A Federal Perspective on Health Care Reform Pulse '98

Speaking Notes
for
Alan Nymark
Associate Deputy Minister

Toronto, May 11, 1998

Check against delivery

Thank you. I am delighted to be with you this morning and to participate with so many distinguished health care experts and decision-makers.

This conference is timely and particularly relevant. Governments, health professionals, stakeholders and the public alike are seized by one pressing health imperative -- to renew and modernize our health care system so that it will work better for all Canadians.

In my remarks today, I want to bring a federal perspective to this discussion of directions for health care reform in Canada -- where we are now and where we are heading.

Economic context

Let me begin with a quick overview of the economic context within which these discussions are taking place.

As you know, the fiscal situation of governments is improving. The Conference Board predicts that Canada's economic growth will be the highest among all G-7 countries this year.

The federal budget is now balanced and most provinces are enjoying budget surpluses. For the first time in many years, most governments are in a position to consider new investments.

As they do so, they face a variety of competing pressures. Some people argue that attention should now shift to debt reduction; others argue the advantages of tax reduction. Still others advocate investing in social programs.

Whatever the merits of these various options, their consideration marks a significant shift in the public policy landscape of Canada. It also offers a degree of flexibility which governments have not enjoyed for a long time and affords choices they have not had.

Public expectations

Against this economic drop, what are the current views of Canadians with respect to health and the health care system?

Polling undertaken by Ekos Research shows that the vast majority of Canadians continue to put health care at the top of their list of priorities for the federal government.

Canadians also indicate that a healthy population is first among overall values they associate with social programs.

Canadians expect the federal government to protect their health and do not accept that health care is the exclusive domain of provincial governments. Indeed the great majority -- 88% -- would like to see the federal government maintain or increase its involvement in health care.

It won't surprise any of you in this room to hear that the confidence of Canadians in the health care system is declining. A poll conducted by Ekos Research last November, indicated that 68% of respondents believed the quality of health care has deteriorated over the past two years.

It is noteworthy that the National Forum on Health made similar findings. It concluded that Canadians are concerned, both about the future of their health care system and about the effect of changes in the economic and social environment on their health. The Forum also found that Canadians support change in the health system, provided the basic principles which underpin medicare are maintained.

As we consider directions for reform, it is important to bear in mind those fundamental principles.

Canada Health Act

As you well know, the Canada Health Act of 1984 was based on five basic principles: universality, comprehensiveness, accessibility, portability and public administration.

These values remain valid today. Indeed, let me emphasize that from a federal government perspective, any reform to the health care system must begin from the premise of a universally accessible, single-payer system.

We have ample evidence that the single payer system works. Not a single study -- anywhere -- demonstrates that there is anything superior.

First, it provides the best access. And better access results in a higher standard of health across the country.

Second, it is economically more efficient. You are all familiar with the economic arguments: because medicare covers everyone, economies of scale lead to lower cost; because there is no discrimination or rating, huge administrative costs are avoided; because the system is financed through taxation, there is no need for a separate collection process; and because payments to providers come directly from government, there is no need for the proliferation of billing stages and practices that are inherent in a multi-payer system.

Third, it is a compassionate system, one which resonates with the values of Canadians, who like the idea of living in a country where they don't check your credit rating before they check your pulse.

Fourth, our system has allowed us to provide Canadians with the kind of high quality health care they expect, at a price we can afford.

And fifth, it provides us with an international competitive advantage in terms of attracting new investment and jobs to Canada.

These are not "touchy-feely" arguments; they are solid, substantive and clear rationales for the kind of system we have, based on principles we want to preserve.

Reform of the Canada Health Act since 1984

Almost from the day the Canada Health Act was passed in 1984, the provinces have undertaken major reform initiatives to ensure its efficiency. The new system introduced by the CHA was always seen as a living system -- one capable of, and designed to, evolve.

By the end of the 1980's, the deteriorating fiscal positions of both the federal and provincial governments made the continuation of double digit increases in health expenditures unsustainable.

While some have suggested that provincial reform was caused by federal cutbacks, I would suggest that the cutbacks had a greater influence on the timing of such reforms rather than their content. The trends were already there. The cutbacks accelerated them.

Let me just remind you of the chronology. Back in the early 80's, we began to see the first elements of de-institutionalization and a move toward home and community care. At the same time, most of the provinces began to "regionalize" their health systems.

Today, many of the provinces have moved a long way through this agenda. However, a number of issues remain. For example, there is the issue of accountability. Significant differences exist from province to province in the scope of reporting requirements and in the capacity of health districts to use information effectively.

There are also concerns about the effective use of human resources. All provinces have physician resource plans, most of which focus on controlling the number of physicians and their locations. Alternative remuneration mechanisms are being explored, but the fee-for-service system remains by far the most common means of remunerating physicians.

There is also a clear need to forecast nursing requirements more accurately in order to smooth transitions, meet demand, and guarantee that sufficient numbers of well trained nurses are available to serve in hospitals, long term care and home care settings, and in public health occupations.

And there is a recognition that we have not sufficiently integrated the concepts of community care and community action into reforms to date.

In many cases, the public is not entirely satisfied that these changes have been well-managed. Today, the pressure points focus on the front end of the acute care system and this is particularly worrisome because Canadians will only support medicare if they are convinced that quality care will be available when it is needed.

Federal Initiatives

During the mid-1990's, the federal government undertook its own deliberations. Some of you were participants in the National Forum process, but let me just remind you that it was one of a series of studies undertaken by governments looking for ways to improve our health care system.

The National Forum on Health was perhaps the broadest in scope, with an unprecedented level of consultation and extremely thorough research. Its five volumes of research have been released in the last few weeks. They discuss Children and Youth, Adults and Seniors, Settings and Issues, Striking a Balance, and Evidence and Information.

I won't attempt to outline the breadth of that work or the very positive government response to it, but let me focus in on just one of the recommendations that has made a unique contribution to our approach to these issues.

The Health Transition Fund (HTF), announced in the 1997 federal budget, was a recognition that governments don't have all the answers, and that the federal government agreed with the need for further analytical work, in cooperation with the provinces.

This Fund, which will provide $150 million over three years, is designed to generate information and evidence on the organization, funding and delivery of health services in four priority areas -- home care, pharmacare, primary health care and integrated service delivery.

Results of projects, as well as the proceedings of the three recent national conferences on pharmacare, health info-structure and home care, will be shared among all provinces and territories. The Fund provides $30 million to national level projects and $120 million to provincial and territorial projects on a per capita basis.

Forty-six national, provincial and territorial proposals have either been approved for funding or have been recommended for approval in the first round of projects.

Minister Rock has begun to announce projects that have been approved. They include, for example, a telemedicine initiative for kidney patients in New Brunswick, a major project to improve primary care in Alberta and a project in Quebec to study integrated health care for frail elderly persons. I'll have more to say on the Alberta and Quebec projects in a moment.

Late last month, Minister Rock issued a request for a second round of national projects to be funded through the HTF.

While there was some initial scepticism, the HTF has become a very positive experience in federal-provincial cooperation. It is jointly managed with the provinces, all of which have vigorously participated. And the project proposals have been of the highest quality.

I am confident that the HTF process will produce evidence-based decision making of the highest order.

Federal priorities

Let me turn now to the federal priorities for health care. These priorities might be broadly classified under two headings: first, maintaining and strengthening the present health care system -- by addressing needs in primary care and improving the integration of service delivery -- and second, expanding the current system by examining options in the areas of home care and pharmacare. I want to touch on each of these.

Maintaining and strengthening the health care system

A. Primary care

By definition, primary care practitioners (usually family physicians) are the first contact patients have with the health care system. At this entry point, services are mobilized to promote health, prevent illness, care for common ailments and manage ongoing health problems.

Both the provinces and the National Forum on Health have identified primary care reform as a priority -- especially in rural and remote areas. Most provinces have launched their major reform initiatives in the last five years, but for some, certain aspects are proving more difficult than anticipated. It is not surprising that the first provincial project under the Health Transition Fund was in the area of primary care. The Alberta Primary Health Care Project will receive federal funding of $11 million to identify and develop new and better approaches to primary care, to the benefit of Albertans and all Canadians.

The challenge for the provinces and territories is to develop, implement and evaluate alternative primary care models. The federal government will work with the provinces and territories to exchange information and learn from each other's experiences with their primary care initiatives.

The federal government has also supported primary care reform through the 1996 Round Table on Primary Health Care and, currently, it is supporting primary health care pilot and evaluation projects through the HTF.

While the Alberta project is the first one on primary care under the HTF, it will certainly not be the last -- applications from other provinces have already been received and we anticipate that a number of important initiatives in primary care will be funded under the HTF. We believe this is a significant way in which the federal government can work jointly with provincial and territorial governments to address the needs of Canadians.

One of the key components of primary care reform is physician services. Doctors simply have to be brought into the primary care reform process in order for it to have the support it needs to be successful.

Physician services is also the subject of one of the working groups established by federal, provincial and territorial Health Ministers at their Fredericton meeting last year.

B. Integrated services

At the federal level, we see better integration of services -- and the delivery of those services -- as a key element of health care reform.

The old notion of our health care system as a series of stovepipe operations -- with doctors over here and nurses over there and therapists somewhere else again, must be updated to reflect the new realities of today's medicine.

Our goal must be a seamless system of integrated care, where the patient deals with the various components of the system without undue bureaucracy or burden.

Last month in Montreal, Minister Rock announced HTF funding of $4.8 million for an innovative model of care which integrates health and social services for frail elderly persons, known as Système de services intégrés pour personnes âgées en perte d'autonomie (SIPA).

Under this project, care will be provided by an interdisciplinary team made up of health and social service professionals, the person's family physician, family members and informal care givers.

Such an approach could reduce the fragmented approach to care for the frail elderly, and the inappropriate -- and costly -- use of acute hospitals and long-term care institutions, while increasing the coordination of services and care.

Improved primary care and better integration of services -- these are the two priorities for maintaining and strengthening the health care system. In terms of expanding that system, the two priority areas for the federal government are pharmacare and home care.

Expanding the health care system

A. Pharmacare

First, pharmacare. In the Throne Speech of September, 1997, the federal government made the commitment to "develop a national plan, timetable and a fiscal framework for providing Canadians with better access to medically necessary drugs."

In pursuing that objective, the federal government identified pharmacare as one of the four policy priorities under the HTF.

Prior to the national conference on pharmacare, in January, the federal government was uncertain as to the level of support for such an initiative. While polls show support for a national pharmacare system, that support is not as strong as for home care, probably because most people already enjoy some sort of coverage, either through provincial or private plans.

At the national conference, a consensus did emerge in favour of a national system, however participants did not reach a consensus on how to proceed.

Dr. Judith Maxwell noted that there are a number of issues which demand further work before this agenda can be advanced. For example:

First dollar coverage. Dr. Maxwell pointed out that no OECD country has first dollar coverage and invited us to consider why this was so. Many began with that type of coverage but could not sustain it. Similarly, many provinces began with more generous systems than they have today.

Who pays? While some believe that the system would pay for itself through efficiency gains, the international experience suggests 8% annual increases in drug costs, even in a low-inflation environment. If our economy is only growing at 3%-3.5%, where will the revenue base come from? Do we pay from the public purse or institute premiums, as in Quebec? Or do we mandate employer contributions?

Public-private roles. For some, the baseline is a publicly-financed system, which would displace the insurance industry entirely. Dr. Maxwell reminded us of the need to distinguish between private financing and private delivery, pointing out that some provinces use the private sector for processing claims and adjudication.

Information systems. This is a very important issue, because the momentum is building for systems that can link public payers with pharmacists, patients and physicians. We must have integrated information systems working well before we can implement pharmacare.

Finally, there is the impact on the research agenda. For example, the conference concluded that we need to understand what coverage people currently have, as well as the impact of co-payments and deductibles on people of different socioeconomic status.

Summing up, Dr. Maxwell suggested that time and patience need to be invested to lead to a sustainable national pharmacare system, or in her words to "get it right".

There are currently five pilot projects on pharmacare under consideration for funding through the first round of HTF and we are encouraging others in the second round.

In addition, one of the working groups established by the Ministers of Health at Fredericton, is devoted to pharmacare issues, including the impact of utilization of drugs in Canada.

And, since July of 1996, the federal government has been working with the provinces and territories through two Task Forces -- one on drug pricing and the other on drug utilization.

B. Home care

It would be difficult to get three health care experts in a room without talking about home care. The federal government has stated the importance of exploring home care and indicated in the 1997 Throne Speech that it will "take measures to support Canadians in responding to the expanding need for home care and community care."

There is also a strong public consensus for home care. A poll conducted by The Canada Health Monitor earlier this year indicated that 84% of respondents were in favour of a national home care program.

The data indicate that the appeal of home care is rooted in a perception of its advantages in terms of health outcomes and quality of life. The public is concerned about costs, but this is subordinate to their concerns about health.

And Canadians are strongly of the view that those who need medical care should get it, regardless of ability to pay or the setting in which it is delivered.

The federal government shares that concern and its goal is to improve access to home and community care to all Canadians regardless of where they live or of their personal resources.

At the national conference on home care, a consensus emerged in support of a national approach to home care, possibly under a single payer system. However how to get there and at what pace, remained unanswered.

As we pursue that objective, I think there are a number of issues which need to be addressed. For example:

What level of service do we wish to provide to Canadians? This includes the level of service we want to provide care givers, many of whom are family members.

We need to address the issue of the costs of home and community care and what an appropriate federal contribution should be. This will involve issues dealing with the standardization of costs and service information.

There is also the question of how to implement changes without constraining provincial flexibility or priorities. Provinces already provide home care and there is no desire to displace or duplicate these provincial programs.

As well, there is the larger issue of how to integrate home care into the health care system, so that we provide a truly seamless, integrated continuum of care. The last thing Canadians want is to have a vast number of doors to knock on when they want access to home care.

And finally, there are the issues of ensuring quality of service, not only with respect to patient choice, but also of training the care givers -- both formal and informal -- and the most appropriate use of human resources.

Challenges

As we attempt to analyze the options, opportunities and impediments ahead of us on the broad agenda of reform of health care, I think we have to ask ourselves what the real challenge is.

Is it a financial challenge? Is it a matter of needing more knowledge? Or is this really a question of how Canadian federalism works -- or doesn't work. I would suggest that it is a combination of all three. Let me expand.

Financial challenge

Perhaps, as some have suggested, the real challenge is a financial one. Over the past few years, the federal government has reduced transfer payments to the provinces -- cuts which the Minister has acknowledged were significant and which had a real impact on health care.

But, at the federal level, Minister Rock has said that the era of cuts in health care is over, that a stable and predictable funding structure is now in place. Transfers will not be reduced again. In fact, total transfer of tax points and cash stood at over $25 billion last year and is growing. And the total CHST transfer will grow by almost 10% over the next four years.

The Minister has also said that should we move to expand the health system to include home care or pharmacare, there will be a significant federal contribution to those initiatives.

Information challenge

We can also ask ourselves, is the challenge really one of needing more information? To be sure, more information is necessary in a number of areas, as I have indicated throughout my remarks. We must develop reliable, complete and objective information upon which to make judgements and upon which to make policy.

Indeed, Health is one of the most knowledge-intensive sectors of Canadian society and managing knowledge is a principal activity of every health department and organization in the country.

We see three main thrusts in this effort. The first is the utilization of knowledge -- in other words, adopting a culture of evidence-based decision making. Canada spends between 9% and 10% of its GDP on health care, yet many of the spending decisions are not based on the best available evidence. We are taking action to create the capacity to review and analyze overall health status and health system performance.

The second major thrust is in the generation of new knowledge and this speaks to the research agenda. We need to improve our understanding of the determinants of a healthy population, enhancing treatment and prevention and improving the performance of the health care system as measured against performance markers.

There is concern among the health research community that Canada has been eroding its research capacity and losing ground to other industrial nations. In 1997-98, for example, Canada spent $8.23 per capita compared to $66.64 (Canadian) in the U.S. The 1998 federal budget restored some funding to the Medical Research Council and Social Sciences and Humanities Research Council, but more funding is required.

And we must ensure that there is balanced funding across the health spectrum including biomedical, health policy and health services research.

The third and final thrust is the dissemination of knowledge. We believe that the information highway can play a major role in knowledge management in health by improving dissemination of information and research findings and by making it easier for citizens to obtain access to health information.

The provinces are already implementing or planning health info-structures. A national strategy is key to facilitating the creation of a "network of networks" that can "speak" to each other.

The federal government is positioned to play a leadership role in coordinating the creation of a national information system. And an Advisory Council on Health Info-structure was established last year to provide Minister Rock with advice on the development of a national strategy for Canada's health info-structure. The Council is expected to report early next year.

Knowledge utilization, through evidence-based decision making; knowledge generation through the health research agenda; and knowledge dissemination, through a better use of information technology: these are the elements of effective knowledge management and, we believe, elements which will make a significant contribution to the reform of our health care system.

By applying the right information at the right time, in the right place, we will ensure that we manage knowledge, rather than just drowning in an ocean of information.

The challenges of federalism

Perhaps the greatest challenge is really about the way Canada works; about collaboration and accountability in a federal system in a major sector in transition.

If so, the past year has seen some significant developments provincial and territorial governments issued a vision for health and health care in Canada: the National Forum reported and published its five volumes of research, the Ministers of Health launched an important initiative at Fredericton and the Prime Minister and Premiers commenced far-ranging discussions about the social framework of the country.

At their meeting in Fredericton, the Ministers of Health committed themselves to working collaboratively to sustain and revitalize Canada's health system. A number of working groups were established in such key areas as doctors' services and remuneration and the roles and responsibilities of the different levels of government. Their reports are due later this spring.

In March, the Federal-Provincial-Territorial Council on Social Policy Renewal launched its negotiations on a framework agreement for Canada's social union, with the goal of concluding such an agreement by July of this year.

New Brunswick Health Minister Russell King co-chaired that meeting, along with Human Resources Minister Pettigrew and perhaps he will be able to bring us up to date on their progress when he speaks in a moment.

But the thrust of this initiative is encouraging: all governments, with the exception of Quebec, have come together to define a new approach, based on partnership, for the planning and management of our social programs.

That process is about renewing our common commitment to those elements of our national life -- our social programs -- which were constructed in earlier times, under very different circumstances -- and which need to be preserved by being made more efficient, effective and adequately funded.

It is an approach all of us should keep in mind as we consider the specific problems facing us in health care.

Conclusion

As I have indicated in my remarks, the debate about health care reform is occurring at a time when Canada's economic context is changing -- and changing for the better. It is also a time when Canadians are more concerned than ever about the future of their health care system -- a system they cherish and want to see preserved.

As Minister Rock said to the National Conference on Pharmacare, Canadians know that these are complex problems and that they involve issues of jurisdiction, but they see these as reasons for governments to work together, not at cross purposes.

You and I know that Canadians are right. When a parent takes a sick child to emergency at two in the morning, their first thought is not which level of government is providing care. They just want the best care they can get, and they want it quickly.

You and I also know that no single player has all of the answers to our health care concerns; and that we increase our chances of success by tackling them cooperatively, and seeing one another as allies in a common cause. In that effort, the federal government is assuming its leadership responsibilities.

The present health care system is in need of significant reform. We're struggling to find the best answers to our questions and a number of initiatives are underway that I believe will provide some of the answers.

We're not there yet, but I firmly believe we're on the right track.

Thank you.