What Bahamas Can Learn from Global Experience with Health Policy

1
What Bahamas Can Learn from Global Experience
with Health Policy?

• Nassau
• June 21, 2007
• Michael Walker
• Senior Fellow
• The Fraser Institute

2
Plan of Discussion

• Why should you listen to what I have to say?
• Health Care Policy in Context
• Myth Versus Reality about the Canadian Model and
  its comparative performance
  
• Alternative futures for Bahamian Policy

3
Why Should You listen to me?

• Bahamians -- like many Americans-- are apparently
  attracted by the Canadian health care model
  
• I have been researching the Canadian model since
  1978 and public policy for nearly 40 years
  
• For 17 years my colleagues and I have been
  measuring the extent of rationing in the Canadian
  system and its comparative performance
  
• Recently, the Canadian Supreme Court agreed with
  our research in finding that the combination of
  the actual performance of the Canadian health
  care system and the prohibition of private care
  in Canada violated the constitutional rights of
  Canadian citizens.

4
Background to the Health Care Debate - General
Issues?

• Wealthy people and nations tend to be Healthy
• Policy can increase the health care access of
  the less wealthy by taxing the income of the
  wealthy
  
• Human and financial capital try to avoid taxes
  and the competition for both kinds of capital is
  global
  
• Nations which attempt to solve the health problem
  of the less wealthy by taxing human and financial
  capital will attract less of both
  
• Therefore, policy which pursues gains in
  population health without careful attention to
  the growth and per capita income effects of the
  methods chosen may produce short term gains at
  the expense of larger long term loses

5
Background to the Health Care Debate Specific
Issues II?

• Health care will become the largest non-traded
  sector of the Bahamian Economy
  
• It will be the source of the most interesting
  jobs and the highest tech employment in the
  economy.
  
• The policies you set there will have a huge
  impact on the Economic Policy setting overall and
  your economic success as
  
• -Tax Policy is affected by the health tax
• -Labour policy is affected by GBE growth
• -The structure of your politics is affected by PS
  unions
  
• -The technological sophistication of you country
  is affected by politicization of capital
  allocation
  

6
How has Overall Bahamian Policy Been Doing?

• Fraser Institute in conjunction with Institutes
  in 70 countries has been measuring policy in 130
  countries since the 1970s
  
• The measures score 38 policies 1 to 10 and rank
  the countries
  
• The following slides show how Bahamas performance
  has changed over time

7
Bahamas Versus the Top Ten
Source The Fraser Institute.
8
Bahamas Competitive Policy Rank
Source The Fraser Institute.
9
The Quality of Policy Really Matters
10
Per Capita Income and Economic Policy Quality
Quartile
Worst Policy Best Policy
Sources The Fraser Institute The World Bank,
World Development Indicators CD-ROM, 2005.
11
Growth in Real GDP Per Capita and Policy Quality
Quartile
Worst Policy .Best Policy
Sources The Fraser Institute The World Bank,
World Development Indicators CD-ROM, 2005.
12
Human Poverty Index and Policy Quality Quartile
Worst Policy ..Best Policy
Sources The Fraser Institute United Nations
Development Programmme, Human Development
Indicators 2005, available at http//hdr.undp.org
/statistics/data/index_indicators.cfm.
13
Human Development Index and Policy Quality
Quartiles
Worst Policy Best Policy
Sources The Fraser Institute United Nations
Development Programmme, Human Development
Indicators 2005, available at http//hdr.undp.org/
.
14
Life Expectancy at Birth and Policy Quality
Quartiles
Worst Policy Best Policy
Sources The Fraser Institute The World Bank,
World Development Indicators CD- ROM, 2005.
15
Infant Mortality and Policy Quartile
Worst Policy...Best Policy
Sources The Fraser Institute The World Bank,
World Development Indicators CD-ROM, 2005.
16
of Population Using Improved Water Sources and
Policy Quartile
Worst Policy Best Policy
Sources The Fraser Institute The World Bank,
World Development Indicators CD-ROM, 2005.
17
As is clear from this global scanThe Quality
of Policy Really Matters For BahamiansAndWe
can se the effects of Bahamas policy decline
18
Bahamian Per Capita Income Rank declining
compared to the World
Source The Fraser Institute.
19
1970-85 Average Per Capita Growth 1.27
1985-2000 Average Per Capita Growth 0.06
20
So, The decline in Policy Quality is showing up
in lower average incomes and lower growth rates.
Apart from any other development, this is going
to reduce the comparative health status of
Bahamians
21
The Canadian Case

• The only country in the OECD that has an
  exclusively public sector single payer for heath
  care is Canada
  
• The Canadian system should be carefully studied
  before launching a National Health Insurance plan
  in The Bahamas
  
• The following is a careful set of measurements of
  the Canadian system.
  
• These measurements caused the Canadian Supreme
  Court to rule that the provisions of the sort of
  System we have were injurious to the health of
  Canadians and violated their Constitutional
  Rights.

22
Age-adjusted Health Spending in the NHI OECD
Nations 2003
Source OECD (2006) Calculations by Authors
23
Inflation Adjusted Provincial/Territorial
Spending Per Person
Source CIHI (2006)
24
Health ResultsGetting What We Pay For?
25
Health ResultsWaiting Times
26
Median Wait by Province, 2006
27
Median Wait by Specialty, 2006
28
Waiting For Care 2006 v. 1993
29
Actual Wait Time v. Reasonable
30
Wait Times for Diagnostic Technology
31
Diagnostic Wait Times in 2006
32
Canadians Wait Longer Than Others
Source Schoen et al. (2005 )
33
Canadians Wait Longer Than Others
Source Schoen et al. (2005)
34
Canadians Wait Longer Than Others
Source Schoen et al. (2005)
35
Health ResultsAccess to Doctors Technology
36
Doctors in the OECD
24th
Source OECD (2006) Calculations by Authors
37
MRI Machines in the OECD
Japan (2002) 29.9
13th
Source OECD (2006) Calculations by Authors
38
CT Scanners in the OECD
Japan (2002) 78.4 Korea 49.4
17th
Source OECD (2006) Calculations by Authors
39
Mammographs in the OECD
7th
Source OECD (2006) Calculations by Authors
40
Lithotriptors in the OECD
18th
Source OECD (2006) Calculations by Authors
41
Comparisons of Age Adjusted Access

• 24th of 28 countries for access to physicians
• 13th of 24 countries for access to MRI machines
• 17th of 23 countries for access to CT scanners
• 7th of 17 countries for access to Mammographs
• 18th of 20 countries for access to Lithotriptors

42
Health ResultsHealth Outcomes
43
Life Expectancy in Full Health in the OECD
16th
Source OECD (2006) WHO (2006)
44
Infant Mortality in the OECD
Turkey not shown
21st
Source OECD (2006)
45
Perinatal Mortality in the OECD
Turkey not shown
14th
Source OECD (2006)
46
Mortality from Disease in the OECD
8th
Source OECD (2006) Calculations by Authors
47
Potential Years of Life Lostin the OECD
Portugal, Czech Republic, Poland, Slovak
Republic, and Hungary not shown
9th
Source OECD (2006) Calculations by Authors
48
Medically Avoidable Mortality (MAHC)
Slovak Republic, and Hungary not shown
4th
Source WHO (2006) Calculations by Authors
49
Breast Cancer Mortalityin the OECD
10th
Source Ferlay et al. (2004) Calculations by
Authors
50
Colon/Rectum Cancer Mortalityin the OECD
2nd
Source Ferlay et al. (2004) Calculations by
Authors
51
Health ResultsGetting What We Pay For?

• High cost system.
• Worsening waiting times.
• Poor performance on waiting times for elective
  medical care
  
• Poor results on access to doctors and
  technology.
  
• Mediocre performance on health outcomes.

52
Canadas Policies are the Problem
53
Cost Sharing User Fees, Deductibles and
Co-payments in the OECD
54
Cost Sharing in the OECD

• Only 5 countries do not have some form of cost
  sharing for major health care services in the
  public system Canada, Czech Republic, Denmark,
  Spain, and the United Kingdom. Following reform
  in January 2006, The Netherlands allows cost
  sharing.
• Four of the 5 experience problems with waiting
  timesCanada, Denmark, Spain, and the United
  Kingdom and growing waiting lists are seen as a
  problem in the 5th.

55
Providers of Public Health Carein the OECD
56
Providers of Public Health Care in the OECD

• 11 OECD countries rely exclusively on public
  hospitals to deliver publicly-funded health
  care.
  
• Of these 11, 8 experience problems with long
  waiting times.
  
• The remaining 3 are transition economies still in
  the process of reforming their economies and
  social service systems.
  
• Not one of the countries with strictly public
  provision exhibits attributes that would be
  counter to economic theory which suggests that
  this would result in inefficient provision of
  services.

57
Private Parallel Health Carein the OECD
58
Is Canada Unique?

• Only 2 of the 28 countries surveyed have no
  comprehensive private provision of healthcare
  Canada and the Czech Republic.
  
• Canada is the only country to have full and
  complete public management of hospital resources
  and no private parallel insurance system.
  
• Canada is the only country to effectively outlaw
  private parallel health care.

59
A Look at the Most Successful Universal Health
Insurance Programs
60
Understanding Australia, Sweden, and Japan

• Lower healthcare costs.
• Better healthcare outcomes.
• User fees or co-payments.
• Parallel private medical treatment
• supply publicly funded care.

61
Australia

• Cost sharing accounted for 16 of total
  expenditure
  
• Benefit is 75 for professional in-hospital
  services and 85 for all other professional
  services
  
• No controls on physician fees (extra billing),
  though physicians who accept 85 of the
  schedule can bill the government directly
  
• Private health insurance cover. Community rated
  with tax incentives

62
Sweden

• County councils deliver care
• Co-payments for physician services, hospital
  care, outpatient care, elderly care, dental, and
  drugs. Fees vary by county but are capped. Less
  than 2 of resources devoted to health care come
  from patient fees.
• No gatekeeping
• Stockholm county contracting with private
  providers better care

63
Understanding Austria, Belgium, France, Germany,
Japan, Luxembourg, and Switzerland

• Lower/similar healthcare costs.
• No Waiting Lists.
• User fees or co-payments.
• Parallel private medical treatment
• Social Insurance Financing
• Private hospitals competing to supply publicly
  funded care.
  

64
Japan

• Cost sharing accounted for 11.7 percent of total
  health expenditures in 2001
  
• User fees of between 25 and 30 percent for
  physician services and hospital care. Varying
  rates for drugs.
  
• Almost total freedom to choose and use private
  and public health care services without a
  referral system.
  
• Competitive private delivery of care (79.9
  percent of hospitals and 93.8 percent of clinics
  privately owned)

65
Switzerland

• Competing insurance funds decentralized,
  self-administered, private and public. (Risk
  redistribution)
  
• Various deductible arrangements (varies between
  insurance policies) and 10 coinsurance rate.
  
• Direct patient payments accounted for 28 of
  total expenditure (both co-payments and private
  out of pocket payments)
  
• Competitive private delivery of care

66
SoHow Good Is Canadian Health Care?

• Less than top performance in health care
  outcomes
  
• Ranks at the bottom in access to care, supply of
  technologies, supply of physicians
  
• Ranks at the very top in spending

67
The Trojan Horse for the Budget

• The Economics of the Canadian Health Care system

68
Avg Ann Growth in GDP, CPI, TREV and PHEX
2000/01 to 2004/05
C
Source StatisticsCanada, Financial Management
System 2005
69
Avg Ann Growth in PHEX and TREV, by Province
2000/01 to 2004/05
Source Statistics Canada, Financial Management
System 2005
70
PHEX as of TREV, by Province 1997 2005
Source Statistics Canada, Financial Management
System 2005
71
ONTARIO Projection based on 2000/01 to 2004/05
Avg Ann Growth in actual PHEX and TREV
72
Why projections are cautious

• PHEX does not include the impact of aging
  population
  
• 50 of per-capita, lifetime health expenditures
  occur after the age of 65. (Brimacombe et al.,
  2001)
  
• PHEX includes drug delisting reform efforts
  rationalization
  
• TREV overstated
• Net of debt service costs, AVAILABLE revenues are
  lower
  
• TREV includes Federal transfers
• TREV includes tax increases

73
Other sustainability warnings

• Government
• (QC) Clair 2000
• (SK) Fyke 2001
• (AB) Mazankowski 2001
• (Senate) Kirby 2001
• (QC) Menard 2005
• MacKinnon 2002

• Private Sector
• Fraser Institute annually since 1990
• C.D. Howe 2001
• AIMS 2002
• Fraser Institute 2004
• Mullins, Esmail, Skinner
• Conference Board 2001 2005
• PWC 2005

74

• CAUSE
• 1st coverage universal public subsidy
• Insuring high-frequency, affordable expenses
• Central planning
• Public monopoly health insurance
• Non-profit provision

• SOLUTION
• User fees limited eligibility for public
  subsidy
  
• Catastrophic insurance design
• Consumer empowerment and managed care
• Allow private insurance options
• For-profit provision

PROBLEM Over utilization moral hazard Ina
dequate insurance protection Inefficient alloca
tion of resources Absence of payer accountabili
ty Under- capitalization
75
The Canadian System is not the one to copy

• But What should be done?
• Lets consider the recommendations of the Blue
  Ribbon Commission
  

76
Health Insurance should be Universal

• OK

77
Health Insurance must be legislated that is not
optional for residents

• OK

78
National Health Insurance should be Administered
by the National Insurance Board

• Not OK
• Commission notes that the NIB is hopelessly
  inefficient 25 overstaffed.this is not
  coincidental
  
• Commission notes that the inefficiency of the NIB
  will have to be dealt withyesbut how??
  
• Commission doesnt question Central planning
  model and hidden costs of monopoly
  

79
The NHI plan should be comprehensive

• Not OK
• This is the real Trojan horse
• 1. Cost of insuring for oil changes
• 2. Eliminates the private option because private
  spending only permitted for services which exceed
  or are not covered by NHI
  
• 3 This provision is the most sinister in the
  report and is the Achilles heel of the Canadian
  Model recently rejected by the Supreme Court of
  Canada

80
Contributions set at a level Affordable by the
Majority

• Not what the Commission actually advises
• Commissions recommendation is that in the
  summary but in the document the Commission
  proposes a progressive Income Tax to finance the
  program

81
No User Fees

• Not OK
• Evidence shows that they dont prevent access
• Exempt the poor
• Involve the patient in the paying process

82
Conclusion

• There are many models for Bahamians to follow
  that will produce better outcomes than following
  the Canadian Plan
  
• In considering the Commissions report Bahamians
  should note that it recommends the adoption of
  the Canadian system while nobody else in the
  world has thought it a good idea to do so
• I wonder why?

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