The subtle contours of the new medicare debate

By Thomas Walkom 
Toronto Star
Nov 01 2011

Get set for the next round of fighting over medicare. The battle lines will become clearer as we approach the 2014 date when Ottawa has to renegotiate its health deals with the provinces. But the contours are already emerging.

First, expect a more subtle dispute. In the past, Canadian medicare battles have been waged over the Canada Health Act, the federal law that effectively bans private funding of most physician and hospital services.

Ten years ago, anti-medicare forces argued that Canada’s health-care system just wasn’t working and that only the addition of a second, private tier of medicine — funded through private insurance — would solve the problems.

This time, expect most critics to pay at least lip service to the Canada Health Act.

In part, that’s because Canadians are viscerally attached to medicare and will reject anything that sounds like U.S.-style medicine.

Even Prime Minister Stephen Harper, at one point a rock-ribbed opponent of universal medicare, now lauds the Canada Health Act

But in part, the change has occurred because most analysts now accept that two-tier medicine doesn’t save any money overall and, indeed, usually costs more.

As economists Don Drummond and Derek Burleton wrote in a TD Bank study last year, adding a private tier simply shifts the cost of health care from people’s taxes to their wallets.

This time around, the debate promises to focus more narrowly on so-called market reforms. With provincial governments pleading poverty, the fight will centre on whether governments should try to raise more revenue for health care or cut costs.

The revenue-raisers are, in general, a modern version of the old user-fee crowd who argue that patients should pay an out-of-pocket price every time they see a doctor. Most studies show that user fees don’t work, but the idea persists.

The more modern version is to have individual patients pay for a portion of their treatment through special income tax levies. That’s what Drummond and Burleton suggest and what Quebec Premier Jean Charest tried last year before public opposition forced him to back down.

The cost-cutters are a disparate group. Drummond and Burleton resurrect the idea of having provincial governments use their combined buying power to winkle better deals from multinational drug firms. That’s a valid idea but it usually falters when the drug companies threaten to pull their investments.

Toronto physician and consultant Michael Rachlis has long argued that better organization significantly lowers health-care costs. A paper released this week by the University of Toronto’s Mowat Institute expands on this theme.

Written by Will Falk, Matthew Mendelsohn and Josh Hjartarson, it makes the point that even when such change occurs, health-care pricing has not kept up.

Factory-style methods of surgery in areas like cataract treatment, for instance, allow physicians to process far more patients than they could a decade ago. Because doctors are paid a fixed, per-procedure rate, this has boosted their incomes dramatically.

The Mowat paper argues that such physicians should get less pay.

How exactly this would happen is unclear. The Mowat paper hints at introducing market mechanisms such as auctions into the system. Britain did something similar when it required doctors and hospitals in its public National Health Service to form trusts that competed with one another and with private health firms. Critics in that country say these changes are paving the way for full-scale privatization of British medicare.

But in Canada, there has been little discussion so far of what happens when faux markets are created in health care. As things heat up, expect more.