Health Sciences 3400A/B Lecture Notes - Lecture 9: Gynoecium, High Tech, Stotting
17 Dec 2016
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1 Funding Health Care
Revisiting the 'Golden Mean'
The good
life,
Aristotle argued, depended on finding proper equilib-
rium.
Too
much courage led to rash behaviour; too little made one a
coward.
Too
much amiability produced obsequiousness; too little,
irascibility. That such excess is undesirable was clear; the difficulty, he
noted, was in knowing exactly how far to move in any given situation.
This Aristotelian model is useful
for
thinking about health care funding:
extremes are dangerous,
but
the exact balance between
extremes-
the
'golden
mean'-
is
much more difficult to determine.
There are a number of desirable qualities in any health care system:
these include cost containment, efficiency, equity, universality, compre-
hensiveness, and responsiveness. The attainment of all these qualities
is
the ideal objective of health policy. The problem is that the more we
move to secure one goal, the more we can undermine one or several
others. The real challenge, as Aristotle suggests,
is
to understand how
we ought to balance these qualities. Aristotle's complete doctrine of the
mean was quite complicated, yet it comprised only three pillars. Health
policy has to balance at least six. Thus the calculations
and
trade-offs
involved can be very complex and, as Aristotle suggested, depend
very much on the particular personality of the individual (or polity)
involved.
What are these pillars of health care?
Cost
containment
is
the capac-
ity of a system to control expenditure. This
is
frequently tied into dis-
cussions of 'sustainability' (which is a much fuzzier concept). Public
systems are generally better at cost containment, especially
if
the gov-
ernments are highly centralized, as decision makers have more control
4 Health Care in
Canada
over expenditure. But demand-based forms of cost containment also
exist: these include any mechanisms to discourage health consumers
from using services (or, at least, to encourage them to use services effi-
ciently). 'Gatekeeping,' in which all initial consultations must be made
by general practitioners (GPs) rather than more expensive consultants,
is one example. User fees, where people must share the cost of a service,
are another. All of these strategies, as we will see, have implications for
the
other
objectives. Discussions of cost containment should focus
on
how well all forms of
spending-
public and
private-
are controlled.
'Containing' government spending on health care by allowing indi-
viduals to purchase health care in the marketplace, for example,
is
not
containment at all,
but
merely cost-shifting, and usually results in even
higher levels of spending.
Efficiency
refers to the amount
and
quality of goods and services pro-
vided relative to the amount of money spent. The provision of health
services is efficient
if
you don't pay more than you have to for goods
and
services,
and
if you don't utilize what you don't really need. A
health care system can be quite successful at cost containment
but
still
be inefficient: it could, for example, spend less money than other sim-
ilar countries
on
health care;
but
if the money earmarked for health
care could potentially be providing more goods and services, then the
system is still inefficient. This was seen by many to be the case with
the National Health Service (NHS) in the United Kingaom before the
internal market reforms of the 1990s. At the same time, a country could
conceivably have a very high level of public spending on health care,
and
still maintain a very efficient level of spending (by providing a sig-
nificant amount of goods and services per dollar spent). Such a system
would probably be found within a nation where health care was highly
socially valued, as the money spent -however efficiently -could none-
theless potentially be used in other areas (such as education, housing,
or military funding).
'Efficiency' may seem straightforward,
but
it is a very tricky concept.
In the first place, measures of efficiency depend
on
counterfactuals,
or
speculations about how things could be otherwise. A health system
is
considered to be inefficient
if
it
could conceivably be supplying more
goods and services with the same amount of money:
but
whether any
particular system
would,
in fact, be able to provide more goods
and
ser-
vices with less money
if
it
were
run
differently
is
conjectural. There are
also the potent questions of what ought to be fair reimbursement for
goods and services (such as physician services or pharmaceuticals), and
Funding Health Care 5
what constitutes 'need' (are fertility treatments, e.g., based on medical
need or subjective desire?). Moreover, there are different ways of under-
standing efficiency. 'Allocative efficiency'
is
a concept that assumes that
an
efficient distribution
is
one in which only those individuals who
really
want
something (and thus are willing to pay for
it)
will receive it
(for a more technical discussion, see Evans
2002).
As poorer individu-
als will be less likely to spend
30
dollars on a consultation with a phy-
sician, they are considered to be 'less willing' to pay for it, and their
decision not to seek medical advice
is,
according to this model of mar-
ket economics, a gain in efficiency. From an epidemiological (or public
health) perspective, however, if the patient who does not seek treat-
ment becomes progressively sicker
and
requires much more expensive
treatment in emergency and surgical wards, this
is
a very inefficient
way to
run
a health care system. This issue
is
highlighted by the case of
a 12-year-old boy in Baltimore whose family could not afford to have
his tooth removed by a dentist. When bacteria from the abscessed tooth
spread to his brain, he was rushed to the hospital for emergency sur-
gery and spent six weeks in hospital at the cost of U.S.$250,000. Even
after this intervention, the boy died (Alakeson
2008:
720-2).
The third pillar of a health care system is
equity.
To
a large extent,
whether equity is important at all in the provision of health care
depends
on
the values of the jurisdiction responsible for delivering
health care. Those
who
believe that access to health care
is
a marker
of citizenship hold that all individuals should have reasonably similar
access to health services regardless of income (or gender, race, age,
or
region). Those
who
hold that health services are commodities that
should be available to those
who
can afford them will see equity in
health care as much less important. Many European countries articu-
late a strong sense of social solidarity, which holds that all citizens
have a collective responsibility for the less well-off,
and
access to
health care (and other social resources) in these countries is generally
indicative of greater equity. Like efficiency, equity can be interpreted
in different ways. In health care funding debates, equity generally
refers to equitable access to health care
by
those who are in need of it,
regardless of income (vertical equity). But it is possible to base discus-
sions of equity on consumption of resources (horizontal equity): those
who consume more health care should pay more; those
who
use less
should be able to
pay
less. This was the logic, for example, for the poll
taxes Prime Minister Thatcher implemented in Great Britain in the
early 1990s.
6 Health Care
in
Canada
Equity becomes especially contentious in debates over health care
when its perceived costs become too high. In Canada, the sense of fair-
ness underlying the idea of 'one-tier' health care becomes weakened
when
long waiting lists for surgery, GP consultations, and emergency
services are seen to be a consequence of a public system. But exactly
what is meant by equity in 'health care' is notoriously vague: for
example, all Canadians
who
have a heart attack will receive full treat-
ment for it, regardless of income. This access
is
not inconsiderable, as
the average cost of treatment for a heart attack in the United States is
about U
.S.$110,405.
Statistically, however, one can discern differences
in the quality of care for heart-attack patients not only across provinces
but
also across regions
within
provinces. There is also a discrepancy
between the way in which men
and
women suffering heart attacks are
treated. Moreover, there is a vast inequity between Canadians suffer-
ing different kinds of illnesses, as all medically necessary hospital treat-
ments are covered
by
public insurance in Canada,
but
often prescription
drugs in many provinces are not. Thus individuals with illnesses that
are addressed in hospitals face no out-of-pocket costs; while Canadians
whose illnesses are treated by drugs on an outpatient basis must, in
many cases, bear these costs themselves. Likewise, Canadians whose
health conditions require buying expensive medical devices (from read-
ing glasses to syringes to oxygen canisters) or services like physjother-
apy may feel there is little 'equity' in the Canadian health care system.
Universality
and
comprehensiveness
are terms that generally are used to
describe the system of health insurance rather than the health care system
per se. But because the two systems are so closely interlinked it is worth
briefly touching on both terms. Universality
is
a weaker form of equity.
Universality is an objective that has, for the most part, been achieved in
all developed countries (with the United States finally making a commit-
ment in
2010
to move towards universal coverage). Universality, how-
ever,
is
a relatively fuzzy concept, as it simply means that all residents
of a jurisdiction are covered by some form of health insurance that gives
them reasonable access to necessary health services. But God and the
devil are in the details: these forms of health insurance can vary widely,
and much
is
left unsaid in what, exactly, is required by the term 'reason-
able access.' There is also no stipulation that all access has to be equita-
ble: some individuals can have access to better or faster health care, and
their particular forms of health insurance can be widely divergent. This
is
where the term
comprehensiveness
becomes relevant. Health insurance,
whether public or private, that covers only certain kinds
of
services (pri-
mary care, hospital care) and not others (drugs and devices, long-term
Funding Health Care 7
care, dental and optical, physiotherapy, and so on)
is
less comprehensive
than insurance that covers all of these. Often (but not necessarily) there
is
a trade-off between comprehensiveness and cost control, or comprehen-
siveness and equity. How comprehensive
is
Canadian health care? Not
very.
The Canada"Health Act does stipulate that health care insurance
must be 'comprehensive,' but this refers only to medically necessary
services that are provided within hospitals, and not on an outpatient
basis (provinces are free to cover outpatient services
if
they choose to do
so, but they are not required
to).
Moreover, the definition of 'medically
necessary'
is
notably arbitrary: it
is
up
to provinces to decide this
for
themselves, and this
is
often a political decision.
It
could not be other-
wise: with the current scope and volume of services, products, and tech-
nologies available to treat ailments, the expectation that all treatments
must be provided to all individuals publically
is
simply not economi-
cally feasible. This
is
why extremely expensive treatments that benefit a
very small number of people are often not covered, despite the apparent
evidence that, to these people, such treatment would seem to be 'medi-
cally necessary.' Whether a system offers 'comprehensive' health care
also depends on the kinds of barriers limiting access to (theoretically
existing) services: all Canadians have access to hip replacements, but
they
face
barriers established by waiting times; Americans' access to hip
replacements has been limited by economic barriers.
A sixth pillar
is
playing an increasingly important role in the provi-
sion of health care. As the selection of services, drugs,
and
technology
increases, and as patients become seen as consumers, much more atten-
tion
is
being placed on the degree of choice available to health care
users.
To
many individuals, the ability to have a say over what kinds
of services they receive, who provides them, and where and when they
are provided
is
important not only because of the sense of autonomy
that it fosters, but also because it forces the health care system to be
more
responsive
to those it
is
expected to serve. In this way, 'choice' often
involves some form of competition;
but
not necessarily competition on
the free market. In some European systems, for example, the ability to
choose between health insurance providers
is
often a choice between
public or private-not-for-profit funders, with private-for-profit insur-
ers comprising a very low proportion of available options. In countries
with 'internal markets' (like England),
it
is
the GPs who have greater
choices regarding where their patients will receive specialized care: but
again, the care options remain largely publicly funded.
The capacity to choose
is
one factor that seems important in cross-
national surveys of satisfaction.
It
can also be a strongly held social
Document Summary
The good life, aristotle argued, depended on finding proper equilib- rium. Too much courage led to rash behaviour; too little made one a coward. Too much amiability produced obsequiousness; too little, irascibility. That such excess is undesirable was clear; the difficulty, he noted, was in knowing exactly how far to move in any given situation. This aristotelian model is useful for thinking about health care funding: extremes are dangerous, but the exact balance between extremes- the. "golden mean"- is much more difficult to determine. There are a number of desirable qualities in any health care system: these include cost containment, efficiency, equity, universality, compre- hensiveness, and responsiveness. The attainment of all these qualities is the ideal objective of health policy. The problem is that the more we move to secure one goal, the more we can undermine one or several others. The real challenge, as aristotle suggests, is to understand how we ought to balance these qualities.
