Public Values

The business case and the human case both support public health care, says health economist

But Canada loses its health-care edge with a pharmaceutical regime you could call "Little America" - Bob Evans

Employers in US trying to cut back on health insurance during downturn[Featuring YouTube video]. In conversation with Dr. Bob Evans of the University of British Columbia, Straight Goods editor Ish Theilheimer discovers that it's not the number of MRI machines a country has that makes their health care any better than another. Another thing that makes the investigation of health care spending levels difficult is how numbers can be manipulated. If a province cuts taxes, therefore reducing income, it makes rates of health care spending unclear.

IT: Its November 17th, in Ottawa at the National Arts Center. I'm talking to Doctor Bob Evans of the University of British Columbia. We're at the Canadian Health Coalitions 30th Anniversary gathering. And we've just been listening to a panel of discussion that Dr. Evans has been speaking on. I was impressed but a number of the points you made. Maybe we can start with comparing the American system with the Canadian system in terms of cost. How different is American spending from Canadian spending on Health Care?

BE: It's hugely different it's about double. It takes up currently about 16 percent of their national income compared to 10 percent for ours. It is of course much higher than any where else in the world. The Americans is by far the most expensive system. It's interesting that spending through the public sector is actually higher than ours as well it's just that they have, on top of that, a huge private insurance sector.

IT: But, there is one place where our spending is similar and that is pharmaceutical costs?

BE: Yeah, we have a pharmaceutical payment system that's essentially an American style. We could call it Little America, because we have the mix of public payment, public subsidy for private insurance, private insurance and out-of-pocket payment. And that's exactly the mix the Americans have as well. And, the fragmentation of the funding system leads to really a complete inability to get your hands around the whole thing. What makes Medicare, and for that matter most of the European systems, different is that they do have a grip on the total cost and so they can apply some sort of pressure for containment. The Americans have no capacity whatever.

IT: Why is it so important to be able to control what you pay for drugs?

BE: Because otherwise you're just going to keep on paying more and more and eventually your system will get to the point, as they are now, saying we don't want to pay for all that, we're going to try and push it back on the patients. So you are hearing employers going to the bargaining table saying we want to cut back on the benefits for employees and will push those cost back on to the individual patients because they're just getting out of hand. That's exactly what's happening in the United States. The private insurance system there is starting to erode, slowly, because employers are no longer willing or able to carry the kind of cost that they're facing.

IT: This relates to what I believe you called the three axes of conflict?

BE: Yeah, I said that basically all health care systems have conflict over who pays, who gets access, and who gets paid. And when you have no ability to contain cost, your who-gets-paid side of it gets out of hand as people are really getting paid too much, and too many people getting paid for things that aren't worth doing. Then the pressure comes back onto the who-pays. Employers in the US and here as well, with respect to pharmaceuticals, are saying we're going to cut back on the amount that were paying and that's going to push the cost over onto the patients.

IT: There's a good deal of talk both in the American health care debate and here in Canada as well about the sustainability of health care spending. You say that's something of a myth why do you say that?

BE: Well, because it's been done by manipulating the numbers. That people point to rising shares of Provincial Expenditure going on health care. Well, this is true or at least it has been true. What they neglect to point out is that Provinces, a number of them, have been cutting back on their tax rates that in turn reduces their revenues and they respond to that by cutting their spending as well, for example what British Columbia did in spades, what happens then is you cut back on your non-health spending, you don't cut back on your health spending, and the ratio of the one to the other, by basic arithmetic, shifts. So it's not so much that the health spending is out of hand as it is the reduction in tax rates have that have triggered off this decline in revenue. That then feeds back into attempts to controller other forms of spending besides health. It's not that health spending has not risen as a proportion of provincial spending. That's absolutely true. But it hasn't risen as a result of provincial income at least not till last year. Last year all bets are off every things gone to hell. But that's got nothing to do with the health care system, got a lot to do with the banking system. So it's been used by, for example the BC government, to try and pretend that health care spending is out of hand. When in fact it was triggered off by their own decision to run through a big tax cut.

IT: Canadians are often told that our system won't pay for sophisticated technology that Americans have access to through their private health care system. Things like MRIs. How do you respond to those kinds of claims?

BE: That's funny I had an MRI three months ago, with no waiting list by the way. The answer to that is that the Americans don't have more sophisticated technology but they have a lot more of it. They have much larger numbers of various different types of machines. The real question then is how appropriate is the level of activity for those machines. Canada has fewer MRI machines but they get used more intensively, and they're used more efficiently, but the variations across countries in this are huge. The Japanese have about 50 percent more of these than the Americans, and I don't know how many times more than the Canadians, other European countries have fewer than we do. In other words there's no international standard about how many of these things you ought to have, it's all over the map. And what that reflects is a failure to have any systematic way of deciding what good these things do. They produce beautiful pictures, no question about that, but how much of that leads to actual changes in diagnosis, how much of that in turn leads to changes in therapy and improvement of out comes. The answer is nobody looks. They just say we got to have more of these. It's sort of on-demand picture taking.

IT: You've spoken of the business case for Medicare and then the human case. Can you briefly summarize what those two cases are?

BE: Well, the human case is simply that it reduces the level of agony in the population. Sickness, injury these are sources of agony. If you compound those with, "Oh by the way not only is your child going to die, but your going to loose your house in the process of trying to save her. As the stocks were describing." More generally, we all have to cope with illness and injury, more so as we get older, do we place additional financial burdens on people. The answer in Medicare is that we don't, the more you privatize the system the more the answer is "Yes you do." If you are unfortunate enough to be unwell on top of that we are going to give you an economic hit. We protect people to a large extent against that in Canada. Not with pharmaceuticals, which is why there is such interest in pharmacare. But the business case is saying not only is this the right thing for human beings to do for each other but doing the right thing is also a good deal less expensive and more efficient than a private free for all.

IT: Thank you very much Bob.

BE: Okay.

Posted: December 04, 2009

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