Game of Premiers: The Premiers, Health & Public Policy

Well, Canada’s premiers and territorial leaders are gathering in Halifax this week engaged in their version of the Game of Thrones with hurt feelings and fiscal uncertainty rather than beheadings, swordplay and pillaging the most likely dire consequences. Among the issues planned for discussion are energy and health care. Not on the official agenda will be the fact that a number of provincial elections loom. Health care is expected to be at the front of the agenda at the summit in Halifax this week but it may surprise even the premiers to learn that after adjusting for inflation and population, growth rates of real per capita public health spending in Canada have recently declined. Data from the Canadian Institute for Health Information shows over the period 2000 to 2011, real per capita public health spending grew at an average annual rate of 2.8 percent. However, recent annual growth rates have declined – from 3.6 percent in 2008, to 2.3 percent on 2009, and to estimates of 1.9 and – 0.7 percent in 2010 and 2011 respectively.

Does this mean that the health care cost curve is finally being bent and health spending is under control? The answer is no for two reasons. First, the current slowdown may simply be the lagged effects of the recession on government budgets. Second, when examined on a provincial level, this trend is not consistent. For 2011-2012, six provinces are projected to see declines in real per capita spending with the largest declines in Ontario and Alberta. Newfoundland & Labrador, Manitoba, Saskatchewan and Quebec are projected to increase. The health expenditure curve continues to rise for some provinces even while the national one is showing some signs of slowing. While some of these differences are rooted in differences in demographics and region specific health needs, the fact remains that inevitably there will be a need for restraint.

The interesting question is what form it might take - the sword or the scalpel? The sword approach involves across the board budget cuts with health care providers and institutions left to absorb the blow and deal with the shortfalls as best they can. The scalpel approach combines targeted reductions with reforms in service delivery and financing such as shifting more physicians from fee for service to salaries, providing hospitals with payments tied to bundles of services and outcomes rather than global budgets, and shifting care to team based approaches and home care. In an ideal world, the scalpel approach is what we want. Indeed, the holy grail of fiscal sustainability for public health care would be reforms that bend the cost curve down and improve both the quantity and quality of health care via transformative change.

However, there are obstacles. First, there is the inertia and established ways of doing things in the current system along with the entrenched interests of both current health providers and health care recipients. Change is often uncomfortable, even if it is for the better. Second, there are the transactions and coordination costs of reform. For example, implementing electronic information systems and establishing team practices take both time and money. Despite the inherent optimism of advocates of transformative change, broad based transformative change of the entire health care system may simply bite off more than you can chew.

Third, to implement change, persistence and discipline are needed on the part of governments and those qualities are not necessarily compatible with the politics of governing. In the wake of the Romanow Report, health funding was increased in an effort to buy health system change and yet the same sustainability issues persist. It was in some respects a wasted opportunity. In the wake of the economic slowdown and deficit situation, successful bending of the health expenditure curve now requires spending less to buy change. Witness the case of Ontario where a large deficit is finally forcing the province to tackle its health sector costs more directly. Some of the savings from the spending reductions can be applied to selective initiatives for transformative change with incentives for implementation – but the transformation will be at the margins and incremental rather than broad based.

Provincial governments must make evidence based decisions on what reforms to implement, set well defined goals and then monitor the process closely.They will have to make choices.   Governments must decide whether to promote healthy lifestyles or implement tele-health. Adopt new information management technologies or modify physician compensation approaches. Move hospitals to bundled outcome payments or provide team based approaches to primary care or reform drug plans. Tackling all these changes at once will be a case of too many targets and not enough instruments. The result will be another failure that weakens the faith of Canadians in the ability of their governments to solve problems.

Comments

[Shangwen]

Livio: I think you're pretty generous in the array of tools you see the premier as having. Going beyond a percentage decrease--for example, discussing empirical evidence on health outcomes--would imply that politicians will assume more direct responsibility for the details of cuts, which they do not want. The blame for that must fall on the evil administrators and program directors.

Empirical evidence does not tell us what an appropriate level of health spending per capita is, but it does tell us about the relative effectiveness, ineffectiveness, and to a very limited extent "ROI" of specific interventions. But I doubt McGuinty or Dexter are going to get behind an announcement that most public health programs are a waste of money, that mental health programs are their own worst enemy, or that we really need to cut back on ultrasounds for health pregnant women.

The transaction costs of big reforms are underestimated. Converting a hospital or clinic to an electronic records system is a long, painful process (I've done it twice), and I would not say such systems are paragons of efficiency. Converting to team-based care is ever harder, but much more cost-effective in terms of patient outcomes. Politically, those are easier to get behind. I have often surmised that a substantial spending cut could be politically softened by a one-time commitment to support capital upgrades--cleaning up dirty old hospitals, replacing old equipment, etc.--but those are not wage increases and so vulnerable to denunciation.

[The Keystone Garter]

...it is odd the USA or Canada, circa 1990s, insured drugs for inpatients, but not for @ home. You don't want people OD-ing; I knew someone who should've been in a nursing home environment 5 years before eligble....but at the same time a hospital bed is expensive compared to @ home service.
People have been wondering why Western Canadians live longer than Eastern....it is from being rich. Income tax revenue has been a part of Canada's health transfers, simple enough. Especially under PC PMs. This is because of high resource rents and general resource mines and low populations.
I like the Oregon list of procedures to be covered. I wonder if all nations and States should have such an ordered list that is explained (CER) and updated. It looks like the feds have been doing things right; forcing stats as a condition of transfers. And the USA isn't too bad after PPS and HMOs with CER. They have too expensive doctors, useless insurance commie-bureaucracy (I imagine the south is like living under Soviet Communism), gunshot wounds...
They have experimented with regional pooling.
Given that our electorate, despite being the most educated, elects redneck-representing retards into office for a decade....following the USA: there should be a general penalty for complexity. I'm grateful JFK negotiated the Cuban Missile Crisis. But any industry or bureaucracy that causes complexity (often on purpose) should pay extra. The USA insurers should've paid a tax for their esoteric rents. Also, any actors that cause human capital to be made stupider unless to prevent WMDs....Canada won't have optimal boomer healthcare because we hitched our wagon to finance and petro...our banks compete against national treasuries (ie. are Crowns) and our petro won't be much in use, shortly...

[The Keystone Garter]

...one of my Edm employers emailed me they have lots of work. lol, I wonder if they are planning on paying Yakubov for a week and then turning all KHL on his paycheck....
AB can't save money...too many rich people lies made their people dumb and unable to mange a checkbook. I think about the best I can suggest in they make products that will be useful in the energy future; manufacturing green stuff and shipping via rail to any of four ports. I federal subsidy to create an MIT at Red Deer, alongside a renewably powered HSR between southern Edm and N.Cgy...in exchange for buying out the peaty-est carbon intensive tar properties, is what I suggest.

[The Keystone Garter]

USA doctors appear to have sold their souls by taken 2x wages, extra specialists given rationing, and having insurance take charge of clinical evaluations of procedures to be insured. Que did everything right in 1971; too bad everyone else didn't copy. The Americans are sloughing off health costs to prisons and reduced worker productivity by making cost-effectiveness the focus. I'd be curious to know the conversion multiplier, the good, you get by paying 1.3x for teaching hospitals and 2.1x for procedures done in remote northern hospitals. I'd want to know this for research hospitals. Easy levers to get more staff or R+D. Maybe some northern towns should be relocated or use tele-prescense or cheaper docs. Need human capital measure to shed light on USA retardism. Copper surfaces, curved easily bleached surfaces and pills can be pooled with other countries. AB's cancelled nutrition programme should count for health care transfer pts if suspected to work.

[The Keystone Garter]

...."Accidental Logics" predates much I.T. I forget the context, but an expert with, er, expert knowledge, and just an I.T. database (AI algorithm), in whatever field both were outperformed by an expert that had the database too. I wonder about partial insurance; does insuring 50% of a procedure (I think Auzzies did) make it much cheaper/better than letting private cover everything? The Oregon budget, they tried universal coverage, was dumb in 1994. At 2% surplus they automatically send out income tax refunds. And they can't run deficits or not easily. You can't even plan anything through that window; you have to wait to know your revenues. The argument given by neocons was they output their slaraies. I don't see that at all. With Chretein's GAI, I'd be eating healthily (want to encourage population growth where healthy foods are cheap, the Port of Churchill potentially has lower helth costs as well as Harper's hydro dam northern towns, than does the rest of the north. We all live on the shoulders of ideas, socialization, and inventions from all the way back to fire and noting plants grew near latrines. CPC (not PCs) and GOPers are delusional.

[City of London Private GP's]

Interesting to see how the healthcare reforms in North America pan out in the months to come. In the UK we're waiting to see the knock-on effects once things start to stabilise across the pond. Eyes are on you guys at the moment!