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From Reuters:
Soaring costs force Canada to reassess health model Mon, May 31 2010 By Claire Sibonney - Analysis TORONTO (Reuters) - Pressured by an aging population and the need to rein in budget deficits, Canada's provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system. Ontario, Canada's most populous province, kicked off a fierce battle with drug companies and pharmacies when it said earlier this year it would halve generic drug prices and eliminate "incentive fees" to generic drug manufacturers. British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit -- an idea that critics say is an illegal user fee. And a few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery. It's likely just a start as the provinces, responsible for delivering healthcare, cope with the demands of a retiring baby-boom generation. Official figures show that senior citizens will make up 25 percent of the population by 2036. "There's got to be some change to the status quo whether it happens in three years or 10 years," said Derek Burleton, senior economist at Toronto-Dominion Bank. "We can't continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services. "At some stage we're going to hit a breaking point." MIRROR IMAGE DEBATE In some ways the Canadian debate is the mirror image of discussions going on in the United States. Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net. Healthcare in Canada is delivered through a publicly funded system, which covers all "medically necessary" hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets, or some C$183 billion ($174 billion) last year. Spending has been rising 6 percent a year under a deal that added C$41.3 billion of federal funding over 10 years. But that deal ends in 2013, and the federal government is unlikely to be as generous in future, especially for one-off projects. "As Ottawa looks to repair its budget balance ... one could see these one-time allocations to specific health projects might be curtailed," said Mary Webb, senior economist at Scotia Capital. Brian Golden, a professor at University of Toronto's Rotman School of Business, said provinces are weighing new sources of funding, including "means-testing" and moving toward evidence-based and pay-for-performance models. "Why are we paying more or the same for cataract surgery when it costs substantially less today than it did 10 years ago? There's going to be a finer look at what we're paying for and, more importantly, what we're getting for it," he said. Other problems include trying to control independently set salaries for top hospital executives and doctors and rein in spiraling costs for new medical technologies and drugs. Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked. "Our objective is to preserve the quality healthcare system we have and indeed to enhance it. But there are difficult decisions ahead and we will continue to make them," Ontario Finance Minister Dwight Duncan told Reuters. The province has introduced legislation that ties hospital chief executive pay with the quality of patient care and says it wants to put more physicians on salary to save money. In a report released last week, TD Bank said Ontario should consider other proposals to help cut costs, including scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care. WINNERS AND LOSERS The losers could be drug companies and pharmacies, both of which are getting increasingly nervous. "Many of the advances in healthcare and life expectancy are due to the pharmaceutical industry so we should never demonize them," said U of T's Golden. "We need to ensure that they maintain a profitable business but our ability to make it very very profitable is constrained right now." Scotia Capital's Webb said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional. "(The public) will use the services more wisely if they know how much it's costing," she said. "If it's absolutely free with no information on the cost and the information of an alternative that would be have been more practical, then how can we expect the public to wisely use the service?" But change may come slowly. Universal healthcare is central to Canada's national identity, and decisions are made as much on politics as economics. "It's an area that Canadians don't want to see touched," said TD's Burleton. "Essentially it boils down the wishes of the population. But I think, from an economist's standpoint, we point to the fact that sometimes Canadians in the short term may not realize the cost." ($1=$1.05 Canadian) (Reporting by Claire Sibonney; editing by Janet Guttsman and Peter Galloway)
By Claire Sibonney - Analysis
TORONTO (Reuters) - Pressured by an aging population and the need to rein in budget deficits, Canada's provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.
Ontario, Canada's most populous province, kicked off a fierce battle with drug companies and pharmacies when it said earlier this year it would halve generic drug prices and eliminate "incentive fees" to generic drug manufacturers.
British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit -- an idea that critics say is an illegal user fee.
And a few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery.
It's likely just a start as the provinces, responsible for delivering healthcare, cope with the demands of a retiring baby-boom generation. Official figures show that senior citizens will make up 25 percent of the population by 2036.
"There's got to be some change to the status quo whether it happens in three years or 10 years," said Derek Burleton, senior economist at Toronto-Dominion Bank.
"We can't continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.
"At some stage we're going to hit a breaking point."
MIRROR IMAGE DEBATE
In some ways the Canadian debate is the mirror image of discussions going on in the United States.
Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net.
Healthcare in Canada is delivered through a publicly funded system, which covers all "medically necessary" hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets, or some C$183 billion ($174 billion) last year.
Spending has been rising 6 percent a year under a deal that added C$41.3 billion of federal funding over 10 years.
But that deal ends in 2013, and the federal government is unlikely to be as generous in future, especially for one-off projects.
"As Ottawa looks to repair its budget balance ... one could see these one-time allocations to specific health projects might be curtailed," said Mary Webb, senior economist at Scotia Capital.
Brian Golden, a professor at University of Toronto's Rotman School of Business, said provinces are weighing new sources of funding, including "means-testing" and moving toward evidence-based and pay-for-performance models.
"Why are we paying more or the same for cataract surgery when it costs substantially less today than it did 10 years ago? There's going to be a finer look at what we're paying for and, more importantly, what we're getting for it," he said.
Other problems include trying to control independently set salaries for top hospital executives and doctors and rein in spiraling costs for new medical technologies and drugs.
Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked.
"Our objective is to preserve the quality healthcare system we have and indeed to enhance it. But there are difficult decisions ahead and we will continue to make them," Ontario Finance Minister Dwight Duncan told Reuters.
The province has introduced legislation that ties hospital chief executive pay with the quality of patient care and says it wants to put more physicians on salary to save money.
In a report released last week, TD Bank said Ontario should consider other proposals to help cut costs, including scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care.
WINNERS AND LOSERS
The losers could be drug companies and pharmacies, both of which are getting increasingly nervous.
"Many of the advances in healthcare and life expectancy are due to the pharmaceutical industry so we should never demonize them," said U of T's Golden. "We need to ensure that they maintain a profitable business but our ability to make it very very profitable is constrained right now."
Scotia Capital's Webb said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional. "(The public) will use the services more wisely if they know how much it's costing," she said.
"If it's absolutely free with no information on the cost and the information of an alternative that would be have been more practical, then how can we expect the public to wisely use the service?"
But change may come slowly. Universal healthcare is central to Canada's national identity, and decisions are made as much on politics as economics.
"It's an area that Canadians don't want to see touched," said TD's Burleton. "Essentially it boils down the wishes of the population. But I think, from an economist's standpoint, we point to the fact that sometimes Canadians in the short term may not realize the cost."
($1=$1.05 Canadian)
(Reporting by Claire Sibonney; editing by Janet Guttsman and Peter Galloway)
JamesNT
Regards, JamesNT
JamesNT: "It's an area that Canadians don't want to see touched
"It's an area that Canadians don't want to see touched
Of course it is a good idea to tweak a healthcare system that is working, but is facing cost pressures.
All industrialized nations face crushing healthcare costs as an important problem now and especially in the future.
Canada is no exception.
At least Canada has a healthcare system with a good framework that will keep solid affordable healthcare a reality.
We can make changes ... and I hope we will.
America, however, is unlikely to fair as well.
The fragmented hodge podge patchwork of profit over patients private insurance companies will mean that America will continue to spend the most and get the least value for healthcare dollars. Billions of squandered money will do nothing other than keep bogus insurance companies from ongoing profits.
Healthcare costs in the US are going to soar both in new spending and getting less value for services already provided. It is hopeful that in a short period that Insurance and Tort Reform will become so obviously needed that real insurance reform will take place. Not the watered down Health Plan that was passed. Real reform with the promise of covering most American's basic needs, but gutting Middle Management (Insurance) to make healthcare more affordable going forward.
Regardless JamesNT - it's good to see your posts. I must say, I was worried about you. I worried you got downsized, lost your job and health insurance. Figured you might have gotten sick and had to declare bankruptcy to get out of your medical bills. I am glad that (as of July 2010) that wasn't the case.
Mortality Amenable to Health Care, 1997-98 and 2002-03 - http://www.allcountries.org/ranks/preventable_deaths_country_ranks_1997-1998_2002-2003_2008.html
The US isn't bottom of the barrel in everything though.
My EMR is: Synapse It is what we know already that often prevents us from learning. Pioneers are the ones with the arrows in their backs.
Ha! ha!
Murdoch, you truly are QUALITY entertainment. And I appreciate your worrying about me. I can assure you, however, that I have not lost my job, been downsized, etc.
I look forward to seeing how Canada manages its way through this situation. My opinion differs from yours, obviously. I'm afraid you are not taking into account several external and one important internal factor to Canada's solvency.
We shall see, won't we.
JamesNT: Ha! ha! Murdoch, you truly are QUALITY entertainment.
Ha! ha! Murdoch, you truly are QUALITY entertainment.
Glad to be of service. I do enjoy trading jabs with you for it's entertainment value.