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
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
Canada suffers from long wait times
Waiting time of four months or more for elective surgery
%
2001-02
2005
2007
2010
50
41
40
,38
33
30
30
,27
27
,26
25
22
20
,23
21
21
19
20
1818
13
10
8
7
8 8
7
,5
7
7
5
6
5
0
0
Main pressure points are in non-Medicare
Percentage of GDP
There is no one most efficient health system
Hospital funding: mostly global budgets
Hospital
Public
Private (notfor-profit)
Private (for
profit)
AUS
DRG
Procedure service payment
Procedure service payment
CAN
Global budget
Global budget
Global budget
DNK
Global budget
n.a.
DRG
FIN
DRG
ISL
Global budget
n.a.
n.a.
IRL
Global budget
Global budget
ITA
Global budget
DRG
DRG
NZL
Global budget
n.a.
n.a.
NOR
Global budget
Global budget
DRG
PRT
Global budget
Procedure service payment
Procedure service payment
ESP
Line item remuneration
Global budget
SWE
Global budget
Global budget
Global budget
GBR
DRG
Procedure service payment
Retrospective
Heath care reform recommendations
Promote cost containment
1. Eliminate zero patient cost sharing for core services by 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.
2. 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.
3. 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.
4. 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.
5. Allow competition to drive generic drug prices to internationally comparable levels.
7
Health care reform recommendations (cont.)
Promote access
6. As finances permit, include essential pharmaceuticals in a revised public core package.
7. Remove tax exemptions for employer-provided private health insurance (PHI) benefits.
Regulate PHI to prevent cream-skimming and adverse selection.
Promote quality
8. Accelerate ICT applications in health care, starting small-scale if necessary. 55% of Canadians
had an electronic health record by end-2013.
9. Encourage provinces to provide better health-system analysis and performance data.
10. Charge a pan-Canadian, independent agency with monitoring and analysis of health-care
quality.