Twenty eight countries have universal healthcare. Twenty two of them have some form of cost sharing.
User fees offer one example.
They work best as a small, flat fee paid at the point of service. Even a few dollars discourages (rational) people from booking for what they asked twice before.
User fees shorten the line for limited service. They free doctors and nurses to meet greater needs.
Some doctors rant about “skimming cream” and colleagues “stealing all the easy patients.”
Many shrug at creaming skimming. Sure, it exists at the margin, but it guarantees incompetence. Doctors need sick patients to stay sharp.
Either way if cream exists, then user fees are anti-cream.
Advocates for national pharmacare assume cost sharing must exist. Patients should share more of the cost of Viagra than Vancomycin (an antibiotic).
The same advocates often see first-dollar coverage (free meds) as outrageous for drugs but essential for doctors’ services.
Canada stands with a small group of six countries without any cost sharing in universal care. Canada stands alone in not allowing any access to medically necessary care outside the state.
NOTE: All countries with user fees have exemptions for the poor, sick, old, and very young.
Two New Reviews of User Fees
I spent several years pulling together a paper on user fees.
In July, The Macdonald-Laurier Institute published my report: Equity and efficiency vs. overconsumption and waste: The case for user fees in Canada. Check out the (shorter) press release here.
How can we protect a common good from overconsumption and waste? Everyone can access a common good. The more I use the less you get.
How can we deliver high-value care to those who need it most?
Should one person, who tries to protect medicare, and their identical twin, who abuses it, pay the same premiums (taxes) for medicare?
Bottom line
Insurance companies designed user fees to decrease frivolous insurance claims.
Fees offer one way to address moral hazard: the tendency to act differently when you do not bear the cost of your actions (e.g., ordering dessert when the boss pays).
User fees were not designed to raise revenue. In fact, user fees tend to increase the total cost because fewer low-value (low cost) patients seek care and more needy (expensive) patients receive treatment.
Canada attempted several blunt approaches to user fees, in the past. Without surprise, they harmed the poor, sick, and elderly. We need exemptions.
Check out the full report.
I’d love to hear what you think.
By the way, the Fraser Institute released an excellent, 110-page review of cost sharing, in June.
Although they appear to have scooped us, Fraser takes a different approach. It unpacks the economics of health insurance design and the theories behind cost sharing. We arrive close to the same conclusions.
Check out their press release here.
On a different note, what should we think about post COVID? Will we be back to pandemic policies this fall?
Back to Normal
Fall promises relief and routine. Kids go to school. Lawns and gardens slow down.
It’s a false promise. September means doing what you ignored in July and August.
In the spirit of September, I hope to get back to regular blogging. Some say Twitter killed blogs. Perhaps. Threads of tweets string 260 character snippets into short essays.
My “Next Blogs” folder in Evernote now has 600 drafts — most are nonsense. But some should irritate you enough to read right through.
Viral Dementia
The pandemic brought a lunatic abandonment of liberal order. This made it hard to write anything beyond accepted dogma.
For example, I suggested in May 2020 that continued hospital lockdowns and cancelled surgeries harmed more patients than all the possible COVID patients who might need hospital care. Was it right to leave hospitals empty through the summer while people in desperate need of non-COVID treatment waited at home?
The pillory surprised me.
The covidians attacked. No surprise there. Neurotic fear rules out clear thought.
But another mass of physicians surprised me. In times of relative security, the majority appear comfortable with complex or conflicting ideas.
But fear dements all.
Having seen it in myself, I should have expected it in others. I did not think so many others could lose their minds at once.
Consider one element. Western civilization grew on the notion, first promoted in the school in Athens, that heterodoxy was a good thing. Divergent opinion should be sought, showcased, and embraced as a way to test popular opinion.
But COVID dementia demanded orthodoxy, even to the CPSO threatening doctors’ licences to practice medicine.
I must say more, but later. It would detract from the intro on user fees above.
Freedom and Equality
Liberalism demands freedom and equality. Given freedom, people will demand equality. Given equality, freedom cannot continue unchecked.
Freedom must succumb to equality. Liberalism eats its own tail.
Medicare proves this point.
We want equal care for all, so everyone can be free to be healthy. Our love of freedom for health means restrictions to achieve that equality. But people find ways to frustrate the plan. We end up with overconsumption and waste.
User fees offer a small step to solving the problem.
Well Shawn, I guess you have finally crossed the Rubicon. You have my full support.
🙂
Thanks!
Good to see you back writing again. We need user fees. We need a parallel private system. We need to do better. We need more critical thinking in this country.
Thanks Yvonne! I agree … and we need to give it the freedom to find ways to improve care for patients.
We desperately need a European hybrid system.
I’ve been tweeting this incessantly …. you may have seen it !
😃
Any movement towards reason is good,user fees incuded.
They will first begin with special menus/accommodations at the privately managed surgicentres.
I did! 😀
Although I support the hybrid, any non-governmental effort will fail if the government continues to allow oppressive regulation of the so-called ‘private’ system.
This gets into a discussion about the difference between the private and public sectors. I see them located at either extreme of a spectrum. In reality, every ‘public’ and ‘private’ effort exists along this spectrum. Your daughter’s lemonade stand might be at the extreme end of private. The post office is fully public.
When the state starts dictating your daughter’s decisions about lemonade (concentration, temperature, quantity, etc), the stand moves along the spectrum towards the public.
Most democratic socialist countries situate their ‘private’ enterprise as close as possible to the government’s end without having to actually own the ‘private’ enterprise itself. Full control; no ownership. This gets into a discussion about what it means to ‘own’ something.
Again, I agree that we need enterprise outside the state AND with limited influence by the state. Trudeau could grant a parallel private option which would perform just as bad as the current approach.
Great to hear from you!!
Cheers
We often devolve into false dichotomies when we are dealing with complex situations. Maybe we could call that a corollary of Mencken’s “For every complex problem there is an answer that is clear, simple and wrong.”
Exactly. Thanks, Gerry!
You obviously put a significant effort into that report. Is there an appetite from both the provincial and federal side to change the Canada Health Act? It is my impression that the populace would rather put up with outrageous waiting times than pay user fees. It’s the Canadian way. Trite but likely accurate. Changing the Act is difficult given the temporal nature of our electoral cycles and the long-standing political tendency of avoiding “radical” change.
I like to look at medical systems where user fees, already established, have decreased, or been abolished. This has occurred in several African counties. What transpires universally is that there is a significant increase in usage of the health care system but no change in outcomes.
As you noted, raising the price of a good or service has two effects: it reduces demand and increases supply. In the case of user fees for health care, paying for a service also makes people use it more appropriately (you don’t go to the doctor for minor ailments) and value it more than if they obtained it for free. On the supply side the evidence is consistent with the view that payments to providers generate incentives for better performance.
Unfortunately, in many African countries, user fees were not paid directly to health facilities or frontline providers. They went into the central-government’s coffers and therefore played no role in incentivizing providers. And since we now know that they didn’t help people use health services better, user fees helped no one. Removing them was a good idea (in this case). But instead of replacing them with systems that held providers accountable for performance, they were replaced with—nothing
By throwing the price incentives of user-fees for providers out with the disincentives of user-fees for users, these countries have thrown the baby out with the bath water.
We need to strengthen systems of basic accountability on the supply-side for health care.
This is easier said than done. The health care bureaucracy of the province I live in (Ontario) has shown itself to be sclerotic and pedantic in its approach. It is synonymous with Titanic chair shuffling.
It most likely involves a process rather than a one-shot solution. Several different accountability systems—ranging from administrative and peer accountability to user fees and pure price incentives—could be introduced, but each will require considerable experimentation, learning and tweaking.
We can debate how this can be done, but the first step is setting up an institutional framework that allows these experiments to be carried out and for the results of such experimentation to feedback into the evidence-base of the policy maker. Without this basic feedback system, we are likely to get it wrong—again.
I’m a pessimist at heart when it comes to our health care system. I’ve been in the system as a provider for almost 3 decades, and am constantly reminded of the quote from Upton Sinclair:
“It is difficult to get a man to understand something when his salary depends on his not understanding it.”
As regards your “Viral Dementia” paragraph, I suspect that we have yet to see the fallout from our collective actions.
“But fear dements all.
Having seen it in myself, I should have expected it in others. I did not think so many others could lose their minds at once.”
I believe that term you are looking for is mass formation psychosis. The above quote from Sinclair is also applicable here. There will be time enough to get to the bottom of how this came to be. More troubling and of more immediate concern to me is the increase in all cause mortality (Canada and Ontario keep changing the way they present their stats, and it’s much easier to look at numbers from England). As you noted, more to be said on this, but later.
Thanks for the blog.
Wow — David, what a thoughtful line of comments. Thank you!
I cannot respond to all your points with the detail they deserve. I’d encourage readers to take a moment and reflect on what you’ve said.
A few thoughts:
Great to see you pointing out how use of services do not correlate directly with health outcomes. The RAND HIE and the more recent Medicaid experiments demonstrated the same thing (both randomized).
Fees can have a measurable impact on patient behaviour, in the absence of larger barriers to care. A two-week wait will overshadow a $25 fee such that the fee won’t do anything. Furthermore, a small fee can change a clinician’s behaviour, if the fee goes to the clinician. If the fee goes directly to the government, we lose that element of impact.
Given a totally dysfunctional system in which patients will put up with any amount of waiting or inconvenience because they are so desperate to get seen, a user fee becomes a poll tax.
I loved your comments about mass psychosis — agree. I worried about introducing a new topic 🙂 Loved your Sinclair quote — a great one indeed!
Really appreciate your nuanced comments and reflection on the whole thing. Fees are one tiny step. The status quo needs to change, maybe user fees could be part of our path towards managing overconsumption and waste?
Thanks again!
Shawn
Unfortunately this isn’t a practical issue or a scientific issue, it is purely a political issue. I cannot imagine any politician advocating for user fees – so it won’t happen. (Or perhaps the new Peter – he’s so off the wall that perhaps he would).
45 years ago I worked in the hospital here in BC as an emergency admitting clerk. People were charged $5.00 for the ER. Anyone on welfare was excluded from this (I can’t now remember how we documented that). $5 bucks was a bit more then than now but there didn’t seem any too much complaint from the customers. And things were a bit looser then so if someone couldn’t pay I was able to ignore it…
I can’t remember when it changed but I don’t imagine there is any hope of bringing it back.
Richard,
Thanks so much for this. I really love hearing first-hand accounts like the $5 example you gave. Hospitals started charging user fees after the federal government stopped the blank cheques in 1977. Of course, hospital user fees ended in 1984 with the Canada Health Act (CHA).
The first Trudeau government was on its last legs and needed something to cling to power. Trudeau came up with the idea of baiting Mulroney to oppose a Bill which would ban hospital user fees and physician ‘extra billing’. Extra billing accounted for 1.3% of the total MD billings nationally, but it made fantastic headlines — it represented an existential crisis!
But it was all political theatre. Mulroney saw through it and got his caucus to vote for the bill which passed unanimously, I believe. In fall 1984, Mulroney won the largest majority in Canadian history.
Thanks so much for taking time to read and post a comment!
Cheers
I remember that time too. The end to balance billing was a desperate attempt to win an election. Monique Begin was the Federal Health Minister and talked about the poverty of her family and the need to protect people like them. Marc Baltzan (president of CMA at the time I believe) pointed out to Monique Begin that the government would run roughshod over physicians’ fees in the future. She said that doctors have so much power that politicians fear physicians. (For decades, I pleaded with Ontario physicians to wield that power).
Marc Baltzan was prescient and all Canadians live with the consequences of that political move.
Gerry,
It is SO helpful to share these details … I know, I’m sounding like I have early dementia by repeating myself. But we must keep telling these stories.
The total dollars collected in balanced billing — what the media labelled ‘extra billing’ — was 1.3% of total MD compensation in Canada. It never exceeded 3% in any single province. No more than 10% of doctors had ever ‘extra billed’ at all. This was researched and reviewed by Carolyn Tuohy, who is not particularly fond of doctors. (She writes far more about the struggle to control doctors.)
The old CMA died long ago.
Thanks again!
Good Morning Shawn,
I have read many things you have written and will keep my comments short perhaps because I have so much to say. You have brought up a great deal with this posting.
I received my licence to practise medicine in Ontario in 1968 which I believe was the year “OHIP started”. I of course was excited to be a doctor but immediately thought and wondered how long it would take for our new system to fail. I predicted 20 years but it did take much longer Actually 50 years and did require a significant stress to bring it to its knees. The system of delivery did not take human nature and behaviour into the equation.
I stayed out of OHIP til forced into OHIP in the early 80’s. I remember the fight within the profession but I was on the loosing team (only 10% of MDs). I was charging my patients till then, a “user fee” and they had to collect most of my fee from the government. I then became an “Employee” of the Government,”he who pays the piper picks the tune”.
I got fed up with Delivery of health care in Ontario and spent my final 5 years in Australia as a full member of the Royal Austral-Asian College of Surgeons Practising Clinical Vascualar Surgery in Queensland and had an academic posting at Griffith University Medical School. My bests 5 years in Medicine.
Patients must take some responsibility for providing their own health care, User fees perhaps???
I was going to make some comments about COVID but will leave that for another day except to say that Brian Peckford the only living person that signed our “Bill of rights and Freedom Constitution Act” is suing the federal Government because of Vaccine Mandates on planes.
Love your “forum” Shawn,
Sincerely,
Graeme Barber MD Ottawa
Graeme,
Thank you so much for taking time to share this. Simply brilliant. We have no way to capture this information unless people like you share it. The best journalists and historians start with eye-witness testimony, if it exists. From my reading, most modern historians of medicare prefer to find snippets that fit with the impressions they bring, fully formed, to the the topic.
As you note, the Medical Care Act passed in 1966 but was adopted by provinces between 1968 and 1972. Medical insurance started out looking like insurance. Patients paid for service, submitted a bill to the insurer (government), then received reimbursement.
But what a bother! Why go through the process of exchange — bill, submit, reimburse — when everything is ‘free’? What a waste of time.
Only a few doctors, such as yourself, saw through it all. Removing the process of exchange fundamentally transformed the experience in the minds of patients, physicians, and the civil servants overseeing it all. For all practical purposes, physicians became providers employed by the state instead of independent contractors (although the CRA still sees them as such).
User fees are only one, tiny element in a much greater discussion about the demand side of the supply-demand equation in medicare.
Sure appreciate you taking the time to share your thoughts — as you know, readers love the comments most. Thanks also for your kind words!
Be well
Shawn
PS. I divided your first paragraph into several smaller ones … I hope that’s ok. Online readers seem to like short paragraphs. Cheers