The Effects of De-listing Publicly Funded Health Care Services Mark Stabile Department of Economics and Center for Economics and Public Affairs University of Toronto and NBER Courtney Ward Department of Economics University of Toronto Thank you to Mary Unsworth for excellent research assistance.

Which services do we fund? Governments that finance health care services are continually in a position of trying to determine what to include in their basket of publicly funded health care. Do we fund new, often expensive technology, AND all existing services? E.g Ontario budget

Public Response Any time a government decides to stop funding services it faces a host of criticism. Providers of those services will naturally be critical. Critics of privately financed health care systems will claim that any de-listing is the start of a “decline” in publicly funded health care. Critics suggest that individuals may move from preventative to acute care, eventually increasing costs.

Evidence? Usually not cited. May not be available before hand. Reason to have greater program evaluation. Motivation for this paper.

All things to all people? De-listings recognize that public health care systems are not in a position to offer all health services to all people. Even if it were possible, tax burden would be too high – wouldn’t remain competitive in other areas. Need to consider opportunity cost of decisions. Including those outside health e.g. education and social services.

Role of the public insurance program As the technology of health care delivery continues to evolve, some services once deemed effective and necessary may no longer be cost- effective to provide. Any insurance program, public or private, must continually evaluate which services it will fund and which services it will not fund.

Trade-off faced by government. Can fund as broad a range of services as possible and ration availability. Or, can focus on core, “medically necessary” services and use partial or full private financing to fund the remaining services. Single payer system for ALL services will necessarily involve a quantity-quality trade-off, either within health or across the public service more broadly. We are seeing this now. Canada’s system originally defined as the second (too rigidly) and is moving towards the first.

De-listing services We argue that governments therefore must consider de-listing some services. At least 4 things we would like to know as we consider de-listing services (necessary but not sufficient): 1.Medically beneficial and cost effective ? 2.How does de-listing alter the demand for the service? 3.How desirable is this demand response? 4.Are there differences in the demand response across individuals and should this inform policy?

Contributions of this paper Provide some evidence regarding points 2 and 4. Partial or full delisting of services have occurred frequently over the past 15 years across the 10 provinces. Exploits variation in de-listings across the provinces to provide empirical estimates of the behavioural response. Evidence is a first step towards understanding the longer term consequences of delisting services.

Services we investigate Four types of health professionals: –Physiotherapists –Speech therapists –Optometrists –Chiropractors Characterize any decrease in public coverage for these services as a delisting (e.g. lower reimbursement, reduce frequency, etc).

De-listings across provinces

Empirical Methods Graphical analysis of changes in mean service use. Econometric analysis of decision to use any services and number of services used. –Control for differences in service use over time. –Control for difference in service use between provinces. –Control for observable characteristics of the population. –Remaining variation here is within provinces over time.

Data Used 2 data sources: –NPHS 1994, 1996, 1998 –CCHS 2000 Each contain info on service use for all 4 areas we investigate Each contain info on province, and health, education, income, and demographics.

Graphical Results - Quebec

Ontario

Manitoba

Alberta

Why might we observe this? Strong trends in use over time? Changes in demographics or income? Other changes in prices? Private Health Insurance? Some of these issues can be resolved using multivariate estimation.

Multivariate Results Findings, other variables: –Income: gradient for “any use” of most services, not speech therapy, no real gradient for number of visits. –Education: strong gradient by education for any use of all services, much less so for number of visits. –Age: strong positive correlation for physiotherapy and chiropractor, less so for other services.

Findings: De-listings Effect of de-listings on the probability that you use the service at all: –Physiotherapist: negative –Optometry: negative –Speech Therapist: positive –Chiropractor: none

Findings: De-listings cont. Effect of de-listings on the use of services for people who go at least once in the year: –Physiotherapist: positive –Optometry: none –Speech Therapist: positive –Chiropractor: negative

Explanation for strange results? Hypothesis: –Low supply with effective price of zero causes shortages. –With positive prices fewer people use services. –Individuals who are most needy increase their use as shortages ease.

Findings by Income (>$30,000) Any visit: none Number of Visits: –Physiotherapist: increase is concentrated among low income! –Optometry: decrease concentrated among low income use –Speech Therapist: no difference by income –Chiropractor: none (decrease slightly concentrated among low income)

By age: youth Only really see an effect for physiotherapy where kids under 20 were less likely than average to use services following delisting. (Small positive effect for chiropractors).

By age: elderly Again, only find results for physiotherapy where elderly as less likely to use any services than the average.

Note on elderly: Target needy elderly instead of all elderly More effective with means testing instead of age testing. Our results present some evidence consistent with this, though not entirely. Consumption versus Investment strategy

Conclusions: We outline four areas of research that should be required to make informed policy decisions about de-listing. We provide evidence on 2 of these areas in the context of recent provincial de-listings. Find that de-listings did affect utilization, but that this effect was not uniform across services or populations.

Conclusions Cont. For example, while the demand for physiotherapy and eye exams decreased, the demand for speech therapy services, and chiropractic services increased in some cases. Nor did people adjust along all margins. E.g. while the number of people using any physiotherapy services decreased, the number of visits among those who did use physiotherapy services increased.

Conclusions Cont. Some differences across services by age and income. Results suggest that policy makers should be aware that the demand response differs significantly by service and by individual characteristics. This information should be considered as services are considered for (continued) public funding. Further research is required to determine whether changes in demand across services and across the population results in long term benefits or costs in health outcomes.