20 January 2010

Healthcare corner #3 - Financing and insurance

ugh, i hate economic stuff but todays class was actually more interesting than painful.

not sure how much interest in canadas health system there is anymore now that apparently the massachusetts election results will cause the outright death of the attempted u.s. health care reform :(, but i will continue in my weekly reporting anyway.

first important point: canada does not have a national health care system. it has 10 provincial and 3 territorial health systems with uniform federal guidelines. the canada health act lays out the five very broad and basic principles that each province is responsible for delivering to its citizens. money comes from the federal government in order to help achieve this.

second important point: only about 70% of the annual total health expenditures in canada are from public funds.
• in 2007, total health care expenditures were $172 billion
• so, about $5,170 per canadian
• and about 10% of the gross domestic product (GDP)

• top 3 places the health expenditures went: hospitals (28.2%), drugs (16.5%), and physicians (13.4%)

insurance system: canadians are publicly insured for "medically necessary" physician and hospital services. each province gets to define these boundaries (within reason) and can decide what else to cover, based on how much extra money is in their pot. typically, canadians are privately insured (often as a package through employment) for things like drugs, physiotherapy, dental, eye, and long term care.

tax collection: taxes fund much of the public health care system, but they come from several places. taxes that go to the federal government are collected as a "general" tax, nothing is pre-earmarked for health care. taxes are also collected from within your province.

money for health care comes from:
1. the federal government gives each province a yearly canada health transfer (CHT) which is basically distributed per capita.

2. "equalization" money also goes to the provinces from the federal government as a form of redistributing some of the wealth from rich provinces to the poorer provinces.

3. if you are a territory you do not get the "equalization" money, but you do get extra money from the federal government to recognize the higher cost of living in such a remote area.

4. provinces also use part of their province-specific taxes from their citizens to put in their health care pot.
money flow: from federal government to provinces. provinces then add to this pot of money. each province decides what package of services it will provide to its citizens. then provinces distribute payment to hospitals and physicians. for hospitals, most provinces break into smaller areas called "regional health authorities" that work with its hospitals to negotiate fees and payment methods. for doctors, provinces negotiate health care fees with physician group(s). the physicians are not government employees. they can opt-in or opt-out of the public health insurance system (though there are typically big disincentives to doing so). physicians are typically paid by fee-for-service, but there are also capitation and salaried payment methods.

student note: it seemed several students were unaware of this level of information about how their health system works. a couple were kind of surprised that only 70% of health care expenditures were paid by public funds.


Meg said...

I am enjoying your Canadian health care series! I have a bunch of questions, but since I am at work, and should be working on reforming the US health care system, I will limit myself to one-ish: does per capita health care spending vary widely by province (I assume so, based on your description)? Is there any correlation between health and spending? Is there anything like the Dartmouth atlas for Canada? Is this something people are concerned about? I thought of this because you mentioned that you met someone who recently moved from Ontario, and she received more pre-natal services there than you receive in NS--so presumably they are spending more, but are they getting better health in return?

lotus said...

hey meg! good to know someone other than dave is enjoying the series. :) the short answer to your question(s) is that those topics are coming up. there is definitely a dartmouth atlas reading or two. the future topics are: delivery, effectiveness, efficiency, equity, and a couple other odds n ends. stay tuned! lol.

Meg said...

Oh good, I will stay tuned.