Top economist warns Canada against two-tiered health care

Canada should remain committed to publicly funded health care, and not open the door to two-tier medicine, says a new report by a top economist.

Governments can improve efficiencies in the system, including changing the way doctors are compensated, without allowing patients to pay for some services, Don Drummond, former chief economist at Toronto-Dominion Bank said in the report released on Thursday.

“A great deal can be done to improve efficiency in the system before privatization is considered,” Mr. Drummond says in the report prepared for the C.D. Howe Institute. “It seems best to simply leave this issue aside for the moment.”

The report, titled Therapy or Surgery? A Prescription for Canada’s Health System, amounts to a staunch defence of Canada’s public health-care system that guarantees universal coverage for many services, including hospital care and prescription drugs for the elderly.

It will likely provide a road map for reforms to health care in Canada’s most populous province. The economist is conducting a review of all program spending in Ontario.

Mr. Drummond’s report for the Ontario government will not be released until early next year. But he says the government won’t meet its commitment to erase the province’s deficit by 2018 unless it caps annual growth in spending on health care, education and other programs at 1 per cent for the next six years. The province is facing a projected deficit of $16-billion this year.

Reducing spending will not be easy. Canadians spent $192-billion on health care in 2010, accounting for just under 12 per cent of the country’s economic output or GDP, the report says. In Ontario alone, government spending on health care has climbed an average of 7.6 per cent a year over the past decade.

The grim reality is that provincial revenues will not grow fast enough to offset rising health-care costs, the report says. The report is the latest foray into public policy by Mr. Drummond, one of Canada’s most influential advisers to governments. In a report last year, he warned that left unchecked, health-care costs are set to reach between 70 to 80 per cent of total program spending by 2030, up from just over 40 per cent today.

In the earlier report, Mr. Drummond and TD Bank economist Derek Burleton proposed that the provinces bill affluent seniors for their drugs and pay doctors based on the quality and cost-effectiveness of their care.

Mr. Drummond returns to those themes in his latest report. He recommends that the provinces overhaul the payment system for doctors by lowering fees in lockstep with improvements in technology that allow them to perform many procedures, including cataract surgeries, more quickly.

The McGuinty government is considering such changes in the next round of contract talks with the Ontario Medical Association. The OMA contract expires in March.

Mr. Drummond also recommends changing the compensation system for doctors. About 80 per cent of doctors’ compensation in Canada consists of fee for services. Blended payment systems, consisting of 70 per cent salary and 30 per cent fee for service are likely best, the report says.

Canadians could receive better value for the money they spend on health care if nurse practitioners or physician assistants performed some tasks now done by doctors, the report says. As well, practical nurses could take on some duties now done by registered nurses.

Mr. Drummond also says there is a role for the private sector in the health-care system as long as its services are paid for out of the public purse. Canada needs more clinics dedicated to one medical procedure, such as cataract surgeries, that produce better care for less money.

Although these clinics are privately operated, they bill the public medicare system for their services.

In the absence of federal leadership, the task falls to the provinces to reform health care, the report says. Mr. Drummond criticizes the federal government for its response thus far to the federal health accord, which expires in March, 2014. All Prime Minister Stephen Harper has done, he said, is promise to extend the annual six per cent increase in transfer payments to the provinces for another two years.

“The federal government walks on eggshells in this provincial domain and will continue to be happy to leave the messy parts to the provinces,” he says.

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Source: Globe&Mail