Health Care Financing in Canada

Pols 321 Lecture 4

Topics

• Federal-Provincial Financial Arrangements

• Distribution of Health Care Expenditures

• Reform Trends

Federal-Provincial Financial Arrangements

EPF: The beginning of the end...

• effectively ended the 50/50 cost sharing arrangements– put hospitals, medical care and post secondary

education under one funding formula– combination of tax points and cash (tied to

growth in GNP and population)– federal government reduced cash transfers by

GDP -2 in 1986/87, GDP -3 in 1989/90, and froze the transfers in 1990/91

Canada Health Act

• Ottawa introduces the Canada Health Act – retains the five principles– consolidates the two previous pieces of

legislation– penalizes the provinces for allowing extra-

billing by reducing EPF payments– came before an election

CHST

• rolls CAP and EPF into a single block fund

• places a ceiling for 1996/97 of $ 26.9 billion

• 1997/98 and beyond to be determined through negotiations

• CHA principles and CAP residency requirements continue to apply

CHST ( $ billion)

Year Totalentitl

Taxpointvalue

Cashentitl

AdditiveCashreductns

Cumul.Cashreductns

1995/96 29.7 11.2 18.5 - 0.0

1996/97 26.9 11.9 15.0 3.5 3.5

1997/98 25.1 12.6 12.5 6.0 9.5

1998/99 25.8 13.3 12.5 6.0 15.5

1999/00 26.5 14.0 12.5 6.0 27.5

2001/02 27.8 15.3 12.5 6.0 33.5

Distribution of Health Care Expenditures

Health Expenditure Percentage GDP, OECD

15.3

10.6 108.2 8.9

0

24

68

1012

1416

18

US Germany Canada Finland OECD

Pe

rce

nta

ge

Public Health Expenditures as a Proportion of Total Health Expenditures

0

20

40

60

80

100

1975 1980 1985 1990 1995 2000 2005

Year

Per

cen

tag

e

BC

Quebec

Alberta

NFLD

Canada

Total Health Expenditures as a Percentage of GDP

0

510

15

20

2530

35

1980 1985 1990 1995 2000 2005

Year

Pre

cen

tag

e

Alberta

Quebec

NFLD

BC

PEI

Nunavit

Canada

Health Expenditures in Canada by Public Source

0

20

40

60

80

100

1975 1980 1985 1990 1995 2000 2005

Year

Pe

rce

nta

ge Provincial Government

Federal Direct

Municipal

Social Security Funds

Total Health Expenditures as a Proportion of Total Provincial Government Programs

0

10

20

30

40

50

1975 1980 1985 1990 1995 2000 2005

Year

Per

cent

age

Quebec

NFLD

Alberta

BC

Canada

Public vs. Private

0

10

20

30

40

50

60

70

80

90

Public

Private

Private Sector Health Expenditures as a Proportion of Total Provincial Health Expenditures

0

10

20

30

40

1976 1980 1985 1990 1995 2000 2005

Year

Pe

rce

nta

ge

Alberta

BC

Quebec

NFLD

Canada

Table 3: Percentage of Total Health Expenditures by Category

Hospital Other Instit.

Doctors Other Prof.

Drugs Capital Public Health

Other

1975 44 9.1 15.0 7.3 10.2 4.4 3.8 6.1 1985 39.8 10.1 15.1 8.3 10.7 4.6 4.3 7.1 1992 37.1 9.7 14.9 8.5 13.3 3.2 4.6 8.7 1996 34.2 10.0 14.4 8.8 14.4 2.5 5.0 10.7 2003 30.0 9.5 12.9 11.9 16.2 4.6 6.5 8.4 2006 28.4 10.3 13.2 10.7 16.7 4.8 6.1** 6.2

** includes “administration”

Table 4: Public and Private Percentage Share of Health Expenditures by Category

Hospital Other

Instit. Doctors Other

Prof.

Drugs Capital Public Health

Other

1975 94.1/5.9 70.8/29.2 98.5/1.5 15.0/85.0 26.0/74.0 70.3/29.7 100.0 49.4/50.6 1985 90.5/9.5 74.5/25.5 98.6/1.4 13.8/81.7 37.2/62.8 77.5/22.5 100.0 54.6/45.4 1992 90.8/9.2 72.3/27.7 99.1/0.9 17.1/82.9 39.9/60.1 75.3/24.7 100.0 56.2/43.8 1996 87.7/12.3 68.1/31.9 99.0/1.0 14.3/85.7 35.2/64.8 72.4/27.6 100.0 69.9/30.1 2003 91.6/8.4 72/28 98.9/1.1 10/90 36.7/63.3 76.5/23.5 100.0 65/35 2006 90.7/9.3 75.2/24.8 98.5/1.5 7.0/93.0 38.5/61.5 71.7/28.3 100.0 80.7/19.3

Registered Nursing Workforce, Canada, 1980 to 2007

                                                                                                                                                                                                                  

NotesIn 1988, the decrease is largely attributed to a substantial increase in the number of employment status Not Stated records in the Ontario data for that year.In 2000, the increase is partially attributed to the identification of comparatively fewer duplicates in the Ontario and Quebec data that year.In 2003, the increase is partially attributed to methodological changes in the submission of data that year.SourceRegulated Nursing Database, Canadian Institute for Health Information

Registered Nursing Workforce, Canada, 1980 to 2007

Registered Nursing Workforce, by Jurisdiction and Canada, 2003 to 2007

  2003 2004 2005 2006 2007% Change2003-2007

N.L. 5,430 5,452 5,496 5,515 5,574 2.7%P.E.I. 1,373 1,377 1,443 1,428 1,435 4.5%N.S. 8,498 8,602 8,733 8,790 8,843 4.1%N.B. 7,186 7,375 7,526 7,680 7,726 7.5%

Que. 62,494 63,455 63,827 64,014 64,955 3.9%

Ont. 85,187 86,099 89,429 90,061 90,978 6.8%

Man. 10,034 10,628 10,811 10,902 10,825 7.9%

Sask. 8,503 8,481 8,549 8,480 8,669 2.0%

Alta. 24,037 25,600 26,355 26,752 27,527 14.5%

B.C. 27,711 28,289 27,814 28,840 30,059 8.5%

Y.T. 290 283 302 324 322 11.0%

N.W.T./Nun. 672 930 957 1,033 1,048 56.0%

Canada 241,415 246,571 251,242 253,819 257,961 6.9%

Licensed Practical Nursing Workforce, by Jurisdiction and Canada, 2003 to 2007

  2003 2004 2005 2006 2007% Change2003-2007

N.L. 2,719 2,710 2,698 2,639 2,598 -4.5%P.E.I. 619 628 606 599 623 0.6%N.S. 3,022 3,058 3,127 3,174 3,160 4.6%

N.B. 2,429 2,556 2,633 2,646 2,734 12.6%

Que. 14,831 15,472 16,293 17,104 17,492 17.9%

Ont. 25,730 24,467 24,458 25,084 26,126 1.5%

Man. 2,417 2,415 2,590 2,652 2,671 10.5%

Sask. 2,056 2,131 2,194 2,224 2,381 15.8%

Alta. 4,766 5,051 5,313 5,614 5,986 25.6%

B.C. 4,391 4,811 4,884 5,412 5,791 31.9%

Y.T. 60 53 56 60 59 -1.7%

N.W.T. 98 91 101 92 88 -10.2%

Canada 63,138 63,443 64,953 67,300 69,709 10.4%

Nurse Practitioner Workforce, by Jurisdiction and Canada, 2003 to 2007

  2003 2004 2005 2006 2007

N.L. 55 61 66 89 96

P.E.I. - - - - *

N.S. 23 30 37 61 72

N.B. 6 14 19 24 29

Que. - - - 1† 1†

Ont. 494 536 590 639 731

Man. - - * * 31

Sask. - 42 74 88 99

Alta. 73 106 130 156 176

B.C. - - * 35 50

Y.T. - - - - -

N.W.T./Nun. 5 12 19 16 42

Canada 656 801 943 1,129 1,346

Reform Trends

Trends: Hospitals (1984-91)

• Total number of beds declined from 7.0 to 6.5/1000 (2.9 in 2007)

• Alberta - government targeted 2.4/100. Capital Health actually achieved 1.4(1.6)/1000.

Trends: Hospitals (cont.)• Nationally (1986/87-1994-95)

– 1994/95 - 901 public, 22 private and 55 federal– total approved beds: 156,547 (98% public)– Number of hospitals fell by 14 % or from 6.6

4.1 beds/1000 (11%). (actually a 30% declined in staffed beds) – 2.9 in 2007

– Average annual growth in operating expenses was 8 % (-2.4 % between 1991/92 and 1994/95)

Trends: Hospitals (cont.)

• Outpatient vs. Inpatient (1986/87,1993/94)– outpatient days: increased by 15%– inpatient days declined by 17%– day surgery increased by 37%– visits to emergency wards increased by 1%

– Alberta: ratio of outpatient visits to inpatient days increased by 130%

Trends: Hospitals (cont.)• Factors contributing to growth in costs:

– wage and price inflation (national and sector specific

– economic downturn– unionization– professionalism– increasing population aging– rising costs per admission (intensity of

servicing/technology, decreasing productivity)

Trends: Physicians (1984-1991)

• # increased at at annual rate of 2%

• cost of services/patient increased by 10% annually (1979/80, 1990/91)

• 10% reduction in medical school enrollment

• increasing service intensity

• declining utilization

• cost per patient increased at 10%/annum (50% attributable to GPs)

Trends: Pharmaceuticals (1987/91)

• Total expenditures increased by 55.(%> 10%/annum (not including drugs dispensed in hospitals)

• new drugs are more costly than existing drugs

• cost or volume?

• Price, volume and quantity have all increased

Summary

• Cost drivers:– economy-wide wage and price inflation

accounts for 50%– population growth 10%– aging 5 %– wage and prices (health) 20%– inpatient/outpatient– higher service intensity 5%– lower productivity 10%

Summary

• Proportion of private vs. public has been relatively stable over time although there is a definite downward trend in percentage of public expenditures

• Definite upward trend in percentage of total public expenditures devoted to health care

• Upward trend in health expenditures as a percentage of GDP

Internet Sources

• http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=home_e

• http://www.fin.gc.ca/access/fedprov-eng.asp