellent or Good
2003 - % Excellent or Good
BCABSKMBONQCNBNSPEINLYKNTNU
CANADA
84.083.685.680.384.585.082.885.389.688.981.780.570.884.4
82.885.788.485.687.189.086.987.388.686.185.379.177.186.8
Political Sustainability: Public Satisfaction
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Concluding Observations
• Canadian Medicare and European v. US trajectory
• Evidence from introduction of more recent universal health care systems
• The revenue and responsibility challenge• Public financing of universal health care
and the choices available