The Next Logical Step
by Margret Kopala

Published in the Ottawa Citizen, February 25, 2006

Canadaís premiers came to town to visit the new prime minister yesterday. Itís safe to surmise that somewhere on the agenda was how Canadaís first baby boomers turned 60 this year. According to at least one study, they arenít getting any healthier. The premiers might also have noted how in 2004, led by B.C. Premier Campbell, they uncharacteristically but unanimously agreed that the federal government should assume responsibility for drug costs.

In British Columbia, seniors will comprise 25% of the population by 2030. Given current trends, healthcare services will consume 70% of all provincial revenues. Worse, drug therapies that already cost Canadians $18 billion annually are escalating. Often, the most expensive drugs offer the greatest benefits, saving lives or ameliorating catastrophic illness.

Yet despite the $130 billions spent on healthcare, tales of inefficiencies, lengthy wait times and lack of equipment or personnel within the system are legion. Citizens donít know who to hold accountable for what and cross their fingers hoping for the best when their turn to use it arrives.

Anticipating this demand and the problems it would create, a slew of studies ushered in the new millennium. Foremost among them, the Romanow Report argued that the current publicly funded, publicly delivered system was sustainable. Senator Michael Kirby, chair of a committee on social services, disagreed, saying that private and public competition for delivery of publicly funded services was is necessary to create efficiencies in the system and consistent with the Canada Health Act.

Today, the wheels of progress grind slowly but Kirby is winning the debate on healthcare reform. Last year a Supreme Court decision opened a door to the private insurance and wait time guarantees announced last week in Quebec. In the meantime, Alberta and British Columbia are cautiously exploring an even wider range of reforms that will include studies of European private-public healthcare delivery.

The reason for the caution is because the British Columbia and Alberta initiatives are not without their detractors. Why would anyone disagree with better health-care services at lower prices? A paper by the Fraser Institute shows how a system in the grips of a public sector monopoly that has produced perverse outcomes and declining standards of care will nonetheless resist change.

ďMonopolies, whether in the public or the private sector, create huge advantages for those who control them,Ē write Fred McMahon and Martin Zelder in Making Health Spending Work. Freed of normal market restraints, rates of pay become a matter of power. For hospital workers, it has meant rates of pay a third higher than those in the private sector while doctors and nurses, reluctant to hold their patients hostage to strike action, earn salaries nowhere commensurate with their training. In 2002, of each new dollar entering the Medicare system, only 1 cent went to pharmaceuticals and only 2 cents to capital spending. Remote bureaucracies with command and control managers are equally to blame, they say.

Some 30% of Canadaís system is already privatized. The public sector could compete against larger scale privatization but international experience suggests otherwise. In Britainís private/public system, for instance, where healthcare accounts for 83% of public spending, a private hospital chain is in discussions to assume management of Britainís failed public-sector hospitals. In Sweden, healthcare services are almost wholly privatized.

One answer to public sector reticence is Medical Savings Accounts (MSAs). A variety of international models exist but McMahon and Zelder simply argue for a system that publicly funds individuals or families who then shop for the best and cheapest services offered publicly or privately. Itís an idea whose time has come.

The Conservative childcare initiative builds on the principal of a nation that is governed federally for the benefit of the individual. By canceling the Liberal childcare arrangements, Conservatives also gave notice of reduced transfers to provinces and signaled an end to expanding public sector monopolies.

Medical Savings Accounts are a next logical step.

The Council of Chief Executives has suggested that the $29 billion annual GST be transferred to the provinces but few would oppose dedicating it to MSAs that give patients control over how their health or pharma care dollar is spent. More important, it could ignite a new era in Canadian healthcare management that would take federal-provincial relations, labour-corporate sector competitiveness, and citizen empowerment to new levels.

MARGRET KOPALAís column on western perspectives appears every other week.

To comment, please send Margret an e-mail.

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