COLUMN

How to remedy medicare

Dian Cohen September 5 1983
COLUMN

How to remedy medicare

Dian Cohen September 5 1983

How to remedy medicare

COLUMN

Dian Cohen

I have just spent a month in a Quebec hospital—one of the province’s best institutions, I am told. I feel lucky to have survived the experience. I do not mean that I was so ill that I was lucky to have survived. I mean that the squabbling between Ottawa and the provinces over control of Canada’s health care system is now weakening the system itself. It is absolutely frightening to be lying in a bed in a hospital whose budget is so squeezed that patients are unable to obtain facial tissues when they need them. Far worse, patients are under the care of residents and interns whose training has completely desensitized them—they function without compassion or even common courtesy.

Canada’s confused health care system has four principal players: the federal government, the provincial governments, the medical profession and the taxpayer. The most important is the taxpayer, who supplies the other three with every penny of their incomes. But the taxpayer is not really in a position to know what he or she needs in the way of health care services and is never directly consulted when key decisions are made. That vital area is at the mercy of the federal government, whose role is to ensure that the health care system works for everyone.

In the past, Ottawa carried out that responsibility by stipulating that in order to qualify for some of the money it collects from taxpayers the provinces’ health care plans must meet four criteria: they must provide comprehensive coverage for all medical services performed by doctors; they must provide universal coverage; they must allow reasonable access to medical services; and they must be portable from province to province. In exchange for meeting those criteria, the federal government agreed to share health care costs with the provinces on a dollar-for-dollar basis. That seemed to work reasonably well until the mid-1970s, when Ottawa, having become more interested in saving money than in controlling the system, made a new proposal for the funding of health care to the provinces, and the provinces went along, believing that they would win more spending flexibility. Thus, in 1977 Ottawa and the provinces agreed to a new funding arrangement called block funding. That meant that Ottawa’s contribution to health care would be linked to the growth of the gross national product

instead of being tied directly to the cost of running hospitals and paying doctors. In essence, Ottawa simply gives a lump-sum payment to the provinces, and they can spend it as they wish. They may or may not choose to spend it on health care.

The provincial governments’ role is to administer the health care system within the overall criteria set down by the federal government. That worked well enough when Ottawa matched every dollar the provinces spent on health care. But when, in 1977, the new deal gave the provinces more control over federal money, Ottawa’s contribution turned out to be considerably less money overall. With the economy in a slump, the GNP fell. So did Ottawa’s payments to the provinces. The provinces then had three options: increase taxes to make up the shortfall, cut back on medical services, or let the doctors and hospitals charge

There is no incentive for hospitals to manage money economically— if they have a surplus, they must give it back ’

patients directly for their services.

For its part, the medical profession is positively schizophrenic about medicare and hospitalization. On the one hand, doctors like it because they get paid on time whether they are top in their field or merely mediocre. On the other hand, they hate it because it does not accord with their self-image as independent, individualistic, decisionmaking professionals. They feel that medicare has diminished their profession, that no consideration is given to the excellence of some and the incompetence of others. They hold medicare responsible for undesirably standardized, assembly-line medicine. They see themselves locked out of policymaking procedures, reduced to functionaries. To date, governments have dealt with few of those dissatisfactions directly. Doctors feel they are scapegoats for a system that no longer works.

The provinces, for their part, are not in any position to take control of the system. No mechanism exists at the provincial level to ensure uniformity of medical services across the country. Nor have the provinces on the whole

been successful either in keeping down costs or in dealing with striking doctors or hospital workers. Taxpayers have preferred to believe that nothing is wrong or, if something is wrong, that the government will fix it. The net result is a situation in which the system itself is threatened.

There are solutions, but they are not easy ones. Ottawa must stop its threats of unilateral changes to the medicare system. And the provinces must make a commitment to the preservation of the principle of universal medicare. The solution requires that a modernization of the systems of both medicare and hospitalization—the world has changed since the federal government introduced publicly funded hospitalization in 1958 and publicly funded medical care in 1968. The area of hospitalization is particularly important because the provinces spend roughly three times more money on hospital services than on medical services. It is crucial to recognize that there is no incentive for hospitals to manage their money economically—if they end up with a surplus, they have to give it back to the government.

The medical profession could make a positive contribution to the good health of the system by easing its grip on its monopoly of many medical services. Doctors could, for instance, allow paramedics and nurses a wider range of responsibilities. That would result in considerable savings for the taxpayer. Considering that doctors generate from 75 to 80 per cent of all health care costs through their control of hospital admissions and prescription drugs, they would do well to institute some review system to ensure that everything that they say is necessary is indeed essential.

The federal and provincial health ministers are meeting in Halifax on Sept. 8 and 9 to discuss the future of the health care system. Without concrete suggestions for solutions to the medicare dilemma on the agenda, the meeting will simply be an extension of the adversarial stance that has been totally unsuccessful over the past six years in creating conditions for better medical care and improved management of taxpayers’ money. More to the point, the health care system shows signs of not being able to withstand, for much longer, the strains that are being imposed on it.

Dian Cohen is a Montreal-based economics writer.