28/08/2012

1

COURTS AS GAME CHANGERSIN HEALTH POLICYColleen M. Flood & Ryan MacIsaacFaculty of Law, University of TorontoFor Queen’s International Institute on Social PolicyAugust 20-22, 2012

1. Canada’s Health Care Silos

PUBLIC• Hospitals• Physicians

PRIVATE• Rx Drugs• Dental care• Vision care

28/08/2012

2

The “not really” “single-payer” system • 70% public, 30% private• 65% of Canadians hold

private health insurance (PHI)

75.9% 74.5%69.9% 70.3%

24.1% 25.5%30.1% 29.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

f

Public Private Source: CIHI

2. Tsunamis, Yo-Yos and Friends for Company

28/08/2012

3

Spending Tsunami

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

f20

11 f

Per Capita Health Expenditure, Constant (1997) Dollars, Public vs. Private - 1975-2011

Private

Public

Source: CIHI, National Health Expenditure Trends, 1975 to 2011, data sets (2011)

The Yo-Yo Effect

-4%

-2%

0%

2%

4%

6%

8%

Per Capita Health Expenditure, Annual Percentage Change In Excess of Inflation –1975-2011

Source: CIHI, National Health Expenditure Trends, 1975 to 2011, data sets (2011)

28/08/2012

4

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Health expenditure per capita, PPP (constant 2005 international $) – 1995-2010

CanadaGermanyFranceUnited KingdomAustraliaJapanNew Zealand

At least we have friends for company…

Source: The World Bank

…But could Canada do more with less?

3844

80.7

68

70

72

74

76

78

80

82

84

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Life

Exp

ecta

ncy

Tota

l Exp

endi

ture

on

Healt

h pe

r cap

ita

Health Spending and Life Expectancy

Total expenditure on health, per capita, US$ PPP Life expectancy, Total population at birth, years

28/08/2012

5

3.1 Private-Sector Spending3. Numbers, Policy and Politics

What Does Canada’s Private Sector Look Like?

Source: CIHI

28/08/2012

6

What Does Canada’s Private Sector Buy?

$-

$250

$500

$750

$1,000

$1,250

$1,500

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 f/ p

Per Capita Private Expenditure by Use of Funds, Constant (2002) Dollars - 1975-2011

Other Health SpendingHealth ResearchAdministrationCapitalNon-Prescribed DrugsPrescribed DrugsOther ProfessionalsVision Care ServicesDental ServicesPhysiciansOther InstitutionsHospitals

Source: CIHI, StatsCan

Private-Sector Drug Spending

$-

$50

$100

$150

$200

$250

$300

$350

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(f/p)

2011(f/p)

Per-Capita Private-Sector Expenditure on Prescribed Drugs by Source of Finance, Constant (2002) Dollars - 1988-2011

Out-of-Pocket

Insurer

Source: CIHI, StatsCan

28/08/2012

7

3.2 Public-Sector Spending3. Numbers, Policy and Politics

What Does Canada’s Public Sector Buy?

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Per Capita Public Expenditure by Use of Funds, Constant (2002) Dollars – 1975-2011

Other Health SpendingHealth ResearchAdministrationPublic HealthCapitalPrescribed DrugsOther ProfessionalsVision Care ServicesDental ServicesPhysiciansOther InstitutionsHospitals

Source: CIHI

28/08/2012

8

The Rising Wave of Public-Sector Drug Spending

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Prescribed Drugs as Percentage of Total Public-Sector Health Expenditure - 1975-2011

Source: CIHI

Real Growth in Spending

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Drugs Hospitals Physicians Public Health Other Institutions

Total (Public+Private Sector) Spending – Average Annual Increase in Excess of Inflation, 1975-2011

28/08/2012

9

Feed the Monster vs. Tame the Monster

What Goes Up Must Come Down…?

28/08/2012

10

The Canada Health Transfer (CHT)Take-it-or-leave-it deal:• 6% annual growth until 2016-17; after

2016-17, annual increases most likely around 4%• Parliamentary Budget Officer

predicts this will be “significantly lower” than actual growth in provincial health spending

• NO STRINGS ATTACHED (provinces will get to govern their own misery)

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Total

Per

Cap

ita P

ublic

Hea

lth E

xpen

ditur

e, $ C

AD m

illion

s

Fede

ral T

rans

fer A

moun

ts, $

CAD

milli

ons

Public-Sector Health Expenditure and Federal Health Transfers, Constant (2002)

Dollars - 1981-2009

Fed-Prov Transfers Public-Sector Health Spending

We’ve got no money, so we’ve got to think.

– New Zealand physicist,Ernest Rutherford who

conducted his research at McGill

28/08/2012

11

4. Courts as Game Changers

Patient Protection and Affordable Care Act (a.k.a. Obamacare)

• Individual mandate:• Penalizes Americans who do not

purchase PHI• Upheld by Supreme Court under

Taxing Clause but not Commerce Clause or Necessary & Proper Clause

• Medicaid expansion:• Threatened to withdraw all federal

funding if states didn’t comply• Overturned as unconstitutional;

Supreme Court said that it was coercive “economic dragooning” by the feds

28/08/2012

12

Ireland’s Risk Equalization Scheme

• In July 2008, the Supreme Court of Ireland overturned a risk equalization scheme for private health insurers.

• The decision left a potential market failure without countervailing regulation.

Indian Right to Life Case• In 1996, the Indian

Supreme Court held that the constitutional right to life includes a positive obligation to provide medical facilities

• Monetary award to a man who was taken to 8 different hospitals after a head injury

28/08/2012

13

A Two-Tier Constitution:Chaoulli v. Quebec• 2005 Supreme Court of

Canada decision that a PHI ban (plus long wait times) violated the Quebec Charter of Human Rights and Freedoms• Rights to life and security of the

person violated• Only directly affects Quebec

Chaoulli 2.0:Dr. Brian Day’s Charter Challenge• Chaoulli-like Charter s. 7

challenge to PHI ban by a doctor who runs a private hospital in Vancouver

• Also incorporates a far-fetched Charter s. 15 argument

28/08/2012

14

Chaoulli 3.0• Justice Centre for

Constitutional Freedoms (JCCF) seeking to extend Chaoulli to Alberta, usingthe Charter

• Similar cases are beforethe courts in Ontario and British Columbia…

OMA Charter Challenge:A Possible Restriction on Government’s Ability to Bargain Hard in the Public Interest

• Ontario Medical Association (OMA) Charterchallenge arguing lack of “good faith” bargaining by the Ontario government with respect to the physician fee freeze

28/08/2012

15

International Treaties

• Trans-Pacific Partnership (TPP)

• Comprehensive Economic and Trade Agreement (CETA)

CONCLUSION:• Canada’s commitment to redistribution in health care is not about to collapse, but it is

being slowly eroded by waves of technological change and an aging population

• Provincial governments (and private health insurers) need to tame the monster rather than continue to feed it to expand the social contract but the incentives for this are not strong

• Courts have the potential to be game changers, delivering an external shock that could significantly change the balance of public/private spending and thus the social compact around a one-tier system

• Provincial governments should vigorously defend court challenges that would limit their ability to negotiate “tough” and be alert to the restrictive terms of upcoming free trade agreements

28/08/2012

16