The health care time bomb

Our aging population will make unthinkable reforms inevitable

The health care time bomb

Jacques Boissinot/CP; Ryan Remiorz/CP

Experts who have been pleading for an urgent debate on fast-rising health costs might secretly have welcomed the appearance of irate demonstrators outside Raymond Bachand’s Montreal office last week, two days after the Quebec finance minister proposed a new health tax, and even user fees, in his March 30 budget. And when Montreal police in riot gear clashed with the protesters, those worried experts—doctors and economists who’ve long argued that Canadians must face up to the hugely expensive needs of a rapidly aging population—wouldn’t have been out of line if they thought, “Finally, this issue can’t be ignored any longer.”

Bachand’s daring budget, and the angry reaction to it, gave those who’ve been issuing warnings about the cost of care a flashpoint to talk about. Quebec faces relentless growth in hospital, drug and doctors’ bills, similar to most provinces. Health will devour 45 per cent of Quebec’s budget this year, up from 31 per cent in 1980, and on track to consume 67 per cent by 2030. So Bachand announced a health tax slated to rise from $25 per adult in 2010, to $100 in 2011, and $200 in 2012. Even more provocatively, he said Premier Jean Charest’s Liberal government will study the idea of imposing a so-called “health deductible,” perhaps $25 per medical visit, which would be incorporated into the income tax system. It took two days for anti-tax, anti-user-fee protests to erupt outside his office in Montreal’s old city. Bachand didn’t back down, succinctly summing up his motivation for making the cost of care more directly apparent to Quebecers: “Nothing is free.”

Of course, Canadians realize health care is expensive, when they think about it. But government insurance means they usually don’t. Anne Doig, the Saskatoon family physician who is also president of the Canadian Medical Association, said Quebec’s surprise move might signal the moment when politicians across the country finally begin to confront costs. “We are pointing out the problem, a stinking elephant in the middle of the room, that our governments have been able to sidestep up to now,” Doig told Maclean’s. “I think we’ve reached the tipping point where they can no longer sidestep it.”

Though she welcomes Quebec’s budget as a wake-up call, Doig doubts Bachand’s measures are the solution: “I think this is perhaps a short-term—I’m not even sure if they meant this as a fix, or as a trial balloon to see how people would react.” Doig said a user fee, even if it’s built into the tax system, rather than collected up front by doctors’ offices and hospitals, is likely to increase costs in the long run. “Anything that causes a person to delay attention in a potentially serious situation is not good,” she said.

That criticism is echoed by Irfan Dhalla, a doctor and health systems researcher at the University of Toronto who has studied user fees. “Patients don’t generally know in advance if they are seeking necessary care or unnecessary care,” Dhalla said. “So the research has shown, again and again, that if user fees are imposed, patients reduce the amount of unnecessary care, but also the amount of necessary care.” For instance, he said women who have to pay for part of a mammogram tend to go without the test, delaying cancer diagnosis, which is bad for their health and ultimately more costly for the system. The same is true when high blood pressure and diabetes aren’t caught early because cost-conscious patients don’t visit their doctors soon enough.

If user fees are controversial, the other options open to provinces aren’t any easier. David Dodge, the former Bank of Canada governor and also a former deputy minister of the federal Health Department, recently laid out what he called four “stark and unpalatable choices” at a Liberal policy conference in Montreal. Dodge said the options boil down to significant user fees or “co-payments”; dedicated health taxes; cutting back on the scope of publicly insured services, which would force Canadians to buy private insurance for what’s no longer covered; or allowing erosion of the quality of care, perhaps letting wait times lengthen, again while allowing those who can afford it to buy private care.

Dodge’s éminence grise stature meant his blunt warning caused a brief stir in public-policy circles. He predicted a more sustained clamour for change will come from ordinary retired Canadians. “We as citizens are not going to put up with being denied access to life-saving, health-enhancing services,” he said. “It’s especially true of the younger elderly, the 60- to 80-year-olds, because many of the new services are things that make their lives better.” Dodge said active seniors—who tend to vote—won’t put up with being told they can neither count on high-quality government-funded care, nor dip into their own savings to pay for services that are denied.

In fact, the impact of an aging population has barely begun to be felt: the first of the baby boomers are only just beginning to retire. Even before that demographic shift takes hold, health costs have risen more than seven per cent a year on average for the past decade. In 2009, health spending hit an all-time high of 11.9 per cent of Canada’s gross domestic product. That’s $183.1 billion, $9.5 billion more than in 2008, or $5,452 per person. Spending is skewed toward the old. In 2007, the latest data broken down by age group, total health spending on those under 64 averaged $1,966 per person. Between age 65 to 69, the average was $5,589. For those 80 and older, the cost soared to $17,469.

Whenever caring for seniors is considered, the costs of running hospitals, long-term care and home care tend to be highlighted. But drugs are emerging as arguably the toughest component to control. The Canadian Institute for Health Information reports that hospitals soaked up 27.8 per cent of health spending last year, down dramatically from 44.7 per cent in 1975. During the same period, drug costs nearly doubled to 16.4 per cent of all health spending. Among the elderly, prescription drugs are a way of life to a startling degree: CIHI recently studied Canadians 65 and older in six provinces, and found that two-thirds are using five or more classes of prescription drugs, and about one-fifth use 10 or more types of prescription drugs.

Despite such cost pressures, many provinces have lately predicted that they will be able to hold down health spending. For instance, Ontario projects a six per cent increase for 2010-11, but just three per cent by 2012-13. British Columbia plans for a 5.8 per cent boost this year, but only 2.7 per cent two years from now. How do they and other provinces plan to do it? Clamping down on pay hikes for health workers, using cheaper generic drugs more, and pushing hospital efficiency are all touted as cost-cutters. Dodge is skeptical. “What I’m afraid of, as you look at the provincial budgets,” he said, “is that they have assumed the problem away.” Doig isn’t convinced either. “I’d like to understand on what basis they make those projections,” she said.

If dramatic reforms don’t yet seem to underpin optimistic provincial forecasts, there’s no shortage of bold ideas in the field. Many experts are intrigued by the way Britain’s National Health Service was overhauled after the Labour government came to power in 1997. They doubled spending, but also boosted efficiency. Wait lists shrank. British patients now shop on websites that rate hospitals and clinics. Those that underperform lose, since the money follows consumer-patients wherever they choose to go for care.

It’s all still paid for by government. Wendy Thomson, director of the School of Social Work at McGill University in Montreal, was chief adviser on public service reform to former British prime minister Tony Blair when he was driving health reform. She thinks fear of U.S.-style care has made Canadian politicians afraid to promote reforms based on a “quasi-market” for medical services. “You want to clearly set a framework of standards and responsibilities, devolve to the level that’s responsible, and step back and reward the successful and punish the failures,” Thomson said. “You don’t see that here.” Maybe after Bachand’s budget, the time is ripe for that sort of new thinking.

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