Bending the cost curve in health care: Canada’s provinces in international perspective
Gregory P. Marchildon and
Livio Di Matteo
University of Toronto Press, 2015
Reviewed by Johny Van Aerde, MD
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With a title like that and authors who are experts in economics, most physicians would not even look at this book’s table of contents, let alone its 480 pages. However, if you are interested in health care systems and their links with politics, economics, and some of the non-medical determinants of health, the book will hold your interest from beginning to end. More than two dozen Canadian and international authors address the past, present, and future of health care based on demographic, financial, and political evidence, adding reasonable projections where possible.
The sustainability of public health care spending is central to any policy debate in Canada. Unfortunately, this debate usually generates more heat than light, and there seems to be no general agreement on what sustainability in health care actually means. Bending the Cost Curve uses many different lenses to approximate that definition.
Part I deals with general considerations on how to “bend the cost curve” (i.e., reduce the rate of increase in spendingin a very broad political and economic context. Uwe Reinhardt’s “alternative methods of controlling the use of real health care” gives a broad view of the determinants of health and the influences on the use of health care. Chapter 2, on financial incentives, provides evidence for the effect of payment method on quality of care and costs and why pay-for-performance often does not affect cost or quality significantly. The last chapter in part I addresses the fact that our aging population has a larger effect on reducing tax revenues than on increasing health care costs. In addition, many Canadians, opposed to “privatization” do not realize that 30% of health care is already paid for by private funds, leaving 70% for the public purse.
Part II describes the common drivers of cost in Canada and some of the political implications or forces behind them. Technological expansion (including pharmaceuticals), growing rates of utilization, population growth and/or aging, and inflation in health human resource costs all increase the expenditures faced by governments in various ratios. Technology and wage inflation are the most important cost drivers common to the entire country.
The last chapter in this section examines the impact of the federal stewardship role on provincial governments. Although the provinces are the main agents on the supply side of health care, the federal government remains a major determinant on the demand side, despite its recent insistence on a more limited role. The federal government will always be responsible for surveillance and control of epidemics, immigration, taxation and income redistribution, health and safety regulations, and, to some extent, drug use and the price of patented pharmaceuticals. Its refusal to take a lead role in influencing some of the cost components that it could affect contributes to the Canadian health care system being among the most expensive in the world.
Part III explores reasons for interprovincial differences in costs and sustainability, mainly differences in population growth, aging, health-care-specific inflation (including the cost of health human resources), technology (including pharmaceuticals), and politics. The six chapters give some interesting and sometimes unexpected insights and frank, evidence-based answers. Why does Alberta spend so much more per capita than other provinces without better outcomes, despite its youngest population? Why did Quebec’s financial numbers for the same year look different when reported by different agencies? What is the real burden threatening the sustainability of the Atlantic provinces? What worked and still works in British Columbia, Saskatchewan, and Manitoba? Why does Ontario spend relatively more on physicians and relatively less on institutional care?
Part IV turns to international health care systems and evidence of success and failure in countries like the United States, Australia, England, the Nordic countries, and Taiwan. Each of these international systems has strengths and shortcomings, and the authors make comparisons with the Canadian health care system, suggesting what may and may not work for Canada.
However, well-informed and appropriate adoption of some of these international components would require evaluation of the changes. Unfortunately, governments in the United Kingdom and in provinces like Alberta and Nova Scotia have reorganized the governance and administrative systems multiple times without allowing for sufficient evaluation. Observations from the UK also indicate that, although clinical practices are crucial to bending the cost curve, the importance of physicians and their teams for efficient resource allocation has mostly been ignored during all the changes.
In the Nordic countries, the health care system is stable because these countries are fiscally sound. At one end of the spectrum is Iceland, which was bankrupt a decade ago; at the other end is Norway, which has no problem with health care expenditures as it has managed its oil revenues better than any other country or province in the world. The use of voluntary supplementary private health care insurance is growing in most Nordic countries, with no limits on access to the public system.
What can we conclude from this book?
Reinhardt, a health economist from Princeton University who was studying at the University of Saskatchewan during the physician strike in 1962 and who witnessed the introduction of universal medicare, makes some disconcerting statements. For example, many of us believe that investment in the socioeconomic determinants of health will improve health and, ultimately, reduce the cost of health care.
Reinhardt states, “Focusing on the non-medical-care determinants of health is bound to increase both life-years and the quality of life lived, but it is unlikely to reduce health expenditures, other things being equal. People will live longer and healthier lives, but eventually their bodies will deteriorate and trigger expensive pressure on the health care system.”
He adds, “Society faces a huge income-seeking medical-industrial complex that is just as powerful and persuasive as the military-industrial complex; the politically powerful medical-industrial complex will fight hard to protect its claim on the nation’s GDP, and even to grow it.”
Bending the cost curve in health care is not just about economics. The book offers us, as a society, many topics to reflect on and discuss. Based mostly on facts and little on ideological interpretation, the book digs deep into the historical, cultural, political, and financial aspects of our health system. Depending on what chapter you are reading, your emotions about the future of health care in Canada will fluctuate. One thing comes out clearly: there is no long-term plan for the Canadian health care system and, as long as health care and politics remain intertwined too closely, there is unlikely to be one.
Johny Van Aerde is past president of the Canadian Society of Physician Executives. He is a clinical professor of pediatrics at the University of British Columbia and the University of Alberta and an associate faculty member at the School for Leadership Studies at Royal Roads University in Victoria; he is also on the faculty of CMA’s Physician Leadership Institute.