Canada
Department of Finance
February 7, 2005
Minister of Finance Tables Legislation to Implement 10-Year Plan to Strengthen Health Care

Minister of Finance Ralph Goodale today tabled legislation in the House of Commons to implement the Government of Canada’s 10-Year Plan to Strengthen
Health Care, which was signed by all 14 first ministers at their September 2004 meeting.

“This plan illustrates very clearly how all Canadians benefit when governments work together in common purpose,” stated Minister Goodale. “The legislation to implement this historic agreement is a priority for the Government.”

http://www.fin.gc.ca/news05/05-011e.html

Canada’s 10-year plan:
http://pm.gc.ca/eng/news.asp?id=260

Comment: No health care system will be free of problems. But Canada demonstrates that a publicly administered and publicly financed program is capable of responding to its problems. In contrast, in the United States, our costs are out of control while our problems grow much worse. Why do we continue to tolerate our outrageously expensive and highly dysfunctional system?

Globe and Mail
March 1, 2005
Ontario hospitals chief pleads for more funds
By Oliver Moore

The head of the Ontario Hospital Association called Tuesday for a new funding arrangement, saying that the current system “would be better suited to a Monty Python movie.”

Hilary Short said that a “dramatically different” approach will be needed to prevent patient care being “cut deeply” when government rules against running a deficit come into play.

“Hospitals have until March 31, 2006 to achieve balanced budgets,” she told The Economic Club in Toronto Tuesday morning.

“The Ontario government, like most other governments, sets hospital budgets at a level it feels it can afford,” she said.

“This year, although the cost of operating hospitals increased by almost 8 per cent, the hospital sector received a 4.3 per cent base increase in funding from the provincial government. But because much of this increase was earmarked for specific initiatives, individual hospitals received an average base funding increase of 1.8 per cent.”

Not only were the increases insufficient, she said, the current funding method forces hospitals to guess how much money they will get and then spend accordingly. Only near the end of the fiscal year do they find out their actual funding, by which time they regularly have to borrow money to make up the shortfall.
“Enough is enough … the time has come to adopt a dramatically different approach. To protect patient care, Ontario needs stable, multi-year funding that is realistic in covering the real cost of providing care.”

http://www.theglobeandmail.com/servlet/story/RTGAM.20050301.whosp0301/BNStory/National/

Excerpts from Hilary Short’s speech:

The Economic Club of Toronto

Since its election in October 2003, the Ontario government has embarked on an ambitious agenda for health care reform — an agenda driven by Roy Romanow’s Royal Commission Report.

It’s come to be called the “Transformation Agenda,” and it consists of several different component parts, parts it must be added that like an engine, need to work perfectly together if they are to run smoothly.

First, the government is investing significantly in community care with the goal of easing pressure on hospitals.

Put plainly, this means shifting money to the community sector so it can serve more people. Over time, this will ease pressures on hospitals and help save money.

Second, the government is requiring hospitals to cut spending and divest themselves of certain services that, in their view, can more appropriately be delivered in the community setting.

The government is implementing this policy deliberately, to allow hospitals to focus exclusively on doing what they alone can do – providing the most complex care.

Third, the government is creating and implementing a plan to reduce waiting times for patients in five key areas – cardiac care, cancer care, diagnostic services like MRIs, hip and knee replacements and cataract surgery.

Fourth, through Family Health Teams, we also know that the government is pursuing the goal of improving access to primary care for the hundreds of thousands of Ontario families without a family doctor.

Fifth, the government is investing heavily in health promotion to ease the burden on our hospital system.

And finally, the government intends to improve the way in which the health care system works at the local and regional level, by creating Local Health Integration Networks.

Taken together, the component parts of this transformation agenda are designed to accomplish a simple goal – drive down costs, while improving access for patients to Ontario’s treasured public healthcare system. And…

To protect patient care, Ontario needs stable, multi-year funding that is realistic in covering the real cost of providing care.

We need a transformational, innovative, new funding model that would help to rejuvenate the entire health system. One idea, highlighted recently by a Senate Committee Chaired by Michael Kirby is called service-based funding.

Service-based funding would provide stable and predictable funding to hospitals.

It would fund them for the volume and complexity of care they provide, and reward them for their efficiency and performance while recognizing the real cost of providing care.

The OECD believes this model has potential. In an October 2004 report on Canada, the OECD noted that moving towards service-based funding would help improve performance and efficiency as well as reduce wait times.

And…
As I close, let me say this.

Hospitals have signed on for the “Transformation Agenda”. Progress is, and will continue to be made, by governments and healthcare providers working together.

What hospitals are asking for are the time and the resources to get it right.

Let’s move forward on primary care reform and investing in services in the community and in the home.

Let’s cooperate and support hospitals as they seek further savings in non-clinical areas like purchasing and accounting.

Let’s look at the facts, listen carefully, and move steadily to better integrate healthcare.

And finally, in the upcoming Ontario Budget, let’s reconsider the fiscal plan for hospitals to sustain our incredibly valued healthcare professionals while protecting patient care through this time of change and transition.

http://www.oha.com/Client/OHA/OHA_LP4W_LND_WebStation.nsf/page/The+Economic+Club+of+Toronto

Comment: The Canadian press seems to prefer to characterize their medicare program as a system that “would be better suited to a Monty Python movie.” Although Ms. Short did use that phrase in describing the difficulties of readjusting budgets during the fiscal year, you would think from the press coverage that the entire health care system was a Monty Python nightmare. That is unfortunate since the all-too-common, doom-and-gloom press coverage of the Canadian system is used to discredit single payer as a model for reform in the United States.

Ms. Short’s actual message is quite clear. The Canadians have an excellent health care system, and they can make it even better. We should be so fortunate.

Globe and Mail
March 1, 2005
Ontario hospitals chief pleads for more funds
By Oliver Moore

The head of the Ontario Hospital Association called Tuesday for a new funding arrangement, saying that the current system “would be better suited to a Monty Python movie.”

Hilary Short said that a “dramatically different” approach will be needed to prevent patient care being “cut deeply” when government rules against running a deficit come into play.

“Hospitals have until March 31, 2006 to achieve balanced budgets,” she told The Economic Club in Toronto Tuesday morning.

“The Ontario government, like most other governments, sets hospital budgets at a level it feels it can afford,” she said.

“This year, although the cost of operating hospitals increased by almost 8 per cent, the hospital sector received a 4.3 per cent base increase in funding from the provincial government. But because much of this increase was earmarked for specific initiatives, individual hospitals received an average base funding increase of 1.8 per cent.”

Not only were the increases insufficient, she said, the current funding method forces hospitals to guess how much money they will get and then spend accordingly. Only near the end of the fiscal year do they find out their actual funding, by which time they regularly have to borrow money to make up the shortfall.
“Enough is enough … the time has come to adopt a dramatically different approach. To protect patient care, Ontario needs stable, multi-year funding that is realistic in covering the real cost of providing care.”

http://www.theglobeandmail.com/servlet/story/RTGAM.20050301.whosp0301/BNStory/National/

Excerpts from Hilary Short’s speech:

The Economic Club of Toronto

Since its election in October 2003, the Ontario government has embarked on an ambitious agenda for health care reform — an agenda driven by Roy Romanow’s Royal Commission Report.

It’s come to be called the “Transformation Agenda,” and it consists of several different component parts, parts it must be added that like an engine, need to work perfectly together if they are to run smoothly.

First, the government is investing significantly in community care with the goal of easing pressure on hospitals.

Put plainly, this means shifting money to the community sector so it can serve more people. Over time, this will ease pressures on hospitals and help save money.

Second, the government is requiring hospitals to cut spending and divest themselves of certain services that, in their view, can more appropriately be delivered in the community setting.

The government is implementing this policy deliberately, to allow hospitals to focus exclusively on doing what they alone can do – providing the most complex care.

Third, the government is creating and implementing a plan to reduce waiting times for patients in five key areas – cardiac care, cancer care, diagnostic services like MRIs, hip and knee replacements and cataract surgery.

Fourth, through Family Health Teams, we also know that the government is pursuing the goal of improving access to primary care for the hundreds of thousands of Ontario families without a family doctor.

Fifth, the government is investing heavily in health promotion to ease the burden on our hospital system.

And finally, the government intends to improve the way in which the health care system works at the local and regional level, by creating Local Health Integration Networks.

Taken together, the component parts of this transformation agenda are designed to accomplish a simple goal – drive down costs, while improving access for patients to Ontario’s treasured public healthcare system. And…

To protect patient care, Ontario needs stable, multi-year funding that is realistic in covering the real cost of providing care.

We need a transformational, innovative, new funding model that would help to rejuvenate the entire health system. One idea, highlighted recently by a Senate Committee Chaired by Michael Kirby is called service-based funding.

Service-based funding would provide stable and predictable funding to hospitals.

It would fund them for the volume and complexity of care they provide, and reward them for their efficiency and performance while recognizing the real cost of providing care.

The OECD believes this model has potential. In an October 2004 report on Canada, the OECD noted that moving towards service-based funding would help improve performance and efficiency as well as reduce wait times.

And…
As I close, let me say this.

Hospitals have signed on for the “Transformation Agenda”. Progress is, and will continue to be made, by governments and healthcare providers working together.

What hospitals are asking for are the time and the resources to get it right.

Let’s move forward on primary care reform and investing in services in the community and in the home.

Let’s cooperate and support hospitals as they seek further savings in non-clinical areas like purchasing and accounting.

Let’s look at the facts, listen carefully, and move steadily to better integrate healthcare.

And finally, in the upcoming Ontario Budget, let’s reconsider the fiscal plan for hospitals to sustain our incredibly valued healthcare professionals while protecting patient care through this time of change and transition.

http://www.oha.com/Client/OHA/OHA_LP4W_LND_WebStation.nsf/page/The+Economic+Club+of+Toronto

Comment: The Canadian press seems to prefer to characterize their medicare program as a system that “would be better suited to a Monty Python movie.” Although Ms. Short did use that phrase in describing the difficulties of readjusting budgets during the fiscal year, you would think from the press coverage that the entire health care system was a Monty Python nightmare. That is unfortunate since the all-too-common, doom-and-gloom press coverage of the Canadian system is used to discredit single payer as a model for reform in the United States.

Ms. Short’s actual message is quite clear. The Canadians have an excellent health care system, and they can make it even better. We should be so fortunate.

Reason
November 2004
Mandatory Health Insurance Now!
By Ronald Bailey, Reason’s science correspondent

Unfortunately, there is no prominent political or intellectual figure on the national scene offering a comprehensive free-market alternative to socialized medicine.

Why not just tell Americans they are responsible for buying their own health insurance from now on? If people couldn’t pay for medical care, either through insurance or out of pocket, they wouldn’t get it. “After people begin to notice the growing pile of bodies by emergency room entrances,” Tom Miller (Cato Institute) wryly suggests, “they will quickly get the message and go get medical coverage.”

Since it’s unlikely that Americans will allow their improvident neighbors to expire without medical care in the streets, is there a politically palatable alternative that can preserve and expand private medicine in the United States? Yes: mandatory private health insurance.

Maintaining our private medical system is vital because American health care and medical science are the most advanced and innovative in the world. If a national single-payer health care system is adopted, most medical progress will be stopped in its tracks.

http://www.reason.com/0411/fe.rb.mandatory.shtml

Comment: For those not familiar with Reason, it is a monthly magazine of “free minds and free markets,” representing libertarian views.

This particular article is of interest because it describes the problems with our health care system from the libertarian perspective. But more importantly, rather than coming to the conclusion that health care must be left solely to the free marketplace, the author concludes that the government must mandate health insurance for everyone.

PNHP and single payer are mentioned several times in the article. The promise of affordable, comprehensive care for everyone through a public program is a frightening thought for libertarians, thus they challenge our proposal with absurd and untrue charges such as the inevitable suppression of innovation. Yet most libertarians are also very human and are repulsed by the concept of a “growing pile of bodies” that lacked affordable access to health care. And they recognize that single payer has been identified as a program that would actually work. To stave off a single payer system, they have had to provide an alternative. It is ironic that they abandon their fundamental cause of freedom by supporting a model that requires patients to include private insurance bureaucrats in their health care relationships.

The point is that all of us (moderates, conservatives, liberals, libertarians, and authoritarians) are now convinced that we must pool resources in some manner to be certain that those with needs will have affordable access to health care. All proposals involve the government to some degree. So let’s finally sit down and agree on which specific polices would be most effective in providing affordable, comprehensive coverage for all. For those who need help, we have a document that clarifies the issues:

http://www.physiciansproposal.org/proposal/Physicians%20ProposalJAMA.pdf 1. Libertarian support of mandatory health insurance (Don McCanne)

1. CMS projections for health spending – 2005 (Don McCanne)
2. The California Health Insurance Reliability Act (CHIRA)
(Don McCanne)
3. What is CHIRA? (Don McCanne)

Health Affairs
February 23, 2005
U.S. Health Spending Projections For 2004-2014
By Stephen Heffler, Sheila Smith, Sean Keehan, Christine Borger, M. Kent Clemens, and Christopher Truffer

Projected National Health Expenditures (NHE) for 2005:

$1,936.5 billion – Total NHE

$6,423.1 – NHE per capita

15.6% – NHE as percent of GDP

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.74

Comment: These numbers are from the Office of the Actuary, Centers for Medicare and Medicaid Services (CMS). These are very useful numbers for your advocacy work since they represent what we are spending this year on health
care, qualified as “CMS projections for 2005.”

————————————————————————————–
Message: 2
Date: Thu, 24 Feb 2005
Subject: The California Health Insurance Reliability Act (CHIRA)

California State Senate
SB 840, The California Health Insurance Reliability Act (CHIRA)Introduced by Sen. Sheila Kuehl, February 22, 2005

For the bill, at this link in the block “House:” enter “Senate” and then for “Bill number:” enter “840”

http://info.sen.ca.gov/cgi-bin/pagequery?type=sen_bilinfo&site=sen&title=Bill+Information

Comment: Many will be curious about the funding. The bill describes the intent of utilizing funds that are currently directed to other government programs such as Medicare, Medicaid, and SCHIP. But under “Article 2. Revenues” it merely states “(Reserved).”

California has a requirement that any new tax requires a two-thirds vote in the Senate and in the Assembly. This statement from Sen. Kuehl’s press release suggests her strategy: “Means-based premiums, assessed according to income and payroll, would replace all premiums, deductibles, co-pays and out of pocket expenses.”

—————————————————————————————–
Message: 3
Date: Thu, 24 Feb 2005
Subject: What is CHIRA?

CHIRA, The California Health Insurance Reliability Act, SB 840, is Sen.Sheila Kuehl’s single payer bill for the state of California.

Rutland Herald
February 22, 2005
Editorial
Clarity on health care

As Vermont legislators confront the burdens and the irrationality of Vermont’s health care system, they face numerous obstacles. One of the most fundamental obstacles is conceptual. A new book written by three Vermonters and to be released within days from now goes a long way to clarifying the conceptual confusion and pointing the way to meaningful reform.

The authors are Cornelius Hogan, a longtime public servant who has served in the Cabinets of Republican and Democratic governors; Dr. Deborah Richter, a
physician and expert on health care reform; and Terry Doran, a journalist who has helped put together a book of unusual clarity and insight. It comes at a crucial moment in Vermont history and ought to be read by every member of the Vermont Legislature.

One of the authors’ central insights can be encapsulated in a number. They point out that about 70 percent of health care costs represent costs of infrastructure. By infrastructure, they mean the hospitals, clinics and personnel that are always available to us whether we are using them at a given moment or not. It is important to address the costs of pharmaceuticals and other supplies, but they only account for about 16 percent of health care costs. Reforming the health care system means taking a look at how we finance the health infrastructure.

The authors refer to this infrastructure as a “shared service.” It is a service we expect to be on call for us whenever we are in need. It so happens that about 10 percent of Vermonters account for about 70 percent of health care spending. And yet it would be impossible for that 10 percent to shoulder the entire cost of the hospitals, physicians and other fixed expenses that were there waiting for them when they got sick.

We spend most of our lives among the 90 percent who are not piling up huge
medical expenses. But we know that if we want those services ready for us
when we need them, we must share the expense even when we are not using
them. That is why we have health insurance.

The problem is our health financing system is disorganized, erratic and unreliable. In the past four years, about 20,000 Vermonters have lost insurance. The Medicaid program for low-income Vermonters is stacking up an enormous deficit. The costs to businesses and individuals continue to escalate at double-digit rates. One of the reasons is that our helter-skelter system of health financing requires an enormous administrative expense for chasing or denying payments. About $1 billion out of $3 billion in health expenditures in Vermont goes to administration.

Past attempts at cost controls have not worked, mainly because they have focused on the individual rather than the system. Managed care was an attempt to curb usage by focusing on individual claims. Thus, HMOs and insurance companies set up bureaucratic systems for screening out what were deemed to be unneeded services. The public rebelled at the interference, and the system failed to control costs.

The focus on individual demand is appropriate in its place. Gov. James Douglas has proposed programs for managing chronic disease better and for promoting good health. These are useful for the individual and, to an extent, for the system.

But we are always going to have a predictable level of health care needs- births, broken legs, heart attacks, diabetes, end-of-life illnesses – and we will continue to need to maintain the infrastructure necessary for coping with these demands. The authors note that it is the capacity of our system that costs us, not its use. It is good to encourage heart health, but medical specialists know that in a population the size of Vermont’s there will always be a certain level of heart disease. Our medical facilities and personnel will have to be there to deal with it, and the underlying assumption of our system is that we will share the cost.

It is an underlying but not fully acknowledged assumption. We share the cost at present by means of insurance provided, if we are lucky, by our employers. Many Vermonters are not so lucky. They are underinsured or not insured at all. A high percentage of all personal bankruptcies occur because of health care crises – a sign that the system is not working.

If we acknowledge the assumption that our system depends on shared costs, like our highways or our schools, then we could put in place a more dependable way of financing it and controlling its costs.

That will be the topic of another editorial.

http://rutlandherald.com/apps/pbcs.dll/article?AID=/20050222/NEWS/502220310/1018/OPINION

Comment: The concept is straightforward. If we want health care to be there when we need it then we must all participate in funding the health care infrastructure so that it is always available. Expecting it to be funded primarily by individuals at the time of expensive, on-demand use is totally unrealistic. Thus insurance.

But what is the trend in insurance today? Under the banner of consumer empowerment, there is a drive to make insurance much less expensive for the
80-90% who are relatively healthy. This is accomplished not only by reducing
benefits and increasing cost sharing, but, more ominously, by gradually transforming the insurance market into one that places the majority who are
healthy into low cost pools (i.e., low cost, high deductible insurance) while leaving the few with high costs in very expensive (unaffordable) pools or with no coverage at all. Only the government would have the capability of funding these high risk pools.

But then where does the government get its money? From taxes paid primarily
by the majority who are healthy. In fact, 60% of our health care system is already funded through the tax system. So why are we wasting health care dollars on insurer middlemen who are creating innovative, rinky-dink pseudo-insurance policies for the healthy?

Since we’re paying for it anyway, why don’t we adopt an equitable method of
funding our “shared service.” None of us use all of our highways, but we want them there when we need them. Can any less be said about our health care system?

BCBS HealthIssues.com
Association Health Plans
A Step Backward for Small Employers and Consumers
February 2005

Congress is considering legislation to exempt association-sponsored health insurance plans (called Association Health Plans or AHPs) from existing state consumer protections. While promoted as a way to address health insurance affordability problems facing small businesses and their employees, the research overwhelmingly indicates that this proposal will make health insurance less accessible, less affordable and less secure for the vast majority of small employers and individual consumers.

A large number of organizations oppose AHP legislation due to concerns about the impact that it would have on access to dependable and affordable health
insurance, including: the American Academy of Pediatrics, the American Cancer Society, the American Diabetes Association, Association of Health Insurance Advisors, the Blue Cross and Blue Shield Association, the Coalition Against Insurance Fraud, the National Association of Insurance and Financial Advisors, the National Partnership for Women and Families, and the National Small Business Association.

This compendium is intended to inform policymakers about this legislation by summarizing the research examining the impact AHPs would have on healthcare
coverage. Taken together, these studies provide a comprehensive economic,
policy and legal analysis of this proposal.

The overwhelming conclusion reached by these studies is that AHPs would:

* Increase premiums for the vast majority of small employers and their workers;

* Fail to address the problem of uninsured small businesses and workers;

* Lead to widespread plan insolvencies and fraud among these AHPs;

* Make it difficult or impossible for small businesses with older, sicker workers to have access to affordable health coverage; and

* Take away state-based consumer protections that millions of Americans rely on today, including the right to appeal when a health plan denies reimbursement for medical care.

http://bcbshealthissues.com/relatives/100240.pdf

Comment: This report is a compendium of conclusions from fifteen different
sources, all indicating significant adverse consequences of policies supporting Association Health Plans (AHPs). It is quite obvious that this is a political document. But it is crucial to understand whose politics this represents. A cursory glance through the list of opponents to AHPs is revealing:

http://www.protectyourhealthcare.org/allies.html

Though some interests may be on the list partially for self-serving reasons, the great majority are concerned about patient-consumers. AHPs would reduce
affordable access to health care.

If AHPs represent flawed health policy, why is there support for them? The following statement from the National Federation of Independent Business (NFIB) sheds light on this issue:

“AHPs would allow small-business owners to band together across state lines through their membership in a bona fide trade association, like NFIB, to purchase health coverage for their families and employees. For example, many small-business owners are members of several associations such as NFIB, the U.S. Chamber, the National Restaurant Association or other trade groups. If AHPs became law, a small-business owner could purchase health benefits through any one of these entities that would act much as the human resources department of a large company.”

http://www.nfib.com/page/AHPs.html

Should health care reform be about adding the NFIB and the U.S. Chamber of
Commerce into the equation as additional middlemen, or should it be about
ensuring affordable access to care for everyone?