Health Care System Financing: Canada versus Best Practise

1. Health Care System Financing:Canada versus Best Practise Presentation at the Conférence de Montréal June 11 2014 Peter Jarrett OECD Economics Department peter.jarrett@oecd.org

2. Some features of the Cdn health care system Medicare • Drugs, dentistry and community therapies not covered • No patient co-payments/deductibles, i.e. no price signals • Private financing generally prohibited In general • Lack of cost-saving incentives • Gaps in information • Decentralised to provinces and below • Spends most on prevention and public health Some consequences • Strong, UK-style equity in Medicare (narrow but deep coverage) • US-style inequity in non-Medicare (high out-of-pocket and private insurance costs) • No possibility of physician “dual practice” (unlike UK) • Medicare services effectively firewalled from private competition (unusual) • Long and locationally variable wait times

3. Canada suffers from long wait times Waiting time of four months or more for elective surgery

4. Main pressure points are in non-Medicare Percentage of GDP

5. There is no one most efficient health system

6. Hospital funding: mostly global budgets

7. Heath care reform recommendations Promote cost containment • Eliminate zero patient cost sharing for core servicesby allowing co‑payments and deductibles. Clarify the CHA to facilitate provincial experimentation with private entry of hospital services and mixed public/private physician contracts. Contracting out occurs in some cases, but extra billing and user charges still not allowed. • Replace historical‑based cost budgeting of RHAs by one based on a formula, and devolve integrated budgets for hospital, physician and pharmaceutical services to RHAs. Ontario has decided to move in this direction as BC has already done. • Introduce an element of capitation or salary for doctor payment with fees regulated by RHAs. The latest figures show that alternative payments to fee for service are 28.7% of the total. • Move to activity‑based (e.g. DRG) budgets for hospital funding,contracting with private and public hospitals on an equal footing. Ontario is phasing in Health System Funding Reform: hospitals will get only 30% of their income from global budgets and 70% on volumes and quality. BC and Québec also have an element of activity-based funding. • Allow competition to drive generic drug prices to internationally comparable levels. 7

8. Health care reform recommendations (cont.) Promote access • As finances permit, include essential pharmaceuticals in a revised public core package. • Remove tax exemptions for employer-provided private health insurance (PHI) benefits. Regulate PHI to prevent cream‑skimming and adverse selection. Promote quality • Accelerate ICT applications in health care, starting small‑scale if necessary. 55% of Canadians had an electronic health record by end-2013. • Encourage provinces to provide better health‑system analysis and performance data. • Charge a pan‑Canadian, independent agency with monitoring and analysis of health‑care quality.