COVER

PUTTING A PRICE ON HEALTH

The Tory race reopens the user fee debate

MARY JANIGAN June 7 1993
COVER

PUTTING A PRICE ON HEALTH

The Tory race reopens the user fee debate

MARY JANIGAN June 7 1993

PUTTING A PRICE ON HEALTH

The Tory race reopens the user fee debate

In a decade of dwindling exexcitations, when even the transcontinental train makes fewer journeys across the land, Medicare is perhaps the last, great national dream. Many Canadians take immense pride in the fact that they and their fellow citizens enjoy unrestricted access to physicians and hospitals—and that none must bear the crippling burden of conventional medical bills. So when several candidates for the Conservative leadership began to flirt with the notion of health-care user fees earlier this year, the reaction was swift and unforgiving.

Health Minister Benoit Bouchard promptly spoke out against user fees, as did the federal Liberals and New Democrats. To some, the rhetoric might have seemed out of proportion with what would likely be a minimal charge—perhaps $5. “But there is a very important symbolism to user charges,” says Ake Blomqvist, a social policy economist at the University of Western Ontario. “There are few other issues in Canada on which we spend as much emotional energy.”

The outpouring of emotion has obscured the central question about user fees: Do they work?

Most studies suggest that user fees do little to control the cost of health care while deterring the poor and the elderly from seeking medical attention. On the other hand, user fees generate revenue. They represent a potential source of funds for debt-laden governments that are unwilling or unable to impose further reforms on the health-care system to ensure greater efficiency.

“User fees do not keep healthcare costs down,” says Raisa Deber, a professor of health policy at the University of Toronto. “They simply shift the responsibility for paying for health care. The easiest way to contain a provincial government’s healthcare costs is not to cut them—because everybody gets mad. The easiest way is to make somebody else pick up the bill.”

There are signs that a significant number of taxpayers do want someone else to pick up the bill. Last September, 22 per cent of those surveyed told Environics Research Group Ltd. that they “strongly support” user fees. That level of support for medical charges would have been unthinkable in 1984, when all three federal parties backed legislation to penalize provinces that imposed user fees. Nine years later, there is a growing gulf between Canadians who abhor such fees—and

Canadians who simply want more revenue to pay the bills. “Our health-care system is a symbol of our national identity—and a source of great pride,” observes Environics vice-president Jane Armstrong. “But it may be that medicare is becoming less of a sacred cow than it once was.”

The shift in public opinion appears to reflect growing unease over the staggering costs of health services. In 1991, Canadians and their governments spent $66.8 billion on health care. As Health Minister Bouchard observed, that works out to $7.6 million every hour. Even more alarming is the fact that between 1988 and 1992, provincial spending on health care increased by an average of 41.8 per cent. Health is the largest item in every provincial budget—about onethird of total expenditures.

Such numbers have prompted most Tory leadership contenders, including Defence Minister Kim Campbell and Environment Minister Jean Charest, to indicate that they might consider changes to the 1984 Canada Health Act that would permit provinces to impose fees for unspecified services. Those musings elicited an unusually blunt warning from fellow cabinet minister Bouchard. “There is a danger in taking shortcuts, in being tempted by immediate and easy solutions,” he said last month. “User fees or taxing health services is not the answer. We must learn how to manage our resources more effectively.”

Most health-care economists would agree with Bouchard. User fees, they say, represent a simplistic, generally ineffective approach to a complicated problem. Although there are many studies, Saskatchewan has become the most striking test tube because it imposed user fees between April, 1968, and August, 1971. The fees were $1.50 for each visit to a doctor’s office—and $2 for each house call or hospital emergency visit. In a 1980 report, University of Saskatchewan economist Glen Beck and University of

Manitoba health economist John Horne concluded that those charges reduced the average use of physician services by six to seven per cent.

But low-income families cut their visits to doctors by an astonishing 18 per cent— three times the average reduction. Although the fees discouraged the poor from seeking medical care, they did nothing to reduce total spending on health care.

Gross payments for medical services increased by 13.5 per cent in 1969, 11.9 per cent in 1970 and 12.2 per cent in 1971. That was at least three times higher than the rate of inflation—and roughly similar to the increases in the other

nine provinces.

Health-care economists are hesitant to explain why Sas-

katchewan’s health-care

costs kept rising—in large part because they do not want to offend the doctors. But one popular theory—the socalled target income hypothesis—postulates that doctors will endeavor to maintain their incomes at a desired level even if their lower-income patients choose to visit less often. They can do that by ordering more tests and services for their other patients. Says the University of Toronto’s Deber: “The evidence seems pretty good that physicians have a certain amount of money that they want to make, and they will adapt the amount that they do in order to make that amount of money. That does not mean that physicians are giving out unnecessary care. But there are a whole lot of things that, given enough time, doctors can do and patients might want to have done.”

In the long run, the solution to the problem

of rising health-care costs will likely be found in complicated and wrenching changes. Some economists suggest that doctors, instead of receiving fees for each service, should be put on salary. Others recommend paying doctors a predetermined monthly payment for each patient. Economists also suggest that provincial govern-

ments should estimate the amount of money required to treat typical cases of any medical problem such as heart attacks; they would then use those calculations to determine the amount that a hospital would receive for treating those problems.

Even those experts who do advocate user fees caution that they must be introduced in conjunction with other measures. The University of Western Ontario’s Blomqvist maintains that user fees encourage patients to act more responsibly. By definition, they also raise money to finance the system. But he says that governments must also change how they pay physicians and how they set hospital budgets. “I have become increasingly reluctant to treat user fees as a critical issue in health policy, simply because too much emotional energy can be wasted on what is, after all, only one component in a series of reforms,” Blomqvist says. “If I could have only two out of three financial incentives, I would pick the ones for physicians and hospitals and drop user fees.”

The international experience with user fees is mixed. There is evidence that they work well when directed at specific problems. In Holland and Germany, patients pay the difference between the cost of generic drugs and the higher-priced brand names if they choose the latter; the result has been a reduction in the cost of all drugs. But other fees pose administrative nightmares. People in Holland who visit hospital emergency departments when they could have seen their own doctor are often assessed a $35 fee. The fee is waived, however, if they are admitted to hospital. “User fees work in certain specific parts of the system very well,” concludes Bradford Kirkman-Liff, a health management professor at Arizona State University.

So far, Ottawa has used its financial clout to prevent provinces from imposing user fees. If a province did charge patients for medical care, the federal government would

deduct the total amount raised by user fees from its cash grant to that province for health care. Under the current funding formula, however, those grants will disappear by the year 2000. Provinces such as Quebec and New Brunswick, which are considering user fees, might then be free to impose them without penalty. Says Queen’s University economist Thomas Courchene: “Because Ottawa is cutting back its payments to the provinces, it is losing its moral authority to make the rules. Experimentation in the design and delivery of medical services is about to explode.” Unfortunately, the evidence so far suggests that user fees will do little to promote efficiency— or health.

MARY JANIGAN