Response to the Romanow
Senator Michael Kirby
Senate Committee on Social Affairs, Science and Technology
the release of Mr. Romanow’s report at the end of November, the badly needed
national health care debate is now fully engaged. The Senate Social Affairs
Committee released its final health care report a month earlier, so we now have
on the table two thorough and well-researched proposed national strategies for
health care reform. Both are consistent in many respects, although Mr.
Romanow’s recommendations differ from those of the Senate Committee in several
must take a hard look at the proposals that are on the table and make their
voices heard in the discussion about what should be done now. The final
decisions will rest with our provincial, territorial and federal governments.
But two things are crystal clear:
First, reports and their recommendations are
one thing. Now is the time for action. Further delay in reforming the
system is not an option.
Second, governments are listening. Canadians’
voices will be heard if they make the effort. The outcome of the forthcoming
debate, and its translation into action by our federal, provincial and
territorial governments depends, very much on people making their views known
clearly, strongly, and publicly.
paper, I will present a response to the Romanow Report. Let me begin, however,
by congratulating Mr. Romanow on the release of his long-awaited report. As I
know only too well, recommending change to Canada’s most-cherished social
program is neither a simple, nor a universally-appreciated task.
Senate Committee was pleased to see that Mr. Romanow has reached many of the
same conclusions as we did in our report, especially with regard to defining the
major goals of health care reform in Canada. He has strongly reaffirmed, as did
the Committee, that the single-payer public insurance system must be maintained.
He has joined us in pointing to the need to make health care delivery more
efficient and more effective, and in stressing the importance of improving
this end, he has made a number of recommendations that are the same as the
Committee put forward a month ago, such as reducing waiting times and reforming
primary care. Moreover, many of his proposals for expanding the areas covered by
public insurance in Canada echo those advanced by the Committee. He has called
for a program to protect Canadians against very high prescription drug costs,
for a limited national home care program as well as for a palliative care
initiative – all areas covered by the Committee’s recommendations.
has also come in with an estimate of the costs for implementing his
recommendations that is in the same ballpark as the Committee’s calculation
that $5 billion new dollars are needed annually.
between Mr. Romanow’s report and that of the Senate Committee there are a
number of key differences with regard to the means and the methods to be
employed to achieve these shared objectives. We are glad that the debate can now
focus on how best to attain a set of goals that we share. The means that are
chosen are of no small significance – some means are more efficient than
others, some lead to better outcomes for patients and some are more effective at
reducing federal-provincial squabbling.
comments on the Romanow report that follow should not be seen as having a
personal dimension. This is not Kirby versus Romanow, as some of the media have
occasionally made it out. In the marketplace of public policy ideas, reasonable
people can, and indeed often do, have honest differences of opinion. This is
what a public policy debate is all about.
this paper, I will address seven topics :
The measures proposed in the Senate Committee’s report to make the
publicly funded hospital and doctor system more efficient;
Our recommendations for renewing and strengthening the infrastructure of
Our proposals for dealing with the number one health care issue of
concern to Canadians – excessively long waiting times for diagnosis and
What the Committee believes should be done to close some of the gaps in
the health care safety net;
How the Committee proposes to enhance government accountability to the
Canadian public with respect to health care;
The measures the Committee proposes to minimize federal-provincial
And, finally, how the Committee envisages paying for the reform and
renewal of the health care system.
each case, I will indicate how the proposals and recommendations we put forward
in the Senate Committee’s report differ from Mr. Romanow’s.
Efficiency Measures: Incentives Instead of Top-Down Micro-Management
early in its deliberations, the Committee recognized that it had to make a
fundamental choice with regard to its approach to health care reform. Were our
recommendations to be based on maintaining the current system in which
provincial governments, in order to save money, try to micro-manage hospitals
and, in some cases, even regulate how people should do their jobs? Or was there
an alternative approach that would see government set the ground rules, but
leave people the freedom to figure out the best way to get the job done? That
is, should government row, or should
it simply steer?
Committee felt strongly that the first approach, top-down command and control,
was not the right one. It was painfully apparent to us that attempts by
governments over the past many years to achieve increasingly close regulation of
the health care delivery system are not working. We concluded that government
micro-management of a system as complex as health care was simply impossible,
and that continued efforts to impose such control would lead not only to more
failure but also result in stifling, rather than fostering, the kinds of reform
that are needed.
Committee therefore opted in favour of the creation of a set of incentives
– incentives that would lead people to behave in a way that we believe is in
the public interest while making decisions based on their own self-interest. We
recognized that the incentives for each of the players in the health care system
(doctors, hospital management, and government), would have to be structured in
such a way that they would lead to the kind of behavioural changes that are
needed to make the system both more efficient and more effective in delivering,
in a timely fashion, the services people need. Therefore our recommended
incentives were chosen after the Committee first decided on the behavioural
changes we wanted to encourage.
me give you two examples of how our incentive-based approach is reflected in the
our report proposes that the way in which hospitals are funded be transformed.
We believe we must move away from the current practice of giving hospitals
global budgets based largely on historical spending patterns. Instead, we
propose to fund hospitals on the basis of the services that they actually
deliver. We call this service-based funding. It means simply that fixed
prices are established for different procedures, and hospital funding is based
on how many of each kind of procedure a hospital actually performs. In other
words, hospitals would be paid for what they do, provided, of course, they do it
well. Service-based funding is not a novel concept. It is used throughout the
we heard made it clear to our Committee that the incentives built into this kind
of funding would generate a number of significant benefits. They would:
encourage institutions to
improve their operating efficiencies, since they get to keep any money
enhance the ability of
managers to manage, because it becomes necessary to know how efficiently the
institution is performing each and every procedure;
make the costs of various
procedures more transparent and improve accountability;
create competition between
institutions, encourage specialization and stimulate the development of
centres of excellence.
encourage institutions to
improve patient service, since revenue depends on numbers of patients
treated (subject, of course, to the proviso that all services provided meet
a high standard of quality and satisfactory outcomes);
the significant advantages that come with service based funding, it came as no
surprise to the Committee that the vast majority of CEOs of major health care
institutions with whom we consulted were in favour of this change in funding
method. One of the things that most major hospital CEOs told us was that they
currently spend in the neighbourhood of 30% of their time haggling with
provincial bureaucrats. What a colossal waste of senior management time! Moving
toward service-based funding will eliminate much, if not all, of this wrangling
since the government will no longer be involved in the micro-management of
is also an important synergy between this method of funding and improving the
quality of health care services that patients receive. Every research study
indicates that if there is one correlation that holds throughout the health care
sector it is the link between increasing volume and improved quality. The more
frequently a particular procedure is performed by the same institution, the
better the patient outcomes. By encouraging hospitals to specialize and by
linking remuneration to the number and type of procedures, we not only drive
efficiency, we also enhance quality.
the shift to service based funding would have the effect of lowering the volume
on another peculiarly Canadian debate – whether services should be delivered
by the public or private sector. With service based funding, the government as
insurer or funder, would become neutral, or indifferent, with respect to who
actually delivers the service.
is already the case in many areas of the health care sector, although many
people are reluctant to recognize it. The principle of public administration in
the Canada Health Act, one of the famous five, refers only to how
health care is paid for, not by whom it is provided.
example, any hospital that contracts out its laundry, housekeeping or cafeteria
services is channelling public funds into private sector service delivery. As
long as service quality is maintained at a competitive price, government, as
funder of the system, as well as the managers of institutions and patients
themselves should be indifferent to the contracting out of services. If service
based funding were to be implemented, this same logic would apply throughout the
hospital sector – it would not
matter who delivered the service, as long as they did so at an agreed,
competitive price and with appropriate guarantees of access and quality.
only is such private delivery of publicly funded services not outlawed
under the Canada Health Act, it is an integral part of health care
delivery in Canada and has been since the inception of Medicare some 40 years
ago. Just think of the private labs, x-ray clinics and other such institutions
that exist across the country. Think of hospitals, for that matter, almost none
of which are government-owned. Think of physicians, almost all of whom are
self-employed professionals operating what amounts to independent small
Committee is not proposing to change the Canada Health Act to allow
greater private sector involvement, nor is the Committee advocating in favour of
expanding private delivery. What we are saying is that with the set of
incentives we propose, it will not be government that decides who actually
delivers each and every service. Patients, or regional health authorities acting
on their behalf, will seek services from those institutions that can provide
them most quickly and conveniently.
me be very clear that the comments I have just made apply only to the delivery
of health care services. The Committee believes strongly that Canada’s single
public funder model must be maintained for hospital and doctor services. Not
only does a single public insurer/funder mean that everyone gets treated
equally, but it is also enormously more efficient than the often-advocated
funding model that mixes public pay and private pay patients, that is, the
“two-tier” model we hear so much about.
example of the use of incentives to achieve behavioural change that I want to
highlight is in the area of primary care reform. Primary health care constitutes
a patient’s first point of contact with the health care system, and includes
many things, ranging from the diagnosis, treatment and management of health
problems to illness prevention and health promotion.
primary care delivery in Canada revolves mainly around family physicians and
general practitioners working solo or in small group practices. Approximately
one-third of primary care physicians work alone; fewer than 10 percent work in
multidisciplinary practices. The vast majority of primary care practices are
owned and managed by physicians. Fee-for-service payment is the dominant form of
general practitioner remuneration.
are a number of major weaknesses and problems with the way in which primary care
is generally delivered in Canada:
Care and services are
Inefficient use is made of
many health care providers, such as nurses and nurse practitioners, who have
very limited opportunity to use the knowledge and skills learned during
their publicly-financed training;
Care is often not available
after hours and on weekends (when most people need it); and
There is a lack of emphasis
on health promotion and illness prevention;
of these difficulties can be traced to a misalignment of incentives with desired
behaviour. Fee-for-service remuneration rewards episodic more than continuing
care, fast “through-put” of patients, and dealing with simple procedures
more than challenging ones. Moreover, it discourages family practitioners from
having nurses, nurse-practitioners, psychologists, and other health
professionals do all the things they are fully qualified to do. This should not
be taken as a criticism of family physicians. Far from it! They are merely
responding, as any rational person would, to the incentives now present in the
Committee has proposed that primary care delivery be reorganized by changing the
way family practitioners are remunerated. We think that fee-for-service should
be replaced by a system based mainly on capitation. Under this system, patients
enrol with a group practice and the group receives an annual payment based on
the number of patients on its list, weighted for such factors as age and gender.
This annual payment is made regardless of whether each patient is seen once or
twenty times during the year.
these primary care groups will generate significant benefits:
Patients will be guaranteed
access on a 24/7 basis to their own team of doctors and other
It will be possible to
utilize better the full spectrum of health care providers, and to coordinate
better patient services through interdisciplinary teamwork –
primary care groups would, in effect, provide “one-stop shopping”
for all the health care needs of the people they serve;
There are potential cost
savings in the longer term by reducing demand on expensive emergency rooms
and specialists’ services and by making sure that the most appropriately
qualified professional handles each task;
It becomes easier to
integrate the provision of health promotion and illness prevention measures
into patient care.
perceptive readers might be asking themselves: “Is the Senate Committee not
being contradictory?” If fee-for service is bad for primary care why is it
good for hospitals? If global budgets are bad for hospitals why would their
equivalent, capitation based funding, be good for primary care?
answer to this apparent contradiction lies in understanding the different impact
that the same payment system can have under differing circumstances.
Both fee-for-service and service based funding encourage providers
(doctors or hospitals) to increase the volume of services that they deliver.
the case of doctors, this can lead to placing greater emphasis on
“through-put”, the numbers of patients seen. This can sometimes occur at the
expense of patients with complex problems, those requiring continuing care, and,
as is all-too-often the case, by neglecting to provide help to those seeking to
prevent illness. This is why our Committee believes that alternative forms of
funding must be introduced for primary care physicians.
the case of hospitals, however, an incentive to provide more services is
precisely what is needed, given the current waiting lists. Measures to compare
the quality and outcomes of hospital care are available now and therefore a
shift towards service based funding would prove beneficial. In other words,
incentives must be tailored to encourage the kind of behaviour that is required
in different parts of a reformed health care system.
have argued that global funding promotes greater stability and also that the
accounting procedures necessary to introduce and sustain service-based funding
will divert funds unnecessarily from patient care.
These are important points in favour, but the Senate Committee thought
them outweighed by the “downside” of global funding – that it will
maintain the inefficient and ineffective, top-down micro-management of hospitals
by government. The Committee is therefore convinced that the method of funding
hospitals must be changed.
recognizing the importance of not diverting money from patient care, the Senate
Committee also recommended that the federal government fund one hundred per cent
of the cost of building the management information system required to make
service-based funding possible.
contrast to the Senate Committee, Mr. Romanow is silent about the method by
which hospitals are funded. His report is also completely silent on issues
relating to teaching hospitals and hospitals in urban areas. In addition, unlike
the Senate Committee, Mr. Romanow is also adamantly opposed to any expansion of
the role of the private sector in health care delivery. In fact, he also
implicitly questions the role that the private sector is currently allowed under
the Canada Health Act. As I noted previously, it is the Senate
Committee’s view that who provides care is essentially immaterial provided the
quality of care is assured and its cost is competitive.
has the Senate Committee and every provincial commission over the past few
years, Mr. Romanow has come out strongly in favour of primary care reform, and
has proposed a significant short-term investment by the federal government to
make reform happen. We all share the same goals and understanding of the
significant benefits that reform in this area will produce.
and Expand Infrastructure: Teaching Hospitals, Information Systems,
Human Resources and Research
now turn to my second topic: rebuilding and expanding the infrastructure of the
health care system.
care infrastructure has been woefully under-funded in this country. Canada
can’t have a sustainable health care system over the long term without a
significant reinvestment in infrastructure. We now rank near the bottom of OECD
countries in terms of the availability of many important pieces of diagnostic
equipment. We have allowed our capital stock to deteriorate and we are facing
shortages of health care personnel across the board. Short-term savings were
made in the 90s by deferring investment in health care infrastructure, but we
will be long-term losers unless this accumulated shortfall is addressed,
has taken a broad view of what falls under the category of health care
infrastructure. I want to discuss briefly the need for significant federal
investment in four areas of infrastructure: the physical plant and equipment of
Canada’s teaching hospitals, information systems including the patient
Electronic Health Record, health research and health human resources.
the federal government should invest in the renewal of physical plant and
equipment urgently needed in Canada’s teaching hospitals.
facts, out of many I could cite, illustrate the urgency of this need:
addition to being the primary site of training for Canada’s health care
professionals, teaching hospitals offer the newest and
most highly sophisticated services and treat the most difficult, complex cases. They are truly a national resource, and as such must be supported
by the federal government. It is only by providing adequate funding to our
teaching hospitals that it will be possible for Canada to develop genuine
centres of excellence, and to be at the forefront of the scientific advances
that are continually transforming the practice of medicine. As well, it is only
by being at the leading edge that we will be able to derive the potentially
significant economic benefits which are likely to result from the
commercialization of the next generation of medical research results.
is not to deny the need for reinvestment in the capital structures and equipment
of community hospitals. That has to be done too. But, in our Committee’s
opinion, reinvestment should begin first in teaching hospitals for all the
reasons I have mentioned.
the federal government should fund the development of a national health
information system, which can be used in hospitals and doctors offices across
the importance of information management to good outcomes in health care
delivery, Canada’s health care system has little capacity for health
information management and does not make use of management information
technology to anywhere near the same extent as other information-intensive
industries. In fact, what we have in this country was described to the Committee
as a “patchwork of unconnected information technology projects.” Surely, if
I can withdraw money from my bank account from just about any ATM anywhere in
the world and securely access my account record via the internet, then Canada
should be able to put in place a single system that allows one hospital, or one
physician, for that matter, to exchange patient information with another within
the same country.
much good work has been undertaken, a truly national system of patient
Electronic Health Records is still far from a reality. That such a system would
help make real the portability clause of the Canada Health Act is
obvious. It would also lay the foundation for meaningful comparisons of the
efficiency of different health care institutions, and of health outcomes at
various institutions across the country. The creation of a truly national system
of Electronic Health Records is one of the cornerstones of our Committee’s
strategy to bring the health care industry first into the late 20th
century and then fully into the 21st century. We consider it a
national priority and believe that it should be entirely funded by the federal
a dynamic and innovative health research sector is a vital necessity, not only
for ensuring the sustainability and the quality of the health care system
itself, but also as a major contributor to economic growth in this country.
creation of the Canadian Institutes of Health Research by the federal government
in 2000 represented a major step forward in consolidating and strengthening the
country’s efforts in health research. But more needs to be done to ensure
adequate long-term funding for health research. The Committee has recommended
that the federal government move as quickly as possible to bring funding for
health research to one per cent of total health care spending. In our view, this
represents the minimum required to keep Canada internationally competitive. To
meet this target will require almost doubling the current budget of the CIHR.
our Committee has defined infrastructure of the health care system to include
the education and training of the people who do the job of providing health care
national strategy is needed in order to make Canada self-sufficient in health
human resources. The Committee has therefore recommended the creation of a
National Coordinating Committee that would bring together the different levels
of government and the key stakeholders to develop and guide the implementation
of such a strategy.
the short term, more money is needed to boost enrolment in educational and
training programs for all health care professions. The Committee recommended
that the federal government do its share by buying places at educational
institutions so that more doctors, nurses, and other health care professionals
can be educated and trained. By focussing its efforts on funding places at
medical, nursing and other faculties, the federal government can lend
much-needed assistance to the provinces without interfering directly in their
area of jurisdiction.
has not addressed the health infrastructure issue directly in the way that the
Senate Committee has. Nonetheless, the general thrust of his proposals with
respect to information systems and Electronic Health Records are similar to
those proposed by the Committee. However, our two reports differ quite
significantly on the methods by which the federal government should fund these
Romanow echoed the Committee’s call to boost funding for research, but unlike
the Committee has not addressed the issue of where the additional money for
research should come from.
other infrastructure areas his report is regrettably short on detail, especially
in terms of estimating the cost of implementing the general objectives he has
endorsed. Thus, he does not propose
that any special investment be made in teaching hospitals or provide any
additional funding for the creation of the national system of Electronic Health
Records that he has endorsed.
most surprisingly, Mr. Romanow sets no specific targets for increasing the
supply of either doctors or nurses in this country, and consequently does not
allocate any specific funding for the education and training of health care
professionals. Moreover, as I previously observed, there is scarcely a word
about hospitals to be found anywhere in Mr. Romanow’s report. This strikes me
as a particularly grave oversight, especially with respect to the urgent needs
of Canada’s teaching hospitals.
contrast to Mr. Romanow, the Committee has carefully laid out a plan that
contains precise objectives to be met in all critical infrastructure areas, and
provides the money required to meet its infrastructure objectives in its funding
proposals. This reflects the Committee’s belief that a broad range of
investments in the infrastructure of the Canadian health care system is
absolutely essential to its renewal and long-term sustainability.
Care Guarantee: Ensuring the Timely Treatment of Patients
turn now to the health care issue of greatest concern to Canadians –
excessively long waiting times for diagnosis and treatment.
is little doubt that long waiting times for access to diagnostic services and
for treatment are the principal worry that Canadians have about their publicly
funded health care system. “Will the system be there when I need it?” is a
question one hears all the time. Although hard data on the full extent of the
waiting time problem is impossible to obtain, there is sufficient polling and
anecdotal evidence to indicate that, to the average Canadian, fixing the system
means reducing waiting times. Canadians deserve to feel secure in the
knowledge that they will receive timely treatment.
thought long and hard about how to achieve this objective. In a system that
strives to treat everyone equally, waiting times increase when there are
insufficient resources available to meet demand. The rules of supply and demand
apply to health care as elsewhere. We know that there is not enough equipment,
and that there are too few health care professionals available to provide care
where it is wanted and needed. We know that more money is needed.
the most important question is: how do we prevent future investments from simply
getting swallowed up without improving the situation for those who count the
most – patients? After all, patients are the people who should be at the
centre of it all – the people our health care system is there to serve. Too
often in recent years this patient focus has been neglected!
too long, governments have seen cost cutting as their preferred, and easiest,
policy option. The brunt of these cuts, particularly during the 90s, has been
borne by front-line workers who experienced increased workloads, and by patients
who were forced to wait longer for service. Those in government who made the
decisions to ration the supply of health care services by cutting resources and
to avoid disciplined waiting lists were not directly affected. They suffered no
consequences as a result of their decisions.
the health care system has been very slow to make use of the lessons learned
from best practices in waiting list management, such as the Cardiac Care Network
in Ontario, and has not yet applied the same waiting list management techniques
elsewhere in the system. To be fair, a structured, needs-based waiting list for
a wide range of surgical procedures is on the point of being implemented in the
Province of Saskatchewan. But that merely brings the total of such lists in
Canada to two – a pitifully small number!
blame for the waiting list problem should be placed where it belongs – jointly
on the shoulders of governments for not funding the system adequately, and on
the providers of health services, for not developing and implementing clinical,
needs-based waiting list management systems.
government’s responsibility for funding the hospital and doctor system through
our publicly funded and administered health insurance program, comes the
obligation to ensure that reasonable standards of patient service are met.
Timely service is the essence of a patient-focused system and of the health care
“contract” between Canadians and their governments.
keeping with its philosophy that the best way to reform a complex system, and
the provision of health care certainly qualifies, is to introduce appropriate
incentives for the players involved, the Committee is firmly convinced that
governments and managers of the health care system must be made to bear the
responsibility for the consequences of their decisions. The Committee’s
proposal to put in place a maximum waiting time guarantee for all major
procedures gives concrete form to this obligation.
idea is that when this maximum waiting time is reached, government would have to
pay for the patient to receive treatment in another jurisdiction, including in
another country such as the U.S. The point at which this health care guarantee
would apply for each procedure would be based on an assessment of when a
patient’s health is at risk of deteriorating as a result of further waiting.
Safe waiting times would be established by scientific bodies using clinical,
Were it to be
implemented, such a health care guarantee would mean that government and the
managers of the health care system would have to shoulder the responsibility of
needed care not being delivered in a timely fashion.
Committee’s Care Guarantee would ensure that allowing waiting times to
increase would no longer represent a cost-free option for governments, or for
hospitals and doctors. They would have to sort out amongst themselves who was
responsible in each case where maximum waiting targets were exceeded, much as
car insurance companies work out who was at fault in an accident. But in the
meantime, the patient would be treated, just as the car gets fixed while the
insurance companies figure out who was to blame for the accident and who pays.
Romanow agrees that patients should be told how long they should expect to wait
for each procedure, but has not recommended going the extra step the Senate
Committee has recommended making the commitment that
these targets will be met and that someone other than the patient will bear the
consequences if they are not. Mr. Romanow believes that it would be enough
simply to inform people of how long they should expect to wait for the procedure
or service they required.
Romanow also believes that the Committee’s Care Guarantee could not be
implemented in practice. Our Committee believes that it could be made to work,
as does Don Mazankowski, whose report has shaped the reform of the health care
system underway in Alberta, and the Canadian Medical Association, which also
advocates the implementation of a Care Guarantee. As well, the Minister of
Health of Quebec recently indicated that he too was in favour of making a
commitment that patients will receive timely treatment. The Committee’s
approach is intended to lift the consequences of underfunding and bad waiting
list management from the shoulders of the one player in the system who bears
none of the responsibility – the patient. On this issue of greatest concern to
Canadians, Mr. Romanow has not offered a solution.
consequences of not solving the waiting time problem are great. Unless Canadians
are guaranteed timely treatment, the future of publicly funded health care is
likely to be at risk, most probably as a result of a constitutional challenge
based on the right of individual Canadians to have access to timely care and to
purchase private health insurance to provide it.
can no longer have it both ways – they cannot continue to fail to ensure that
the delivery system provides timely access to medically necessary care in the
publicly funded health care system and, at the same time, prevent Canadians from
acquiring those services through private means. Thus, one consequence of not
implementing the health care guarantee would be to render it highly likely that
the current legal prohibition on the creation of a parallel private health care
insurance and delivery system would be challenged successfully in the courts. To
avoid this outcome, the Committee is convinced that the Care Guarantee must be
turn now to the Senate Committee’s proposals for closing some of the gaps that
now exist in the health care safety net.
factors motivated the Committee’s approach to expanding public coverage with
respect to prescription drugs. First, as everyone knows, drug prices are the
fastest growing component of health care costs. Second, the development of new
treatments and new prescription
drugs often replace hospital care; they make it possible to treat people
out-of-hospital where, of course, Medicare, as originally conceived, does not
pay for drugs. Third, new scientific research often leads to new highly
effective, but extremely costly, drugs becoming a bigger part of the therapeutic
arsenal. Together, these three factors mean that the trend toward prescription
drugs consuming an ever-larger portion of the health care budget is not a short
and finally, publicly funded coverage for prescription drug costs is very uneven
across the country, a situation that is particularly acute in Atlantic Canada.
its work the Committee sought to uphold two fundamental principles with respect
to publicly-funded health care:
quickly became clear to the Committee that these principles were threatened by
the absence of a national prescription drug program to protect Canadians against
the risk of very high, or as we say in the report, ‘catastrophic’,
prescription drug costs. Although Canadians, on average, spend relatively little
of their income on prescription drugs, the problem for those who face very high
drug expenses can be extremely severe. Let me illustrate with just two of the
examples given to the Committee, both of which involve Atlantic Canadians.
first case the Committee became aware of involved a professional librarian who
was a member of a good quality employer-sponsored drug benefit plan. His wife
required prescription drugs costing $50,000 a year, leaving the individual in
question with personal out-of pocket costs of $17,000 annually. This example
clearly illustrates that even people with excellent drug insurance plans are not
fully protected against the risk of undue financial hardship arising from
catastrophic drug costs.
the second case, which we recounted in our recent report (and which was also
widely featured in news reports on the CBC in the run-up to the release of Mr.
Romanow’s report), medication for
pulmonary hypertension costs a particular patient more than $100,000 a year. The
patient spends over $4,600 monthly (or $55,000 annually) for her health
insurance premium, and her share of the cost of the drugs and the peripherals
needed to administer them. Because in her province patients must exhaust all
their savings, including RRSPs, before receiving government aid, she faces
destitution as a result of having to take the medication that is keeping her
in the Committee’s view, is simply wrong. No Canadian should be forced into
bankruptcy as a result of having to pay prescription drug costs. It was to
achieve the goal of removing the financial barriers between those who need
health care services and those who provide it that Medicare was conceived in the
Committee worked hard to find a feasible remedy to this growing problem. A
detailed study done on behalf of the Committee showed that there were 600,000
people, or 2% of the population, with no drug coverage at all. All of them live in Atlantic Canada. The data also indicated that a further 9% of the
population were still at considerable risk of impoverishment despite having some
prescription drug coverage under their current private and/or public plans.
means that, in all, 11% of the Canadian population is at risk of significant
financial hardship as a result of having to pay high prescription drug expenses
out of their own pockets. Currently, more than 100,000 Canadians experience
annual drug expenses exceeding $5000 per year and there is little doubt that
this figure will grow substantially in coming years.
offering protection to Canadians who risk financial ruin is the main reason the
Committee chose to recommend a catastrophic drug insurance program, there are
also a number of other good reasons to move in this direction. Patients who face
high drug costs may simply decide not to continue their treatment, and as a
result doctors may be inclined to keep patients in hospital longer where their
drugs are paid for under Medicare. Existing private supplementary plans could
also come under severe financial pressure, causing employers to reduce or even
eliminate coverage, as is already happening with some small and medium-sized
Committee has therefore proposed a plan that builds on, rather than replaces,
Canada’s extensive current systems of provincial prescription drug coverage
and private supplementary drug insurance plans. The Committee’s proposal calls
for the federal government to take over responsibility for 90% of prescription
drug expenses that exceed a certain limit that qualifies them as
“catastrophic.” This limit has been set at a total of $5000 per year, no
matter whether the $5000 is paid partly by the individual, partly by a private
plan, or partly by a public plan.
result of the Committee’s plan, which will cost the federal government $500
million a year to implement, is that no Canadian will ever have to pay more that
3% of his or her family income for prescription drugs.
Committee’s plan shifts the burden of insuring against catastrophic drug
expenses to the insurer most able to deal with the risk – the federal
government. This will free up money in all provinces and also help to ensure the
long-term sustainability of private drug insurance plans by removing the extreme
volatility in plan costs due to catastrophic drug expenses. Moreover, potential
plan sponsors who have hesitated to adopt supplementary prescription drug
benefit plans in the past may now be more inclined to introduce them.
Romanow has also addressed the catastrophic drug problem. He
proposes to have the federal government pay 50% of the cost incurred by
provincial drug insurance plans for ‘catastrophic’ drug coverage. His plan
places the threshold of ‘catastrophic’ at $1500 per year.
is impossible to know what the impact of Mr. Romanow’s plan would be for
Canadians in general, since there are no fixed targets set for the maximum that
families could spend out-of-pocket on prescription drug expenses.
Everything depends on how the provinces choose to use the new federal
contribution. However, if the current levels of individual out-of-pocket
contributions within many provincial plans are maintained, Mr. Romanow’s plan
would cost many lower income Canadians who face catastrophic drug expenses more
than would the Committee’s plan. Moreover, Mr. Romanow has not addressed in
any way the role of the many private employer-sponsored plans that play a major
role in insuring Canadians for prescription drug expenses. In short, the
Committee’s proposal for catastrophic drug insurance is both more feasible and
more equitable than Mr. Romanow’s plan.
Acute Home Care
design of Medicare has not kept up with the times. The Canadian system has
remained a publicly funded hospital and doctor system. Increasingly, however,
health care services are being delivered outside of hospital walls, by a wide
array of highly-trained professionals, not just by doctors.
delivery in the home is a reality now and the need for it will grow as the baby
boom generation ages, as average life expectancy rises, as health care delivery
is increasingly de-institutionalized, and as work and social patterns decrease
the availability of informal care-giving by family members.
each province and territory offers financial support for some form of home care
program, but it is not defined as a “medically necessary” service under the Canada
Health Act. Therefore, publicly funded home care programs vary greatly
across the country in terms of eligibility, scope of coverage and applicable
user charges. Some, like the extra-mural program in New Brunswick, stand out as
models of the benefits an integrated home care program can provide.
that resources are and will continue to be tight and that only a fiscally
responsible program has any chance of being implemented, the Committee focused
only on post-acute home care, that is home care that follows an episode of
Committee’s proposed plan would cover patients for up to three months
following their release from hospital. It would be administered by the hospitals
themselves, with the federal/provincial/ territorial governments sharing the
costs on 50/50 basis. We have estimated that the federal share of a National
Post-Acute Home Care Program would cost $550 million annually.
as we recommended with respect to hospital funding, the Committee has
recommended that a service-based funding approach be used for its post-acute
home care program. Because we have recommended that the funding for post-acute
home care go directly to the hospitals from which the patients concerned are
discharged, those hospitals will have a strong incentive to provide the most
efficient form of care available,
whether delivered inside the hospital walls or in the home.
patients will be able to convalesce in the most appropriate setting without
worrying whether they will have access to the care they need. By having ‘the
money follow the patient’ a national post-acute home care program will
therefore both improve patient care and generate new efficiencies in the health
care system. Hospitals will be able to use the money to develop home care
services themselves or to contract with the most efficient community-based home
the 50:50 federal-provincial cost shared structure of the Committee’s
proposal, there should not be significant federal-provincial conflict. Because
the program uses service-based funding, the federal government would never
become involved in operational decision-making. Of course, agreement between the
two levels of government will be required in order to put in place the
service-based funding framework. But once that is done, the federal role will be
limited to paying its share of the bill for the services that are actually
delivered to patients, and periodically undertaking an audit simply to make sure
that billed services were in fact performed.
Romanow’s home care proposal is both broader and less extensive than the
Committee’s plan. It is broader in that he devotes most of the $1 billion in
funding that he allocates to home care to providing services for home mental
health case management and intervention, whereas the Committee decided to wait
to conduct a separate study on mental health issues before making its proposals
with respect to mental health.
is less extensive in that it provides post-acute home care for only 14 days
following discharge from acute care and 28 days for rehabilitation, compared to
the three months of coverage under the Committee’s plan. This difference in
scope is reflected in the fact that the total cost of the post-acute home care
provisions in the Commission’s plan are around $300 million, compared to the
total of $1.1 billion in the Senate Committee’s federal-provincial cost-shared
program. It seems to us that Mr. Romanow has considerably underestimated the
cost of an adequate, publicly funded, post-acute home care program.
care is a special kind of health care for individuals and families who are
living with a terminal illness that has reached such an advanced stage that
death is close on the horizon. The goal of palliative care is to provide the
best possible quality of life for the terminally ill by ensuring their comfort
and dignity and relieving pain and other symptoms.
care can be offered in a variety of places — at home, in hospital, in
long-term care facilities, and occasionally in hospices. However, in Canada
these services are fragmented and, in many parts of the country, they don’t
exist. Recent studies have estimated that while over 80% of Canadians die in
hospital, fully 80-90% of Canadians would prefer to die at home, close to their
families, living as normally as possible. But the services necessary to enable
them to do so are not often available.
Committee is convinced that it is essential for the federal government to make a
substantial contribution to make palliative care services available to Canadians
in their homes. Try as we might, however, it has proven impossible to obtain the
data to permit accurate estimates of the cost of a national palliative home care
program. Nonetheless, the Committee believes the federal government should set
aside $250 million in new money to cover the costs of a program to be developed
in conjunction with the provinces and territories and paid for on a 50:50
cost-shared basis. The Romanow Commission allocated $90 million per year to
palliative care in the home.
measure, allowing people who take time off work to care for dying relatives to
draw Employment Insurance benefits, has also been recommended by the Committee.
the Committee’s recommendations?
readers are probably wondering how the Committee proposes to pay for rebuilding
the infrastructure of the Canadian health care system and expanding public
coverage to new areas such as ‘catastrophic drug’ insurance, home care and
palliative care. The Committee has calculated that it will require an additional
$5 billion in federal funding annually to implement its recommendations. This is
new money, over and above current funding, and is an essential investment in
order to buy the changes that are needed to ensure the long-term sustainability
of our health care system.
the outset, the Committee has insisted that it would be irresponsible for it to
‘duck’ the tough issue of where additional funding should come from. Of
course, should the federal government have the money available through a
realignment of spending priorities, then the question of raising additional
money would not arise. Nonetheless, the Committee felt it both prudent and
responsible to propose a plan to raise additional funds, and it has done so by
proposing a variable National Health Insurance Premium that would cost Canadians
in the lowest income tax bracket 50 cents a day, increasing to $4 a day for
those in the highest income tax bracket.
Romanow, on the other hand, has chosen not to address the issue of where the
money to pay for his proposals should come from. The issue is quite simply not
dealt with in his report.
would now like to turn my attention briefly to indicating how adoption of the
Committee’s approach to health care reform would also help calm the
notoriously stormy waters of federal provincial relations.
is no doubt that Canadians are fed up with what appears to them to be perpetual
squabbling between the two levels of government involved in the health care
system. Canadians, quite simply, do not care whether one level of government is
more at fault than another for the failings of the system. Canadians want the
system to work and to be there when they need it. And they expect both levels of
government to work together to make sure this happens.
Committee has made it clear that its approach to health care reform is based on
carefully distinguishing between the funding of health care and the actual
delivery of services. In our view, the key to minimizing federal-provincial
conflict is to avoid having two levels of government involved in the joint
management of operational decisions relating to the hospital and doctor
Committee has thus proposed two kinds of funding arrangements. First, some
programs will be funded entirely by the federal government, and targeted towards
specific ends. These include infrastructure funding for teaching hospitals,
information systems and their development, the Electronic Health Record, as well
as the purchase of additional places for the education and training of health
care professionals and an expanded health research program. As these investments
are 100% federally funded, there should not be federal-provincial squabbling
over who should pay how much.
second type of funding arrangements proposed by the Committee are 50:50 federal
provincial cost-shared programs. But unlike past programs of this kind, the
Committee has recommended using service-based funding as the way of distributing
the new money. What this means is that the federal government would not be
involved in the operational decision-making process. Once the program parameters
were in place, all the federal government would have to do is pay its share of
the bill once it was known how many of each type of procedure or service were
actually performed in each province or territory.
means that for the federal government the only issue is basically an accounting
issue – calculating how many people received home care following a hip
operation, and how many needed it after cataract surgery, and so on – and not
a question of how these services were delivered or by whom. This gets the
federal government out of the operational side of service delivery, and avoids
arguments over such questions as the details of how a service should be
delivered and what services should be publicly funded; these question have
frequently been the source of federal-provincial conflict. Therefore the
service-based funding approach should go a long way towards avoiding the type of
problems that used to arise when federal-provincial cost sharing also meant much
greater joint management of service delivery.
Romanow has chosen to recommend that the Canada Health Act be amended in order
to include a sixth principle that will hold the provinces accountable for
spending federal money targeted to health care.
Committee decided not to go this route for a number of reasons. In the first
place, opening up the CHA in order to incorporate additional principles, no
matter how worthy, is a very risky undertaking. Once the icon – the Canada
Health Act – is taken off its pedestal it is impossible to predict exactly
how it will be amended. We don’t think it is worth the potential threat to
some of its fundamental principles, universality being one.
the key aspect of accountability that must be improved does not involve the
federal and provincial governments. What needs improvement most is the
accountability of all levels of government and the health care system itself in
all of its aspects to the Canadian public. This can be achieved without opening
up the Canada Health Act. In addition, we have little doubt that the
provinces are indeed spending the health portion of the CHST on health care,
since the federal cash transfers to the provinces represent a small percentage
of total provincial health care budgets.
the Committee regards Mr. Romanow’s proposals to open up the Canada Health
Act as both unwise and unnecessary. In fact, there is the very real danger
that by placing his new programs, such as home care, palliative care and
catastrophic drug insurance under the Canada Health Act as he proposes to
do, Mr. Romanow will end up actually exacerbating the state of
is because, no matter what the rhetoric about federal-provincial collaboration
that surrounds these programs, once they are under the umbrella of the CHA
the enforcement of their provisions becomes the exclusive responsibility of the
federal government. The Committee has avoided this kind of problem by not
opening up the Canada Health Act and by utilizing service-based funding
for all cost-shared programs.
recommendations in Mr. Romanow’s report and that of the Senate Committee
reflect diverging approaches to the role of the federal government in the health
care system, and are likely to have quite different impacts on
Romanow sees the federal government as the guardian of the national health care
system, whose role is to set national standards and to enforce them. This
approach assigns to the federal government the task of ensuring that the
provinces behave in the right way. This is hardly the best way to go about
improving federal-provincial cooperation in health care.
Committee’s recommendations are based on the view that it is the
responsibility of the federal government to put in place the infrastructure that
makes a national health care system possible. This approach makes the federal
and provincial government into partners, each having its own role to play –
the federal government has the main responsibility for providing the
infrastructure and the provinces operate the system.
to the Canadian Public
I just suggested, the real area where accountability must be significantly
improved is the way in which all levels of government report to the Canadian
public on the state of the health care system and the health status of the
Canadian population. For this reason, the Committee recommended the creation of
a National Health Care Commissioner and a National Health Care Council that
would be national in scope, rather than being the creation of just one
level of government or the other.
Commissioner and Council would be responsible for reporting to the Canadian
public on an annual basis on the state of the system as well as on the health of
Canadians, working closely with such established and well-respected institutions
as the Canadian Institute for Health Information. They would also advise the
federal government on spending priorities for any new money raised for health
Romanow has proposed the creation of a new Health Council of Canada that
resembles the Committee’s proposal in many ways. He has given his Council a
somewhat broader mandate than the Committee assigned to its Commissioner, but it
would report to Canadians on many of the same topics.
one potentially significant difference is over the degree of independence that
these organisms would have from government. The Senate Committee thought very
carefully about how best to ensure that in its day to day operations the
proposed National Health Care Commissioner would be entirely independent of
government. While Mr. Romanow envisages representation on the Health Council of
Canada from stakeholders and ordinary citizens, there would also be government
representatives on the Council, which would almost certainly make it more
difficult for it to act in a truly independent fashion.
way of conclusion, let me briefly summarize the six main points of divergence
between the Senate Committee and Mr. Romanow. As I noted at the beginning of
this paper, these differences are essentially over how to go about achieving
health care reform in Canada, not about the need for reform. The Senate
Committee and Mr. Romanow are agreed on the basic objectives to be pursued and
the need to pursue them vigorously and without delay. If I have highlighted some
of the differences between Mr. Romanow and the Senate Committee, it is because,
having come to many of the same general conclusions, we can now engage in a
constructive debate over how to bring about the changes that Medicare needs.
The Senate Committee believes that the system is too complex to continue
to be micro-managed by government and that reform can only be achieved by
putting in place an appropriate set of incentives to motivate behavioural change
by people on the ground. Mr. Romanow remains wedded to the old-fashioned, top
down, command-and-control model. Hence, the Committee favours service-based
funding for hospitals and Mr. Romanow is silent on the issue.
The Senate Committee believes that the funding and delivery of health
care services are separate issues. Like Mr. Romanow we favour a single payer,
publicly funded model. Unlike Mr. Romanow we believe that the funder should be
neutral or indifferent with respect to who owns and operates the organizations
responsible for service delivery. This means keeping open the delivery systems
to greater competition among providers. In the search for the most effective
forms of service delivery for Canada’s very diverse communities and regions,
Mr. Romanow has closed the door on testing any approaches to service delivery
that involve an increased role for the private sector.
The Senate Committee’s proposals with regard to the federal role in
rebuilding and developing health care infrastructure are considerably more
extensive and detailed than Mr. Romanow’s. This is particularly true with
respect to our emphasis on treating teaching hospitals as a national resource
the capital needs of which should be met by the national government. As well,
the Senate Committee, unlike Mr. Romanow, has attached great importance to
setting precise, carefully costed, targets for increasing the supply of health
The Senate Committee believes that providing patients with a guarantee
that they will be treated within a specified maximum waiting time is essential
both as a spur to the pace of reform of the health care system and as a direct
benefit to patients waiting too long for essential services. Moreover, the
Committee believes firmly that those who are responsible for the lengthening
waiting times of recent years must be held accountable for fixing the problem.
The consequences of Mr. Romanow’s position is that those who fund and manage
the health care system are not held accountable.
The Committee has provided Canadians with a concrete plan for raising the
money that is needed to renew, rebuild and reform Canada’s publicly funded
health care system. Moreover, the Committee’s plan does not rest on the shaky
ground of forecasting permanent federal surpluses. Mr. Romanow has chosen not to
venture onto this terrain. He is completely silent in his report on how he would
pay for implementing his proposals.
The Committee’s proposals for expanding publicly insured services do
not require the opening of the Canada Health Act, whereas Mr. Romanow has
chosen to place expanded services under the umbrella of the Act. Because
the federal government solely responsible for enforcing provincial conformity
with the Act, this could have the opposite effect to the one desired by
Mr. Romanow, that is, it could worsen federal-provincial relations.
the outset the Committee’s priority has been protecting the health of
patients. The Committee recognized that what was needed was not the affirmation
of lofty principles and general goals. What is needed is a detailed plan of
action whose cost of implementation is clearly spelled out. With this in hand,
Canadians will be able to decide whether they are prepared to pay the cost of
preserving the health care system they hold so dear. Canadians must not
be given the impression that health care is a free good to be paid for out of
someone else’s pocket.
are all responsible for paying for our health care system, and a responsible
approach to public policy means letting each and every Canadian know how much it
is going to cost them out of their own pockets to have the kind of publicly
funded health care system they want and deserve. The Committee believes that it
has put on the table an action plan, and a method of funding that plan,
that, if implemented, would help make a fiscally sustainable health care system
brings me back to my opening theme. The national health care debate has now been
joined. This debate will come to a head at the First Ministers’ meeting in
is critical that between now and then Canadians make their views known to as
many federal and provincial leaders as possible, including their Premiers, their
provincial Ministers of Health, and their provincial Finance Ministers. They
need to tell them what reforms they want them to support at the First
Ministers’ meeting, and to tell them also what approaches to reform they want
them to take.
future of the health care system depends very much on what Canadians do in the
next two months.
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