“The World Is Not the Way They Tell You it Is”*

Robert G. Evans

Centre for Health Services and Policy Research, UBC

April 4, 2008

The Money Game “Adam Smth” (George Goodman) 1966

This is a story about:

• Myth and Reality

• Identity,

• Anxiety, and• Money. (Ibid.)

For Example:

• CANADA NEEDS MORE DOCTORS!!!

• (The CMA)

Figure 1: Canadian Medical Schools, 1960/61 to 2007/08

0

500

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1st. Year Enrolment Graduates 4 years later

And is about to get them, in spades.

• Policies ten years ago have determined our future for the next decade, at least

• Increased training places now would only add to the surplus twenty years from now.

But what about the terrible shortage TODAY!

• Has anyone checked the trends in medical services use (or at least in physician billings)?

• Expenditures per capita, adjusting for inflation, have been rising rapidly for a decade now.

Figure 2: Expenditure on Physicians' Services, Canada and B.C., constant $ per capita, 1975-2007

$0

$100

$200

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1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006f

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B.C. - CIHI deflator Canada -- CIHI deflator B.C. - BCMA fee Index

Growth in Expenditures per capita, B.C.1997$, p.a., alternative deflators

BCMA CIHI• 1978-2005 2.45% 1.61%

• 1978-1991 2.90% 2.02%• 1991-2005 2.04% 1.22%

• 1991-1996 0.05% -0.32%• 1996-2005 3.17% 2.04%• 2005-2007 -- 2.44%

Figure 4: Expenditure on Physicians' Services, Canada and B.C., constant $ per capita, 1960-2007

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B.C. - CIHI deflator Canada -- CIHI deflator B.C. - BCMA fee Index Canada historical

Figure 7: Expenditure per Physician, Canada and B.C., constant $ per capita, 1975-2006

$0

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1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006f

B.C. - CIHI deflator Canada -- CIHI deflator B.C. - BCMA fee Index

Growth in Expenditures per Physician, B.C.1997$, p.a., alternative deflators

BCMA CIHI• 1978-2005 1.79% 0.96%

• 1978-1991 1.68% 0.82%• 1991-2005 1.90% 1.08%

• 1991-1996 0.38% 0.01%• 1996-2005 2.76% 1.68%

Is Physician Productivity Really Rising That Fast?

• If yes, why do we need more doctors?

• If no, what are they billing for?

But How Many Doctors Are There?

• The number of doctors per capita has hardly changed in twenty years

• In 1990, this ratio was called a surplus.

• True, the population have aged, but in itself this makes little difference (0.3% -0.5% per year)

Figure 5: Canada, Physicians per 10,000 Population, 1968-2006

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All physicians Specialists Family physicians

Figure 6: Canada, Physicians per 10,000 Population, 1968-2006

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All physicians Specialists Family physicians BC total BC Specs. BC GP/FPs

Yet Doctors Are Working Less

• Decline in Self-Reported Weekly Hours of Work, Canadian GP/FPs

• Watson et al. (1993-2003) 8.5%

• Crossley et al. (1982-2003) 15.6%

So: Widespread perceptions (and loud claims) of shortage

• Same number of doctors,• Each (on average) working fewer hours, and• Providing or at least billing for more and more

services, • Large increase in doctor supply on the

immediate horizon

But Other Countries Have More Doctors!!!

• Indeed they do, but there is no relation between doctor numbers and health status

• For that matter, there is no relation between health spending and health status either, at least not in high income countries.

Why Does the CMA Want More Doctors?

At CMA, defending and promoting the interests of Canada’s doctors is central to our mission. Advancing the medical community’s financial interests is an important element of that commitment.” -- Victor Dirnfeld, former president, CMA

“To every complex question there is a simple answer: Neat, Plausible, and Wrong.” H.L. Mencken

Another Example: Underfunded and Fiscally Unsustainable?

• Canada’s health care system is not fiscally unsustainable

• In international terms it is well-financed• There are still many opportunities for

improved efficiency• But the twin propositions above boil down to

an argument for cost-shifting from public to private budgets, and cost expansion

"General Government Net Financial Liabilities (% of GDP) G-7 Countries 1970 - 2006

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Canada United States Japan United Kingdom Germany France Italy G7 Average

Figure 1National Health Expenditure as Percent of GDP, Selected OECD Countries, 1960-2005

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Figure 2National Health Expenditure as Deviation from OECD Average, Selected Countries, 1960-

2005

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• Health spending did significantly increase its share of provincial government spending – but NOT or revenue, and this expenditure trend ended several years ago.

• “Apocalyptic demography” is also a myth. The aging population will require increases in health spending, but will not strain a growing economy.

Figure 3 Canadian Provincial Government Expenditures as percent of GDP, 1980/81 to

2006/07

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Figure 7B: Canada, Provincial Government Expenditure on Medicare and on All Health Programs, as a Share ot Total Revenue, with and without Tax Cuts, 1980/81 to 2005/06

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All Health Exp. over All Rev. M'care Exp. Over All Rev. All Health Exp. Over Aug. All Rev. M'care Exp. Over Aug. All Rev.

Figure 6A: Canada, Provincial Governments, Total Revenues over Total Expenditures, 1980/81 to 2006/07

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So Why Tell Lies?

Myths obscure the real objectives of: 1) Transferring costs from the healthy and

wealthy to the unhealthy and unwealthy,

2) Improving access for the wealthy and unhealthy, and

3) Expanding income opportunities for strategically placed providers.

• REFORM: Improve, make better, eliminate accumulated inefficiencies and abuses

• RE-FORM: Change the structure, for better or for worse

• REACTION: Restore past practices or structures, remove innovations

• GENERAL BENEFITS: A shared objective of more effective, efficient, timely, humane, health care. (Rousseau’s General Will)

• REDISTRIBUTION: Inherent conflict over the balance of benefits and burdens among the members of the population. (Resulting in Rousseau’s Will of All)

ALTERNATIVE WAYS OF PAYING FOR HEALTH CARE

GOVERNMENTS

SOCIAL INSURANCE

PRIVATE INSURANCE

NET TAXES

SOCIAL INSURANCE

PRIVATE

OUT-OF-POCKET CHARGES

HEALTH CARE

RESOURCES

INCOMES

FIRMS

PEOPLE

Total Revenues = Total Expenditures =Total Incomes

[FOR HEALTH]

PREMIUMS

PREMIUMS

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CA

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PROFIT

NOTONLYFOR

PROFIT

FORPROFIT

GOVERN-MENT

AGENCIES

WHO PAYS?How is the total bill divided among the population?

WHO GETS?Are access, quality, timeliness based on need or

ability/willingness to pay?

WHO GETS PAID?How much are providers paid, and how much is taken

out in administrative overheads?

Yet Another Example: B.C.’s Fair Pharmacare

Redistribution of income from drug users to taxpayers, i.e. from unhealthy and unwealthy to healthy and wealthy

• Partial mitigation through income-related subsidies

• Effect on access unclear, drug use apparently unchanged.

• Longer-term increase in expenditures due to reduced purchaser bargaining power. Income transfer from drug users and taxpayers to drug manufacturers

Genuine Reform Might Address:

• Efficiency and Effectiveness of care provided

• -- Micro, the hospital porter story

• -- macro, the clinical variations stories

• Large Variations in patterns of care among:

• 1) Regions• 2) Hospitals• 3) Individual Clinicians

• Unrelated to patient needs, characteristics, or outcomes

H o s p ita l A d m is s io n R a te s , S e le c te d C a rd ia c C o nd it io ns , C a na d ia n C it ie s ,1 9 9 6 /9 7 to 1 9 9 9 /0 0

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American studies of regional variations: Higher utilization and costs associated with:

• Poorer quality,• Higher mortality• No greater patient satisfaction,

• But more physicians (specialists) and hospital capacity

• Better Health?

• Greater Effectiveness and Efficiency?

• Or Just More Activity and Higher Cost?

• Well….

• Expenditure Equals Income