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

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

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 scan… The Quality of Policy Really Matters For Bahamians And We can se the effects of Bahamas’ policy decline

18 Bahamian Per Capita Income Rank declining compared to the World Source: The Fraser Institute.

Average Per Capita Growth 1.27% 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 Results: Getting What We Pay For?

25 Health Results: Waiting 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 Results: Access to Doctors & Technology

36 Doctors in the OECD 2 4th Source: OECD (2006) Calculations by Authors

37 MRI Machines in the OECD 13th Japan (2002): 29.9 Source: OECD (2006) Calculations by Authors

38 CT Scanners in the OECD 17th Japan (2002): 78.4 Korea: 49.4 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  24 th of 28 countries for access to physicians  13 th of 24 countries for access to MRI machines  17 th of 23 countries for access to CT scanners  7 th of 17 countries for access to Mammographs  18 th of 20 countries for access to Lithotriptors

42 Health Results: Health Outcomes

43 Life Expectancy in Full Health in the OECD Source: OECD (2006); WHO (2006) 16th

44 Infant Mortality in the OECD 21st Turkey not shown Source: OECD (2006)

45 Perinatal Mortality in the OECD 14th Source: OECD (2006) Turkey not shown

46 Mortality from Disease in the OECD 8th Source: OECD (2006) Calculations by Authors

47 Potential Years of Life Lost in the OECD 9th Portugal, Czech Republic, Poland, Slovak Republic, and Hungary not shown Source: OECD (2006) Calculations by Authors

48 Medically Avoidable Mortality (MAHC) 4th Source: WHO (2006) Calculations by Authors Slovak Republic, and Hungary not shown

49 Breast Cancer Mortality in the OECD 10th Source: Ferlay et al. (2004) Calculations by Authors

50 Colon/Rectum Cancer Mortality in the OECD 2nd Source: Ferlay et al. (2004) Calculations by Authors

51  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. Health Results: Getting What We Pay For?

52 Canada’s 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 times— Canada, Denmark, Spain, and the United Kingdom and growing waiting lists are seen as a problem in the 5 th.

55 Providers of Public Health Care in 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 Care in 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)

65Switzerland  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  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 So… How Good Is Canadian Health Care?

67 The Trojan Horse for the Budget The Economics of the Canadian Health Care system

68 Source: StatisticsCanada, Financial Management System 2005 Avg Ann % Growth in GDP, CPI, TREV and PHEX 2000/01 to 2004/05 C

69 Source: Statistics Canada, Financial Management System 2005 Avg Ann % Growth in PHEX and TREV, by Province 2000/01 to 2004/05

70 Source: Statistics Canada, Financial Management System 2005 PHEX as % of TREV, by Province 1997 & 2005

71 ONTARIO: Projection based on 2000/01 to 2004/05 Avg Ann % Growth in actual PHEX and TREV

72 Why projections are cautious 1. PHEX does not include the impact of aging population: n 50% of per-capita, lifetime health expenditures occur after the age of 65. (Brimacombe et al., 2001) 2. PHEX includes drug delisting; reform efforts; rationalization 3. TREV overstated: n Net of debt service costs, AVAILABLE revenues are lower 4. TREV includes Federal transfers 5. 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 1. 1 st $ coverage; universal public subsidy 2. Insuring high- frequency, affordable expenses 3. Central planning 4. Public monopoly health insurance 5. Non-profit provision SOLUTION 1. User fees; limited eligibility for public subsidy 2. Catastrophic insurance design 3. Consumer empowerment and managed care 4. Allow private insurance options 5. For-profit provision PROBLEM 1. Over utilization; moral hazard 2. Inadequate insurance protection 3. Inefficient allocation of resources 4. Absence of payer accountability 5. 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 with…yes…but how?? Commission doesn’t 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 Commission’s 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 don’t 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 Commission’s 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?

83