Neat, Plausible, and Wrong: The Myth of Health Care Unsustainability
(Released February 28, 2011)
The “Sustainability” Myth
The assertion that Medicare is “unsustainable” has been repeated so many times[1] that in some circles it has become accepted as indisputable fact. Critics[2] of Medicare assert that the cost of our public health care system is growing at an alarming pace. They are joined by provincial Premiers who are concerned that health care is taking up an increasing proportion of provincial budgets.[3] They claim that the cost of health care is rising faster than the pace of inflation and taking up an increasing share of provincial budgets. Extrapolations of future costs, based on these trends, lead to alarming assertions that health care could consume 70% of provincial tax dollars by 2022[4] and 80% of provincial budgets by 2030[5]. Critics warn that the depth of the crisis will inevitably increase, with a tidal wave of health care demand sweeping across the nation as baby boomers become seniors and overwhelm the system. With this supposed crisis looming, provinces have been forced, say critics, to reduce commitments to education[6] and municipalities[7].
These fears consistently lead to the claim that the only “adult” response is to break with what has for many decades been a fundamental priority in Canadian political life: the preservation of universal, publicly funded health care. Pundits claim that governments must “relinquish their monopoly over the market for medical insurance … raising funds from the private sector through private insurance, co-payments for publicly insured medical services, and deductibles linked to utilization”.[8] In short, critics assert there is no way forward but a repeal of the legislation that preserves our health care system – the Canada Health Act.
Without such changes, critics tell us that governments will need to ration health care by increasing wait times and barriers, and by cutting quality, to make ends meet until they finally face “the facts”.[9]
While this argument is sufficiently compelling to have won it widespread repetition in newspaper reports and public commentary, it is not substantiated by the available evidence. In fact, it flies directly in the face of most reliable data on health care. As the flurry of media coverage and public debate accelerates around this cavalcade of inaccurate platitudes, it is hard not to be reminded of what H.L. Mencken warned many years ago, “There is always an easy solution to every human problem – neat, plausible, and wrong.”[10]
Download the full report: Neat, Plausible, and Wrong: The Myth of Health Care Unsustainability
Health Care System Sustainability
(released at the CMA General Council - August 24, 2010)
The ‘S’ Word: Sustainability
Increasingly the health care debate in Canada is being framed by the issue of “sustainability,” a concept that can be helpful, but also misleading and potentially harmful if misused. The notion of sustainability is sometimes helpful when discussing costs and, more importantly, value for money in health care. We all agree that the health care system needs to be reformed, not only to ensure that it is “sustainable,” but also to improve population health and the health care experiences of people in the system. We need to be aware, however, that many proponents of for-profit private care work from the assumption that because health care costs are increasing, the system is therefore “unsustainable.” According to this view, because the system is “unsustainable,” we need to accept the necessity of private funding and abandon the Canada Health Act. This argument is unsound.
Download the full report: Health_Care_System_Sustainability.pdf
The Sustainability of Medicare
Simply shifting costs from governments to individuals does not make a healthcare system sustainable, even if it helps governments “control” spending. It simply downloads the cost of health care to individuals.
Why is there a debate about the sustainability of Canadian health care?
Some government, business and physician leaders have said we should expand the role of the private sector in the financing and delivery of health care, arguing that our current system of Medicare is not sustainable because of increasing costs; in particular prescription drugs, new technologies and pressures from an aging population.
However, there is strong evidence that a shift from our publicly funded system to private forprofit funding and delivery of health care would not improve sustainability, and would adversely affect overall health care system cost, efficiency, equity and accessibility.
What is sustainability?
A sustainable health care system is one that we as a society can afford now and in the future, and that provides good value for the money we spend on it. It means being able to ensure that Canadians receive high-quality care for a full range of health needs based on need and not ability to pay, within an agreed-upon framework of medically necessary insured services.
The argument that shifting more of the costs of health care from governments to individuals will make the system more sustainable is false. A shift may help governments “control” their spending, but it would have negative impacts on health care in terms of overall costs, quality and accessibility.
In this sense, the sustainability debate is really about how we should pay for health care, how services are allocated, and whether service should be provided through public funding based on need - or private financing based on the ability to pay, which would benefit the wealthy, some physicians, insurance companies and investors.
Health care costs in Canada are not spiraling out of control
It is true that we spend more on health care today than in the past, but the claim that health care is taking over the government budget is misleading. Spending is increasing as a proportion of government spending but this is because of decisions governments made in the late 1990s to cut taxes and to reduce spending in other areas like education and social services, and does not represent a true increase.i In other words, health care appears to represent a bigger part of the pie because the pie has been shrunk. It would not be dominating budgets if tax rates had been maintained and spending on education and social services strengthened.
In terms of real spending based on national wealth, between 1970 and 2006, total spending on health care from private and public sources rose from 7% to 9.8% of GDP, with similar or larger increases occurring in all high income countries. It is estimated that this rate of growth is affordable for decades to come.ii
What about adding more private funding and insurance and reducing public spending?
In Canada, 70% of health care comes from the public purse; the remaining 30% from private health insurance or ‘out of pocket’ payments for services like prescription medicines, dental services and home care. Most OECD countries cover services such as these, and publicly fund more than 70% of overall health care costs.
Supporters of increased private funding argue that if we allow private insurance for medically necessary hospital and physician services, wealthier patients will be able to pay for care in private clinics, freeing up the public system for the rest of us. However, the evidence suggests otherwise:
• Australian data shows that establishing a parallel private insurance systemiii increases wait times in the public system as nurses and doctors move to the private system. This is especially true in places like Canada with a shortage of health care professionals.
• Numerous studies show that privatization introduces inefficiency because of the heavy administrative costs associated with complicated accounting and billing schemes. The U.S., a country with a huge number of payors for health care, spends 30 cents of every health care dollar on administration.
• Leaving patients to pick up the tab does not control health care costs, it simply downloads costs to citizens. This might make Medicare more affordable for the government, but it would be less affordable for average Canadians and would thus threaten the principle of equity on which our system is founded.
Does this mean we should not be concerned about health care costs increasing?
It would be foolish to think that our publicly funded health care system does not need improvement simply because it is affordable for the foreseeable future. While most people who use the system report excellent service, there are significant inefficiencies and long-term challenges that must be addressed. Furthermore, regardless of how much we spend, or can afford to spend, if we are not getting appropriate access to high quality care that actually improves the health of our population, we need to do better.
To improve value for money, increase cost efficiency and thus enhance the sustainability of Medicare, governments should:
1. Develop a public prescription drug program so that governments can negotiate with pharmaceutical companies for reasonable drug costs
2. Shift the focus from expensive hospital-based care to primary care, health promotion, disease prevention, and the social and economic determinants of health
3. Optimize the use of - and collaboration between - highly trained health professionals
4. Accelerate information technology solutions such as integrated electronic health records
5. Make strategic capital investments in equipment and buildings
6. Use health technology assessment to channel funding toward true innovation rather than well marketed gimmicks and me-too technologies with no added value
7. Address the shortage of health professionals
8. Improve physician and hospital funding mechanisms to encourage more appropriate delivery of care
Conclusion
Both the Canadian Medical Associationiv and the Romanow Commissionv concluded that private insurance would not improve access to publicly insured services, lower costs, or improve quality of care. Demographic changes and other cost pressures mean that we need to look seriously at health care in Canada. But increased privatization would mean that Canadians would pay more overall, and would likely see reduced access and poorer quality care. Canadians have expressed a strong desire to maintain the fundamental aspect of Medicare - providing care based on need, and not ability to pay. Thus based on the evidence, and Canadians’ attachment to Medicare, our focus should be on how to get the most efficient and highest quality health care value for our public dollars.
i Dhalla, I. Canada’s Health Care System and the Sustainability Paradox. CMAJ, July 3, 2007; 177
ii Dhalla
iii Duckett, S.J. Living in the parallel universe in Australia: public Medicare and private hospitals, CMAJ 2005; 173:745-747
iv Canadian Medical Association, It’s about access! Informing the debate on public and private health care, June 2006
v Building on Values. The Future of Health Care in Canada, November 2002. (The Romanow Report)
