Inside Canada's health care privatization movement

“It’s too bad there aren’t more people behind this idea,” commented an ash blonde attendee in a grey pencil skirt and matching suit jacket as we filed into the elevator at The Fraser Institute on Burrard Street.

Some of the doctors, politicians, and sympathizers remained in the presentation room chatting to one another after Dr. Brian Day’s laudatory speech on health care privatization, "The Madness of Medicare".

The real problem, she continued, was that “unfortunately, it’s usually the left-leaning people that are the most politically active today.”

The six grey-haired business types nodded in agreement, lamenting the state of affairs with a rueful snicker.

Ten minutes before, she had inquired how Dr. Day can widen his message to Canadians amidst vehement defense of the current health care system in the country.

She noted that in spite of a powerful NDP presence in Vancouver, he managed to operate his private clinic without much trouble, and that “in fact, [Dr. Day] enjoyed 40 favorable editorials across the nation.”

There seems to be little awareness, however, that it was Paul Martin’s administration that pushed through the current health care system back in 2004, after Roy Romanow published his landmark Health Care report in 2002 exacting what was needed for the following 10 years.

At the event, Liberal Chilliwack MLA Jon Les made no secret of his fervor for Day’s concept to privatize health care: "We have to find a system that is responsive to patients, not responsive to bureaucrats, and not responsive to politicians. Give patients their rights back. Dr. Day knows the issue inside out, has all the data on it, and everything he told us is right on the money,” he argued.

Cambie Surgical Centre

In 1995, Dr. Brian Day opened Canada’s first for-profit, private clinic, the Cambie Surgical Centre, where he promises to deliver first class surgery while taking the load off the overcrowded and mismanaged public system.

In July, Day got into hot water with the BC government for extra billing patients in the amount of roughly $500,000, but the only thing the BC government did was to kindly ask him to stop the practice. To which he raised a proverbial middle finger and went ahead with his business replacing hips and knees.

The government could not even recuperate the money, since extra-billing is adjudicated under the Canada Health Act, a federal issue.

In addition to the extra-billing of patients, the Canada Health Act explicitly prohibits provincially insured medical procedures to be administered extra-systemically, but the precedent set by the Quebec vs. Chaoulli case now gives him and physicians like him a way around the Act.

In 2005, the Quebec Supreme court deemed it unconstitutional for the public system to force patients deteriorating in health to wait to be treated simply because hospitals were backed up and private clinics are not allowed to perform the same procedures.

The private sector thinking goes that Canadians should be able to decide individually how they want to spend their money, and if they decide to skip the queue to treat a ligament injury, then so be it.

“The government cannot run a monopoly on such issues,” as Dr. Day put it.

A costly public health care system

The reason health care privatization is stepping to the forefront in the national debate is because the Canada Health Act has become a mangy, cost-addled money trap fed by annual increases well beyond the economy’s current abilities. The Organization for Economic Co-operation and Development (OECD), an international policy performance gauge, repeatedly ranks Canada as a mediocre healthcare supplier at best.

Despite being in the top 10 for per capita and share of GDP spending – at $4,363 and 11.4 per cent, respectively – Canada places dead last among its Western counterparts in wait times to see a specialist. In 2010, 59 per cent of patients in line for an appointment with a specialist had to wait four or more months. For elective surgery, the wait times have improved since 2005 and only 25 per cent of patients had to wait four or more months for treatment.

The OECD report does rank Canada high in some unflattering categories: first for Accidental Puncture and Lacerations, at 520 incidents per 100,000 discharges, and third in Foreign Bodies Left in Body post-operation at 9.7; OECD averages for those Public Safety rubrics are 220 and 5.7.

Compared to other countries measured by the OECD, Canada places 27^th in terms of medical school grads, at 7 grads per 100,000 citizens, and 20^th for churning out 20.7 medical graduates per 1,000 physicians. Once they are graduated, general practitioners’ salary is on average 3.1 times the average wage of the general population and a specialist’s is 4.7 times the average wage. This means that not only does Canada fail to replenish its physicians at a quality-enhancing rate, but even if it did, salary standards are so high now that they would financially gut the health care system.

Back in 2004, Parliament decided to increase federal health care transfers by six per cent annually regardless of shifts in economic growth; for good or ill. The Romanow report called this “an escalator system.” Last December, Finance Minister Jim Flaherty informed Canadians that this trend will extend to 2017, after which annual health care increases will mirror the percentage growth in GDP plus inflation, but will never fall under 3 per cent.

Using 2012 projections from the November fiscal update, the Finance Ministry estimates that between 2012 and 2016, Nominal GDP growth will average 4.2 per cent.

Like all projections, these numbers will be re-adjusted every three months, and if the Ministry’s latest upward adjustment of the national debt level to $600 billion is any indicator, their current GDP averages are hope against hope that the economy will pick up in the coming years.

Still, the Canada Health Act’s mandate ensures that most of the tax revenues designated for health care is blown on doctor wages that perennially outpace inflation, and on hospitals where wait lists rank highest in the developed world.

Of the $207.4 billion in total health care costs projected by the Canadian Institute for Health Information (CIHI) in 2012, publicly covered hospital care and physicians make up 46 per cent ($95.4 billion) of total costs. 

Day and his side of the trench argue this is due to logistical and administrative inefficiencies, which take shape in various, unnecessary executive positions at hospitals; beds over-crowded with the elderly who should be in different facilities; and doctors who are “not incentivized” by a healthy patient, but receive so called block payments – monthly salary. 

The streamliners at the Fraser Institute would like to see a system that functions much like commission pay at retail stores: the doctors receive money for every patient they treat successfully.

For 2012, CIHI measures overall public portion of health care at $144.7 billion, and the private at $62.7 billion. For the latter, this is an increase of 4.6 per cent from the previous year. In comparison, for the fiscal year 2011-12, the Finance Ministry projects Canadian Healthcare Transfers – the federal contribution to health care – at just under $27 billion, or 11 per cent of the $244 billion in total projected federal expenses.

This means that the residual 89 per cent percent of health care costs are borne by individual provinces and their residents. That is a whole lot of cheddar, by any account, and an enticing revenue stream for the private sector.

The second costliest item wedged between hospital care and doctor visits is drug coverage which grew over 3.3 per cent in 2011 to an estimated $33 billion, according to CIHI. The reality is that every other part of health care – optometry, ambulance services, dentistry, drugs, chiropractic services, etc. – is private already and can only be covered by market-driven “supplementary” (private) coverage offered by all members of the Canadian Life and Health Insurance Association.

In essence, Canadian health care adheres to market dynamics but for the two parts that eat up a substantial amount of tax dollars.

Future expectations

In the years following the Romanow report’s 47 recommendations and the regime change in Ottawa, Stephen Harper’s cabinet also failed to flesh out and implement the necessary changes the fifty ardent and “sympathetic” listeners at the Fraser Institute are still seeking. The recommendations tried to cover most health care topics and find workable goal for reasonable time frame.

For this decade, the report suggested a renegotiation of the Canadian Health Transfer every five years, the results of which were explained above. In tandem with the escalator system, health care efficiency should be enhanced with a pan-Canadian electronic medical history database, as well as full integration of prescription drugs “at all levels of care and coverage under the Canadian Health Act.” In regard to access, quality, and safety of health care, the Health Council is to report to governments and Canadian with improvement recommendations.

However, everyone who was outside the global banking cartel had no way to foresee the 2008 financial collapse, the event which would ultimately queer most governments’ short-term plans.

For parties, it is easier to start shaving numbers off the federal expense budget ahead of elections and prime a market-driven playing field, if not with outright support, then with the usual parliamentary complacence in regard to private sector interests.

Both the Left and Right of Canada’s political spectrum have been neglecting the health care system’s infrastructural problems, while policy research institutes like the Fraser Institute, the Conference Board of Canada, and the C.D. Howe Institute have been crucial in supplying the necessary data to mold a correct and palatable rhetoric toward privatization.

These think tanks often collect some of the same data as say, Stats Canada, and in addition measure the impact of policy decisions out of Ottawa. Whereas Stats Canada would solely collect and publish numbers – though with the caveat that official government report can, and do shine an overly positive light on leaders’ activities – think tanks are known to include in their assessments a set agenda or recommendations which leaders should implement. The above think tanks have a palpably profit-driven agenda which still calls for willing acceptance by citizens.

With good reason, too. Canadians take an unusual amount of pride in having public health care, according to Jeffrey Simpson, Globe and Mail columnist and one of the media’s figures supporting the above think-tanks. Aside from boorishly plugging his new book at a health care summit given by the Conference Board of Canada last October, he argued that the English-speaking Canadians do not identify themselves by the anthem, or the flag, or bilingualism, but by the privilege of publicly funded health care.

Says Simpson:

“It’s an existential question, self-definitional question, and if you therefore raise questions about how good it (public health care) is, you’re asking people whether maybe they’re not so good as people. This is crazy.”

Another explanation could be that Canada can tangibly differentiate itself from the United States due to publically-funded health care. Having adopted it as a universal constitutional right is something the US could, in a way, look up to and copy from its awkward Northern cousin.

To tinker with what people perceive as a more humane way to deal with the sick, or just debate any alterations to the Canada Health Act, would be tantamount to political suicide for any party. But even as the political parties remain silent, the lobbyists are slowly working to change the tone of the conversation. 

No fix in sight 

By the time the health reforms slated for 2017 kick into gear, Canadians will once again head to the polls to reelect a third term for the Harper administration and a health care system that will last until 2022 if left untouched. While the recession has not been as hard on Canada as it has been on the US or the UK, the supposed “recovery” has also not brought the desired results Ottawa wanted to see by now.

Debt, as in most Western countries, has kept the nation afloat. But in order to rein in the $600 billion in loans, revenues have to either increase dramatically, or cuts will have to be made to social programs. National production and income are not hitting pre-recession numbers, and reason suggests that cuts will be a major part of upcoming federal budgets. Point in case is the coupling of the Canadian Health Transfer to nominal GDP.

Ahead of the 2015 elections, the incumbent Conservatives can profit greatly from healthier numbers in their bookkeeping, but that will require increased, if not full autonomy of provinces in health care administration. Here, too, think tanks play a key role in molding leaders’ opinions.

After 30 years of the Canada Health Act’s ratification in Parliament and a financial collapse five years ago, the health care system appears to be effectively in a vacuum barely upheld by the act, there for the taking for anyone who will be organized and well-funded enough to usurp it in the coming years.

Privatization advocates' closeness to Harper government 

In that regard, the general populace may be unconsciously prescient in its wariness toward health care changes, since the think tanks advocating an egocasted change not only have the ears of Canada’s political leaders, but also enjoy substantial support by multinational industry magnates.

Take for example, The Fraser Institute, where we lay our scene: widely considered the largest of Canada’s 97 think tanks, the establishment constantly releases reports on the problems of public health care, and frequently receives praise by policy makers such as Prime Minister Stephen Harper.

In a commemorative publication, which features 35 ideas on the various social topics in the think tank’s research and measurement purview, Harper attests to its leadership role in Canada’s think tank business, rightfully earned through its “rigorous economic research and effective public education.”

At least in the Prime Minister’s eyes, the institute “has been a compelling advocate for the benefits of competition, open markets and economic freedom,” which is what ultimately matters to the Fraser Institute’s ideological lighthouses, and major donors, Charles G. and David H. Koch.

Another go-to policy cruncher shortlisted by ranking legislators is Toronto’s C.D. Howe Institute, a Fraser Institute associate. It, too, is revered by the Prime Minister for its “remarkable work over the years promoting sound economic policies and fiscal prudence”, with David A. Dodge as president.

Throughout his career, Dodge has been in very close contact with the innards of Ottawa, serving in the mid-1990s as Deputy Finance Minister, followed by the Deputy Minister position at the Health Ministry. He then became Governor of the Bank of Canada in 2001 until his departure for the business law firm Bennett Jones in 2008, where he is now a senior adviser for Governmental Affairs and Public Policy. 

Meeting Obamacare halfway 
In the 2011 Benefactor’s Lecture at C.D. Howe, Don Drummond outlined some recurring themes present among almost all health care advocacy groups.

First, as baby boomers are starting to sail off into retirement and eventide facilities over the next decade, the health care system, Drummond argues, has to shift from an acute care model – dealing with illness as it happens – to a chronic care system, which takes place over the long-term.

And as Chilliwack’s Jon Les pointed out, health care should perhaps be structured around the patient with sickness prevention at the forefront. Even the Canadian Healthcare Association agrees with the notion that the best way to cut health care costs is to cut the possibility of developing preventable ailments like diabetes and heart disease.

But unlike the C.D. Howe Institute, the CHA wants to keep a publicly funded system as empowered by the Canada Health Act, whereas the think tank promotes a system reformed by the provinces and territories without the help of Ottawa.

With public health care system being costly and unsustainable and private health care – which would exclude many low-income individuals and families – is increasingly gaining momentum.

Maybe Canada will not get an American, two-tier health care system split between insurance companies and the public.

But if the trends of Canadian cultural development persist as they have over the past decades – Canadian life mirroring the American minus constitutional arms proliferation – Canada will meet Obamacare halfway, for the same kind of people that fight for economic freedom in Washington D.C. are slowly capturing the policy decision processes on Parliament Hill.