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Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 22 - Evidence

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OTTAWA, Wednesday, June 13, 2001

The Standing Senate Committee on Social Affairs, Science and Technology met this day at 3:35 p.m. to examine the state of the health care system in Canada.

Senator Michael Kirby (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, I see a quorum. I would like to thank all of our witnesses for appearing including Professor Flood, who is here from Switzerland today to speak before us.

The purpose of today's hearing is to have a round table with a very distinguished panel of witnesses. What can Canada learn from health care systems in other countries? Are there ways of doing things that we ought to adopt? Are there, lessons that we should avoid?

We have had some comparative research done for the committee. We have also had a very interesting series of videoconferences, from Sweden, the United Kingdom and from Germany. We have not only had the benefit of some written research material, but also we have had the benefit of talking to a series of experts.

Our goal today is to have a general discussion along the lines of the five questions that were sent to you.

Please proceed with your opening comments.

Mr. Claude Forget, former Minister of Health: Would you prefer that we address the five questions in our introductory comments?

The Chairman: That is correct. You may make any opening comments that you want to make, but we would prefer that you relate to the five questions. You may take five or six minutes for each for introductory comment. That should consume about half an hour and lead us to an interesting debate.

Mr. Forget: The first question that you posed was: "How do the health care systems of other countries differ from Canada, and what impact do those differences have on issues like cost-containment?"

It should be obvious from the written research, as well as from the verbal comments that you heard a few weeks ago, that differences in systems, at least among the countries that we are currently thinking about, are rather slight.

One must make a distinction between the differences in the health systems themselves, and the differences in the societies. One must consider the underlying, overall societies that provide the context for these systems.

I met with managers of U.S. health care organizations and U.S. health care government officials recently. I was struck at the similarity in the issues that we confront, the goals that we have in common, cost-containment for example, and even the tools that we use. However, that does not minimize the differences in the overall systems because the systems and the problems that confront them are seen from the vantage point of a society that is different in many respects.

For instance, the U.S. is a wealthier society and is able to spend more and pay people more. It is a more litigious society and that has all kinds of consequences. It is a society that is more tolerant of exclusion and disparities, and that is also reflected in problems of lack of coverage and so on.

However, the systems are confronted with the same realities and try to cope with those realities. That is even more true in the case of European systems. Within the European systems there are many similarities and many similar frustrations. However, there is a difference and I would like to underline that difference.

It is quite apparent that some societies, at least in Western Europe, have perhaps had a more pragmatic approach to the problems of their health systems. They have experimented and have attempted to devise new approaches.

That has not been a steady course for any them, because the closeness of these systems to the political life of their respective countries has meant that there have been several changes. I am referring here to the Stockholm experiment in Sweden and the capping of the waiting lists. I am also thinking about the internal market in Britain, and the way it was dashed with the change of government.

It appears that there are many instances of pragmatic solutions being attempted. However, those systems are closely related with the political lives of their respective country means that the attempts are fragile. These experiments are not sustained, even when successful.

I would not condemn any system for attempting new solutions and changing its mind when new solutions are not effective. However, this has not been the case. The closeness of the system to the political life of the country means that ideological reasons are the cause of the system's failure.

We share that habit to some extent. It should alert us to the danger of a public system that is held hostage by the vagaries of political life. When the health care system is tied to the political system it fails to sustain a pragmatic, managerial approach to problem solving. That is something that we sorely miss in the public system. The public system appears less satisfactory to the users when compared with a private system.

I am putting aside all the questions of distribution and access. Certainly, in terms of managing the system, this feature points to differences.

The second question is: "Can we learn from others?" I say, yes, we can learn from others.

The question is whether we would be more successful in avoiding the trap that I just described. I note from reading the testimonies that you have heard, including the Stockholm private management of hospital experiment, that there is a factor that is almost never discussed in Canada. That factor is the growing impact of European competition law on the nature of the health care system.

European law forbids monopolies in any sector. Therefore, that law has compelled a number of national systems to open up in a way that would not have happened based on national legislation.

The experience in Sweden, of differential user fees for hospital and primary care clinics, has been an incentive for different channels to be used. That is illegal in Canada. I believe that is regrettable because it could be of help to the Canadian health care system.

The capping of waiting lists in Sweden was a very interesting experiment. It seemed to have had a dramatic impact. Contracting out for certain kinds of services, from the vantage point of hospitals, was also an interesting experiment.

The internal market that was applied half-heartedly in the U.K., and then terminated, certainly represents the best attempt of which I am aware of the greater weight to the preferences and the demands of the using public as opposed to professionals and governments. My wife and I have written a book on this topic. I still firmly believe it is the best way to go. It would not solve everything, but it is interesting alternative.

The third question is: "How many different countries have managed to provide their population with a broader rage of coverage?" Germany is a good example of the provision of broad coverage. Relative wealth is probably a factor in Germany. There is also a wide consensus in the country on the need for broad coverage.

I would rather not address the second part of the question, which is the correlation between health outcomes and the level and extent of public care insurance coverage. I do not suppose anyone could establish an empirical relationship on which that could be based. My opinion is that extension of coverage is essentially a political decision. It is taken as part of a political agenda. It cannot be supported by any kind of evidence of impact on outcomes.

Your final question is: "What can the federal government do?" I would like to step away from this these questions for a minute.

Until now, we have had a relatively simple binary situation. The same is true in all the countries to which we are comparing our system. I mean that the whole purpose of the national health system has been to provide both financial and geographical access to patients. Access is there or it is not. It is a black and white issue.

However, the world is becoming much more complicated. We now realize, at least in some countries, that the issue of quality is multi-dimensional and it forces us to move away from a black and white situation. The question is not whether we have access, but what kind of access we have. We have lost our innocence as a result of such things as the tainted blood episode that affected all Western countries. There is also increased public knowledge about errors and accidents.

Two years ago, the U.S. Institute of Medicine published a rather famous book called "To Err Is Human." It is estimated that avoidable errors cause the premature deaths of about 50,000 Americans per year. Medication errors are the cause of a fatality rate higher than total fatalities arising from industrial accidents.

These figures have startled public opinion, but they only confirm what we hear from anecdotal evidence everywhere. In this world of qualitative differences, there is a great need for initiatives to be taken.

Just this year, the Institute of Medicine has published Crossing the Quality Chasm: A New Health System for the 21st Century which contains recommendations that I commend to this committee for careful study. The recommendations contained in that book answer many of your questions. Obviously, any recommendation is subject to debate and is only one view of the world.Publication of indicators and information about health will go a little bit of the way toward providing some indication of quality but, unless it is supported by a much more systematic use of technology, it will not go very far. Data gathered any other way is very expensive; its quality is debatable; and whatever standard you set, you are not in a position to assess whether the standards are being followed.

Therefore, a prerequisite to doing anything serious about quality care is to have the architecture and classification needed to support an international system. We do not need a set of predetermined software to assess quality, but the architectural and the classification tools to enable people to develop software applications using this common base to make it comparable.

The U.S. and the U.K. are about to undertake a major effort in this regard. I know that the Canadian government has also taken an initiative in parallel with CIHI to do something. It would be sad if Canada, the U.S. and the U.K. developed a national system without trying to establish a common base. A common base could probably be done through the OECD or a similar organization. That would be my recommendation.

My second recommendation is that the Canadian government try to have a less static view of the health care system. In the past two years initiatives have been taken by some provinces to experiment with the private provision of certain services within the public system. Statements were made in Ottawa that were not helpful and, in addition, I am told that they were untrue.

This is sad, because we need to be more pragmatic and encourage a more managerial approach to the system. At the present time, so much of this is pre-empted by legislation that forbids almost anything that would need to be included in an experiment. Even the clause on public administration has been so badly misinterpreted that it is useless.

The Chairman: Thank you for that terrific overview. What is the tittle of the second book you referred to from the Institute of Medicine?

Mr. Forget: It is called Crossing the Quality Chasm. I have an advance copy but I believe that by now it has been published. It is the recommendation that follows the first book entitled "To Err is Human".

Mr. Cam Donaldson, University of Calgary: Some of my comments will reflect the contents of this recent C.D. Howe Institute commentary, "Integrating Canada's Dis-integrated Health Care System: Lessons from Abroad." I have given the clerk a copy of this study.

I am not sure that I agree that there are many similarities among the countries that we are discussing. Once you get beyond the fact that most developed countries spend a lot of public money on health care, you will see that there are disparities between the systems.

Some of the differences that I will highlight pertain to the lack of potential within the current structure to reform health care in Canada. Most of my comments will be relative to the U.K. system.

In the U.K. there is a much greater emphasis on the primary care part of the system. It is much less detached from the rest of the system, and it is more involved with health authorities in terms of defining strategy with regard to where the resources should be going.

As part of the primary care system, as you will be aware, there is "rostering" whereby people cannot doctor shop. That primary care system plays an important role in the system that I think is important with respect to efficiency.

Another difference relates to what is covered publicly. In Canada, the public financing of the system is focused on hospitals and doctors. In many other countries, public financing extends much more into pharmaceuticals.I am not sure what the implications of that are for efficiency, but there are certainly implications of that with respect to equity and access to needed care.

Differences also arise with respect to the extent to the two-tier system in different countries. In the U.K., everyone is locked into paying for the system. In Canada we pay through our taxes. However, unlike Canada, the U.K. has no restrictions on private purchase of publicly insured services. That is always portrayed as a great thing about the Canadian system, but one of the paradoxes is that in the U.K. only 10 per cent to 15 per cent of expenditures come from the private purse: in Canada that figure is 25 per cent. Therefore, what you have here is a different form of the two-tier system. It just covers a different set of services.

In terms of ability to reform more explicitly, as has been said in the U.K. and other European countries, there is a definite split between the purchaser of care in some senses looking after the finances on behalf of the population and providers. That does not exist here. It may be possible to move in that direction. The moves to health authorities, health boards, health districts, depending on which province you come from, can be seen as a first step in that direction. Of course, Ontario is different so it may be further away from that possibility.

Other countries are intervening more directly in the system through things such as commissions for health improvement. This is being done in the U.K.

The issue of public purchase of private care has been touched on. This is more readily undertaken in many European countries. That has obviously caused a lot of controversy here and to an extent a standoff between the provinces and the federal government. To me, the implications of that are unclear. I will return to that at the end of my time.

The big difference here compared to many other countries is the remuneration of physicians. To me, this is a great barrier to reforming the system. I personally think that maintaining a fee-for-service form of remuneration is inconsistent with moving to a purchaser-provider model. I do not think that a purchaser-provider model will work with a fee-for-service form of remuneration.

The answers to the other questions are a lot shorter. In terms of experience from other countries, of course, you can get ideas from other countries, but they cannot just be adopted. As was stated by Mr. Forget, we will have to try to experiment more with the Canadian system. That may be unpalatable to certain people, but that message has to be conveyed. That will put us in an advantageous position relative to many other countries that have introduced, and then swept away reforms wholesale. That has made them very difficult to evaluate.

The third question deals with the broader range of coverage. I am not sure of the reasons for it. It may have to do with historical artifact. It may be that by the time a comprehensive system was introduced throughout Canada there was an entrenchment of private insurance that did not exist in other countries at the time. The more comprehensive systems of the other countries were introduced in the 1940s. There was probably an element of political compromise to get a system in place.

I do not think anyone has studied the influence of extent of coverage on health, but I do know one study by Starfield and colleagues at Johns Hopkins that looked at the impact of different types of systems on health. This study compared private systems, social insurance systems, and taxation-based systems. I can provide the committee with a reference to that study.

The fourth question asks what the federal government can do. One of the problems here in Canada is the tension that exists between the provincial and federal governments. That question is very difficult to comment on. I might ask a question in response, "Is it possible for the federal government to partner the provinces on some reforms or experiments that might take place in a part of a province?

The final question deals with the role of the private sector. There are two things that will drive this. One is the community's values and the other is evidence. At the moment it is being driven by values. This is due because there is not a lot of evidence apart from the U.S. A lot of the evidence from the U.K. is not relevant to Canada.

If we move ahead on this, we have to distinguish between the role of private provision and private finance, so there can still be private provision within a publicly funded system. That is an important distinction. The evidence that exists is mixed and there is not a lot of it. There is evidence that it happens. Again, in many European countries public purchasers do contract with private providers for various types of care, particularly elective surgery.

The evidence is mixed with respect to an internal market. There were some successes shown in the U.K., and some lack of success, rather than negative results. Certainly potential was shown. Again, I emphasize that this needs to be experimented with in Canada, if we are to think about moving ahead.

The remnants of that internal market still exist to an extent. We mentioned the separation of those who pay on behalf of the population and providers. I have no evidence for that, but I think it is a good thing that the population has a powerful, wealthy agent that is trying to shift resources around in their favour.

There are huge obstacles to implementing that in Canada. If you were to go further and think about a general practitioner fund-holding model then the population will have to accept rostering. Remuneration and employment status of physicians will have to be radically altered. The question of introducing drug budgets into a purchaser-provider system would also have to be considered. That may be a way of getting pharmacare into the public domain.

I am ambivalent with respect to user charges. When we consider user charges, we also have to account for the supply side dynamics, and how the supply side might react to reductions in demand by some elements of the population. We may end up spending the same on health care but meeting less need. There is some evidence that shows that user charges discourage ineffective care, but to an extent they also discourage effective care. Members of the committee can guess the part of the population most drastically affected.

Social insurance and long-term care pharmaceuticals are not my area. However, there are enormous challenges to be dealt with concerning long-term care and variations in funding arrangements, costs and provisions, where there are huge variations. That presents an enormous challenge. Bringing that area into the public system will provide a lot of political challenge. That may be an opportunity to negotiate with some provinces with respect to co-funding on some experimental work.

Mr. Åke Blomqvist, Visiting Academic, Applied Research and Analysis Directorate, Information, Analysis and Connectivity Branch and Professor, University of Western Ontario: I will not directly address the specific questions, but I will instead take the opportunity to provide you with a very brief summary of what I think are some of the most important lessons that have come out of the work that I have been doing on international comparisons, and from the reports that have been submitted by others for the committee.

Let me preface my remarks with a general comment on the approach to health care reform in Canada, which stems from the report submitted by Professor Tuohy. She has made the distinction between an incremental approach to health care reform, versus a gradual approach towards a blueprint. The comments of Mr. Forget and Mr. Donaldson represent that distinction, with more of an incrementalist approach on the part of Mr. Forget, whereas as an economist Mr. Donaldson tends more towards the blueprint model.

As a Canadian with some understanding of the political complexities, I understand there may be no choice other than to take an incrementalist approach. I have some understanding of where we might like to end up if the process of health care reform is ever finished.

I am reminded of a quip attributed to Yogi Berra:

You've got to be very careful if you don't know where you're going, because you might not get there.

From that point of view, the notion of having a blueprint plays a useful role.

Before I talk about the concrete areas where I think the opportunities for reform look most promising, I will make a distinction between lessons that can be drawn for the provinces, and the lessons that can be drawn for the federal government.

Our federal-provincial system of government means that most of the lessons that can be drawn from comparisons of health care systems are lessons for the provinces. They are relevant to the federal government to the extent of the Canada Health Act, as a set of more or less binding constraints on what the provinces can do. It may be that certain aspects of the Canada Health Act should be revised in order to give more freedom to the provinces to experiment with some reforms. However, most of the lessons are lessons for the provinces.

The concrete areas of my remarks will echo many things that Mr. Donaldson has said. From my point of view, a blueprint that could be helpful for Canada looks a bit like the United Kingdom. However, I am also interested in using some aspects of the Swedish system as a blueprint for provinces in Canada as well. Some of my ideas relate to that.

I identify three major areas where I think that there is some room for health reform in Canada. They correspond to the distinction I always make when I analyze differences between health care systems. First, there is the system of funding and the restrictions on coverage in the publicly-funded system. The second area corresponds to the question of primary care and whether there are opportunities for reform in that area. The third area, to which I have previously referred, is hospital and specialist services. Perhaps more broadly you can refer to that as system management. Those three areas are areas where one can find reason for fairly specific reforms.

With respect to funding and coverage, I can only echo what Mr. Donaldson has said. Canada has a relatively low degree of public funding of total health care expenditures and the reason is because we publicly fund a relatively narrow range of hospital and physician services. From that point of view, it seems to me that introducing some form of pharmacare and modifying the Canada Health Act are likely to be useful reforms. That is, the accessibility objective should be addressed in the context of paying for pharmaceuticals.

With respect to the second area, primary care and primary care reform, the best opportunities exist by taking some type of approach, possibly optional, to modify the system of paying primary care physicians. Mr. Donaldson has identified this as rostering and capitation. They hold the key to primary care reform.

It is an interesting question whether one can go the incrementalist route and experiment with rostering and capitation on an optional basis rather than ramming it through as an arrangement that is supposed to cover the entire provincial health care system. There are challenges in terms of coming up with an approach to that issue.

Finally, with respect to system management, going further in the direction of regionalization or formalizing the system of regional management and hospital resources by introducing some type of population-based funding for regions represents a promising avenue. The major reform that needs to be addressed, and is not yet, concerns integrating primary care services into the mandates of regions and redefining the question of population-based funding in such a way that it incorporates funding of primary care services, as well as hospital services. These are the three major areas where I think that opportunities for reform look most promising.

With respect to pharmacare, there is a range of issues that need to be addressed. The role of formularies and possibly the role of the federal government in providing model formularies that can be used by provinces in introducing pharmacare should be examined. One should examine whether that should be a system of reference-based pricing. One should consider whether one should allow a situation where one should allow persons who so desire to get more expensive, uncovered drugs by paying for them out of their own pocket. If so, should one have some type of supplementary insurance to pay for the pharmaceuticals?

You could also integrate, as Mr. Donaldson said, the notion of a pharmacare system with a drug budget for physicians. The British "fund holding" experiment included provision of a drug budget for the primary care physicians who were part of the experiment.

I do not think a great deal needs to be said about the second area, which is primary care reform. I would like to stress again what Mr. Donaldson emphasized, namely, that it is probably not widely appreciated in many parts of Canada that if you want to go to an effective system of capitation, you must accept some degree of rostering. That means, for the duration of the capitation contract for a patient, during which time you are supposed to use the services of one and only one family doctor, you are not entitled to seek services from any other physician, except on the recommendation of your family doctor. Whether that reform would be acceptable to Canadians needs to be addressed.

Fund holding dovetails nicely with the idea of capitation. Fund holding is an expanded version of capitation. It means that instead of paying ahead of time for a capitation amount for the primary physician services, you pay for some portion of the pharmaceuticals, and perhaps some portion of the hospital services, that physicians prescribe or recommend on behalf of the patients. There is a very close connection between the principle of fund holding and the principles of capitation and rostering.

The third area is system management and the question of regional and population-based funding. Experience with "purchaser-provider split" and with contract-based care and internal markets in the United Kingdom should be studied closely by Canadians. I have views on why there is a re-evaluation of those methods in the United Kingdom. Perhaps we can postpone discussion on why I think that some type of purchaser-provider split is a good thing, even though it did seem to have problems in the United Kingdom. Those problems did not exist anywhere near the same extent in Sweden.

Let me say a few words about funding and the question of the public-private split.

With respect to the user fees, I have come to the conclusion that we will never have a rational debate about user fees in Canada. The concept of user fees has become a symbol in the federal-provincial jostling over power in health policy. We are all better off giving up on the idea of user fees for physician services and hospital service.

If, however, we expand the concept of medicare to include publicly funded pharmacare, and perhaps long-term care and home care as well, then I believe that the issue of user fees must be re-examined. I do not think that there is an example of a country that covers pharmaceuticals and long-term care that does not have some degree of patient co-payment.

Should there be opting out in the Canadian system? I mean should people be allowed to opt out of the public insurance system and get some reward for that, as people do in Germany? In Germany you become exempt from the payroll tax if you get private insurance.

Obviously, this is a very controversial issue, but the model has already been introduced. In Quebec's pharmacare plan, there is an effective opting-out provision. You can have either public coverage or private coverage, and if you have public coverage, you have to pay a premium. In that sense, it is formally equivalent to an opting-out provision.

On the question of the social insurance system versus a tax-based system, we observe that to some extent that issue is a red herring. From the viewpoint of economic theory, once you have decided how large a portion of health services the public sector is supposed to pay for, then the relevant theoretical apparatus that kicks in is that of designing an efficient tax system. There is no such thing as an efficient tax system to finance a certain type of public expenditure; there is only an efficient tax system to fund all public expenditures. To that extent, much of the debate is misplaced.

Professor Colleen Flood, University of Toronto: Thank you for asking me to participate today. It is a little odd testifying from such a distance. I will try to be brief. Obviously we have already participated quite a bit in the discussions with our report.

In looking at how the health care systems of other countries differ from Canada, I agree that, superficially, there does not appear to be a great deal of difference, but the differences are systematically deeper than they first appear to be. If you only look at aggregate shares of public and private financing, that does not tell you very much. If you start getting into a little more detail, you will find that, although New Zealand has a much higher share of its system publicly funded, it has much higher rates of user charges and co-payments for family doctor services. As family doctors are the gatekeepers to the rest of the system, this is a fundamental barrier to access to the rest of the system. If you just compare Canada with New Zealand on the public-private mix, Canada looks like it is not as good as New Zealand in terms of progressivity, but if you get down to the details, there are problems of access because of these huge charges for family doctor services. I think that the devil is in the detail to a significant extent.

In talking about public-private mix, just to speak to the issue of social insurance payments, I do not agree with Mr. Blomqvist that there is not some significant difference between tax-generated financing of systems and social insurance systems. Perhaps we can talk about this a bit more in questioning, but it seems to me that there may be issues around the political acceptability of spending on health care systems when you finance from employer and employee contributions as opposed to tax-based contributions. Another issue is to ensure that significant cutbacks or increases in public spending are not related to the prevailing political winds at the time. I think there may be more to this issue of social insurance funding than Mr. Blomqvist does.

Looking also at health outcomes, it is true that there is not much difference, in terms of life expectancy and morbidity, between the health care systems of developed countries. We have to ask what we want from our health care system. I would argue it is more than we can currently measure. If we were only putting forward to Canadians that the things we should care about are things we can currently measure like life expectancy and infant mortality and morbidity, we are really barking up the wrong tree. Canadians care very much about things like timeliness, palliative care and the degree to which the system responds to changes in technology and demographics. You can have a great system today, but if it will not respond to changes in technology and demographics over time, again, you are barking up the wrong tree.

If we are looking for a blueprint for Canada, we have to be careful about what it is that we want to achieve. I do not disagree that there are certain aspects or parts of the U.K. system that bear a lot of examination and perhaps replication, but we have to be very careful that the U.K. may not have the outcomes that we want to achieve. They have very low costs, but they also very long waiting lists, and waiting lists and waiting times have probably been the greatest source of discontent and concern for Canadians. We want to take the best aspects of reform from countries like the United Kingdom but not the worst.

In forms of the public and private mix, my sense and conclusion from the work that I have done and that I have done together with Mr. Stabile and Ms Tuohy is that there is no magic solution in terms of the private-public mix. Even these terms are getting a little stale because there is so much variation in what is public and what is private. Canada would benefit from a more rational, coherent and national assessment of the cost effectiveness of health care services that could inform provinces in determining the general range of publicly funded services.

This, I think, speaks to a role for the federal government. The federal government could help to provide a national assessment of the cost effectiveness of drugs and new technologies. It could also provide information on existing health care services that could help and assist and inform the provinces in deciding what services should be publicly funded, if there should be co-payments and if so, for what services in particular.

I have some comments on contracting out and internal markets. It is important to realize that the act of contracting out itself is not a solution. Contracting out to competing public and private providers may, in certain health care markets and at certain times, be beneficial, but whether or not this will be true at any particular time will vary over time and across health care markets. In other words, this is not a one-stop game. Health care markets are not the same. They are dynamic. They change over time.

It is vital that we have a system that is able to decide whether, at any point in time, it is a good idea to contract out or a good idea to provide it in-house. This means we have to consider the incentives that the buyers or the purchasers of health care have to do a good job. When I am talking about buyers and purchasers, I am talking about health authorities; community care access centres; non-profit organizations; private insurers; a group of health care providers that are responsible for purchasing; and others who ensure access to a broad range of health care services.

It is my opinion the reason why contracting out in the U.K. and New Zealand in the internal markets was not as successful as was first hoped, is because insufficient attention was given to the incentives that the buyers or purchasers of care had, to do a good job. There was insufficient attention given to the fact that you needed information about the costs and benefits of the health care services that were being delivered. We are moving from a state in both the U.K. and New Zealand where we had absolutely no information about the costs and benefits of care to where we needed almost perfect information in a contracting-out environment.

I think that if we are considering a shift to contracting out, we have to consider what incentives there are for good decision-making. We need to make sure that we are considering generating good information about the costs and benefits of care, and we have to realize that Rome was not built in a day. In order to achieve real, lasting and sustainable change, it will take time to get the information.

In terms of what the federal government can do specifically, as I have already said, there is a definite role for the federal government in setting national standards and in evaluating the cost-effectiveness of a wide range of care. There is possibly a role for the federal government, as there is for the Australian Commonwealth Government, in managing the pharmaceutical plan. That should be evaluated. There is also the possibility of the federal government, in partnership with one or more provinces, actively experimenting with GP fund-holding from the ground up to finance primary care reform by way of an initiative similar to the GP fund-holding initiative in the United Kingdom. That would be a way of rolling in an extension of the range of care to pharmacare and potentially home care through these budgets.

Mr. Mark Stabile, Professor, University of Toronto: I will be brief. We have heard people note here today that the big difference between our system and others is not the level of private financing, but the role of that financing. In fact, you have noted, as a committee, through the systems you have studied that, in fact, we spend more money privately than any of the systems that you have examined over the last few weeks. Today I will highlight a few things that might be useful.

The first is the use of co-payments, or deductibles. Research from several countries confirms that if you make people pay out-of-pocket, they use fewer services. Whether this is a good thing depends upon which population you are targeting. You will save money, and for middle and high income adults, most studies find that the clients and utilization do not translate into worse health. There is a considerable amount of evidence that suggests that increasing barriers to primary care access for children is very costly in terms of their health. The same is true for other already under-serviced populations, namely lower income populations.

It would be a mistake to alter behaviour through out-of-pocket costs for health care without addressing whether individuals have the means to pay for these costs. While other countries have user charges, they have a mechanism, be it means testing, greater income redistribution, or something similar, to ensure that people have the means to purchase this care.

On the issue of for-profit versus not-for-profit delivery of care, there is limited international evidence on the differences between the two when both types of care are publicly financed, in the spirit of Alberta's efforts. However, interesting new evidence from the U.S. suggests that for-profit providers can alter the behaviour of not-for-profit providers. The research examined whether for-profits are more likely to upcode than not-for-profits. Upcoding is a term used to describe the practice of shifting the diagnosis that a hospital gives a patient from one that pays less to a diagnosis that pays more. It presumably has no effect on the quality of care received, but it will affect the amount of profit the hospital makes. The results are interesting, because they indicate that not only do for-profit hospitals seem more likely to upcode than not-for-profit hospitals, but in areas where there is a high density of for-profit hospitals, the not-for-profit hospitals are more likely to upcode. The for-profit hospitals may, in fact, be altering the competitive behaviour of not-for-profit hospitals. That should be kept in mind.

It has not been stressed enough that, in response to the committee's inquiry as to why other social insurance systems are able to offer a broader range of coverage than we offer are, it is important to recognize that we are making trade-offs. We do that to expand the base of public coverage, which we all agree we might want to do. We will have to consider not offering first dollar coverage for everything we do for all doctor and hospital services. Whether this indicates means testing for some forms of coverage, allowing a mixed private and public funding for items that are currently only publicly financed, or considering other methods of redistribution, is something that we should talk about today.

Ms Carolyn Tuohy, Professor, University of Toronto: I will take a somewhat different approach to these questions. I am a political scientist, following a range of lawyers and economists, and I want to talk about political feasibility.

Certainly one way that these various nations differ from Canada is in their broad political systems and in fact, in the politics of the health care sector in each of these nations. We can learn from these other nations about systems that have proved to be politically feasible. Then, choosing from the menu of possibilities with which Canada is faced, we can speculate as to what would be politically feasible in the Canadian context.

I want to pick up the other end of the stick instead of starting with what we want to do and then thinking about whether it is politically feasible. I want to start with what is politically feasible and then see what possibility from that menu selection would work best.

In the paper that I prepared with Mr. Stabile and Ms Flood, we pointed out that of the nations that we considered - Britain, New Zealand, the Netherlands, Australia, Canada and the United States - there were basically three approaches to health care reform. I called them a "big bang approach," a "blueprint approach" and an "incremental approach." A big bang approach is an attempt to get it all right, all at once - big bang, comprehensive reform. There is an attempt to do this in Britain, New Zealand and the United States. In Britain and New Zealand there was an attempt to introduce an internal market very rapidly. In the U.S. there was an attempt to introduce universal health care through managed competition.

The Netherlands chose to take a blueprint approach - the sort of thing that Mr. Blomqvist talked about - of having in mind where you want to go, but taking it in steps. In Canada and Australia there was really not a blueprint, just a series of adjustments in particular sub-sectors.

The irony is that it does not seem to matter which kind of approach is taken - big bang, blueprint or incremental. There were varying degrees of success in each nation. I would disagree a little with Mr. Forget in that I think the internal market reforms stuck more in Britain than they did in New Zealand. Granted, they were absorbed by the existing system. The attempt to split the NHS hierarchy into purchasers and providers was an attempt to break up an established structure. The human networks within that structure re-knit themselves to a certain extent.

The result was long-term, rather than annual, contracts. There was also less competition among providers than was originally anticipated. The result was also more explicit bargaining and contracting between purchasers and providers and, in a sort of sleeper reform, general practice fund-holding in the primary care sector. Although the language certainly changed when Labour took over in 1997, the fundamental concept of fund-holding by general practitioners, now in larger groups, and the fundamental split between purchasers and providers was maintained.

In New Zealand, on the other hand, the reforms were progressively rolled back after a series of changes in government. It remains to be seen whether this is followed through, but there was a version of the British sleeper effect with general practitioner budget-holding in New Zealand as well. Generally, I would agree that those reforms were more rolled back than was the case in Britain. The U.S. attempt to introduce managed competition in a big bang way simply failed spectacularly, as we know, with the Clinton reform.

In the Netherlands blueprint approach, it is interesting that at each step toward the blueprint, you need to maintain the coalition of support that you had at the outset. As I pointed out in the paper, this is both a difficult policy design problem and a difficult political problem. If you have what we will call, for the sake of argument, a left-right balance in the overall package of reforms, and everyone agrees to it at the outset, keep in mind that you must satisfy the left and the right at each step. It is very difficult to do. This was the experience of the Netherlands through a series of coalition governments in which the complexion changed from centre-right to centre-left to centre-right. They ended up with an implementation in one sub-sector - in the social insurance sub-sector - of significant reform, but certainly not with the whole way to manage competition that was originally anticipated.

Finally, Australia and Canada had incremental reforms that did make a difference in certain sub-sectors, not within an overall blueprint, of hospital restructuring in Canada and of public subsidies to private insurance in Australia.

Why did these nations take these particular approaches? I argue that it is really the result of conditions in the broader political arena rather than in the health care arena itself. A big bang approach to health care reform is very politically risky and it is rare that any government will take that chance. It requires a confluence or convergence of political developments that is very rare. You must be able to consolidate political authority on a fairly massive scale and you must have the political will to take the risk. To the extent that you consolidate authority, you also consolidate accountability, which then makes it more difficult to shift the blame to someone else.

We have seen big bang reforms on rare occasions. We saw it in Britain after the Second World War with the establishment of the NHS. We saw it in 1980s in Britain with the Thatcher government in its third successive majority mandate. These are rare events.

Blueprint-type reforms are more likely in coalition circumstances where bipartisan compromise is necessary. I have not mentioned certain U.S. states where we also saw blueprint approaches because of the need for bipartisan compromise - with a similar result as that in the Netherlands. Things tended to stall or get rolled back as the complexion of the political coalition changed over time.

In Australia and Canada we have seen incremental reforms where federal-provincial consensus cannot be mobilized for something broader. That, also, is a result of factors in the broad political arena and not in the health care arena itself.

What can we learn in terms of what actually happens in implementing these reforms? Across these nations, regardless of whether they took a big bang or blueprint or incremental approach, things got implemented to the extent that governments could make strategic alliances with certain key actors in the health care arena. It was only in that respect that they were implemented.

That takes us to the structure of interests in the health care arena, and to the structure of the health care system.

In the British hierarchy of the NHS there is what my colleague Rudolph Klein in Britain has called the "implicit concord," the founding bargain between the providers, hospitals, the medical profession and the state. Basically, the state will set the budgetary parameters and physicians, primarily, will allocate within those parameters with very little interference from the state. The internal market reforms were a big shock to that accommodation, but it did recover. It did re-knit itself.

In New Zealand, as Ms Flood has pointed out, because of the extensive system of co-payments, there is a much more divided base for accommodation. Physicians are dealing not only with the state but with patient out-of-pocket payment and private insurer payment. That has fragmented the basis for a political accommodation between the profession and the state.

In the U.S, there is what Allen Schick has called "hyperpluralism" in the health care arena, given the turbulence of the markets and the various interests that throws up. In the Netherlands we have what has described as the social middle ground of the social insurance funds, the physicians associations, the private insurers - again, the grounds for compromise being across a number of representative interests. In Australia, we have a more New Zealand-type situation of a divided structure of interests. In Canada, ironically, given our relatively low share of public funding, we have an accommodation between providers and the state that is not unlike that in Britain because our physicians and hospitals are essentially locked into exclusive public payment.

This meant that in each of those nations there were different structures in which to seek strategic alliances. There were the GPs in Britain and, to a lesser extent in New Zealand, general practice fundholding became advocates of reform. In the U.S., hyperpluralism fragmented the possibility of coalition. In the Netherlands, the social insurance funds were the allies of the state in reform. In Australia, again, there is a fragmented basis for accommodation.

In Canada, what does this suggest? It suggests that we ought to be cautious about a big bang approach. I frankly doubt that we have the political conditions in the broad political arena for a big bang approach to health care reform, which would require an unprecedented - at least since the 1960s - degree of federal-provincial consensus. If we want to think about a blueprint, I agree with Mr. Blomqvist, it is a more intellectually appealing approach. I am not sure that we could again maintain the federal-provincial coalition over that series of steps. The best we can do may be a bolder approach to incrementalism than what we have adopted in the past, seeking champions and allies within the health care arena.

I would consider that to be most in the arena of primary care reform. There seems to be a consensus developing here about the importance of primary care reform, where there are strategic allies, where there are physician groups in support of primary care reform in most provinces.

Let me just say a word about several things that have come up in the earlier comments. With regard to private provision of publicly financed care, there are three caveats about turning to private providers for purchase by public payers. The first is with regard to lines of accountability. It is very important to distinguish, in the private sector, not just between for-profit and not-for-profit, but between investor-owned and proprietary organizations. In proprietary organizations, essentially, the providers consume the profit. In investor-owned corporations, the profit is distributed as dividends to shareholders and as equity gains to shareholders. There are very different incentives in each of those cases. We might discuss that in the questioning segment later.

The second is the potential for cream-skimming. Across nations where we see private, for-profit providers move into areas, it is into those that are profitable and that pulls them out of the public system. Even if they are publicly financed, that leaves a public hospital with much less capacity to cross-subsidize and a much greater pressure on its public budget.

Finally, I offer a warning about bundling of services. Mr. Stabile can speak to this later. If those private providers are providing services that are publicly paid for and can bundle those services together with services that must be paid for privately - such as a foldable lens - that is an effective co-payment, if you cannot get the public service without buying the private service. This is something that Bill 11 in Alberta has regulated against, but it is clearly an incentive for private providers.

I was going to speak about user charges, but I will not.

The Chairman: I will not allow myself to get sidetracked by your comment about the private-public issue, except to point out that this country has had a long experience in transportation, telecommunications and other industries in which a private provider was required to subsidize, in effect, uneconomic portions of the business. For instance, telephone companies were not allowed to only service urban areas; they were required to serve rural areas. Transportation companies were required to provide service to clearly uneconomic routes. A lot of Canadian experience would counter the notion that you cannot have private providers of a public service and require the private providers to do certain things which are clearly uneconomic as part of the deal. I do not want it get into that subject.

Ms Tuohy: The point would only be that must be regulated if you do that.

The Chairman: Mr. Forget raised a question which has troubled this committee from the beginning, and we would like to have some advice on the massive misinterpretation of what the public administration principle of the Canada Health Act means. Have you any thoughts on how we can redefine that principle in a way that means what it was meant to mean, or alternatively, how we can correct what, I believe, is frankly a deliberate misuse of the principle by many people?

Mr. Forget: It is easier to say that it has been misinterpreted than to suggest a constructive way of doing it. I suppose the original intent was that when medicare was instituted the provinces should not wash their hands entirely of the problem and asked private insurers to manage the system on their behalf. This may have been at the back of the minds of the legislators 40 or 50 years ago. As long as provincial governments would keep essential and ultimate accountability for the system that they supervise, that should allow them to do pretty well everything else that they feel appropriate and expedient. Of course, we know it has not been interpreted that way. It means a complete ban on any kind of private provision and so on.

What does the law mean? Well, I suppose different lawyers will read it differently. One other thought that came to me in connection with that is the notion that "public administration" tends to suggest a close relationship between the health system and the government, but the example of Holland and Germany suggests that a distance can be built between a non-profit, publicly-constituted authority and the day-to-day political life with the vagaries of political life that are disturbing to a system like that.

There is a lack of continuity at senior levels in our health departments. Certainly that has been observed federally, but also I believe it has been observed in many provinces. It has come to the point where the total expertise and the experience embodied in the top civil servants who run the health system in the various provinces have become very small indeed. These are not jobs that are rewarding in terms of a feeling of success these days and, therefore, people tend to move frequently. As a result, the system is led by people who have minimal knowledge about what they are trying to regulate.

Building distance between politicians and the management of the health system might be good and it might be one way of reinterpreting the public administration to give more freedom and also build more distance.

The Chairman: In that sense, set it up as an arm's-length agency, a Crown corporation, whatever you want to call it.

Mr. Forget: Yes.

Senator Morin: I would like to thank Mr. Forget for coming. He was Minister of Health when I was Dean of Medicine at Laval and he was one of the best, if not the best, Minister of Health we have had in Quebec. He wrote an excellent book on internal markets in Canada and for those interested in internal markets it is an excellent reference source.

I have two special requests before starting. Ms Tuohy, we have received excellent documents from you. One of the documents stated there was a percentage of the population in various countries that is on waiting lists. This was limited to only three or four countries; the U.S. and other countries were missing. Is there an extended list? Perhaps we could be provided with a full list of countries, as far as waiting lists are concerned.

Ms Tuohy: I should pass this question on to Professor Flood. There was a Commonwealth Fund survey of the population in the five Anglo-American countries that asked questions about waiting lists. We have that data.

Senator Morin: Perhaps we could have those lists.

Professor Donaldson, perhaps we could have the reference quoted on the study comparing various systems of delivery.

Mr. Donaldson: Absolutely.

Senator Morin: From our study of various countries there are three major differences between Canada and the other countries. Our system is very decentralized. I cannot think of another country where the whole delivery of health care is within the responsibility of the states or provinces, as the case may be. The central government always has some power over the delivery of health care. Here in Canada it is totally provincial. The provinces totally resist any intrusion of the federal government, however beneficial that might be. As time goes by, whatever federal funds are spent in health are unattached. As long as tax points or unattached funding are given, the federal government is losing power.

I was wondering at one point if we should not let the provinces go their own way, let them experiment independently under the umbrella of a certain number of small, generally agreed principles in view of the fact that we are so decentralized. I would like to have your views on that.

Another distinction that was alluded to is that every country we studied has a private-interest sector in hospital and medical services, for all sorts of reasons, some of which may be historical. Countries such as Australia are promoting this and subsize their insurance sector. Australia thinks the private sector is very important and it hopes to bring at least half of the population into it.

Some provinces in this country are more interested than others in going this route. We can have theoretical discussions about that. Should we let provinces again experiment under the umbrella of a small number of generally agreed principles?

Another point that struck me concerning our Canadian system is the increase of costs and the effect that it has on the provinces.

According to CIHI, health care costs for provinces increased by 9 per cent last year. There is not one single province that has not complained that its health care delivery system costs 45 per cent or even 50 per cent of its budget. This morning the newspapers reported that Quebec health minister Trudel was telling radiologists that he had to turn down their requests, however well founded, and which university should be closed.

In Great Britain the platform of the Labour Party at the last election contained a promise to increase the cost of the health care system by one-third. Our impression, from hearing from witnesses, is that Australia and most European countries are relatively flat. What strikes me in Canada is that our health care is increasing so much. We have reached the point that the provinces no longer can afford the increases that have occurred - especially over the last two years.

Ms Flood: When talking about the degree to which the provinces are constrained by the terms of the Canada Health Act, I gather from your comments, senator, you were implying that they are.

I would argue, in fact, that the criteria of the Canada Health Act is fairly broad. Within that, there is scope to move to a number of things, such as internal markets and primary care reform. The only thing that is expressly prohibited is a move toward user charges, or extra-billing and two-tier medicine. However, that is only to the extent that we are talking about increased private financing for reform within the publicly-funded system.

It is true that we seem to have had a lot of misinterpretation about what public administration actually means, but I believe those people who would argue that prohibits contracting out to private providers are absolutely wrong. That is not what the Canada Health Act says. Absent that wrong interpretation, there is a great deal of scope for the kind of reforms that most of the experts around the table are talking about.

On the second point, subsidizing or allowing private insurance, experiments with private insurance and extra-billing, our work shows that those countries which have two-tier do not perform any better with regard to waiting lists and waiting times. If you have private insurance, you obviously will have shorter waiting lists or waiting times, but overall waiting lists and waiting times are not reduced.

That being said, there may be ways to experiment with private insurance, as in Quebec, in terms of regulating private insurance coupled with mandatory employer-employee contributions to extend the range of services provided. If we think about private insurance in the way that we think about private insurance in the Netherlands, or any social insurance countries, then there are many more prospects for interesting reform.

Mr. Forget: This issue goes back to the point that Mr. Blomqvist raised: What is the objective of the system? In responding to the roles of private and public, we have a system in which, quite obviously, the whole philosophy is influenced by a public health approach, even when we are dealing with care to individuals. The public health approach permeates everything in the way governments discuss whether some form of organization will produce better outcomes. The outcomes that they refer to are outcomes for society as a whole - life expectancy and things of that nature. They are not outcomes for the individual who presents at the clinic or at the hospital and needs a particular service. That set of outcomes, which are outcomes of private interest, tend to be rather ignored in the system. We like to deal at the macroeconomics level of the health care system - the equivalent of the rate of inflation and rate of growth of the economy. In the health care system, it is called life expectancy and things of that nature. That has driven a public health approach to public funding.

As we become aware of the multi-dimensional nature of the outcomes, the qualitative nature of the outcomes, it will become hard to sustain that view. For instance, the day will come when we can rank providers in any field - cardiac care, for instance. There will be a national ranking of who is in the top quartile, the second quartile, or the third quartile. What politician will want to say that you must get care from providers in the fourth quartile? Just try to wrap your mind around this. It is an extreme example.

As long as you develop a sense that there are variations, you will also develop the sense that there are trade-offs. People will trade off outcomes, in this specific context, for proximity. They already do this. It is known that volume and success of outcomes for certain surgical procedures are related. This has been known for a long time.

This has not lessened the pressure to have cardiac care facilities in areas of the country that are of low-density population and cannot possibly provide the volume needed to maintain high quality. This has been known for a long time. Has it had any impact on public choices, on popular pressure and on individual choices? People do go to these institutions, and if they cared to inform themselves they would know that they are taking higher risks. Trade-offs are being made but they will become more and move obvious. When these trade-offs are fully documented - and that will happen, it will be available on the Internet 10 years from now - people will know these things.

The multidimensional nature of health care to individuals who seek help will make it impossible to finance the whole of health care. Those who want more of this as opposed to less of that will be told that we will finance a core and they will pay for the excess. I cannot see how governments or public administration can make those choices and make them effective, when they have economic consequences within the fully publicly funded system.

This will come. The system will break down unless it seeks more flexibility. I believe that is the answer to Senator Morin's question. Is there a role for private financing? Eventually we will all agree that we cannot resolve these problems except by allowing people to pay the difference when they make choices that have economic implications.

The Chairman: To echo that point, there is a Web site available now which lists all the cardiac surgeons in New York State and all of their records in terms of operations and so on.

Senator Morin: We do not need that in this country because we have the best cardiac surgeons here.

The Chairman: Many years ago, Mr. Forget, when I was giving a speech to the Nova Scotia medical association, I thought I spoke a truism, but the members got upset when I reminded them that 50 per cent of the doctors graduated in the bottom half of their class - a point that they seemed to find relatively offensive.

Mr. Stabile: The counter to trade-offs is trade-offs subject to constraints. Many of the people making those choices are making choices because of the constraints. I do not disagree with you, but we must recognize the equity implications of your comments. It may be true, but equity implications are large.

Mr. Forget: The equity implications, first and foremost, are that you cannot make these choices for people whenever you know what the options imply. To a large extent, we are still ignorant about these rankings; to an amazing extent we do not know what is the relative quality of providers in the system. When that becomes public it will be ethically impossible for the system to make those choices. The people will need to make those choices and they must be empowered to make them, but this will have economic implications for them.

Mr. Donaldson: I wish to make a similar point to that of Mr. Stabile. I do think there are serious equity implications of going in that direction.

The other point I wanted to tackle was the final one on costs. I believe you are correct, the lid has come off with respect to costs in the last year or two, but it must be remembered that was after a number of years where Canada was very flat, and some would argue that, in real terms, compared to the demands being placed on the system, there was actually a reduction in costs in the country. It is partly related to that.

What is happening in the U.K. is simply a political commitment by the new government to raise the level of spending there to the European average, or the OECD average, one or the other.

Senator Morin: It was specifically written in the platform as one-third.

Mr. Donaldson: That is right, but we have no idea what impact that will have on the health of the population. We have no idea what impact the recent spending increases in Canada will have on the health of the population. These things have to be seen within a much broader "determinants of health" model. If we want to have incremental improvements in the health of the population, should incremental improvements not be put into the health care system?

The Chairman: I would not place a huge emphasis on what is in an election platform.

Senator Morin: I agree but it is in a different direction.

Senator Fairbairn: Mr. Forget, you spoke about reaching a point of empowering citizens to make their own choices. You said quality was multi-dimensional, not black and white, and that we in Canada have indeed lost our innocence - and I assume other countries have as well - in facing difficulties like the blood system. You spoke about errors and mistakes.

I want to ask you about an issue that has troubled me. In that area, although I would not put it in terms of errors and mistakes, the technology of medicine has enabled certain institutions and the people who practise within them, often outside this country, to build up an expertise in very rare and complicated medical problems. What happens when a patient in Canada learns that a physician here can perform a particular process that he or she requires - be it a stem cell transplant or something - but to get the best advantage, he or she must go elsewhere to foreign doctors who may not be any better than the Canadian doctor but who have done the procedure more often. Although they admit to making mistakes along the way, those doctors have established a body of expertise that makes their clinics more attractive. If I were the patient I would want to go to the most experienced doctor. Then the patient is faced with the financial issue of who picks up the tab.

What are your thoughts on that? Provinces have the ability to assist with out-of-country treatment, or they can make the judgment that the expertise exists here, whether it is as much as elsewhere, and the patient is told to stay here. That can be a huge blow to an individual who might see an entire private insurance policy disappear in the snap of a finger really. It all comes down to that question of quality.

Do you have a comment on that in terms of our system here in Canada? Are our national borders becoming so blurred that we must have a different perspective on how we support people in their quest for quality elsewhere?

Mr. Forget: Essentially it comes down to this question: Is our health insurance system in Canada insuring individual Canadians or insuring the income of the providers?

I would certainly hope that we prefer to consider that Canadians are insured against illness, as opposed to providers having their incomes insured by government. That is what it boils down to.

A case very similar to this, the Stein case, has been tested in the courts in Quebec. You may be familiar with the case. The Quebec government had a rule whereby any medical procedure available in Quebec could not be insured out of the country. The court deemed that the medical procedure - in this case a cancer treatment - was available in Quebec but it was not available in a timely fashion. The individual went to New York State, had the procedure performed, and eventually the Quebec appeal court decided for reimbursement for the procedure obtained in New York State. The judge decided that "available" meant available in a timely manner considering the nature of the illness. Time is of the essence in treating cancer, obviously.

It was compounded by another dimension whereby there was an implantable pump that had to be put in the patient at the time of the operation. That implantable pump was not on the list of approved purchases for Quebec hospitals. That was another supplementary reason.

This case shows that, when tested in the courts - and it is only a Quebec appeal court judgment so we cannot draw inferences too far - the provincial governments, it seems, have lost the lost ability to prevent out-of-country or out-of-province purchases of services when there are justifiable reasons to go that route.

This is what I referred to as the impact of the European anti-monopoly clause on some health systems which, I understand from conversations I had with people in Holland about that, would seem to prevent citizens of particular European countries from being reimbursed for treatments received in other European countries.

There is a drift here which suggests, indeed, it is the citizens who are ensured and that it is a question of fact whether it is reasonable or not reasonable to go abroad for treatment. I suppose it is not a totally open door.

Senator Fairbairn: The scary thing is how long it might take a patient to go through a court challenge to receive that kind of access. In many cases time is of the essence. This is a difficulty in every province. It certainly is in my province of Alberta. It is a very human and tragic decision to have to make.

Mr. Forget: It is the context in which several provincial governments decided, more or less simultaneously with that court decision, to offer out-of-country treatment for cancer cases.

Senator Fairbairn: Judgments still must be made about whether procedures done here may be done better elsewhere.

Mr. Forget: That is the purely qualitative dimension.

Senator Fairbairn: We have a complicated system in Canada. It is a very politicized system in terms of the angst of the debate about jurisdiction, whenever there is an election or whatever. We definitely have our jurisdictional pressures and stresses in this country.

Mr. Donaldson and Ms Flood, in examining public versus private, talked about the notion of the federal government partnering with a province. Could you give us even a hypothetical example of that? You might even use the recent situation in Alberta. How do you envisage such a partnership taking place on that delicate issue?

Mr. Donaldson: I had not envisaged anything. This was just a thought that I had in my hotel room last night. I suppose I was also thinking about the jurisdictional issue. In some senses, the federal government cannot legislate for reform. A potential way of doing that might be to encourage partnership on these reforms with perhaps a 50:50 funding arrangement. I did not have any particular reform in mind, beyond what we talked about, be that internal market reform or extending capitation beyond the quite restricted experiments that are currently taking place in various provinces.

Ms Flood may have firmer ideas on that.

Ms Flood: On the constitutional divide, so far the courts have interpreted that the provinces have primary jurisdiction over the management and funding of health care services. That may change. At a certain point the courts may have to revisit whether, under the peace, order and good government power, the federal government does not have a more expanded jurisdiction. The federal government does have some jurisdiction over pharmaceuticals, which are becoming a more and more important component of health care.

Given the current jurisdictional arrangements and the current way that courts have interpreted the divide, people have been proposing that the federal government offer to fund primary care reform in a particular province. As a hypothetical example, the Province of Nova Scotia would agree to undertake primary care reform along the lines of GP fund-holding, in exchange for which the federal government would fund the capitated prescription diagnostic budgets, for example, that groups of family doctors and nurses would have. This would be a wonderful province-wide experiment. If it were successful, it could be a path that other provinces may wish to follow.

That is a very simplified example of the kind of partnership that many people envision.

Senator Cordy: I was interested in the comments of Professor Donaldson and Professor Flood on remuneration of physicians. I attended a health conference in Nova Scotia last week where one doctor suggested that, as a profession, they have done a good job - perhaps too good a job - of convincing people that they must seek a doctor's advice for many things. Professor Flood referred to that as the gatekeeper function in our system.

How do we create the political will to make changes to our system? I was interested in your comment, Professor Tuohy, that rather than going for the big bang in Canada it may be better to work at it in small parts. You talked about forming alliances with key actors in the system. Can you expand on how we could do that? When I say "political will" I am not necessarily referring to government, but to political will within the health system and within the Canadian public for change.

Ms Tuohy: The example that I gave and the one that I would emphasize, is primary care reform. I think there is a will on the part of primary care providers - mainly physicians but nurse practitioners as well - to participate and co-operate in primary care reform. Most of the provincial medical associations are on side. In Ontario, at least the College of Family Physicians is on side.

There is a potential for that kind of alliance. It is one that has a lot of leverage on the system, exactly because of the gatekeeper function. We could possibly enact primary care reform on a voluntary basis, as was the experience in Britain and New Zealand. I am agnostic as to whether we really need to make it mandatory. I think that is the appropriate area of focus, given the climate in Canada now both within the health care arena and more generally. I think it will have a lot of purchase on things such as drug prescribing and referrals, both to specialists and long-term care.

Ms Flood: I agree wholeheartedly with that. Professor Blomqvist commented on the concern about capitation restricting choice and how it will be a significant issue for Canadians. It is important to remember that when talking about GP fund-holding we are actually talking about a group, possibly a relatively large group, of physicians and nurses working together on a team. In that way, if you do not like your family doctor, you could have another doctor from the team. The choice is restricted to the team, not necessarily to the particular physician.

The key here is actually folding in the budgets for prescription drugs and diagnostic services. In my opinion, the real problem is not so much doctors referring for their own services over and over again, but more that they do not have an incentive to be much concerned about the costs and benefits of the stuff they prescribe and recommend. That does not mean they are evil; it is just that, historically, they have had no incentive to be sensitive to that. Mr. Stabile can give you statistics on the rate of prescribing in Canada.

It is very important to roll in a larger budget. The question is what range of services it should cover, but that is key to primary care reform.

The Chairman: As Professor Flood must leave us now, I wish to thank her for her contribution today. It has been most helpful.

Senator Cordy: Universality is probably one of the most important things to Canadians. Following on the idea of starting things on a smaller scale, could you see pilot projects taking place within just one province in Canada or even one part of a province? People tend to think that what services are offered in one province must be provided across the country.

Ms Tuohy: I think that would be viable as long as the pilot projects are large enough to cover major regions within provinces or even an entire province. I believe that is consistent with the Canada Health Act. We ought not to think that the provision for access on uniform terms and conditions is a barrier to this kind of experimentation.

If Ms Flood were still here, she would confirm that really refers to the absence of financial barriers. As long as we are not pricing differentially within the public sector and we are not erecting financial barriers to care, I think the kinds of primary care experiments to which you refer can go on within the context of the Canada Health Act.

Mr. Donaldson: I have a brief comment that relates to the last point that was made. If we are to implement reform, of course, there is an element of volunteerism in this in terms of the people who take on the new reform. However, I think it has to be cast on a more widespread basis. There has to be an element of persuading doubters into it. The evidence that exists so far on capitation involves small, isolated studies of volunteers. What do they show? They show no impact. That is because volunteers who go into capitation studies are already people who are quite trendy in terms of their attitude to how they deliver care. Their volume of referrals to hospital is low. They are probably low users of drugs. You could argue that these volunteer experiments have actually been damaging to the cause of health care reform.

Senator Keon: I am sorry our international circuit is closed. I wanted to ask the panel something. I have thought for a long time that our major problem in health reform in Canada is the absence of a good health information system. When you search around the world, you cannot find one. It is very interesting that, perhaps, the British are coming closer than anyone to being able to address this. Technologically, it is quite possible - and it is happening by serendipity on the Internet. The only problem is that all the information that is coming out is very inaccurate.

The Chairman: We are developing an information system with false or, at least, inaccurate information.

Senator Keon: In your opinion, why have we not done this? Is it too politically hot? Are we afraid to present our customers with what we have and what we do not have? In our own country, is the reason federal-provincial wrangling, and internationally, is it international wrangling? It is not a question of what is possible or impossible, it is just not happening. I do not think that funding is a major problem. I do not think it would be that expensive.

I would like all of you to address this. If we are going to have the kind of outcomes that Mr. Forget referred to, then we have to have this.

Mr. Blomqvist: If I were to consider under what circumstances the information seems to have been most effectively used to provide cost effective care, I would go to managed care plans in the United States. They have a direct financial incentive in disseminating information among their clients as to what is not necessary and what does not meet cost-effectiveness criteria.

On a national scale, the British, as you suggest, have come closer to that. You can, if you like, think of the NHS as one giant monopoly-managed care plan. In a sense, the incentives are similar.

In systems in which there is fee for service and hospitals funded by global budgets or something like that, individual actors do not have the incentive to do that.

The Chairman: What is your guess as to why provincial governments have not got into this as, presumably, they would stand to benefit considerably from a more efficient information system?

Mr. Forget: I do not know. It is a mystery to me why it has not come about, in part, but only in part. Whenever governments mention an information system for health, the spectre of confidentiality is raised. I believe that is sometimes sufficient to scare away governments from an enterprise, the benefits of which will only materialize several years down the road. Politically, it is short-term pain for long-term gain, which is obviously not a very promising situation.

Also, I think that the provincial governments are awed by the nature of the problem. To have a good information system, you must have a good conceptual model of what you are trying to achieve and what kind of information is needed by whom to make what kind of decisions. This is where the spectre of an unmentioned issue emerges: Will we run the system for the benefit of the payers and as a cost-control mechanism over and above everything else, or will we have an information system that will help make good choices from the point of view of the users? These are two different philosophies. The debate has not even started on that.

Thus, you find that information technology is used in a piecemeal fashion. Almost ever piece of medical equipment now produces digital output of one kind, but you cannot connect it with anything else. Basically, it stands on its own feet. No one has developed the software needed on a world-scale basis because every hospital, every province and every region has its own system. The hurdles to overcome in designing a common architecture and a common classification system are enormous.

From what I understand of our neighbours to the south, there is a lot of stir there. I have heard Americans from the Institute of Medicine say that we require something like the Manhattan Project. They certainly contemplate devoting on the order of half a billion dollars to building this because the resources required would be enormous indeed. So many people must come together and agree.

Consider the Digital Register Graphic, DRG, for example. It a widely used classification system for medical procedure, but it is plagued with all kinds of difficulties. All these issues have to be resolved, in some sense, at a macro level, at least before you can have off-the-shelf software that a hospital could use to do many kinds of analyses and support-management tasks, just as you would in the private sector. We have Enterprise Resource Planning, ERP, systems and so on. We do not have the equivalent in the medical sector because the infrastructure and the architecture have not been developed.

Senator Robertson: Add to this, too, the danger to provinces in having incorrect information or something that does not stand up. A great deal of money is required to do it right.

Mr. Forget: This is where a national initiative could bear fruit - but a national initiative in the context of an international effort. There is an national undertaking currently getting underway to do something like that. If it is just for Canada, my fear is that it will not yield the benefits that it would if it were of an international nature.

Senator Robertson: The empowering of citizens is very important. I would like to know if any of the witnesses are aware of a program or a pilot project that has attached to it a specific educational program so that citizens can be empowered.

Without knowledge, it is difficult to empower citizens. In some of the regions of the country, people are more concerned about the loss of jobs than they are about the loss of medical people. Have you had any experience with that? In order to empower citizens, they have to be reasonably knowledgeable. Have you had any experience with that?

Ms Tuohy: I could say a word about the attempts in the Netherlands and New Zealand to hold various town-hall type fora to discuss what ought to be in the basic coverage package. It did not have that much effect on the basic coverage package, but arguably it did have an educational impact on the citizens who participated as to the efficacy of various forms of treatment. This is a well that may not prove to be one that is worth dipping into.

Mr. Blomqvist: The Oregon Plan is another example. At the more micro level, work has been done in the departmental health administration at the University of Toronto, which is creating systematic information for patients in the context of certain types of operations. Is it not prostate cancer where they have been working on providing videos to help people make decisions?

Ms Tuohy: That is at a more micro level, yes.

Senator Robertson: There seems to be general agreement, and I do not disagree, that we must do something significant with primary care and pharmacare.

I am interested in the general feeling that I get from you that it would be fine to have co-pay with primary care and pharmacare, but not with the rest of the system. Am I interpreting you incorrectly?

Ms Tuohy: That would be interpreting me wrong. I would certainly imagine co-payments with pharmacare. As has been pointed out, virtually every system of pharmacare does involve some degree of income scaled co-payments, but not for primary care.

Mr. Blomqvist: I agree.

Mr. Forget: The only mention I made of something like that is in recounting the experience in Sweden of differential co-payments to channel more of the demand for primary care away from out-patient clinics and hospitals and into primary care facilities. This is a problem. Our emergency facilities, which also serve for ambulatory care of all kinds, are a problem that is quite familiar. Education or exhortation does not seem to do the job.

A little economic incentive to shift people into other facilities might help a great deal - not as a way to finance the system, but as a signal to people. They might think longer before going to an outpatient facility or an emergency facility. For lack of another approach, we are more or less driven to think of solutions of this nature.

Senator Graham: Is there any way in which we can get an accurate handle on the relative costs of administration with respect to the various health care systems in the countries that we have been reviewing?

We have talked of Canada costing 2 per cent to 3 per cent, Germany was 5.6 per cent and the United States was much higher than all of the above. It depends upon the kinds of services that are provided and that sort of thing. Could you comment? Is there any way of obtaining an accurate handle so that we know where we stand in our own country, relatively speaking, with respect to the costs of administration?

Mr. Forget: I would assume it is not a terribly difficult thing to compute, at least based on the sample of hospital budgets, provincial government budgets and so on. You can put together an estimate, if not a total count.

There again, from previous discussions of this issue, when you consider hospital budgets, if you examine the administrative budget, you have one figure and then people will say: "Well, what about the head nurse in each department, is that administration or not?" If you take a view of that nature, then it becomes a very complex problem, indeed. Is the chief of the department spending part of his time on administration and should that be counted? It becomes almost impossible to answer the question if you get too sophisticated.

Certainly administrative budgets are known in hospitals. Since the budget cuts of the last half of the 1990s, what has happened is that this is the part of hospital budget that has been cut most dramatically. In the hospital that I know, the McGill University Health Centre, there was a reduction in real terms of 40 per cent cumulatively in the administrative budget to the point that, it is my feeling as a board member, we are undermanaged. We are not in a position to effectively manage such complex organizations with the kind of personnel that we have.

I do not have the figure before me, but whatever it is, it has now reached a level where it is basically too small. Bear in mind that a hospital produces thousands of different kinds of services. It is the most complex organization in the world, bar none. To deliver services in a satisfactory manner, it must be actively managed by skilled professionals. I do not think that we are at that stage at the present time. There is a problem of quality, but there is also a problem of quantity.

Senator Graham: A couple of months ago we heard a witness who said that it is not a question of throwing more money at the system, or millions of dollars more, it is a question of becoming more efficient in the delivery. I wonder if any of you would like to comment on that?

Ms Tuohy: That is not just an issue of administrative overhead, though. The issue of efficiency of delivery has to do with the whole production function.

Senator Graham: I understand that and that is getting into another area.

However, would you agree with the position that was put forward by the witness that it is not a question of throwing more money at the process, it is a matter of efficiencies in delivering the system?

Mr. Forget: There is an American study on this matter based on an overview of the literature. This is a review of dozens of studies and it tries to answer the question: How good is the quality of health care in the United States?

From such studies, the conclusions that arise are: With regard to primary care, only half the care that should be given is given; with regard to chronic and acute care, only about 60 per cent of the needed care is given. These are American figures - with their high level spending. I do not know what the comparable figures would be in Canada. Of the care actually given, 30 per cent is inappropriate. That gives you an idea of how much of a gap we have in terms of effectiveness, or efficiency or whatever it is. Certainly it does not mean that if we were better, we would spend less.

Many people go without the care they apparently should have, from objective studies. Some of the care they get, they should not get, or they should get something else. That does not mean that the whole amount would be saved.

That does not suggest that there is a significant amount of saving to be had by better management of the system. That would be more appropriate and more effective, but it might end up costing more.

The Chairman: Every time we talk about the delivery of services in this committee, we end up in the situation that the delivery of service is a provincial responsibility and so either as much as we would like to influence it, we cannot, or we can influence it, but we cannot do it. That is not true with respect to the Aboriginal population. The fact is that the number of people for whom the federal government is directly responsible for delivering services exceeds the population of five of the provinces. The reality is that we are the sixth largest provider of services in the country.

In a broad sense, thinking of Ms Tuohy's comment, should the federal government contemplate using the sizeable group of people to whom we deliver services as a significant pilot project, or because of a combination of income and a variety of other things, such as educational levels, would it not be a good representative sample, which is to say that you could not draw any conclusions from doing something with the Aboriginal population and could not draw any conclusions about the same systemic changes elsewhere? That is the first question.

Second, can we learn anything nationally from the Quebec pharmacare program?

Ms Tuohy: I will point you toward Australia and New Zealand with regard to the Aboriginal issue. You may have already examined this, but the most innovative things Australia and New Zealand are doing is in regard to their Aboriginal populations in terms of integrated health care delivery.

The Chairman: I should tell you that in a videoconference with Australian witnesses, they actually thought that Australia and New Zealand were 20 years behind Canada in terms of where they stand with respect to their Aboriginals.

Ms Tuohy: That is on the health outcomes, yes.

The Chairman: We have referred to the Aboriginal issue here as a Third World issue. If there is such a thing as a fifth or sixth world, that is where that is.

Senator Morin: We are spending half of the money. Apparently they are way behind us. That was exactly the question we asked.

Ms Tuohy: Perhaps if you talk to different people you get different answers. Certainly, I have been told by colleagues in Australia - and more so in New Zealand - that the experiments with delivering integrated care to Aboriginal populations are the most innovative things they are doing in terms of health system design.

Pharmacare in Quebec really bears consideration. If we can think of some melding of public and private insurance, that is the interesting model to look at.

Mr. Blomqvist: With respect to the question of funding for health care for Aboriginal populations, it is my understanding that physician and hospital services are still covered by the provinces at the present time.

The Chairman: They are not if you are on a reservation.

Mr. Blomqvist: They are not covered on the reserve - but I am not sure with respect to how many hospitals and physicians. With respect to the pharmacare plan, I personally think that there is much to be learned because it is the one example of an opting-out insurance plan that does exist in Canada at the present time.

I also gather that there have been studies that have negative conclusions with respect to utilizing user fees as a cost control measure, which raises the question of whether there is some prospect of experimentation with other methods, like formulae or drug budgets for physicians rather than user fees.

Mr. Forget: On these two issues, I am speechless. As a Canadian my only thought with regard to Aboriginal health is basically shame. I have no other thought.

With regard to pharmacare, I would like to know what lessons can be learned from that program. For me, as a user, it is somewhat of a paradox that I no longer have to pay anything to get prescription drugs. I never considered that a problem. It is a problem for some people. I do not know whether they are better off now than before. I would like to learn from an objective study, but I do not know the answer.

The Chairman: I thank the witnesses for coming. We appreciate you taking the time to be with us.

There is one last session tomorrow at noon before we break for the summer.

The committee adjourned.

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