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This post seriously misunderstands what is at stake. There can't be a reasonable discussion of health care when there are members of the "reform" side who are arguing bad faith. I have no faith that any attempt at reforming the system won't be a Trojan Horse attempt at defeating principled universality. Better no reform than a Trojan Horse.

Or the unnatural fixation on our "public" system which only applies to doctors and hospitals. It doesn't include out-of-clinic drugs. The meaning of "Physician" is "One who prescribes Physic", physic being another word for pharmaceuticals. As a diabetic I am acutely aware of the limitations of our public system. The NHS in the UK covers out-of-clinic drugs, we don't. We screwed up back in the 1960's when designing our public system but we're to cowardly to admit it.

First, I would point to Mandos' comment as a good reason why politicians know they can get away with sustaining a lose-lose game in avoiding real debate.

Part of the problem is Canadian provincialism and our wish to cling to the erroneous beliefs that (1) we actually have "universal government-run health care", (2) the Americans have/had some kind of free-market system, and (3) Canadians invented socialized medicine, peppermint ice cream, and love.

Kevin Outterson at IE has a post using OECD data, that lends yet more support to the argument that optimal health system design is largely unrelated to being either primarily market-based or primarily government-run. That is hardly surprising, when you consider that every system in the world is in fact a target of a bewildering and straegy-free array of government interventions from price controls to occupational licensure to various types of rationing and administration. So in the context of any developed nation, the question is one of getting a good mix of policies in the right economic context. That is no small feat, but it is better than being limited to either clamming up or being hysterical.

The system--such as it has been--that Americans have had since the 1970s was a lousy one, but the one they are heading towards is equally lousy in different ways. Nonetheless, they have done a decent job at trying to have a public discussion on a very divisive issue. Despite the poor policy outcomes of the past few decades, American policy makers have been better advised and have stimulated more fruitful discussion on health care policy than we have seen in any other developed nation. That is far more than you can say about Canada.

Determinant nailed a key aspect, as I am well aware every time I renew a particular prescription which is also not covered by my employer-linked private insurance.

A key related problem I see is that we don't have sensible metrics for the health care system. For example, if a hospital somehow managed to 'cure' twice as many people with the same resources, I think most of us would consider that a hugely positive thing. But it doesn't make any difference, as far as I can tell, to the hospital's financials or budget. They don't even suddenly appear as "great" on any rankings -- likely because we probably don't want everyone going to the one great place and leaving other hospitals underutilized.

Wait times are also not sensibly thought out. Overall, it seems as though we perceive anything less than 100% utilization as a waste -- which anyone familiar with service and queuing models will tell you leads to longer wait times. The shorter the wait times, the more you will fall away from 100% utilization.

Good, fast, cheap - pick two (a choice most people don't want to face).

Behind all this, of course, is that *every* election issue seems to have a deep grey area behind it. Understanding even one of these might need at least an hour or more of focused reading or research. But voters don't want to (or can't) put that kind of time in, so every candidate summarizes to the sound bite. Moreover, once you understand the grey area better, it often becomes clear that everything is a giant trade-off, and your key problem is getting 30 million people to agree to choose one solution more than it is finding a solution.

On the whole, I think we're doing this to ourselves.

First, I would point to Mandos' comment as a good reason why politicians know they can get away with sustaining a lose-lose game in avoiding real debate.


The system--such as it has been--that Americans have had since the 1970s was a lousy one, but the one they are heading towards is equally lousy in different ways. Nonetheless, they have done a decent job at trying to have a public discussion on a very divisive issue. Despite the poor policy outcomes of the past few decades, American policy makers have been better advised and have stimulated more fruitful discussion on health care policy than we have seen in any other developed nation. That is far more than you can say about Canada.

It's quite arguable (and I know many people who argue it) that America would have been better off if it had not had the debate that it just had considering where it has led and is further leading. I presently live the American system.

This is not just about health care, and I am not claiming that the Canadian system does not have problems. There is an ideological juggernaut looking for chinks in the armor. Inevitably it will find them but I am hoping that we can stave it off as long as we can. If I could have confidence of the good faith of the overwhelming majority of the interested parties, I'd be more open to the discussion.

I do not have that confidence. Too many people are waiting to queue-jump over the bodies of others.

I'm a hospital administrator and have a graduate degree in health economics. I'm going to add to Chris S's comment.

There are plenty of people developing metrics on system performance in health care, but the issue is highly problematic. There's the issue of the massive IT investment required, the training costs, the huge and costly roll-out time, the technology quality, and often very low compliance. I'm not saying that to make excuses, but it's a huge problem. Add to that the fact that such spending gets coded as "administration", and you can see just how popular a massive investment like that is to politicians and executives who get slammed for our allegedly top-heavy system. The only time I have ever seen anything close to an enterprise-wide clinical informatics system was in the US VA hospital system, and even there they have serious limitations. (I spoke to three older specialists in a VA hospital who had experienced the switch to a high-tech system, and they all said the main benefit was that it was "easier for teaching students". Huh?) The easy way out is to develop extremely gross metrics like measuring the numbers of transplants, the numbers of ED visits, nursing vacancy rates, etc. There are lots of those data sets, and anyone with a serious interest in improving the health system would rightly look at them and say, "so what?".

Throughout the system, there are plenty of people spending time working on improvement projects--clinicians and non-clinicians alike--but the projects are very specific and can take a long time to implement, never mind expand into other areas. Nevertheless such work is being done, and a characteristic of such professionals is that I know of not a single one (including myself) who believes the answer is higher spending.

Wait times are the subject of intense discussion, partly because they are difficult to set. There are wait times based on clinical necessity, wait times based on throughput maximization models, and so on. Such models are typically developed for areas with problematic wait times, like hip/knee replacement. Developing preventive models is much less common, and not easy to do besides. Successful models generate a lot of interest, partly because they show what can be done with industrial engineering, partly because they target (sorry for the phrase) the low-hanging fruit.

I really don't think most Canadians are closed to new options, given that they report pretty high levels of satisfaction and already pay (depending on your data and sub-group) anywhere from 25-50% of their health care costs out of pocket (many Americans pay similarly ratios). The problem is that too many organized interests can make hay from hysteria and unfounded claims, and politicians know it is more rational to avoid it and trumpet our greatness, which is not great.

I remember being at a health econ conference (with a very ideologically diverse group) when the Chaoulli decision came out. Someone took a poll of the room, and not a single person thought the decision was a big deal. Contrast that to the apocalyptic response in the media and blogosphere .

Shangwen is right in that Canadians are far too narrow in our view of health care. I put it down to being in North America while living next to a health-care outlier, the United States.

I really wish we would learn more from the UK and Europe.

When it comes to employer health benefit plans, I believe the business of business is business, to pursue profit for shareholders, not be a welfare delivery mechanism for employees. We got the system we have by applying the same policy we did with pension, to make the pension/health care premium tax deductible to the employer and tax-free on receipt to the employee*. It's a Ghent System but it's also tax-funding health plans. It keeps drug costs of the balance sheet and income statement of government but it's still there in the shadows. Every time we cut personal and corporate income taxes we lower the value of this government contribution. We undermine the basis of our benefits system. Few realize it but it's at the heart of our pension and drug coverage troubles. Every time we cut taxes we shift more and more of the burden of pensions and benefits onto employers and employees. Have have to face up to what we've done.

Private Health plans in Canada exist to slice, dice and minimize cost-sharing, that is risk pooling for employers. It's sub-optimal. I would far prefer a universal drug benefits system paid through taxes. I prefer it because an employer should be indifferent to the health condition of a prospective employee. My diabetes should be of no concern to them, except if I operate heavy machinery. I prefer it because an employee should be free to seek the job they want and not be bound to one place due to benefits. That's not a free-market system, that's a shadow public system with the worse of both worlds, government pays and the private sector delivers, sort of, grudgingly and sub-optimally.

Let's face up to the fact that drugs are an integral part of the health system and treat them as such. Drugs should play no part of the employment relationship and are not a substitute for universal government action.

*not the case in Quebec's provincial income tax system as regards health plans.

Maybe I'm weird or naive, but I'm really not that worried about Canadian health care. And I have no clue what everyone is so convinced is broken. It's received wisdom that there is positively, definitely something fundamentally wrong with Canadian health care. Only nobody can point to what. And if you ask people specifically, they usually say they receive pretty good care.

Examples from my own life: When my son was born, he and my wife received very good, if a little hectic, care. When they found my son had a heart defect, he received truly outstanding care. When my dad was almost killed in a severe car accident a few years ago, he received outstanding care. On the weekend I met a very nice couple who had just given birth to a 27 week premie. They said they where receiving outstanding care. When my octogenarian paternal grandfather went on a waiting for heart surgery - which he easily could have paid to have done in Florida - and subsequently died on the wait list, I was fine with that too (see above); old men die and choices have to be made. I'll choose the newborn over the the 80 year old 10 times out of 10. In every instance in my life where I have had anything to do with the health system, it has always been very good, and never a worry of suffering financial ruin as our friends in the US do. So what, specifically, are we all so convinced is going wrong?

Even the costs issue - and I firmly believe the boomers will vote themselves more and more healthcare to the exclusion of just about everything else - is ultimately self correcting. Right now there are too many old people who want to live forever. Old people use lots of health care and don't generate so much tax revenue, so everyone else has to pay for their health care. But old people (like everyone) ultimately die. The demographics will fix themselves, and my future self and future generations can pay the bills over time. Fortunately, the government can borrow long term rather cheaply these days. Granted, this probably isn't optimal, but it's hardly Armageddon.

typo: sound -> son.

[Fixed - SG]

My last comment (by the way, I wish health economics would generate more comments...). My dream scenario would be to have a policy debate not focused on the financing of the health care system or the red herring of payer identity, which constrains discussion to a technocratic nightmare of expert hubris and dubious international comparison. I would much prefer to have some high-placed group of people launch the ultimate policy bomb, and ask the question, "What is the real contribution of health care services in Canada to the our health?" I would like that asked because, as the evidence for the past 30 years has consistently shown, it isn't much.

If you ask the basic question, "Why are some people healthier than others?" and add to it some subsidiary issues like different outcomes from health interventions, you get the answers that have been uncovered by epidemiologists, health economists, and groups like WHO, RAND, and many population health projects. Most of our health is rooted in genetics, with education, income and lifestyle providing the biggest incremental boosts. Health care access doesn't add much, though it does make us feel good. Obviously, if you get hit by a bus or discover a tumor in your brain, the solution is not to go back to grad school or get a second job, but those are not health dilemmas faced by most people, and they are faced by some people only a few times in life. But take two identical twins where one is a high school dropout and the other is the manager of a plant, and the plant manager will consistently have better health even if he's overweight.

This is not an issue that squares easily with politics, because it doesn't--in our current policy framework and welfare state--translate quickly into something that politicians can claim to be doing for you. It has more to do with making the impact of certain life choices more transparent. I see situations all the time where 30% or more of the total cost of treating a patient has proceeded long past the point of providing any measurable benefit, yet if you argue that funding a service could easily be cut by 25%, people find that intolerable.

If you want a healthy population--preferably the real goal of policy--then you start with getting as many people as possible to follow Grandma's Advice: eat your vegetables and get a good sleep, stay in school, get a good job, and don't hang out with the bad kids.

Shangwen: ""What is the real contribution of health care services in Canada to the our health?" I would like that asked because, as the evidence for the past 30 years has consistently shown, it isn't much."

There are some things western medicine is just amazingly good at - if you have appendicitis, or need a hip replacement, modern medicine can *make you better*. Which is wonderful.

But the older you get, the less likely it is that you'll have a disease that admits of a miracle cure.

The father of a friend in mine had, I think, a stroke, after a long, healthy life. In Canada, perhaps he might still be alive - but incapacitated, which if he is at all like my friend, he would have hated, if he'd known what was going on. In Europe, where he lived, he was allowed to slip away.

This is the moral dilemma raised by modern medicine - when to say "enough."

Patrick, I don't think it's true that "Right now there are too many old people who want to live forever." I suspect if you polled people, they would say that their ideal was to drop off the cliff - metaphorically speaking - experience simultaneous failure of major systems. A massive heart attack after an August weekend spent up at the cottage (or in La Verendrye) hiking and canoeing. People just don't want to suffer. But once you're in the medical system, you become this passive patient who just does what he/she is told. It is almost impossible to refuse treatment, and it is almost impossible for medical professionals to withhold treatment. (I talked about some of this in my "health care lessons from the animal hospital" post, the subject of which is sitting here beside me).

Thank you Shangwen. I learned more about how to think about health economics in the last 15 minutes than in the last 20 years.

Still not convinced we can have such discussions in an election context - though it would make a great topic for a show like Tele-Quebec's Huis clos, where 7 ordinary people are gathered for 4 hours to hear from experts and stakeholders about both sides of a thorny social policy issue, then publicly take position. I watched a few (each show distills the debates in 1 hour) and it was usually very interesting. A rare example of good television, with probably about 2,000 viewers on average...

The problem with the health care debate is that we constantly conflate two distinct issues:

1. Who will deliver health care?
2. Who will pay for health care?

Many seem to intentionally confuse these two, as if socialized health insurance can only possibly work within a socialized medical industry.

Frances: Yes, agreed. My statement was not intended to be factual.

Patrick - I guess I was looking for any excuse for a rant ;-). By the way, my first ever academic publication was an article about health care with Julian Le Grand and David Winter, giving the best-ever co-author combination "Le Grand Winter Woolley".

Okay, that was so far into the "too good to be true" range that I had to check it out. That's absolutely awesome.

Patrick, you point out the things that work well, but what about preventive care for people who are well? Where I live in Montreal, there are no doctors who are accepting adults as patients. If I want to go for a checkup, I have to waste half a day waiting in a walk-in clinic. The doctor and I will never have seen each other before and expect to never see each other again.

I said I wouldn't comment again, but I will. I think some of the other comments here have been really good, and I am always anxious to see more discussion of health economics.

Frances, your comment about end-of-life issues is dead-on, and the issue is a unique example of how difficult it is to disentangle economic value from health care decisions at the margin, both on the consumption and provision sides. (Side note: the business about how the last year of life constitutes 50% of a person's lifetime health care consumption is a folk legend; it doesn't even make intuitive sense. Gary Becker had a paper out last year estimating that it was closer to 20%. Working in a facility with a large palliative care department, that makes much more sense to me, though 50%+ would apply to some outliers like pediatric deaths, or drawn-out deaths of young people in ICUs related to vehicle accidents.)

Politicians and their strategists are in a real bind. They are talking to a public who incorrectly equate health with the health care system, a system that is notoriously difficult to bring order to and is subject to irrational and often value-destroying regulations. A couple of years ago at the Globe and Mail, Andre Picard (whom I rarely agree with) had an excellent article asking, "What on earth can ministers of health actually do?" The tragic answer is that they really cannot do much. Health care organizations, as Mintzberg and Glouberman pointed out, are populated largely by employees whose economic advantages are tied not to their employers but to their licensing bodies/unions; they have "customers" who have little incentive to really understand what they are getting and are rationally averse to consuming anything more than the simplest information; and they are horrendously inefficient. What can the minister of health do? Mostly what he or she can do is respond conspicuously to some localized "crisis" in emergency departments or diagnostics, and throw some extra money at it, knowing full well that the outcome is likely not to change. Even a first-year business undergrad can tell you that is no way to run a railroad.

For example, a popular intervention for ministers and senior bureaucrats in the past few years has been to declare that lack of employee training in some issue (hand-washing, infection control, security procedures, whatever) is shockingly inadequate and a great threat to the public, so they order health care organizations to institute mandatory training on the topic with 100% employee compliance. That is insane: the cost of training 100% of staff--which includes casual staff, people on the verge of retirement, people who have already been trained elsewhere in the procedure, and people for whom the procedure is occupationally irrelevant--is enormous. In a hospital with 1000 employees, this involves massive overtime pay, huge scheduling adjustments that cause under-staffing in other areas, cancellation of more relevant clinical education programs, and huge work backlogs throughout the facility, and the incremental costs can rise to the hundreds of thousands--deficit territory. A ministerial order to have all employees receive a 60-minute training on properly donning protective gear may sound like nothing, but it makes no sense. If all you did was focus on training 80% of permanent staff, and excluded casuals, those about to retire, and people for whom the procedures is irrelevant, you would reduce the risk of any patient being cared for by untrained staff to a statistically negligible rate. Yet we have accountants and psychologists being trained in complex nursing procedures, simply to avoid embarrassing the minister.

So, in terms of Kobayashi Maru, I am not optimistic. Is there some highly charismatic, economically literate party leader out there who can take it on?

exExPath: Yup. Similar problems here in Edmonton. But it hardly lives-up to the rhetoric that the system is hopelessly broken.

Though the whole preventative care for healthy people strikes me as received wisdom too. Maybe Shangwen can set me straight. Seems to me that once you do the really easy stuff like vaccinations, preventative measures really fall on the individual: eat your veggies, get a good nights sleep, and exercise. Visiting a doctor probably isn't going to do much good. I wonder what the cost/benefit looks like for something like regular check-ups for otherwise healthy people. It can be a double edged sword: lots of extra testing etc ...

Shangwen - great comment.

Patrick: "Though the whole preventative care for healthy people strikes me as received wisdom too."

It's always striking to go to New York city and see all of the anti-stereotypical thin Americans. I don't think New Yorkers are particularly more virtuous than other Americans - it's just that in New York, it's faster to walk or take public transit than to drive a car, so people walk places, and that keeps them fit.

So, yes, it's a matter of individual responsibility. But cities and economies can be organized to make it easy for people to take on that responsibility or to make it challenging - think of the relative price of getting calories from meat versus getting calories from green vegetables.

In New York, if you go North of, oh, 150 in Manhattan or the Bronx or much of Queens and Brooklyn they don't look very different from the rest of the USA, honestly. Midtown and Downtown Manhattan are actually a pre-selected population a lot of whom depend on their looks or can only afford to be there because of their looks.


Not the Alpher–Bethe–Gamow paper?


Mandos - Or perhaps I'm just mistaking Montrealers and Londoners and Parisians over for a shopping spree for thin Americans?

Anonymous civil servant:
The "Huis clos" show was cancelled....

"But cities and economies can be organized to make it easy for people to take on that responsibility "

Don't get me started! The single best thing we could do to improve our health and the environment would be to marginalize the automobile. So much of what ails us (literally) could be improved with better urban planning.

We just suffered through a *very* long, cold, snowy winter here in Edmonton. Life devolves to a series of mad dashes across frozen windswept parking lots. It's not Kobyashi maru, but it's certainly a sort of endurance test. A denser, more compact, more visually appealing city (most of Edmonton is a wasteland of 4 lane roads and strip malls) would have made life so much more pleasant.

Now, where's the number to that migration lawyer in Sydney ...

Shangwen - your analysis has been most useful. You should be writing some Op-Eds on this for the Globe, Post and Ottawa Citizen.

"Why are some people healthier than others?" Most of our health is rooted in genetics, with education, income and lifestyle providing the biggest incremental boosts. Health care access doesn't add much, though it does make us feel good"

Your comments remind me - and older readers may recall - when the highly intelligent Marc Lalonde, Minister of Health under Trudeau (1976?) ordered a Health Canada study on what could be done going forward to further improve the health of Canadians. After a year or so and huge amount of research and expert testimony, they concluded that further improvements could only be achieved through behavioral changes amongst Canadians e.g. quit smoking, eat less, exercise more, cessation of toxic drugs, not drinking and driving etc.

BTW, you did not discuss 2 tier, although we are the only OECD country that does not permit 2 tier. I am puzzled why govts have no objection to people spending their money foolishly in a casino or a myriad of frivolous pursuits e.g. tanning salons or luxury cars, but prevents me from spending my money on my body at a private clinic for non trivial reasons. I think feminists refer to this as "womens' right to choose" as no one has or should have the authority to tell that person what to do with her body.

Patrick, you are right about the problems with prevention. There have been a number of studies (and meta-analyses) on the health benefits and cost-effectiveness of the old annual checkup with the GP, and the results are so dismal that they are no longer recommended. Of course, there are people who still get them because they believe in them. And there are GPs who continue to provide them. Once again, where there are problems with excess consumption, there are problems with excess provision.

I think I am pretty open to changing my views in the face of good evidence. One of the biggest about-faces I ever experienced was meeting a group of grad students in development economics and population health, who told me that most prevention programs are useless. That was a stunner. Until then, I would have accepted the rhetoric (widely used but associated in this country with Marc Lalonde in the 70s) that health care systems should focus on prevention rather than treatment. Everybody eats that one up. But while it is true that a small number of personal health behaviors have a huge preventive effect--good nutrition, not smoking, and employable skills--health care interventions proposed as preventive of specific illnesses have a terrible record. I have seen programs designed as "prevention" or "early detection" of psychosis, Alzheimer's, and diabetes, and none of them were effective except in providing grist for ambitious researchers.

Prevention also gets overused. The world-renowned oncologist, Oprah Winfrey, has been screechifying for years that every woman over 40 should get an annual mammogram. That too is insane, but unfortunately she is taken seriously; I wish every 30 year-old woman with the BRCA gene good luck getting into that lineup. In the long run, I think prevention is one of those predominantly rhetoric-driven "strategies" with an intuitive appeal more powerful than the evidence. I think it is also why health care systems have, responsibly, not put much into prevention and have focused more on improving the efficiency and effectiveness of disease management. Some people groan that that is a terrible, reactive "western" thing, but it is often the better strategy, particularly in a free society. If I can misquote Lady Thatcher, the facts of life are economic.

ian lee:

It isn't true that Canada doesn't have 2-tier health care. We have always had it. It's just that the private tier is offshore, if you will, in the United States. "Critical Illness" insurance is nothing but a policy designed to give the holder a plane ticket to the nearest US city and pay for their treatment at a clinic there. Canada in population terms is a thin layer 350 km thick along the US border. The private clinics have always been there, over the border. It's a unique to Canada situation that lets us get away with this policy the way we do.

Ian: "we are the only OECD country that does not permit 2 tier"

Do you ever wonder why hockey players never have to wait for an MRI? There's a little loop-hole that allows private treatment when the health care needs are work-related.

I wonder who else is using those work-related health care provisions, apart from professional athletes?

Ontario also has less private provision in terms of, e.g., diagnostic testing, some types of surgery, than some other provinces, e.g. BC and Quebec.

Ian Lee, thanks for the kind words. I am, in fact, writing this on work hours, but as I am doing it during an ultra-boring conference call with the federal government, I have no qualms if people find the comments instructive.

You ask about two-tier health care. That is one of those rather empty terms, like "private versus public", that exists only in the shriek-filled world of radio call-in shows and political debate, so let us unpack it a bit.

Whether it is publicly funded, privately purchased, insured through a third party, or provided by your workplace, health care is a "normal" or luxury good. That is, the more we earn, the more we tend to consume. If you plot out the consumption of health goods and services by income group, you get a tilted S-shape curve; that is, poor people consume relatively little, and consume slightly more as they earn more; the middle class increase their consumption at exponentially faster rates as their income grows; and then the rich increase consumption at smaller increments as they get wealthier (I am generalizing heavily here). For example, in nearly all Canadian cities, the biggest consumers of psychotherapy, physiotherapy and rehab, antidepressants, and prenatal ultrasound testing are the middle and upper-middle classes. Is this consumption adding noticeably to their health? No.

So, if we really have a policy of universal health care, would it not then make sense for the government to do some combination of (a) aggressively increasing consumption of those services by poorer people, or (b) halting consumption by wealthier people? Maybe it would, but we don't do that. In fact, we could not even if we wanted to. We have stratified health care, because incomes and their associated preferences are stratified. This is why politicians fret endlessly over welfare-state services that tax-paying voters consume--education and health care--while worrying considerably less about the quality and humanity of those areas consumed largely by the poor--prisons and child welfare systems.

People invoke "two-tier" to suggest that there is some mustache-twirling cannibal elite who want to kick granny out of her hospital bed so they can use it for their purebred greyhounds. But nearly everyone uses two tiers, or both tax-funded and direct personal payment. You go see your GP, which the government pays for, then get a prescription, for which you pay a part. Your doc tells you to shed that spare tire, so you fork out some after-tax cash for a gym membership or workout equipment. Congratulations! You are now one of the Vanderbilts, along with 85% of Canadians.

"Private versus public" is the same thing. Does the Ontario government have a plant where they design and build MRIs, or where they manufacture antibiotics? Is there any part of Canada where the government really provides all health care? In reality it is about 60% provided through tax-funded, publicly administered services. Not quite what the Canada Health Act leads most people to believe.

Likewise, what about the "private", terrifying free-market system that is alleged to exist or have existed in the US? Federal and state governments tell private insurers what kind of coverage to provide, dish out billions in value-destroying corporate welfare to drug companies and manufacturers, and regulate professional groups in the most absurdly detailed ways (in Florida, a psychologist can ask you whether you own firearms, but a psychiatrist cannot). Where's the free market in that? On top of it all, the US government spends more per person on health care than any government in Canada.

I hardly know where to begin! But I must agree that quality health economic conversations are wonderful.

The Funding Issue:
In terms of more money, Shangwen is correct. There should not be "more" money spent in the health system, public or private. That does not mean the money currently spent is being spent well. Every health care provider and health economist will tell you stories of waste and inefficiency.

The Private Issue:
From a political perspective this is the biggest red herring of them all. Are we talking about private purchase or private provision? And the politicians refuse to make that distinction.

The Number of Tiers:
In BC we have 5 tiers for physician services. The Medical Services Plan (paid by the taxpayer), ICBC (paid by motorists), WCB (paid by employees and employers), Federal Government for RCMP, prisoners, military, etc., and the private consumer but you need to walk through a fairly big hoop.

But the #1 challenge to the sustainability of a universal coverage system is the ambiguous description in the CHA "medically necessary". This is the true Kobyashi Maru test. The example I use is the following two patient scenario. Patient 1 works in Smallville, north of the 41st. He accidentally slips on the ice and rips off half of his pinky finger on the gravelled sidewalk. At the hospital the ER doc promptly amputates and minimizes the likelyhood of future infection etc. Patient 2 works in Bigicity, less than 100km from the US border. He suffers the same slip but the ER admits the patient and the plastic surgeon reattaches his finger and is expected to regain full functionality.

How does the polician defend this clearly different level of treatment?
What is Medically Necessary?

How many health care systems do we have in Canada? Is it the one system called Medicare? No, we have eighteen systems:

#1-13: Provinces and territories, all different
#14 Status Indians on reservations
#15 the very large private market (cf Frances' comment on athletes), whether through privately purchased insurance or direct payment
#16 employment-based health benefits (i.e. the dentistry and massage fund)
#17--a very special case: members of the Canadian Forces, the only group who have true-blue 100% gummint-paid health care. Unlike civilians though, they can actually be ordered to undergo medical treatment if it is occupationally necessary. And when they leave they military, they fall back under systems 1-13, but also get...
#18 enhanced medical coverage for Veterans.

All of those cover a very wide range of coverage types. A status Indian who lives on a reserve and served 20 years in the Air Force is doing pretty nicely, at least in terms of personal health care costs, which would be zero. A self-employed plumber in Halifax or Winnipeg has, in effect, no choice but to be a big consumer of private health care.

I think another point that needs to be added is health care consumption is incredibly inelastic. Wealthier people do spend more on health related items but the decision to go an emergency department has nearly zero correlation with price. Especially if you are taking somebody else (child/parent) to the ER.

Admittedly some people do play around with their drug regime due to financial constraint, i.e. cutting pills in half to make them last longer.

ps - while I am also on business hours, as a health economist I could argue this is part of my job.

Or perhaps I'm just mistaking Montrealers and Londoners and Parisians over for a shopping spree for thin Americans?

Heh, there's that too. But there's also a lot of models and secretaries to stockbrokers, not to mention the stockbrokers themselves who are a notoriously shallow lot, and a very high concentration of other image-obsessed industries, all the retail workers who must look good (thin) in order to work at the A&Fs and the AXs, all the musical actors and the wannabe musical actors, students, etc. Once you get to the further reaches of the city, "normal" people live there, and they look like America for the most part. I lived for a few months fairly far north in Manhattan and it was just like a working-class minority neighbourhood anywhere else, but a bit more tightly packed. Sure, everyone used the subway. But they came home to fried chicken and mac&cheese and television.

Was at a very good conference this last 2 days. http://www.csls.ca/events/stewartfestschriftworkshop.asp

The presentation by Michael Wolfson was very much in accord with Livio's post and especially Shangwen's comments here: http://www.csls.ca/events/2011/wolfson.pdf

Basic message: Canadian data is crap, and that causes massive inefficiences.

Shangwen and Determinant,
In my earlier post re 2 tier, I was obliquely referring to the recommendations by OECD in Economic Survey of Canada 2010 chapter on health care and related OECD publications, calling for co-pays and more private investment in health care in Canada.
I agree that we have always had 2 tier in terms of services not covered by public health care (and thus private insurance such as Great West) and de facto 2 tier in terms of being able to travel across the border as Danny Williams did and Robert Bourassa before that - to name but two well known instances.
However, I am referring to the Australian or the UK model where there are two parallel systems operating side by side. A quick anecdote. I have a friend who is a Brit but teaches in an Australian university who thinks the Labour Party is far too "conservative". I mentioned that she must abhor the 2 tier system in Australia and UK. To my shock, she advised she and her friends in the Australian universities like their health care system very much. She was very aware that it is strongly opposed by many on the left in Canada.
And I agree with Peter that the distinction between private provision and private payment is fudged by elected officials regularly.
Can we redefine 2 tier as the existence of two parallel systems with the private system delivered privately and paid privately to help clarify the beast on the private tier side of the debate?

Health care discussions crack me up. Everyone is so fixated on trying to fix our current system by changing this or altering that to the point where nobody is designing a better one to present to the Canadian public.

We'd be better served if everyone pretended Canada didn't even have a health care system and then spent their time designing one that works.

Nick: haven't read the pdf yet but I will--thanks. Wish I could have gone to that conference. One of the advantages Americans have is that, because of their massive research infrastructure and their insuring of every last aspirin and bed-sheet, they know exactly what kind of utilization and cost structures they have. Even the NHS doesn't come close. Here we have crap. A lot of what ends up getting sent to ministers is estimated or seriously mismeasured.

Ian and Determinant: When the OECD and others rightly propose that Canada add some more private market options, I interpret this not as "privatize your system" (as many people do), but as "please throw in some more options to extend choice and make costs more transparent". After all, we already have extensive private spending on health, which the OECD certainly understands. Earlier I argued that we do not have two-tier, instead we have normal, income-elastic consumption regardless of marginal utility of health gains (conceding Peter McClung's point on ED utilizations being inelastic).

Pursuing that option may or may not lead to more efficient spending and utilization--I don't think we know that. It would not help us with the larger problem of GDP% spent on health, considering the real economic value of health gains directly related to health care. See the RAND Insurance Experiment on that one. Even in scenarios where people have paid most of their costs out of pocket--like Hong Kong prior to reunification--you still had a sizable number of above-median earners who paid for health care as a form of signalling or conspicuous consumption. (Peter's point on distinguishing between provision and consumption is also an important one.)

Right now there are lots of people howling that the federal government does not formulate policy based on reliable, broadly confirmed empirical evidence. That is mostly the prison and climate change thing. But what about evidence-based health care policy--let's see how popular that would be. Getting rid of occupational licensure (credentials without monopolies)? Cutting health spending by 30% and transferring some of that to skilled trades apprenticeships? Make healthy young pregnant women pay for ultrasounds? Eliminate free psychotherapy after 6 sessions? That is what the consensus would direct us to do, but certainly not the politics.

Here's a fun question: who are the most efficient users of the health care system? By that I mean, which people are getting the greatest health gains from the conventional health care system, relative to their time and cash expenditures and their costs exacted from the system? Is it the professor who has just wrapped up his 91st psychotherapy session, or the healthy 25-year-old law grad who has just gotten her fourth prenatal ultrasound? Is it the math teacher who signed up for the "free" nutrition clinic? No. It is poor people who use the emergency department as a primary care clinic. When you have few employable skills, no money, live in a crap neighborhood, and have one son in jail, there is precious little the health care system can do to make you better. Those people are the target of much condescending derision and social engineering, but they deserve a medal (or income transfer) from the rest of us for applying valid economic intuition to their use of health care.

Shangwen - I agree completely. We already have a bastardized form of 2 tier - those services delisted by public health care or never provided for by public health care in the first place and in some places, private clinics e.g. MRI clinics in Gatineau, Quebec (next door to Ottawa) but not in Ontario. But presently in Canada, we mostly do not allow full service, side by side public and private systems. As we boomers age and start to use health care more frequently (as I have for years with arthritis) and run into long queues, we impatient boomers will likely change our minds.
And, agreed - the OECD is not advocating privatization. Neither am I. I simply want the choice to flip back and forth between a public system and a private system as they do in Australia and other OECD countries such as Sweden, depending on one's sense of urgency or importance or willingness to pay out of one's own pocket.
As stated before, it is utterly bizarre that I can waste large sums at the casino or a tanning salon or on frivolous consumption more generally, but I am not allowed to spend money on services provided by public health care, for my own body and health for non frivolous reasons. If we believe in the individual right to make choices concerning one’s own body e.g. therapeutic abortions, why not for other medical purposes?

Patrick said: Maybe I'm weird or naive, but I'm really not that worried about Canadian health care. And I have no clue what everyone is so convinced is broken. It's received wisdom that there is positively, definitely something fundamentally wrong with Canadian health care. Only nobody can point to what. And if you ask people specifically, they usually say they receive pretty good care.

I agree concerning life threatening illness. I had similar experiences when my mother was diagnosed with cancer and when my partner's father had a heart attack. When you are really sick and really need immediate attention, Cdn health care WILL be there and will come through.
BUT and HOWEVER, if you have a chronic illness e.g. rheumatoid arthris (1 year waiting for an appointment in Ottawa at Riverside Rheumatology Clinic), or need knee replacement (1 to 2 years at Ottawa General per the ortho surgeon) or hip replacement or similar non emergency, non life threatening illnesses or diseases the waiting period, is very long.
That makes sense. Treat those who most badly need treatment immediately.
But this answers your question above i.e. that nobody can point to the problem in Cdn health care.
Answer: chronic or not life threatening illnesses or injuries.

Ian: one thing that many people rightfully worry about is the cost of ageing boomers.

One thing I learned from the conference was that health care costs curve up steeply with age, with most health care costs in the last 12 months of life. And the number of people dieing will be rising, as a proportion of the total population. Bill Robson's (CD Howe) paper does some calculations of the demographic effect. Think of it like an unfunded CPP. The implied future liability is larger than the existing national+provincial debt, IIRC.

One policy response would be to start saving now (raise taxes, cut spending, etc.)

But Michael Wolfson said "no". The data we do have suggest we are spending a lot of money currently that doesn't seem to have any measurable effect on health outcomes. Which is wasteful in itself, but does suggest an alternate way to fix the demographic problem.

Nick - I agree 100%.

From CD Howe David Dodge's paper, "Chronic Health Care Spending Disease", pg 7 of 16 page pdf (stats came from CHIH, "National Health Care Expenditure Trends, 1975-2010" I think):

Graph: Healthcare spending per capita by age group, 2008 (pg 7, Dodge)

- Under 45, average person consumes $1500 healthcare per person per year
- 45-65, average doubles to $3,000 healthcare consumption per person per year
- 65-75, 5x more than people under 45 at $7500 healthcare consumption per person per year
- 75-85 jumps to almost $21,000 healthcare per person per year
- 85 and older consumes on average $25,000 per person per year

Perhaps delisting chronic health care and pushing it into private care, is effectively an implicit tax on boomers. OK with me, as someone who is probably consuming more than the average $3,000 for my age group.

People--what a great discussion this is. We need to keep it up. Currently this feed is running a 150-comment deficit compared to some MMT Re-engineering thing that reads like a D+D gamer conference (kidding, apologies Nick). Health econ is real world stuff!

Ian: I agree that it is madness that I can spend my money on all kinds of serious or trivial things, and in so doing not only control the timing and level of my consumption pretty closely, but also refine my intuition about the value of those things. When we cannot do so for healthcare, then it's like a $10 All-You-Can-Eat serving subsidized food. What we have now is a system where many things are government-paid, and a separate menu is out of pocket or privately insured. Parallel systems are better, but you need a geographically small, densely populated country to make that work, like the UK. That leaves people like me doing the old "Run to the Border!" to get a diagnostic test for $400 in the US when the local wait is 18 months (I actually did that).

The demographic problem is a tough one. I have seen some research suggesting that, while cost broadly rises by decade of life as Ian cites above, there are significant event-based cost bulges that cannot be so clearly tied to absolute age. For example, costs in the last year of life are high, but that is as true for those who die at 25 or 60 as it is for those who die at 90. Second, childbirth is another big cost event: prenatal care, labor and delivery, and the first year of pediatric care all make a very costly package. But that is a good thing. A very good thing.

The cost of elder care is a huge, unsolved problem. I like to think that an Old Age savings account would work, but who could save that much when only 1/3 of us have RRSPs? I think the idea Nick reported, of squeezing inefficiencies and low-value services out of the system, and shifting them gradually into geriatrics and long-term care, is a better one. There is plenty of free money there, but some terrible politics to get your hands on it. And that brings us back to the original post by Dr. Di Matteo....

Chronic care in a Long-Term Care facility in Ontario isn't a free lunch, the government goes after your assets before they give you aid.

However, the problem of chronic care in LTC facilities is less than you might think, let me explain.

I have insurance training, so I know long-term care insurance. The large life insurers, Great-West, Manulife, Sun and a few others sell this product now. It's a private policy, as I said LTC care isn't covered by the Canada Health Act. It's also sold by a few Canadian Blue Cross plans, all of which are non-profit.

Most importantly, LTC is frequently hooked up to Disability Income insurance policies as a dual package. It solves a big problem with DI in that you pay for the policy over your working life and hopefully don't claim anything at age 65. Rolling those premiums over into a LTC policy turns DI into a total-life or till-the-grave policy, at which point you're dead and don't care anymore. Actuarially it works out really well and isn't expensive at all. This is one problem that is probably best left to insurance rather than savings accounts.

One thing the Canadian insurance market does well is offering Disability coverage through group plans. No group benefits package in Canada is seen without a DI policy. Most importantly, there is no tax funding for DI coverage, it is straight premiums or benefits taxation, no dual deductions. So there is no government distortion here.

As Nick says, first we eat the free lunches, then we make the hard choices. So by hook or by crook we have the government encourage group insurers to offer LTC hooked up to DI premiums. That takes a large slice of the need for LT care off the table. The government can then set up a "last resort" plan of greater or lesser generosity.

When speaking about LTC care, it's important to remember who uses it. This product is much more established in the United States and I heard a presentation by an American underwriter on the topic. She said that 70% of claims are for Alzheimer's or other dementias, and in the US the policies are usually bought 2 years before claim. In Canada we tend to buy them earlier, and the earlier the policy is bought the higher the percentage of claims for Alzheimer's.

So Long-Term Care insurance is really Alzheimer's Insurance, as is the care itself. If we are to make hard decisions we need to first correctly identify the problem.

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