Financing a First Nations and Inuit Integrated Health System - A Discussion

The Scope of Integrated Health Funding

Provincial Overview

Figure 6 itemizes the health and health related expenditures to First Nations communities in Ontario in 1997/98. The Medical Services Branch (MSB) provides the largest component, at almost $204 million (63.9%), followed by the province of Ontario at $78 million (24.5%) and the Department of Indian Affairs and Northern Development (DIAND) at $37.5 million (11.7%). The DIAND component includes the health-related expenditures of Adult Care and Child and Family Services.

1. MSB
   
   In 1997/98, the largest component of MSB was the non-insured health benefits (NIHB) Program at 46.2% of total expenditures. This program is currently not available for transfer. Although the federal government originally planned to initiate NIHB transfers, this has been put on hold at the request of First Nations. First Nations are concerned about the implications of transferring NIHBs in an environment of capped funds. As well, an evaluation has not been completed on existing NIHB pilot projects.
   
   Experience with First Nations and Inuit which have assumed management of the NIHB program has demonstrated the substantial savings which may be realized from local management of this program, which may be redirected to other areas of the health system. In particular, dental care, which is paid through the fee for fervice (FFS) (and which represented 21.4% of the total Ontario NIHB Program in 1997/98) presents opportunities for savings through alternative financing arrangements, such as contract or salaried dentists, which may be negotiated at the local level.
   
   As will be discussed below, limitations imposed by community size may necessitate cooperative arrangements between communities or within regions with respect to inclusion of NIHBs in an integrated funding model.
   
   Health Transfer accounts for 13.4% of the MSB expenditures -- as of August 31, 1998, 19 transfer agreements had been struck in Ontario, comprising 33 communities or 26.6% of all communities in the province. Therefore Community Health Services (non-NIHB), Environmental Health and Surveillance and the National Native Alcohol and Drug Abuse Program (NNADAP) in Figure 6 contain a mixture of expenditures relating to program funds to non-transferred bands and program funds which are not currently available for transfer. Regarding the latter, funding areas in Community Health Services not available for transfer include programs where resources have been provided to regional First Nations organizations, such as consultation funds and health liaison, resources for time-limited programs such as the Canada Prenatal Project, and time limited proposal-based programs such as Aboriginal Head Start.
   
   Administration costs in the Ontario region (at regional and zone level) are provided in Figure 6 and were just under $3 million in 1997/98.
   
   
2. DIAND
   
   DIAND provides the majority of the non-health programs to First Nations, including child and family support, adult care, income maintenance, elementary/secondary education, post secondary education, band government support, housing and capital infrastructure and maintenance. The health-related funds of child and family care and adult care would complement the other health components in an integrated financing model. Figure 6 provides a breakdown of these DIAND expenditures in Ontario in 1997/98. Most of these expenditures are paid directly to the Ontario Ministry of Community and Social Services (MCSS), nursing homes or First Nations political organizations. As a result of the 1965 Ontario Welfare Agreement between the province of Ontario and DIAND, the province agreed to provide services for social assistance, day care, child welfare, homemakers and nursing in-home services. The province is reimbursed for the majority of these expenditures: for home care, the federal government pays 20% of the gross costs and 91.46% of the remaining 80% of costs incurred by the Ontario government. Regarding Type I and II institutional adult care, the federal government reimburses 100% of the provincial expenditures. The federal government also pays 91.46% of all child welfare costs. The DIAND financial system records expenditure information is based on an agreed cash flow with MCSS and First Nations and not actual costs incurred. The 1997/98 data in Figure 6 are estimates based on this projected cash flow as the financial audits of the programs are not yet completed and actual expenditures are not available. These estimates do not include headquarters or regional administration costs. (The total departmental spending on overhead reported in DIAND's main estimates is about 3% of total departmental costs.)
   
   Adult care
   This program covers both institutional care and non-nursing home care. There has been wide variability in the per capita amounts provided to the regions for home care, as the allocation by headquarters has been based on historical levels. Additional resources were provided to regions which had demonstrated disparity in 1994/95.
   
   The institutional care component is directed to Type I and II adult residential care. Higher adult level care which requires increased health services is the responsibility of the province under the Canada Health Act. There are only 13 residential care institutions situated on reserves in Canada, seven of which are in Manitoba. Of the remaining, three are in Ontario, two in Alberta, and one is in British Columbia. Utilization in off-reserve institutions by residents of First Nation communities has been low as many elderly and disabled people do not want to leave their communities. As well, provincial health facilities must accommodate the demand from both the general population and First Nations. Because of these factors, expenditures for institutional care show great disparities among the regions.
   
   Figure 6 shows that a total of $10,955,117 was spent between home care and institutional care in Ontario in 1997/98.
   
   
   Issues to be resolved if adult care was included in an integrated health funding model include:
   
   • How can institutional dollars to First Nations be allocated equitably given the great range seen in per capita expenditures historically?
     
     
   • What would be the catchment area of existing First Nations residential homes in the context of the surrounding First Nations? Would institutional resources be distributed to these neighboring communities and services be contracted back to the institution?
     
     
   • This analysis is focused on First Nations in Ontario, but in the broader national context, MSB may in practice pay for differing levels of residential care among the regions. How would resources be allocated to equitably address these regional-specific issues?
     

Child and Family Services
Under legislation, provinces have legal authority for child and family services, stemming from their jurisdiction over health, welfare and education provided in the Canadian constitution. Before the advent of Indian Child and Family Service (ICFS) Agencies, the federal government reimbursed provinces for services provided, commonly from Children's Aid Societies. Since the late 1980s, First Nations gradually assumed control over child care through ICFS Agencies, and direct provincial administration has greatly declined. ICFS Agencies are involved in foster care, group homes and institutional care for First Nations children up to 18 years of age. As Figure 6 shows, the estimated 1997/98 expenditures were $25 million in Child and Family Services, or two-thirds of the total health-related resources from DIAND.

Issues of note for an integrated health funding model include: How to align ICFS resources from ICFS agencies which represent several bands in an integrated health funding agreement if the health resources are not managed by the same band grouping?

Family Violence
The DIAND family violence initiative expired in 1995/96 however was extended into 1997/98. This initiative provides funds for the provision of on-going community-based services to deal with all aspects of family violence on reserve, including emergency shelters. There were four emergency shelter projects funded in 1997/98. The non-shelter funds were flowed mainly to Political Treaty Organizations (PTOs) to be distributed to communities. Together, these two components accounted for an estimated $1.4 million in 1997/98 (Figure 6).

Issues of note for an integrated health funding model include: What will be the relationship between PTOs and communities? Will a community's resources remain at the PTO level or be allocated directly in the envelope of funds?

3. Province of Ontario
   
   The third funder of First Nations and Inuit health services is represented by the provinces and territories. In the majority of cases, the province provides services rather than actual funds, as seen regarding health services insured under the Canada Health Act. First Nation and Inuit have little or no control over the planning and delivery of insured hospital services. Provinces have a recent history in devolution of institutional resources, as in all provinces except Ontario, regional health authority envelopes are founded on hospital budget transfers, with other budgets for services added according to provincial priorities. The situation has not occurred, however, where a portion of hospital's budget is severed and given to a particular population in the hospital's catchment area. This practice has many precedents internationally, with perhaps the most well-known being the GP fundholder system in Britain, where physician groups hold health funds for the benefit of their patients and contract with hospitals and specialists for needed services.
   
   The third funder of First Nations and Inuit health services is represented by the provinces and territories. In the majority of cases, the province provides services rather than actual funds, as seen regarding health services insured under the Canada Health Act. First Nation and Inuit have little or no control over the planning and delivery of insured hospital services. Provinces have a recent history in devolution of institutional resources, as in all provinces except Ontario, regional health authority envelopes are founded on hospital budget transfers, with other budgets for services added according to provincial priorities. The situation has not occurred, however, where a portion of hospital's budget is severed and given to a particular population in the hospital's catchment area. This practice has many precedents internationally, with perhaps the most well-known being the GP fundholder system in Britain, where physician groups hold health funds for the benefit of their patients and contract with hospitals and specialists for needed services.
   
   
   The situation with respect to physician services is less clear. In most if not all provinces, the history of physician-provincial negotiation of FFS schedules has been rocky to say the least. The physician lobby is powerful, and individual First Nations would not have the financial or political clout to realize similar negotiation successes to that obtained by the provinces. As well, physicians' receptivity to their budgets being rolled into an integrated funding agreement, and alternate forms of reimbursement pursued, is unknown at this point. In provinces where an alternative medical funding mechanisms have been suggested, physicians are adamant that choice must exist, and that they will not be forced into salaried, capitation or contractual arrangements exclusively.
   
   In Ontario, there are three main sources of health funds for First Nations: services covered under the Canada Health Act: The Ontario Health Insurance Plan (OHIP) and hospital (including the Medicare services at Sioux Lookout Zone and Moose Factory Zone), health rograms some of which are largely reimbursed under the 1965 Agreement, and the Aboriginal Healing and Wellness Strategy (AHWS). As Figure 6 shows, an estimated $78.2 million was spent in 1997/98 on First Nations on reserve. The following observations are pertinent:
   
   • The Aboriginal Healing and Wellness Strategy (AHWS) is a collaboration between First Nations, Métis and off reserve Aboriginal groups and the provincial Ministries of Community and Social Services, Health, the Ontario Native Affairs Secretariat and the Ontario Women's Directorate. The Strategy provides resources for a variety of services to both on or off reserve populations including community prevention and health promotion workers, health liaison, crisis intervention teams and workers, health outreach workers, healing lodges and treatment centres, shelters, Aboriginal health planning authorities, maternal and child centres, community health access centres and translators. In 1997/98, expenditures for all services funded in First Nations communities or which serve both on and off reserve populations, were $24,92,467 excluding capital expenditures. This $24 million includes both operating costs (e.g. health access centres) and one-time grants (e.g. training projects) awarded through a competitive process.
     
     
   • OHIP and hospital acute separations expenditures are identified for First Nations on reserve in the Ministry of Health database using a residency code. Missing from the expenditures provided is the cost of chronic hospital separations. Also listed in Figure 6 are Medicare services expenditures which include hospital services in Sioux Lookout Zone and the Weeneebayko Health Ahtuskaywin (WHA) and physician services in WHA provided under a cost-sharing agreement with the federal government.
     
     
   • It is very difficult, if not impossible to allocate other health program resources between on and off reserve populations, as Ontario Aboriginal health programs are provided to all Aboriginal people regardless of status. These programs include community health services, mental health services, diabetes strategy, Best Start Program, supportive housing, Acquired Immune Deficiency Syndrome (AIDS) programming etc. As noted in Figure 6, an approximation has been made using the proportion of First Nations on reserve compared to the total Ontario Aboriginal population. An adjustment has been incorporated for the services reimbursed by the federal government under the 1965 Agreement.
     
     
   • Administration costs have been included in the AHWS expenditures, but were not provided for the balance of the provincial programs.

     Issues for discussion on provincial funding in an integrated health funding model include:

   • At what point should physician budgets be part of an integrated funding agreement -immediately or after integration in other areas of the health budget has established a track record and illustrated its benefits to a wary physician lobby?
     
     
   • How would the provincial health insurance system deal with the on and off reserve migration of community members? This is an issue in integration generally, but perhaps more so for the provincial resources, due to the high costs of hospital stay and physician services.
     
     
   • What should be the amount of hospital resources transferred? Average per capita costs based on the province as a whole, adjusted for need (see equity section above), or the historical costs which have previously shown a significantly reduced utilization of First Nations for hospital care?(Note 50: The 1997/98 provincial acute separation costs for the entire population were not available for this analysis, however a 1991/92 analysis by the Aboriginal Health Office of theOntario Ministry of Health found that acute and chronic hospitalization for First Nations on reserve cost $553 per person, which was 32% less than the $808 seen in the rest of the population.) First Nations needs are great, and perhaps community control over the entire health system would mean that barriers to access are removed, and utilization would increase. In that case, funding on historical costs would put First Nations in a deficit position.
     
     
   • Similarly, First Nations in the past have shown a higher usage of general practitioners than specialists when compared to the provincial usage. What would the basis be for the physician financial transfer -- historical costs or costs projected on need?
     
     
   • What compensation should be provided to First Nations for hospital resources being removed from the institutional sector by the Hospital Services Restructuring Commission in Ontario? Currently $900,000 is being removed from this sector, with equivalent amount to be reinvested into community-based and other care. The province is not required to provide home care services on reserve (although some services are provided through the 1965 Agreement as the section on DIAND financing illustrates), however First Nations will equally share the hardship imposed by decreased hospital resources. In fact, as home care resources are more scarce in First Nations communities presently, the impact of hospital closings may be more profound among this population.
4. Per Capita Expenditures
   
   Figure 7 presents the 1997/98 expenditures on a per capita basis using the on reserve DIAND First Nations population. As the NIHB program is provided to all First Nations regardless of status, its per capita calculation uses the total DIAND First Nations population to provide a true reflection of the cost allocation. As a result, the MSB proportion of the total per capita expenditures drops to 57.4% or $2,233.72 per person. The province of Ontario's share of the per capita expenditures is $1,120.14 or 28.8% of the total, and DIAND's health related expenditures are $536.36 per person or 13.8% of the total.
   
   
   As mentioned earlier, an analysis of 1991/92 OHIP data found that on reserve residents consumed 30% less OHIP expenditures than the rest of the population. The 1997/98 expenditure data provided here show that $233.78 was spent per capita on reserves for OHIP services; if contract physician costs are added, this amount increases to $255.73. For the non-First Nations population in Ontario, per capita OHIP costs are $406.70. These results confirm the difference seen in the 1991/92 data and suggest that in fact, the disparity is increasing. For OHIP expenditures solely, First Nations on reserve consumed 42.7% less expenditures than other Ontario residents or 37.1% less if contract physician expenditures are included in the calculation.