As privatization grows, so do our health care costs
The Canadian universal medical insurance system is arguably the best in the world, and there is no good reason for it to be in crisis. The problems that exist for the system are the results of bad planning and the wrong priorities. We need more, not less, of what the system does right. And it is up to us to ensure the system survives, and indeed improves.
One of the major problems with deciding how well the Canadian system is doing is that we need to be clear as to what it has been set up to do and what it is not set up to do.
The Canadian system is mandated to control three sub-sectors—hospitals, physicians, and administration—and not other sub-sectors such as dental care, pharmaceuticals, long-term care, medical devices, and so on. Since 1971, when the single-payer Canadian system was fully implemented, the three sub-sectors controlled by the Canadian public system have seen their relative share of our economy remain virtually the same. That is, hospitals, physicians, and administrative costs have not changed if we look at them with respect to their share of our entire economy over the past quarter-century.
In other words, the costs of our public
health system have not increased. The share of hospital, administrative and physician costs in the overall economy has remained the same, which means the system has controlled the costs it was created to control—maybe too well. Overall health care costs, however, have soared as a proportion of our economy. Where have they grown then, if not for hospitals, administration and physicians?In 1993, Canada ranked 16th among the 24 leading industrial nations when public spending was calculated as part of the total health picture. But when overall health expenditures—which combined both private and public spending—were calculated, Canada placed second, later dropping to fifth in 1995.
Why have our health costs grown at all? Not because of the public system, that is clear, but because of the private system that we have no control over. It is the private sector that has caused health expenditures to grow.
An example of the wrong priorities and bad planning is the deregulation of Canada
*s drug industry, which led to spectacular increases in the cost of drugs----costs that were once the lowest in the industrialized world. From 1987 to 1996, the cost of prescriptions in Canada rose by 93% compared to an increase of all consumer prices by 23.1%. Drug costs grew proportionately faster than any other item on the nation*s health bill, from 9% of total health expenditures in 1984 to 12.7% in 1994, and to over 14% by 1996.Spending on hospitals during this period, meanwhile, decreased from 42% to 37.3% of total health expenditures, and spending on physicians fell from 15% to 14.2%.
If you do the math, you find that hospital expenditures fell by just about the same amount that drug costs went up. It could be argued that we exchanged less hospital care for increased revenues for the drug companies. If we have a crisis in health care in Canada today, it is because the private sector is crowding out the more efficient and equitable public sector, since public sector costs are under control while the uncontrolled private sector
*s costs continue to grow.The public system needs to be protected, strengthened and expanded. The U.S. market-driven medical system spends about 14% of its economy on health care, while Canada
*s cost is projected to be about 9% of GDP for 1998. Significantly, both nations* health care costs stood at about 7% in 1971, when the Canadian system converted to the publicly-controlled single-payer system and the U.S. decided to stick with a market-driven private system.The current incarnation of the American system is the private managed-care system. It is widely regarded as a disaster. In protest, 15,000 dissatisfied U.S. physicians recently decided to unionize, joining the AFL-CIO in an affiliation with dentists, interns, residents, nurses, medical technicians and home health aides to fight managed care.
In 1975, in Canada, the public funded more than three-quarters (76.4%) of the total health-care bill, while private insurance and direct-out-of-pocket payments covered 23.6%. By 1997, the ratio had shifted to about 68% public and 32% private. Some of us believe this sort of erosion of the publicly-supported system tends to undermine political support for our universal programs.
As essential health services are underfunded or misallocated, it confronts people of principle with difficult choices: whether or not, for example, to hire a private sector nurse for an ailing family member, because hospital care has been denied by the shortage of hospital beds.
Now, closing hospital beds may often be the right thing to do—but only if it is accompanied by the provision of an appropriate community support system, such as public health nurses. Care and help from friends and family is not a substitute for an efficient and effective public health system.
The American upper classes have retreated behind private enclosures where they live in isolation from the rest of the population—with their own police, entertainment, recreation, education, and health systems—at the same time as they demand cuts to their taxes. They have abandoned their sense of community. I don
*t think this is the kind of world most Canadians wish to live in. We rely on our health care system as the first line of defence against the loss of our more equitable and civilized society.An example of wrong priorities and bad planning is the deregulation of Canada
*s drug industry, which led to spectacular increases in the costs of drugs—costs that were once the lowest in the industrialized world.We want to make sure that we take care of each other and not rely on the market for our health. But, the ever-increasing privatization of our system is making it harder and harder to obtain from it the care we need. Our family members and friends wait too long for diagnostic tests for life-threatening, painful and frightening illness, sit in halls waiting and humiliated for rooms and treatment, rely on family and friends when they are sent home earlier than ever before to deal with their physical, psychological and pain needs.
The pain, lost labour time, humiliation and fear are not being reflected in the statistics, nor are the long-term effects of delayed diagnoses or suffering. Almost everyone now knows somebody who has gone through this ordeal. By closing hospital beds and laying off nurses, our political leaders have effectively offloaded their responsibility onto the community—still another form of privatization. Families and friends are having to do what the system used to do for us. The public health system is being partially replaced with unpaid (mostly) woman
*s work and for-profit health care.What we need instead, and must demand, is for the public system to be expanded to include drugs and long-term care and public health care in the home.
We should also be aware that health is affected more by what happens in our home and workplaces than in our hospitals. The richest among us are healthier than people with middle-class incomes, and those with middle-class incomes are healthier than those who are the poorest. Babies born to poor families, for example, have twice the rate of infant mortality and disability as children living in affluent families.
#(Robert Chernomas is a professor of economics at the University of Manitoba)The way to control health costs is to reduce poverty and inequality. Only by eliminating the socioeconomic causes of ill-health can we reduce the need for services instead of reducing services to the needy.