Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue 13 - Evidence, May 3, 2000
OTTAWA, Wednesday, May 3, 2000
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 3:45 p.m. to examine the state of the health care system in Canada.
Senator Marjory LeBreton (Deputy Chairman) in the Chair.
[English]
The Chairman: This is the sixth meeting of the committee to study the health care system. Our witnesses today are from Health Canada. We had hoped to hear from the Canadian Institute for Health Information as well, but there were scheduling difficulties. Therefore, we will hear from them at a later date. The Clerk has sent to your offices, a recent report of the CIHI entitled "Health Care in Canada, the First Annual Report," which presents a broad range of facts about health care funding.
Our witnesses from Health Canada will discuss the evolution of health care expenditure, including private and public spending, long-term trends and their impact, and the rationale for changes in federal funding mechanisms. The witnesses are: Abby Hoffman, Senior Policy Advisor, Health Canada; Cliff Halliwell, Director General, Applied Research and Analysis Directorate, Information, Analysis and Connectivity Branch; and Frank Fedyk, Acting Director, Canada Health Act Division, Intergovernmental Affairs Directorate, Policy and Consultation Branch. I understand, Ms Hoffman, that you are the lead speaker on behalf of Health Canada.
Ms Abby Hoffman, Senior Policy Advisor, Health Canada: In addition to the two subjects that you identified, we understood that a few comments about the federal role in health, particularly with respect to health care, might be useful to members of the committee as well. I will start with a few comments. These are three rather large topics and I know that we have been given a guideline of approximately 10 minutes for introductory remarks. I will forewarn senators at the outset that I will likely exceed that, so feel free to cut me off at any time that seems appropriate. We will be pleased, obviously, to respond to questions or comments from committee members after these initial comments.
I will begin with a few observations about the federal role in health. Clearly there is not time to describe that role in its entirety, but allow me to touch on some key aspects. We currently describe the federal mission in health as being that of helping the people of Canada to maintain and improve their health. We do that through work in three broad areas. One pertains to national health policy and systems, including in particular our publicly funded health care system. The second area pertains to our work in the fields of health promotion and protection, including disease, illness, and injury prevention. The third area pertains to our particular roles with respect to the health and health care services of First Nations and Inuit.
Our primary and most visible functions in health care are the following: the provision of financial contributions to provinces and territories in support of their health care systems and, to a much more modest extent, to individuals through tax measures such as the medical expense allowance; interpreting and enforcing the principles of the Canada Health Act; ensuring access to community-based health care services for First Nations and Inuit; and working in partnership with the provinces, territories, and key stakeholders such as health provider groups, to strengthen and adapt the Canadian health care system to current and anticipated changes, including changes in health needs associated with such phenomena as population aging.
In addition to those quite explicit roles related to health care, much of our other work in Health Canada does have a direct or indirect contribution to the health care system. Many of our key health protection and regulatory roles are very important. For example, we ensure that Canadians have the benefit of timely access to safe and effective drugs and products. We also ensure that Canadians are protected from health risks associated with elements in the health care system, or pertinent to the health care system, such as pharmaceuticals, blood products, medical devices and so on.
As you know, we are both conductors and, more importantly, funders of health research. We spend a lot of energy, in conjunction with various organizations in the non-governmental sector, on the development of a health information infrastructure.
Through cooperation with other partners, and our own Laboratory Centre for Disease Control, we have many responsibilities of a coordinating and leadership nature in the provision of epidemiological and health surveillance data.
We are also responsible for the development of national disease control strategies in collaboration with provinces and territories. Those would include areas such as cancer, heart health, HIV, AIDS and so on.
There is very little that we do entirely on our own. Collaboration with the provinces and territories on a broad range of health and health care issues is strongly embedded in the health sector, and certainly in our work.
[Translation]
The recognition of a federal role in health, and focussed federal-provincial-territorial collaboration on health issues, has been a distinguishing and very long-standing feature of the health centre. While provincial governments have primary responsibility for health care delivery, the field of health is not assigned exclusively to either order of government.
[English]
There are very well-established and well-developed mechanisms for intergovernmental collaboration in health. I will not dwell on these, but suffice it to say, health ministers, as you may know, meet at an annual conference, and, depending on their respective mutual agendas, sometimes more frequently. Deputy ministers meet formally twice a year at least, and again, informally more frequently, as required.
Four very important expert committees support those deputy ministers and ministerial-level interactions. One works in the areas of population health -- for example, with respect to the health surveillance and immunization of children. Another committee deals with health services. High on that agenda, for example, are health human resources, and physician and nursing issues in particular. The other two committees are concerned with health information infrastructure.
These committees, incidentally, have significant membership from the non-governmental sector, from both NGOs and the academic community. They have perhaps worked quietly, but nonetheless very expertly and effectively.
Obviously, the Government of Canada acts as a facilitator and coordinator on health issues with pan-Canadian dimensions. Recent examples that have an impact on the health care system include the development of a strengthened blood supply system, and initiatives such as the Health Transition Fund, which provided $200 million through the 1997 budget to support provincial, territorial and national innovations in home care, pharmacare, primary care, and integrated health services.
Our role in health care is clearly long-standing and extensive. I want to underscore that, by its very nature, it is carried out in partnership with provinces and territories and in collaboration with stakeholders and citizens.
Let me move now to the subject of the evolution of federal funding for health. Much of what I will try to highlight is covered in two handouts that are being tabled today. These documents are entitled "Health Care Expenditures in Canada: The Key Facts" and "Health Care Expenditures in Canada: Sources of Financing."
I want to cover several areas. This is even more complicated than recent media campaigns would have us all believe. I will try to touch on some of the main points, and my colleagues can respond in greater detail when this initial presentation is complete.
I will first say a word or two about growth in health spending. If one looks at changes by decade, there is no question that the rate of growth in health care spending in Canada did slow considerably from the double digit rates in the 1970s and early 1980s to rates well below 5 per cent per annum in the 1990s.
We must be careful how we interpret the extent and the significance of the slowdown because raw numbers are a little misleading. We need to take into account the much higher levels of inflation in the 1970s and early 1980s compared with single digit inflation in the latter part of the 1980s and the 1990s, and our current very low levels.
In terms of public and private spending, through the mid 1970s into the 1980s, both public and private spending grew at more or less similar rates. However, in the 1990s, the slowdown in public spending on health was considerably more pronounced, with a number of years of little growth or even modest declines.
I want to underscore "modest declines." The value of public health care spending in the 1990s was not slashed dramatically, as is often claimed. It simply did not grow as much, and again the documents we have tabled provide you with further detail.
[Translation]
And, by the end of the 1990s, as governments for the most part put fiscal deficits behind them, public expenditures started rising again, at a pace similar to private expenditures. The net result was a decline in the public share of total Canadian health expenditures in the 1990s.
When one adjusts spending for overall population growth and general inflation, the slowdown in public spending -- indeed the decline in the mid-1990s -- becomes more apparent.
[English]
In other words, the mid 1990s was clearly a period when public health expenditures did not keep pace with overall, albeit low, inflation rates and population growth. However, with the rebound in public health expenditures in the late 1990s, the overall level of public spending regained its peak of the early 1990s in terms of real per capita expenditures, even after adjusting for population growth and the general rise in price levels.
The fastest growth rate in recent years has been in the area of drugs, with slower growth in hospitals and physician spending, which had dominated -- particularly hospital expenditures -- health care spending in the early days of medicare in the 1960s. One reason why the public share of total expenditures has decreased is because private expenditures are more important in that fastest growing area, namely drugs.
Let me comment now on sources of financing, and particularly the history of federal transfers to the provinces. The federal government has always been an important contributor to provincial revenues to help support the provinces in providing Canadians with services in such areas as social security, education, and health. Equalization, as you know, has certainly been a very significant source of revenue for the less well-off provinces.
In brief, the following is the evolution of federal contributions. Prior to 1977, we cost-shared specific hospital and physician expenditures on a 50/50 basis with the provinces. If a province spent more, the federal government paid half of that incremental amount. In 1977, the federal government replaced cost-sharing for social programs with the EPF, Established Programs Financing. EPF consisted of both cash and a transfer of tax points, or tax room, to the provinces, giving them more own-source revenues. This evolution was, significantly, a function of the provincial desire for greater flexibility in generating revenue to meet their own priorities, and in spending revenues, however sourced, in ways that they felt best served their needs.
1996 saw the advent of the Canada Health and Social Transfer that replaced both the EPF and the Canada Assistance Program, which had previously supported provincial social security. Again, the provinces gained more flexibility in how they split the transfers among the three areas of social security, post-secondary education, and health. Clearly, as we all know, the CHST represented a cut in cash transfers at a time of broad cutbacks in federal spending to address the deficit situation. However, the value to the provinces of the tax point portion of the CHST continued to grow as the economy grew.
The net result of expenditure restraints that had been instituted, and better economic performance and concomitant reductions in public deficits, meant that additional cash could be put back into the CHST.
In 1998, the CHST cash floor was raised, eliminating a previously planned cut. In the 1999 budget, $11.5 billion was added over a period of four years. Of that amount, $3.5 billion was put into a CHST trust fund for the provinces, giving them flexibility to draw on those funds as they saw fit over the ensuing four years. They could take all the money at once or have it flow to them at a slower pace.
In Budget 2000, a further $2.5 billion was put in trust for the provinces to draw from, but in contrast with both the trust and the incremental CHST cash in 1999, the monies in 2000 could be used for any of the three areas and not for health care exclusively.
If the provinces draw from these various amounts in an orderly fashion over the time periods in question, federal cash transfers in 2000-2001 will still fall short of the level of 1995-1996 -- that is, prior to the introduction of the CHST -- by about $3 billion. That is the essence of the provincial position on transfers that we hear constantly.
On the other side, when one takes into account the value of the tax points, which continue to grow with the economy through the 1990s, total CHST transfers in 2000-2001 -- that is, cash and tax room -- will exceed the value of the transfer in 1995-1996. This is the essence of the federal position.
Before leaving federal expenditures, I wish to say that it is difficult, as has been reported in the media and recently in the document that you received from the Canadian Institute for Health Information, to determine exactly how much the federal government spends on health because of the flexibility under the CHST. When one calculates federal contributions to health using the same notional apportioning among health, post-secondary education and social security as existed in the pre-CHST days under the combined effects of EPF and CAP, the federal government is contributing $1 out of every $3 spent on health by public authorities in Canada. That is a subject of debate at the moment, but it is undeniable that it is a one-in-three share of public spending.
We will respond to the questions and comments you have later. I will now continue with the third topic, namely, the evolution of federal legislation related to health care insurance.
The delivery and means of financing health services on a universal basis has been a long-standing subject of study. It was the subject of several commissions in the 1930s and 1940s. I will not dwell on that history, but universal, publicly financed health insurance effectively began in 1947, when the Province of Saskatchewan introduced a public insurance scheme for hospital services. About nine years later, the federal government offered to cost-share hospital and diagnostic services, similar to those available to residents of Saskatchewan, on a 50/50 basis to encourage the development of similar hospital insurance programs in all provinces. That led in 1957 to the federal Hospital Insurance and Diagnostic Services Act, which required provinces wishing to participate and receive federal contributions to provide universal coverage for a minimum range of federally defined in-patient hospital services on uniform terms and conditions. It took about four years for all provinces to chose to meet those conditions and participate.
[Translation]
In 1964, the Royal Commission on Health Services reviewed the health system and recommended that the federal government also enter into agreements with the provinces to share the costs of comprehensive, universal medical care for their residents, sustaining the view that pre-paid access to medically necessary physician care for all Canadians was equitable, cost-effective and socially responsible.
[English]
The enabling legislation, the Medical Care Act, was proclaimed in July 1968. The principles that provincial medical care insurance plans had to meet in order to be eligible for what then became federal cost-sharing were the following, recognized as four of the five principles of the Canada Health Act today: public administration of their health insurance plans on a non-profit basis; insurance of a comprehensive range of medical services; universal coverage of insurable residents; and portability of coverage within Canada. Some provinces had already met these criteria and joined the program immediately; others took several years. However, by 1972 all provinces and territories were participating.
Earlier, I described some of the movement from cost-sharing to per capita entitlement, so I will not dwell now on the corresponding funding mechanisms for health insurance.
[Translation]
After Justice Hall's subsequent review of the Health Insurance Program in 1979, he reported that health care in Canada ranked among the best in the world, but warned that extra billing by doctors -- requiring patients to supplement what a doctor was paid by the provincial plan and user fees levied by hospitals.
[English]
For example, registration costs, per diem copayments, and so on. Justice Hall's view was that we were threatened with a two-tier system that would endanger access to care.
In response to these concerns, in 1984 Parliament unanimously passed the Canada Health Act, which replaced the Hospital and Diagnostic Services Act and the Medical Care Act. There were several key points in the Canada Health Act worth noting, including the affirmation of universal insurance as the basis for medically necessary hospital and physician services, and the strengthening of the principles of portability, comprehensiveness, and public administration. A fifth criterion, accessibility, was added -- that is, reasonable access to medically necessary insured services on uniform terms and conditions. Further, and perhaps most importantly, there was to be an effort to discourage user charges and extra billing. The CHA provided for mandatory dollar-for-dollar deductions from federal transfer payments to any province that permitted user charges or extra billing for insured services.
As you know, each province and territory operates and manages its own health care system that respects the principles of the CHA with financial assistance from the federal government, resulting effectively in 13 individual but interlocking plans. To receive full cash contributions, provinces and territories must be in compliance with the act.
I will now address my last point, which deals with the services that are and are not governed by the principles of the Canada Health Act. There are five of them.
First, there are insured services. Under the comprehensiveness criterion of the CHA, provincial and territorial health insurance plans must insure all medically necessary hospital, physician, and surgical dental services. However, the act does not define "medical necessity." That is determined through negotiations between provincial medical associations and departments of health. In reality, medical practitioners commonly determine medical necessity in the course of their interactions with and provision of care and treatment to patients. Some things, however, are more clearly defined as not medical necessary -- for example, cosmetic surgery. There is flexibility.
Second, extended health care services are the variety of community and institutional programs and services, including long-term care and certain aspects of adult residential home and ambulatory care, that are subject only to the conditions of the Canada Health Act, which means information is to be provided and the federal contribution is to be recognized. However, copayments, that is supplementary charges, may be levied for such services, and indeed are.
Third are supplementary health care services or additional benefits. These are the health services that provinces and territories have offered over time, perhaps on a universal basis, but with various terms and conditions added that effectively abridge the degree of universality. I am talking about prescription drug programs, chiropractic services, physiotherapy, dental services, and so on. Since these services do not fall under the CHA, only certain population groups may be eligible -- seniors or children, for example, or individuals on social assistance -- and copayments, deductibles, and so on may also be levied.
Fourth, there are uninsured services. I gave you the example earlier of cosmetic surgery.
More problematic perhaps are services that have been deemed non-insured by provincial legislation or regulation. One example that definitely affects the way in which primary care is delivered is that telephone advice is not an insured service. If you want to get advice from your physician and the physician wants to be able to bill the provincial medical scheme for that advice, say for commentary on tests that you may have received, you have to visit the doctor's office. He or she cannot give you that advice over the telephone as a billable service. It does not mean it does not happen; it just means it is not a billable service.
Finally, there are de-insured services, again a category that is often exaggerated. From time to time, in the negotiations between provincial medical associations and their respective health departments, various services, whether it is wart removal or wisdom teeth extraction or whatever, have been removed from the list of insured services.
We are now ready to take your questions.
The Chairman: Thank you. It was a very comprehensive and good explanation of the Canada Health Act.
Senator Robertson: Ms Hoffman, I wish we had received some of these documents earlier to study. It would have helped considerably. I find them coming in at this time very difficult. They are very important, but it is difficult to properly analyze them without a little time. I hope that perhaps after we have had a chance to look at these, we may have another opportunity to ask questions. Really, you cannot make sensible comments on something you receive five minutes before a meeting starts.
Ms Hoffman, I want to start by being very elementary. What interested me the most in your discussion was the comprehensiveness principle. I know you had to go quickly to get through it all. Would you tell me, please, from your national perspective, what is health care that is covered by medicare? What is to be included in the comprehensiveness principle? Just repeat that for me, please.
Ms Hoffman: Perhaps I can just start by briefly commenting on what I said, and then I will ask Mr. Fedyk, who is the acting director of the responsible division, to provide some more detail.
In sum, under the comprehensiveness criteria of the CHA, provincial and territorial health insurance plans must insure all medically necessary hospital, physician, and surgical dental services to eligible persons in the particular province. I then went on to say that medical necessity is not defined anywhere in legislation, and therefore is a matter of negotiation that may give rise to some differences from province to province.
Mr. Frank Fedyk, Acting Director, Canada Health Act Division, Intergovernmental Affairs Directorate, Policy and Consultation Branch, Department of Health: The important distinction is that it is only physician and hospital services. The act does list all the in-patient and out-patient hospital services that must be insured on uniform terms and conditions. With respect to physician services, as Ms Hoffman has described, it is mostly by negotiation between the provinces and the medical professions.
That has led to a very comprehensive list that is ever-changing as new technologies and physician services become available. It has been found to be very advantageous to not have a list, because it becomes out of date and it is always more difficult to add or remove something. It is therefore left up to negotiation, and then the physician determines when it is medically necessary. Cosmetic surgery is often used as an example of a service that can be both medically necessary and medically unnecessary. If you are in a car accident and are disfigured, it could become medically necessary to repair your disfigurement through cosmetic surgery. However, if you choose to have your nose shortened or lengthened, that would not be a medically necessary service and would not be insured.
Senator Robertson: Let me be perhaps both more general and more specific, if that is possible.
One of the problems that provinces are having right now is that hospital stays are often shortened and then the patient is sent home. Most provinces do not cover the care taking place in the home. Nursing homes and special care homes are under different classifications. If you did not have this comprehensive list, what would you define as health care?
What concerns me is that the current definition of health care is so obsolete, much is being lost. Have the ministers discussed this? They surely must be trying to make a determination of what is health care in today's structure. We seem very out of date on this. We are leaving it up to the provinces, but many, like my own, are financially strapped. Where do they get the money for these things they still have to deliver? I believe that is where much of the problem lies, in addition to the waiting lists for hospital care and special invasive procedures. The public is becoming extremely upset because they get dumped out of the hospital and the provinces have no money to care for them.
What is your definition of health care in a perfect world, just forgetting for a moment this comprehensiveness?
Mr. Fedyk: The care that Canadians require is physician, hospital, and home care. It is a full spectrum. Many provinces do have home and community care programs, but they are very much a patchwork. The legislation under which the federal government makes a contribution covers the physician and hospital services, and part of our extended health care contribution is for nursing homes, adult residential care, and a component of home and community care. However, the amount was $20 per capita in 1977. With the amalgamation under the Canada Health Act in 1984, the criteria relating to adult residential care and the health care component of home care were only subject to the conditions of the act that refer to recognition and the provision of information.
Mr. Fedyk: I think we would all agree that it is quite comprehensive and includes care in the community.
Senator Robertson: There is absolutely no way that the provinces can look after all that under the present financial circumstances. That is another issue.
When did the new formula that replaced the CHST come into force?
Ms Hoffman: When did the CHST come in?
Senator Robertson: I understand it was phased out.
Ms Hoffman: Are you talking about the move to equal per capita under CHST?
Senator Robertson: Yes.
Ms Hoffman: That was announced in the 1999 budget.
Senator Robertson: It is my personal opinion that "per capita" is terribly unfair and I do not know why the provinces, especially the smaller ones, would ever agree to that. It is necessary to have a certain amount of money to develop a decent base before the implementation of such a system can be accomplished. If there are more people, there will be a greater opportunity to develop a better base. Without that better base, a province will be in trouble right from the start. We will discuss that subject.
[Translation]
Senator Gill: I presume that you have statistics regarding Aboriginal people. Was there an increase in the budgets for the past 5 or 10 years? Is it more expensive to treat an Aboriginal than a non-Aboriginal?
[English]
Ms Hoffman: I can respond briefly to those questions, although I think that it might be more helpful if we ask individuals in the Medical Services Branch of Health Canada to provide the committee with more detailed information.
Yes, there have been budgetary increases for health services for First Nations and Inuit that are financed by the federal government. Some of those budgets have been subject to caps, but it is rather complicated because First Nations, Inuit, and aboriginal people living off reserve do receive services from various sources. They may receive services that are directly or indirectly financed by the federal government. As citizens of Canada, they also receive services at the provincial and community level.
You asked if it was more expensive to provide services to aboriginals than to non-aboriginal Canadians. Yes, but probably for two main reasons. One is the regional dispersal of the aboriginal population. Providing services in remote areas is extremely difficult of course. Those costs, for example the cost of transportation itself, are enormous. As we all know, regrettably, the standard of health of the aboriginal population is, on average, considerably poorer than that of non-aboriginal Canadians, and that includes their vulnerability to a number of quite debilitating chronic diseases. I am thinking, for example, of diabetes. I would be happy to have the department respond in more detail to your questions.
Senator Gill: I would like to know if the condition of the aboriginal people is improving or not. I am hearing that a lot of money is being invested in that area and the problem is still the same or maybe even greater.
Ms Hoffman: The health status of aboriginal people relative to the non-aboriginal population is improving on average. The disparities are significant and they persist. There is no question that there is still a great deal to achieve. There is also no question that some significant improvements have been accomplished.
Senator Carstairs: The National Forum on Health has recommended a national pharmacare program, as have others. Your own study shows it to be the fastest growing area of health care costs. What work is being done in the Department of Health to develop a strategy with respect to pharmacare in this country?
Ms Hoffman: We have been dealing for some time with the provinces on a whole array of pharmaceutical issues, not necessarily exclusively focused on pharmacare, but on other issues that concern improvements to access and the cost constraints. Access to drugs is certainly on the agenda of the federal, provincial, and territorial ministers. That work will proceed as the ministers agree that that subject should be one of the priority areas of concern.
Senator Carstairs: In other words, not very much has taken place since the National Forum on Health reported on the need for a national pharmacare program.
My next question has to do with the fact that anecdotally, and then more specifically with respect to my own province, hospitals have as many as 40 per cent of their beds occupied by individuals who could be in long-term care beds, personal care homes, or indeed in the community if that were possible. We have examples of people waiting for acute care beds, not because there are not enough, but because they are being used for other things.
What kind of strategy do we have, if any, to increase extended care beds or build a home care program that would free significant numbers of acute care beds for acute care?
Ms Hoffman: I will make this comment in respect of your earlier question about pharmacare. Through programs such as the Health Transition Fund, a lot of excellent and extensive work -- innovative pilot projects of quite considerable scope and expense -- has been conducted in the areas of improved access to pharmaceuticals and to home care. Those were two of the highest priority areas flowing from the National Forum on Health and an agreed set of priorities from the provinces, territories, and the federal government. A great deal of work has been done to develop what are believed to be effective models that address the kind of issues that you have identified.
However, clearly the decision on whether or not there will be a national approach to pharmacare or home care service provision will ultimately be taken by ministers collaboratively. At the same time, our knowledge about what models might work and how effective and efficient they might be has greatly increased.
I might point out also that we know that through the 1990s it was possible to reduce per capita spending on hospital care by doing exactly as you have suggested needs to be done. Individuals who needed extended or chronic care, whether home or institutional, but of a sort that was considerably less expensive than hospital acute care, were able to be relocated to other facilities in home or community environments for their recuperation. Clearly, this has not been done to a sufficient degree.
Senator Carstairs: Is it possible for this committee to see some of the studies that have been conducted and the results of some of these pilot projects, both with respect to pharmacare and the delivery of home care?
Ms Hoffman: Absolutely. I am sure that individuals connected with the Health Transition Fund would be happy to come and talk about their work and the reports received so far. There are a great many more that we anticipate receiving over the next one year to 15 months.
Senator Carstairs: My final question has to do with the fact that a number of witnesses who have appeared so far have indicated that the most cost-effective spending in the entire health care system is on illness prevention. Prevention programs are not covered under the "umbrella," if you will, of comprehensiveness because there has always been a "sweep it under the rug"attitude in my experience as a provincial politician. Provincial politicians cannot prove that preventive medicine works. Thus, there is great reluctance to put any dollars into preventive medicine because while there are people knocking on the hospital doors, you have to spend all the money there. The story is never about the study that showed that a prevention model worked. The story is about the 35 people lined up in an emergency room waiting for a bed in the acute care section of the hospital.
We know about that dynamic. What initiatives is the federal government taking to provide funding for preventive medicine?
Ms Hoffman: I would say we are pursuing that very broadly on two tracks. As you no doubt know, we pursue many risk factor reduction or disease prevention strategies. I mentioned heart health, HIV, AIDS, and anti-smoking campaigns in my opening remarks. Those clearly have very large preventive components. That is one track. The other is the priority that we want to place on primary care reform.
We think that a new approach to the interaction of physicians with patients is absolutely critical to getting prevention considered seriously within the health care system. Some changes in the way primary care is delivered will certainly be necessary, and in what is considered to be significant and should be financed.
Some elements of preventive care are "billable," but many, such as advice giving and counselling of patients and so on, are not. That is not to say that physicians do not do it, but it does not have the priority that I think all of us would want, and in the way previous witnesses have spoken about. It does not have a place of prominence, either in the interaction of physicians with individuals or their interaction with whole populations in their respective communities.
We agree absolutely on the priority, and are working on those two tracks. The first one, disease prevention, is a major national strategy. It has been part of Health Canada's activity for quite some time.
Senator Carstairs: Perhaps this is not a fair question to ask a bureaucrat, but I am going to put it to you and answer it if you can. Why, therefore, do we not even spend the dollars that are available for anti-smoking programs? The monies are there. They are collected for that purpose, but we do not spend them.
Ms Hoffman: You suggested it was not a fair question for a bureaucrat and I will concur.
Senator Carstairs: Fair enough.
Senator Callbeck: I want to ask a couple of questions about the formula for CHST, which is made up of cash plus the tax points. What is the formula for determining the amount of cash?
Ms Hoffman: I will ask Mr. Halliwell to respond to that, please.
Mr. Cliff Halliwell, Director General, Applied Research and Analysis Directorate, Health Canada: There is no current formula for determining the cash portion. The CHST level is set by budgetary decision of the Government of Canada. I believe that in the 1999 budget, the federal government committed to establishing a longer planning horizon for the level of the CHST that it provides to the provinces. Under the Social Union Framework Agreement, the federal government has also agreed to give notice of changes in the level of the CHST cash entitlement. However, there is no formula driving the level of the CHST.
In the past two budgets of 1999 and 2000, prudent fiscal planning left the federal government with a budgetary surplus that exceeded the commitment to pay down debt. The "surplus surplus," if you will, was put into a trust fund to help the provinces meet their health care needs in 1999, and health care and education needs in 2000. This was a mechanism by which "surplus surplus" was made available to help provinces over subsequent periods, four years in the case of the 1999 entitlement. Budgetary resources from the federal government for fiscal year 1998-1999 were put into a trust fund from which the provinces were able to draw at a pace that they thought appropriate. The same thing was done with the $2.5 billion in budget year 2000. There is no formula that drives the cash portion.
Senator Callbeck: You say that the decision is made every year in the budget, except for these trust amounts that have been set up. Thus a province must wait until the budget comes down before they really know how much they will get?
Mr. Halliwell: The provinces know what core funding they will receive under the CHST over the next several years. What they did not know, particularly at the time of the 1999 budget, was that they would be getting a one-time -- it then turned out to be twice one time -- transfer under the CHST.
Nonetheless, the provisions that were made gave them flexibility and a way to avoid being in a rush to spend those funds, the value of which was unknown until the Minister of Finance released his budget publicly. They do have the option then of planning as to at what pace to draw down that trust fund. Therefore, they have a degree of certainty there.
They know the minimum they are going to get, but the last two budgets have given them more than that. They do not know, nor can they be told, whether there will be another increase in a subsequent period, which again would be a policy decision at budget time.
Senator Callbeck: You are saying that before the budget comes down, they know there is a minimum amount of core funding that they will receive. How do they know that? There is obviously some kind of formula. How is that determined, and how far ahead does a province know?
Mr. Halliwell: The federal budget sets out a multi-year track for the level of the Canada Health and Social Transfer to the provinces.
Senator Callbeck: For the core funding?
Mr. Halliwell: Yes.
Senator Callbeck: Thus, they would know for a number of years.
Mr. Halliwell: Which is the vast bulk of the CHST cash transfer, I might add.
Senator Callbeck: How far ahead would they know about that core funding?
Mr. Halliwell: Four years.
[Translation]
Senator Pépin: I also sit on another committee. Depending on the province, often some treatments or services seem more difficult to access than others. The distribution of resources and expenditures for health care seem to vary from one province to the next.
How do the health care expenditures of a province compare to those of another province? Can higher expenditures be explained by higher salaries in wealthier provinces? Are the wealthier provinces more inclined to spend more per capita on health care than poorer provinces? Do the richer provinces have a healthier population? Are the expenditures of the province linked to the health care needs of the population? Do the provinces with a lower socio-economic status or with a more aged population spend more money per capita?
The follow-up subcommittee to update " Of Life and Death," which examines palliative care, has received various opinions about this. When we were discussing health care services in general, we were wondering whether we would find some answers on this subject.
[English]
Ms Hoffman: Perhaps I could ask Mr. Halliwell to respond first on the variability in spending between provinces, and then I will pick up on some of your other points.
[Translation]
Mr. Halliwell: I would like to point out that when we discuss a province's capacity to provide health care services, we must not forget equalization payments. We have programs that helped the have-not provinces provide all necessary services to their citizens.
We must not forget that. These funds are not available for the three wealthiest provinces in Canada. However, some provinces receive many different forms of revenue from the federal government. Often, when the role of the federal government in the health care system is discussed, equalization payments tend to be forgotten.
On pages 7, 8, 9 and 10 of our brief, two graphs compare health care expenditures in the public sector for all provinces. The first graph compares the level of public expenditures, the second compares the total level of expenditures, that is, public sector plus private expenditures.
Since we compared 1989 and 1999, we used data adjusted for inflation in order to be able to compare those two years which were 10 years apart. We observed that there was a significant increase in public spending in some provinces from 1989 to 1999.
In Newfoundland and Nova Scotia, in general, there was an increase in almost all provinces for real expenditures and that is per capita, to compare levels over those 10 years.
These graphs indicate that there is not much difference between the provinces in terms of spending. I cannot say this with certainty, but I believe that there is probably less variation in health care expenditures than in the GDP per capita. It is the role of our equalization payment system to enable the have-not provinces to offer comparable levels of service.
There may be more variation in private spending. It is not very obvious according to the graph on pages 9 and 10. Provinces where the citizens have the most disposable income can buy private health care services. But variations between the provinces are not very marked.
[English]
Ms Hoffman: I think the problem is that, first, we do not have a good overall estimate of the health status of entire populations in the country, or even within provinces, although we know a great deal. However, factors other than health status of the population, including particularly the efficiency of the system and decisions that provincial governments may have made about what additional services they will insure, will influence the overall level of expenditure. If you look at the variable of aging, you will not find a link between it and actual expenditure. It is nonetheless a major concern to try to establish what the relationship will be.
We know that the Canadian population as a whole will reach a point where 20 to 25 per cent of us will be over age 65 within approximately 40 years, but some provinces will reach that point in a little more than half that time. Although, for example, these provinces with faster rates of aging -- Newfoundland, the Atlantic region generally, Saskatchewan -- appear to have reasonably comparable levels of total spending now, there clearly is greater pressure in some of those provinces than in others. We do know now that the most important determinant of the level of spending is what the government in question decides to spend, not the health status of the population, its age profile, the dispersion of the population by region, and so on. Those are not ultimately the most important factors currently.
[Translation]
Senator Pépin: You talked about the fees that could be added when someone goes to the doctor. That doctor will receive medicare payments but will charge the patient 25 or $50 according to the type of consultation. I did not know that that was becoming common practice. It is accepted in all provinces. Do we have a percentage? Someone told me that he had an eye examination. The doctor told him that he had always participated in medicare but charged him $50 extra, above and beyond what medicare pays him. If someone says he cannot afford to pay $50, can he go to another doctor?
[English]
Mr. Fedyk: Perhaps I could elaborate on the difference between insured and uninsured physician services. The visit to the medical physician is covered, while the visit to the optometrist is a supplementary benefit in terms of the Canada Health Act. Copayments and physician fees for such services are permitted, as with visits to chiropractors and physiotherapists outside of the hospital. The physician services are for medical and surgical appointments. Most provinces have de-insured visits to the optometrist, or they have limited coverage to various age groups. If you are under age 18 or over age 65, they cover the service. If you are between those two ages, it is then a supplemental insured service and there could be a copayment.
[Translation]
Senator Pépin: We talked about house calls. I come from Quebec. I remember a debate that took place perhaps a year or two ago regarding doctors who offered home care. We were told that medicare refuse to pay for those expenditures. Now we have sick people who receive palliative care and who are requesting visits from doctors. If I understand correctly, there is a group of doctors authorized to make house calls. Is this generally true throughout the country? Does it vary from one province to the other? Who is authorized to do this and who is not?
[English]
Mr. Fedyk: The palliative care programs across Canada are at different stages of development, similar to other home care services. Some are very well developed and include home visits by physicians, care nurses and other health professionals. Unfortunately, it does vary across the provinces and is not covered by the federal legislation. Therefore, there is a patchwork and there are no national standards.
[Translation]
Senator Pépin: Let us get back to our aging population. Increasingly, patients are being sent home 24 hours after surgery or even the same day. They may be asked to go to a CSLC. However, if you have patients who need a house call the day after surgery, be it gallbladder surgery or something else, can we then expect that such service will be provided to these people or will that choice be left up to the provinces?
[English]
Mr. Fedyk: The design, delivery and financing of health care services is primarily a provincial responsibility in determining what their health insurance programs will cover.
Senator Fairbairn: I am tempted to carry on with some of the questions that Senator Pépin has asked, particularly with respect to the variations in home care and the requirements of your position. Since there is a cost that many people cannot afford, the patient and the home care person will be missing out.
I would like clarification on another aspect of the issue.
I am from Alberta. We are engrossed, at the moment, in the controversial bill that is currently moving its way through the legislature. The federal government has questioned some parts of the bill, but seems to be waiting to see if the bill passes before making certain decisions.
I am aiming at the provisions of the Canada Health Act regarding user charges, extra billing, and consequent penalties that might be required. Can you explain how that works? For instance, in the Alberta bill, how would charges for enhanced services work? There was a hope that this would not be part of the proposed legislation, that it would be clearly prohibited, but it was not. It is a foggy area. How is it determined -- by anecdotal reference? How is it determined what should be penalized? How is a penalty payment applied? That has been done in Alberta and elsewhere. Is that a population-based decision? How are the costs or charges for these enhanced services tracked? I suppose that extra billing is more clear-cut, but even so, could you explain that to me?
Mr. Fedyk: I would be more than pleased to. Enhanced goods and services are not subject to the criteria and conditions of the Canada Health Act, which covers insured physician and hospital services. The minister articulated his concern about enhanced medical goods or services provided in conjunction with an insured service, and stated that the Saskatchewan or the Ontario view was that those goods or services should be provided at no cost to the individual. That was what Minister Rock was articulating as the suggested approach.
Senator Fairbairn: It would be okay if enhanced services were provided at no extra cost.
Mr. Fedyk: At no extra cost. There could not then be a potential for queue-jumping in terms of access to that insured service through the purchase of an enhanced medical good or service. That is what the minister has articulated through his exchange of correspondence with Minister Johnson.
Our act covers the extra billing that occurs when physicians charge over and above the rate at which they are reimbursed by the province, or when an individual enters the hospital and there is a charge for medical goods or services. The act spells out the process.
Anyone can bring a complaint or a concern to the minister. It could be through a letter, a telephone call, or a study. The act specifies that we initiate an investigation with the province. The federal bureaucracy will ask the province for clarification and additional information. Once we are provided with that information, and have deemed that in fact this is a violation of one of the criteria, we usually find that it is a violation of the accessibility criterion.
The accessibility criterion states that you must provide access to a comprehensive range of insured health services, which are hospital and physician services, without any financial barrier. Financial barriers would be extra billing or user charges.
If we are satisfied with the determination that these are not legitimate charges, and that they are in fact extra billing, we then require them to provide further information on the amount charged. The legislation provides for an automatic dollar-for-dollar deduction. Thus, for extra billing amounting to $1 million, we would reduce the transfer payment to that province by that amount.
If the information shows that these are legitimate charges, for example, enhanced goods and services for which the individual paid, we would not initiate a process.
The minister is required to consult with the province in question and must notify them through registered mail. They have 30 days to respond. When we receive the material, he must respond within 60 days on whether we accept their explanation or we will impose a penalty. The legislation is very specific about the way in which the bureaucracy and the minister approach their counterparts.
Senator Fairbairn: In the case of payment for enhanced services, do I understand that it becomes problematic in the context of where and how this is done? You say that if it is not insured, then there is no problem.
Mr. Fedyk: Enhanced medical goods and services are, by definition, over and above what is medically necessary. They are not insured and are beyond the scope of the act. They are non-insured services.
The concern arises when they are combined with an insured service.
Senator Fairbairn: That is what I am getting at.
Mr. Fedyk: I am not sure if I have answered the question, but there is no penalty that can be imposed through the Canada Health Act for the purchase of enhanced goods and services.
Senator Cohen: My question, probably to Mr. Halliwell, is regarding cost-sharing arrangements vis-à-vis block funding. What are the main advantages and disadvantages of the cost-sharing arrangement, and the strength and weaknesses of block funding? That is the first question.
Mr. Halliwell: Frankly, the disadvantage of a cost-sharing agreement is the simple fact that you end up with a situation where the people make spending decisions are spending 50-cent dollars. It is a lot easier to decide to spend money if somebody else is putting in half. That cost is then borne not by a particular province, but by all the citizens of Canada. At a time when the federal government was more concerned about its fiscal situation in the late 1970s -- obviously less concerned subsequently -- it was a disadvantage for the federal government to be exposed to spending-level decisions made by others.
The advantages of formula-based or block funding were a greater degree of certainty about the level of federal expenditures, and a greater incentive for cost control on the part of the people actually making the decisions.
One disadvantage of having transfers to the provinces, shall we say, tightly "partitioned off" into particular components -- health separate from education, separate from social security -- was that with the move to block funding, the particular circumstances of a province were not reflected. As Ms Hoffman has indicated, there is quite a difference in the age profile amongst the provinces. A province with a younger population would probably want to use CHST funds to a greater extent for education than a province with an older population and more need to spend it on health care. A system with a degree of flexibility offers those advantages.
In the end, the evolution of these transfers has been dominated by a move to reduce federal fiscal exposure to provincial decisions, in the hopes that that would lead to a greater incentive for cost control. It also gives the provinces greater flexibility to use those funds for the purposes that they see as most pressing, which will obviously reflect provincial variations in need, but also variations in preferences for the types of goods and services that the public sector should provide.
Senator Cohen: Do you think that the change has made the delivery of health care services more effective than it was?
Mr. Hoffman: That is a difficult question to answer. One further element that I might add to what has already been said is that the flexibility did not just extend to provincial decisions on apportioning money across sectors. It also pertained to how they would spend their money within health itself. One thing that did arise from that flexibility was a decision by most provinces to extend, under certain conditions, the range of insured services made available. One could argue that, given the total monies available over the decades concerned, provincially insured services with respect to drugs, home care, and various other health services might not have evolved if the 50/50 arrangement had continued.
However, it is also arguable that perhaps there would have been pressure to apply the 50/50 regime to a wider array of services. It is a little hard to tell. We would all agree that it has been a positive evolution, even with conditions including deductibles, copayments, ineligible populations, and so on. It is good that provinces have chosen to extend the array of chosen services. The difficulty is that they have not done so uniformly, and we have ended up with fragmentation and something of a patchwork across the country.
Senator Cohen: Are you able to tell us something of the strengths and weaknesses of the CHST thus far? Has it been in existence long enough for you to be able to assess that, or is that not a fair question?
Mr. Hoffman: It is not so much that it is a fair or unfair question. It did not add any significantly greater flexibility; therefore the issue really becomes the amount of money available. As money is put back into the CHST, and what we get back in terms of cash, we are already there and beyond if one includes that and tax. However, in terms of the situation of comparable cash to the pre-CHST days, one can say we are back to where we were in pure dollar terms.
Clearly, the issue is not purely money, by any stretch. The question is: What kind of system, structured how, is being financed and supported with the available dollars? I will just stop there.
Senator Keon: I want to compliment you on giving us a very clear, critical path of where we have been since the Second World War. I am now going to try to make you speculate on where we are going.
I want to expand a little, before I go to something else, on your answer to Senator Cohen. I think most health professionals feel that the CHST was a very good thing because it addressed the fundamental question of health, and population health, as it relates to wealth, well-being, social status and so forth. Most knowledgeable people are pressing to have a greater impact in that direction. I think that was a good thing, but what got lost was the accountability. I do not think there is any way of dealing with that problem just now. It was relatively simple when the 50/50 split in dollars existed. This brings me to what I really would like to hear all three of you discuss.
To my way of thinking, we are lacking a structural framework. We have excellent endeavours in population health. We have excellent endeavours in public health. We have some superb health education programs. We have an excellent health care delivery system, despite its problems right now. We are on the verge of having, I think, an absolutely superb research system with the Canadian Institutes of Health Research and a loop that should allow us some early feedback and adjustments and so forth.
Even though you are bureaucrats, you know a lot about this. You have been working in it a long time. Why do you not venture into the political waters where elected politicians would not even dare go, and talk about a structural framework in Canada that could work and could somehow overcome the sensitivities that exist in the provinces and territories?
Ms Hoffman: Are you asking this question because it is past five o'clock?
Mr. Halliwell: I was going to point out that, amongst the three of us, as you well know, Abby can run the fastest.
Ms Hoffman: There is a great deal we could say, but whether it would be appropriate to do so is another matter. Let me address a couple of points, Dr. Keon, on your preliminary comment, and then I will move to your main question.
First, it is true that the cost-sharing regime did allow for a certain degree of accountability because one could simply assess what it was that the provinces submitted, in each case, to receive their 50-cent contribution from the federal level, but as we have all increasingly come to appreciate, all that allowed was a measure of outputs: How many beds there were, how many of certain kinds of services were delivered. The connection between those outputs and health outcomes, and whether the people who needed the services most actually were the ones who got access to them, and whether they were appropriate for optimizing the benefit for the individuals concerned, is a really open question. We would certainly agree that this whole issue of accountability, which depends so much on the adequacy of information, and on which a lot of work is being done now, is really quite critical.
Without sounding like I am dodging your invitation to speculate completely, it really is essential that we have that information in order to think seriously about frameworks for the health system in the future. One of the earlier lines of questioning really got at the nub of any framework, and that is that we need to bring, as I think you have suggested, the preventive side together with the care and treatment side. We need to pay more attention to how we integrate the delivery of services to individuals, that critical interaction with providers, with the provision of services, be it through providers -- nurses and physicians -- or through public health networks or mass campaigns or whatever. We need to have the individual-based and the population-based approaches to health also integrated. That is at a very highly generalized level, but those seem to me to be among the most critical challenges.
Senator Keon: Do you see an evolution of a structural framework? I am very encouraged by what I see of the interface now between federal-provincial ministers and deputy ministers and bureaucrats at various levels, who are really huddling a lot and exchanging information in a pretty good atmosphere. Do you see coming out of that a structural framework that would let us look at the big question of the overall health of our country?
Ms Hoffman: We have certainly seen virtually every minister and every jurisdiction say that a critical and essential route to addressing some of the pressures on the health care system is for us collectively to be doing a much better job on the prevention, promotion and protection sides. There is certainly interest in a more balanced approach in the system overall.
Pursuing that depends, of course, on the degree to which the intense public concerns about what is happening on the care and treatment side can be addressed. It is pretty clear that most citizens, be we bureaucrats, senators, or whoever, knowledgeable about the health system or not, have an instinctive view that prevention and promotion ultimately make sense. However, when people feel that the care and treatment side is vulnerable, they are somewhat resistant, quite understandably, to seeing more energy, and possibly more resources, being devoted to health prevention and promotion, public health, population health, those kinds of activities. We really do need to work on both sides at once, and I think you have commented already that that is the kind of approach that we hear being discussed, and one has reason to be optimistic as a result.
Mr. Halliwell: If you look at the record of this century, the large gains in life expectancy for Canadians have probably been dominated by improvements in prevention of health problems, through obvious means such as general public health measures that were the origin of public health departments, but also other areas such as reduction in accidents, and so on. We may, in some respects, be victims of some of our own successes in this area now, in that the remaining work to be done is perhaps more intractable. What immediately comes to my mind is teenage smoking. Although I am not a parent myself, I understand it is hard to tell teenagers anything. We may be in a world where we have made a lot of progress and we are dealing now with more intractable problems than used to be the case. We should not lose track of that progress we have in fact made in general areas of prevention and in making Canadians more cognizant of the roles their own personal comportment and socio-economic circumstances play in health outcomes.
Senator Robertson: I am interested in three different areas that we have not discussed this afternoon. If you do not have the answers right now, perhaps they could be delivered to me through the clerk.
I should like to know if the levels of staffing and financial support in the approval and inspection services regarding drugs, food protection, and agricultural chemicals -- which do not rest with you, although they should -- have been increased to more properly handle the approval and inspection process.
The second question relates to pharmaceutical costs. We hear a lot of complaining about the costs, but we also know that many of the new drugs remove the necessity for patients to stay in expensive hospital beds. Do you have any data that would show the net cost comparison of the effect of six or eight of the new drugs -- the wonder drugs -- with the cost of treating those patients in the hospital? The information I have been able to gather shows that some of these new drugs result in tremendous savings because they remove the necessity of using a very expensive hospital bed. I would like that comparative data at some time.
The third point is, on page 11-12 of "Health expenditures in Canada" -- and I am sure we will have to study these before you come back -- if you go down to the transfers to support health, and the graph at the top of that page, you will notice of course that expenditures drop significantly from 1995-1996, but I thought I heard you say we are going to go back up again to that point. I see that graph coming down almost to 50 per cent of 1995-1996 and it makes me a little suspicious. We know that the federal minister has been trying to convince -- and he may be right in doing so -- the provincial ministers to look at a redesigned health care system that includes many more component parts than now. Is he insisting on that for better health outcomes, or is it because, as I see here for 2004-2005, your financial contribution then drops significantly?
Ms Hoffman: Let me answer the first two questions.
First of all, we will, through the Chair, provide you with information about the budgetary and staffing levels in the Health Protection Branch.
With respect to drug costs, there are two ways of responding to that. One is that we know, at the macro level, that we were all able to cope with reduced expenditures in the hospital sector because the availability of new drugs did eliminate the requirement for hospitalization in certain conditions, or they enhanced the recovery process, et cetera.
There are also a number of smaller-scale, micro studies about particular drugs that would supply you with the kind of insights that you are looking for and that come to the conclusions you drew.
However, it is worth pointing out that there are some other drugs that, while they enhance the quality of life for the individual in question -- and I am thinking here now of some of the new drugs we have recently heard about for individuals who have Alzheimer's -- will prolong the period over which the more severe form of the disease will affect the individual. The net result of that is that that individual will require care over a longer period of time. Ultimately, the economics are that it is more expensive. The quality of life gain is, of course, tremendous.
In the majority of cases, it cuts the way you suggested, with lesser cost, but there is another side to the coin as well.
Mr. Halliwell: With respect to that chart, it is just a chart of the level of expenditures projected in the fall 1999 fiscal update by the Finance Department. It is the transfers to other levels of government. The top line is total transfers, including equalization, and the second line is the current CHST. In earlier periods, it would have been the Established Programs Financing.
The bottom line is our estimate of the split of the CHST. Clearly, in the current fiscal plan, there are no large increases in the CHST. The position of the Government of Canada is, if agreement is reached on plans to reform the health care system, to obtain a more integrated system in particular, more transfers would be forthcoming. The federal position clearly is that we have to reach agreement on a plan before we reach agreement on a level of funding.
The Chairman: I should like to thank the witnesses most sincerely. It has been a very interesting two hours.
The committee adjourned.