Skip header and navigation
CMA PolicyBase

Policies that advocate for the medical profession and Canadians


10 records – page 1 of 1.

Federal tax proposal risks negative consequences for health care delivery

https://policybase.cma.ca/en/permalink/policy11960
Date
2016-11-18
Topics
Physician practice/ compensation/ forms
  1 document  
Policy Type
Parliamentary submission
Date
2016-11-18
Topics
Physician practice/ compensation/ forms
Text
The CMA is the national voice of Canadian physicians. On behalf of its more than 83,000 members and the Canadian public, the CMA’s mission is helping physicians care for patients. In fulfillment of this mission, the CMA’s role is focused on national, pan-Canadian health advocacy and policy priorities. As detailed in this brief, the CMA is gravely concerned that by capturing group medical structures in the application of Section 44 of Bill C-29, the federal government will inadvertently negatively affect medical research, medical training and education as well as access to care. To ensure that the unintended consequences of this federal tax policy change do not occur, the CMA is strongly recommending that the federal government exempt group medical and health care delivery from the proposed changes to s.125 of the Income Tax Act regarding multiplication of access to the small business deduction in Section 44 of Bill C-29. Relevance of the Canadian Controlled Private Corporation Framework to Medical Practice Canada’s physicians are highly skilled professionals, providing an important public service and making a significant contribution to our country’s knowledge economy. Due to the design of Canada’s health care system, a large majority of physicians – more than 90% – are self-employed professionals and effectively small business owners. As self-employed small business owners, physicians typically do not have access to pensions or health benefits, although they are responsible for these benefits for their employees. Access to the Canadian-Controlled Private Corporation (CCPC) framework and the Small Business Deduction (SBD) are integral to managing a medical practice in Canada. It is imperative to recognize that physicians cannot pass on any increased costs, such as changes to CCPC framework and access to the SBD, onto patients, as other businesses would do with clients. In light of the unique business perspectives of medical practice, the CMA strongly welcomed the Finance Committee’s recommendation to maintain the existing small business framework and the subsequent federal recognition in the 2016 budget of the value that health care professionals deliver to communities across Canada as small business operators. Contrary to this recognition, the 2016 budget also introduced a proposal to alter eligibility to the small business deduction that will impact physicians incorporated in group medical structures. What’s at risk: Contribution of group medical structures to health care delivery The CMA estimates that approximately 10,000 to 15,000 physicians will be affected by this federal taxation proposal. If implemented, this federal taxation measure will negatively affect group medical structures in communities across Canada. By capturing group medical structures, this proposal also introduces an inequity amongst incorporated physicians, and incentivizes solo practice, which counters provincial and territorial health delivery priorities. Group medical structures are prevalent within academic health science centres and amongst certain specialties, notably oncology, anaesthesiology, radiology, and cardiology. Specialist care has become increasingly sub-specialized. For many specialties, it is now standard practice for this care to be provided by teams composed of numerous specialists, sub-specialists and allied health care providers. Team-based care is essential for educating and training medical students and residents in teaching hospitals, and for conducting medical research. Put simply, group medical structures have not been formed for taxation or commercial purposes. Rather, group medical structures were formed to deliver provincial and territorial health priorities, primarily in the academic health setting, such as teaching, medical research as well as optimizing the delivery of patient care. Over many years, and even decades, provincial and territorial governments have been supporting and encouraging the delivery of care through team-based models. To be clear, group medical structures were formed to meet health sector priorities; they were not formed for business purposes. It is equally important to recognize that group medical structures differ in purpose and function from similar corporate or partnership structures seen in other professions. Unlike most other professionals, physicians do not form these structures for the purpose of enhancing their ability to earn profit. It is critical that the federal government acknowledge that altering eligibility to the small business deduction will have more significant taxation implication than simply the 4.5% difference in the small business versus general rate at the federal level. It would be disingenuous to argue that removing full access to the small business deduction for incorporated physicians in group medical structures will be a minor taxation increase. As demonstrated below in Table 1, the effect of this federal taxation change will vary by province. Table 1: Taxation impacts by province, if the federal taxation proposal is implemented In Nova Scotia, for example, approximately 60% of specialist physicians practice in group medical structures. If the federal government applies this taxation proposal to group medical structures, these physicians will face an immediate 17.5% increase in taxation. In doing so, the federal government will establish a strong incentive for these physicians to move away from team-based practice to solo practice. If this comes to pass, the federal government may be responsible for triggering a reorganization of medical practice in Nova Scotia. Finance Canada Grossly Underestimating the Net Impact The CMA is aware that Finance Canada has developed theoretical scenarios that demonstrate a minimal impact to incorporated physicians within group medical structures. Working closely with our subsidiary, MD Financial Management, the CMA submitted real financial scenarios from real financial information provided to the CMA from incorporated physicians in group medical structures. These real examples demonstrate that there will be a significant impact to incorporated physicians in group medical structures, if this federal tax proposal will apply to them. The theoretical scenarios developed by Finance Canada conclude the net financial impact to an incorporated physician in a group medical structure would be in the magnitude of hundreds of dollars. In stark contrast to the theoretical scenarios developed by Finance Canada, the CMA submitted financial scenarios of two incorporated physicians in group medical structures. The financial calculations undertaken by the CMA is based on the real financial information of these two physicians. The examples revealed yearly net reduction of funds of $32,510 and $18,065 for each of these physicians respectively. Projecting forward, for the first physician, this would represent a negative impact of $402,330 based on a 20-year timeframe and 4.8% rate of return1. Extending the same assumptions to all incorporated members of that physician’s group medical structure, the long-term impact for the group would be $39.4 million.2 1 Source: MD Financial Management 2 Please note that these projections have not been adjusted for the inherent tax liability on the growth. 3 Source: MD Financial Management 4 Please note that these projections have not been adjusted for the inherent tax liability on the growth. For the second physician, projecting forward, this would represent a negative impact of $223,565, based on a 20-year timeframe and 4.8% rate of return3. Extending the same assumptions to all incorporated members of that physician’s group medical structure, the long-term impact for the group would be $13.4 million.4 Unprecedented Level of Concern Expressed by Physicians Following the publication of the 2016 federal budget, the CMA received a significant volume of correspondence from its membership expressing deep concern with the proposal to alter access to the small business deduction for group medical structures. The level of correspondence from our membership is quite simply unprecedented in our almost 150 year history. As part of the CMA’s due diligence as the national professional organization representing physicians, we informed our membership of Finance Canada’s consultation process on the draft legislative measures. In response, the CMA was copied on submissions by over 1,300 physicians to Finance Canada’s pre-legislative consultation. In follow up, the CMA surveyed these physicians to better understand the impacts of the budget proposal. Here’s what we heard: . Most respondents (61%) indicated that their group structure would dissolve; . Most respondents (54%) said they would stop practicing in their group structure and that other partners would leave (76%); . A large majority (78%) indicated that the tax proposal would lead to reduced investments in medical research by their group; . Almost 70% indicated that the tax proposal would limit their ability to provide medical training spots; and, . Another 70% indicated that the tax proposal will mean reduced specialty care by their group. The full summary of the survey is provided as an appendix to this brief. To further illustrate the risks of this proposal to health care, below are excerpts from some of the communiques received by the CMA from its membership: . “Our Partnership was formed in the 1970s…The mission of the Partnership is to achieve excellence in patient care, education and research activities….there would be a serious adverse effect on retention and recruitment if members do not have access to the full small business deduction…The changes will likely result in pressure to dissolve the partnership and revert to the era of departments services by independent contractors with competing individual financial interests.” Submitted to the CMA April 15, 2016 from a member of the Anesthesia Associates of the Ottawa Hospital General Campus . “The University of Ottawa Heart Institute is an academic health care institution dedicated to patient care, research and medical education…To support what we call our “academic mission,” cardiologists at the institute have formed an academic partnership…If these [taxation] changes go forward they will crippled the ability of groups such as ours to continue to function and will have a dramatic negative impact on medical education, innovative health care research, and the provision of high-quality patient care to our sickest patients.” Submitted to the CMA April 19, 2016 from a member of the Associates in Cardiology . “We are a general partnership consisting of 93 partners all of whom are academic anesthesiologists with appointments to the Faculty of the University of Toronto and with clinical appointments at the University Health Network, Sinai Health System or Women’s College Hospital…In contrast to traditional business partnerships, we glean no business advantage whatsoever from being in a partnership…the proposed legislation in Budget 2016 seems unfair in that it will add another financial hardship to our partners – in our view, this is a regressive tax on research, teaching and innovation.” Submitted to the CMA April 14, 2016 from members of the UHN-MSH Anesthesia Associates Recommendation The CMA recommends that the federal government exempt group medical and health care delivery from the proposed changes to s.125 of the Income Tax Act regarding multiplication of access to the small business deduction, as proposed in Section 44 of Bill C-29, Budget Implementation Act, 2016, No. 2. Below is a proposed legislative amendment to ensure group medical structures are exempted from Section 44 of Bill C-29, Budget Implementation Act, 2016, No. 2: Section 125 of the Act is amended by adding the following after proposed subsection 125(9): 125(10) Interpretation of designated member – [group medical partnership] – For purposes of this section, in determining whether a Canadian-controlled private corporation controlled directly or indirectly in any manner whatever by one or more physicians or a person that does not deal at arm's length with a physician is a designated member of a particular partnership in a taxation year, the term "particular partnership" shall not include any partnership that is a group medical partnership. 125(11) Interpretation of specified corporate income – [group medical corporation] – For purposes of this section, in determining the specified corporate income for a taxation year of a corporation controlled directly or indirectly in any manner whatever by one or more physicians or a person that does not deal at arm's length with a physician, the term "private corporation" shall not include a group medical corporation. Subsection 125(7) of the Act is amended by adding the following in alphabetical order: "group medical partnership" means a partnership that: (a) is controlled, directly or indirectly in any manner whatever, by one or more physicians or a person that does not deal at arm's length with a physician; and (b) earns all or substantially all of its income for the year from an active business of providing services or property to, or in relation to, a medical practice; "group medical corporation" means a corporation that: (a) is controlled, directly or indirectly in any manner whatever, by one or more physicians or a person that does not deal at arm's length with a physician; and (b) earns all or substantially all of its income for the year from an active business of providing services or property to, or in relation to, a medical practice. "medical practice" means any practice and authorized acts of a physician as defined in provincial or territorial legislation or regulations and any activities in relation to, or incidental to, such practice and authorized acts; "physician" means a health care practitioner duly licensed with a provincial or territorial medical regulatory authority and actively engaged in practice; Incorporation Survey, October 2016 *Totals may exceed 100% as respondents were allowed to select more than one response 65% 13% 6% 5% 2% 2% 2% 2% 2% 1% ON AB BC NS MB NL QC SK NB YT % Distribution by Province of Practice 65% 28% 22% 15% 9% 8% 8% 6% 6% 3% 3% 3% 3% Academic health sciences centre Private office / clinic University Community hospital Emergency department (in community hospital or AHSC) Community clinic/Community health centre Non-AHSC teaching hospital Research unit Free-standing lab/diagnostic clinic Free-standing walk-in clinic Nursing home/ Long term care facility / Seniors' residence Administrative office / Corporate office Other % Distribution by Work Setting 20 12 9 8 8 7 7 6 5 5 4 Ottawa Hospital (Ottawa) University Health Network (Toronto) Sunnybrook Health Sciences Centre (Toronto) Foothills Medical Centre (Calgary) St. Joseph's Health Centre (Hamilton) Mount Sinai Hospital (Toronto) London Health Sciences Centre (London) South Calgary Health Campus (Calgary) St. Micheal's Hospital (Toronto) Children's Hospital of Eastern Ontario (Ottawa) Royal Alexandra Hospital (Edmonton) Most frequently mentioned hospitals where respondents work in group medical structures Synopsis 61 54 76 78 67 68 30 36 19 16 23 24 9 10 5 6 10 8 Group medical structure will dissolve Stop practice in your group medical structure Partnering members leave the group medical structure Reduced investments in medical research Reduced medical training spots Reduced provision of specialized care Physicians perceptions about the likelihood of the following outcomes Likely or very likely Unsure Unlikely or very unlikely The federal government is advancing a tax proposal that will alter access to the small business deduction. If implemented, this proposal will affect incorporated physicians practicing in partnership group medical structures. The Canadian Medical Association (CMA) is actively advocating for the federal government to exempt group medical structures from the application of this tax proposal. 94% 2% 4% Importance of Exempting Group Medical Structures from the Tax Proposal Important or very important Unsure Unimportant or very unimportant To support the effectiveness of its advocacy efforts, the CMA conducted an online survey seeking input from members who had voiced their concerns about this issue directly with the Department of Finance and who had copied the CMA on their submissions. Sample: physician type, province, and work setting The survey was sent to 1089 CMA members, of which 174 responded (15.9% response rate). All sample respondents were incorporated and practiced in a group medical structure; 26% were family physicians (N=45) and 74% were specialists (N=129). Most respondents indicated practicing primarily in Ontario (65%) and Alberta (13%). With respect to practice settings, the majority reported working in an academic health sciences centre (65%), followed by a private office/clinic (28%), university (22%), community hospital (15%), emergency department (9%), community clinic/community health centre (8%), non-AHSC teaching hospital (8%), research unit (6%), and free-standing lab/diagnostic clinic (6%). In total, respondents worked in 79 hospitals spread around 36 cities. Likelihood of outcomes resulting from the federal tax proposal When asked about the possible consequences of the proposed changes, the largest share of respondents (78%) felt a reduction in investments in medical research was likely or very likely. Almost as many (76%) also felt that partnering members would likely leave the group medical structure. . Most respondents (61%) indicated that their group medical structure would be likely or very likely to dissolve if the federal tax proposal to change access to the small business deduction was implemented. Less than one-third (30%) felt unsure while only a few (9%) reported it as unlikely or very unlikely. . More than half of respondents (54%) indicated that they would be likely or very likely to stop practicing in their group medical structure if the tax proposal was implemented. More than one-third (36%) were unsure while only a few (10%) reported it as unlikely or very unlikely. . More than three-quarters of respondents (76%) indicated that other partnering members would be likely or very likely to leave their group medical structure if the tax proposal was implemented. About 20% remained unsure while only 5% reported it as unlikely or very unlikely. . Almost 8 in 10 respondents (78%) indicated that implementing the tax proposal would be likely or very likely to reduce investments in medical research for their group medical structure. 16% remained unsure while 6% reported it as unlikely or very unlikely. . Approximately two-thirds of respondents (67%) indicated that implementing the tax proposal would be likely or very likely to reduce the ability of the group medical structure to provide medical training spots. About a quarter (23%) remained unsure and 1 in 10 reported it as unlikely or very unlikely. . Almost 7 in 10 respondents (68%) indicated that implementing the tax proposal would be likely or very likely to reduce provision of specialized care by their group medical structure. Almost a quarter (24%) remained unsure while 8% reported it as unlikely or very unlikely. Importance of exempting group medical structures from the tax proposal More than 9 in 10 respondents (94%) felt that it is important or very important for the federal government to exempt group medical structures from the tax proposal to avoid negatively affecting health care delivery in their province. The remaining respondents were unsure (2%) or considered it unimportant or very unimportant (4%). Other Impacts – Write-in Question Before submitting the survey, respondents were given the chance to provide additional comments about other potential impacts that the proposed changes might produce. Most responses touched upon a few and inter-related themes, including: 1. Impact on education and research will be detrimental and will eventually affect patient care: o “Without the group medical structure, we cannot adequately support teaching education and research activities. Physicians in academic health sciences centres will be forced to use their time to see patients, in order to bill fee-for-service to make a living. Very little time will be left over to spend doing the research that is critical to advancing medical science, to supporting our university, and our nation’s prominent place in the world of medicine” o “Support is given to the academic health sciences centres by the provincial government in order to facilitate research and education. The federal government's changes will penalize physicians who already dedicate much of their time to providing the stepping stones to advance medicine forward. These physicians generally make less income than physicians working in private practice. They are willing to take this monetary hit because they love what they do. However we all need to support our families and put food on the table. With the government's changes, this may not be possible in the current system, and these group medical structures will need to be dissolved and the physicians working will have much less time to dedicate to research and education.” o “Less education, research activity to focus on fee-for-service procedures to compensate for higher taxes.” o Our ability to provide teaching for medical education and research, which are currently not remunerated, would be curtailed. There would be no incentive but rather a significant disincentive to provide these activities because we would be financially penalized compared to physicians in the same specialty that are not in group medical structures.” o “As the main teaching practice structure, we will lose full time faculty who provide the backbone to the program. They currently earn much below the average for Family Physicians in the province and our ability to support education and research will be compromised.” 2. Discourages practice in academic centres: o “Working in an academic center as a general pediatrician means that we already make substantially less money than our community colleagues. There is very little incentive to remain in academic practice if we not only earn less, but are then not entitled to the same tax savings. I would leave academic practice and I suspect many of my colleagues would as well. I think we could see the end of the current group medical structure, as it would no longer support a financially viable model for academic practice.” o “Creates a further divide between working in an academic centre and in the community. It will continue to be more advantageous to work in a smaller community - more money, less cost of living, less administrative and academic hassles, less research funding. Why bother working at an academic centre with such disadvantages.” o “This policy seems to target academic physicians in groups disproportionately. These physicians currently support research and education by reallocating our own funds generated from clinical care. It is puzzling as to why the Federal Government is waging this war on the academic physician workforce.” 3. Physician retention and recruitment will be challenging: o “I will retire sooner than otherwise.” o “At the present time it is very difficult to recruit family doctors who are interested in teaching, research and administration of academic family medicine. This tax change will make it increasingly more difficult to recruit such individuals.” o “I'm concerned that the proposed changes erase any benefits from a corporation structure and leave me with a loss. Work is so stressful and demanding that if I find myself in a disadvantaged situation financially as well, this would be another factor encouraging me either to retire or move outside of Canada. If I'm going to be faced with losses and more stress, why not instead focus on my quality of life instead?” o “It would severely restrict our ability to recruit research and specialty physicians. We would not be able to compete with community centres and would see a dramatic decline in our ability to provide for teaching and research activities now funded through the group structure.” o “I am a dual citizen and would seriously entertain moving to the USA.” o “It will basically force me to go to a free standing walk in clinic.” o “It would be less likely to recruit the best quality of medical staff to academic practice as there will be a significant financial disincentive, especially compared to what that same individual could earn on their own in a community practice. This is on top of the fact that academic practitioners tend to earn less to start with.” 4. Discourages team-based collaborative care: o “The bill sets up an unfair system where it is more attractive to be a solo MD rather than to collaborate and be part of a team.” o “This creates an every person for themselves philosophy.” o “The provision of our group services is required to ensure best patient care. It is wrong to penalize this model of comprehensive care.” 5. Practice will close and services will be limited in certain areas: o “Any reduction in research, administration, academic activity, and members would affect patient care at our facility and therefore be a threat to patient safety. e.g., if multiple physicians leave, then we won't have enough physicians to cover the emergency department appropriately, wait times will increase, and serious patient safety concerns will arise.” o “Reduces productivity of the doctors concerned and hence quality of service provided. Access will also be affected!” o This would be unattractive for some, and they may leave (or others may not join.) If partners leave, the overhead will go up and we would likely close. Because our overhead is already borderline unacceptable. Shared between fewer docs would make it economically impossible. And this could easily happen if docs leave. o “Reduced physician coverage if members opt out of group medical structure, which would have an impact on greater access and the quality of care.” o “Our ability to have a large interdisciplinary team to assist in serving our patients could not continue to exist. Our ability to continue to provide 24/7 on-call and after hours clinics would decrease due to a change in the structure leading to less practitioners.”
Documents
Less detail

General Agreement on Trade in Services (GATS) and the Canadian Health Care System : Submission to the Minister of International Trade

https://policybase.cma.ca/en/permalink/policy1973
Last Reviewed
2019-03-03
Date
2000-12-15
Topics
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2019-03-03
Date
2000-12-15
Topics
Health systems, system funding and performance
Text
The method a country chooses to fund and deliver health care demonstrates the values of its citizens and the type of nation that they wish to live in. Canadians, through their elected representatives, have placed a high value on a single-payer, tax-financed health care system with a delivery system that is essentially private and not-for-profit. The principles providing the underpinnings of the system are embodied in the Canada Health Act (CHA) and include the following: universality, comprehensiveness, access, portability and public administration. Since the passing of the CHA, Canadians have grown increasingly passionate about these principles and have demonstrated time and again that these principles are in close alignment with their values. Canadians have chosen tax-based financing for their health care system as it relates to hospital and physician services. The provincial and federal governments, through federal government transfers such as equalization payments and the Canada Health and Social Transfer and through provincial taxation, fund the various organizations and health care providers that deliver health care. Therefore the financing of the health care system has been socialized and publicly administered as opposed to privatized through compulsory private insurance. This indicates that Canadians view health care as not just an ordinary good, such as an automobile or a house that they pay for based on their own financial resources, but as a good whose cost should be shared by the community on the basis of the ability to pay of individuals. For those two components that are most likely to create true financial hardship for families and individuals, hospital services and physician services, the overwhelming majority of the funding is from public sources as opposed to private sources. When it comes to the health services that are subject to the provisions of the CHA, namely hospital services and physicians' services, Canada has chosen a predominantly private delivery approach. Physicians are largely self-employed and operate within a private sector solo or group practice while community and teaching hospitals are largely private not-for-profit organizations. Most Canadian hospitals are governed by voluntary boards of trustees and are owned by voluntary organizations, municipal or provincial authorities or religious orders. 2.0 CANADIAN VALUES The evolution of Canada's health care system has been profoundly influenced by Canadian values and as a result so will its future. The Prime Minister's National Forum on Health produced a series of documents on Canada's health care system including analyses that delved into Canadian values regarding health care and Canada's health care system in particular. The following quotes are from Graves, Frank L. Beauchamp, Patrick, Herle, David, "Research on Canadian Values in Relation to Health and the Health Care System" Canada Health Action: Building on the Legacy, Papers Commissioned by the National Forum on Health, "Volume 5 - Making Decisions, Evidence and Information". These quotes exemplify the importance of health and the health care system in the hearts and minds of Canadians. "There is a broad consensus that the Canadian health care system is a collective accomplishment, a source of pride, and a symbol of core Canadian values. The values of equality, access, and compassion are salient to perceptions of the system and often held in contradistinction to perceptions of the American system. Moreover, the system is seen as relatively effective and sound. It may be the only area of current public endeavour which is seen as a clear success story." p. 352 "The public perceptions of problems in the health care system reflect many of the themes evident in broader concerns about government. One of these themes is a growing wariness of "expert" prescriptions for the health care system." p. 353 "This finding reconfirms a consistent conclusion of other research in this area - the gap between expert rationality and public values. It would be prudent to acknowledge the public's entrenched resistance to a purely economic mode on health care." p. 354 "A number of key conclusions are evident. First, people were generally loath to trade-off elements of the current system against the promise of better or fairer future performance." p. 355 "The public will be resistant to a rational discourse on these cost issues because they are more likely to see these issues in terms of higher-order values. The evidence suggests that further dialogue will tilt the debate more to values than economics. The public will insist on inclusion and influence in this crucial debate and they will reject elite and expert authority." p. 356 "In response to a question on how health care was different from other commodities and services sold in the marketplace, participants agreed that its main difference lies in the fact that it was directly related to "life and death"." p. 370 "Most simply did not want efficiency to be the driving force in health policy." p. 378 "The focus group discussions augmented the belief that health care is more about values than economics." p. 389 "Although other competing priorities emerged over the period of the discussion, it is equality of access that serves as the primary source of this pride. The "Canadian" values are wrapped up in equality of access - everybody gets relatively equal care when they are sick and nobody has to lose their house to pay their hospital or doctor bill. It is this feature of the system which is seen to most distinguish it from the American model (which is the point of comparison)." p. 393 "Many people readily acknowledge that their belief in egalitarianism is restricted to health care and that they are not troubled by wide discrepancies based on ability to pay or status in other areas of society. They have no trouble isolating health care in this way because they see health care as something of a completely different character than housing or automobiles or vacations." p. 393 "There is an overwhelming consensus among Canadians about the importance of equality of access as the defining characteristic of our system. That consensus is premised upon the assumption that quality is a given, as they have perceived it to be in the past." p. 395 "It is also true that, since Canadians recognize that a truly private system like the U.S. version might provide even greater levels or quality of freedom of choice to at least some citizens, they are choosing to sacrifice some of that from the system in order to provide equality of access to a universal system." p. 396 Clearly, Canadians value their health care system and the principles that it is based on. 3.0 IMPLICATIONS FOR TRADE LIBERALIZATION The core values that Canadians have expressed in relation to the health care system raise certain issues as to the impact of trade liberalization on those core values. Following is an analysis based on an examination of the various modes of trade. 3.1 Modes of Trade in Services The Uruguay Round of trade negotiations leading to the World Trade Organization's creation in 1995 classified services into 160 sectors. Health services are classified as a sector. In addition, trade in insurance services may affect health services where a market for health insurance exists. The General Agreement on Trade in Services (GATS) distinguishes among four modes of trade in services. Each is briefly described below, together with examples, (involving the mythic countries 'A' and 'B') from the health sector. [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Mode Example 1 Cross-border trade - provision of diagnosis or treatment planning services in country A by suppliers in country B, via telecommunications ('telemedicine') 2 Consumption abroad - movement of patients from country A to country B for treatment 3 Commercial presence - establishment of hospitals in country A whose owners are from country B, i.e. foreign direct investment 4 Presence of natural persons1 - service provision in country A by health professionals who have emigrated from country B [TABLE END] To date, Canada has made no commitments in the health services sector. Commitments in general have been shallow in the health sector in comparison to the most liberalized sectors, telecommunications and financial services, reflecting in part the substantial uncertainty about how such commitments will affect health care systems. Many of the countries that have undertaken health sector commitments have opted for enshrining the status quo, or even the status quo with commitments that include language proficiency requirements for health care professionals. Some WTO Members, however, have made more extensive commitments, driven in part by the hope that this will facilitate development of export opportunities and importation of foreign capital and know-how. Where developing countries have made such commitments, the general lack of resources appears to be a far more potent barrier to trade than the presence or absence of such commitments. 3.2 GATS and the Health System: Role of Insurance and Health System Structure To understand trade implications for the health sector, it may be helpful to distinguish between three functions that undergird all health systems: regulation/stewardship, financing, and service provision. Since the inception of Medicare, Canadians have received their health care through a system of private providers regulated under statutes. This links them closely to a financing system comprised largely of public funds in the form of general taxation revenues disbursed to health care providers by provincial and territorial governments and drawn from provincial and federal revenues through the progressive income tax system. The regulatory/stewardship established by the Canada Health Act and provincial regulation is pivotal to the system's structure. For example, building private hospitals need not be explicitly banned because funding levers make this a difficult business proposition as services provided there would not be automatically covered by provincially managed insurance schemes. A further useful distinction arises between input goods and services (drugs, devices, health care personnel, cleaning, laundry etc.) and the output of health care services. It is difficult to argue that the cleaning of hospitals is fundamentally part of the output of health services, rather it is similar to cleaning of other facilities and is increasingly performed by commercial entities in contractual relationships with health care facilities. These commercial entities include firms with foreign ownership or shareholders. Similarly many of the drugs and devices used in Canadian health care facilities are traded goods, moving in international trade from foreign-based suppliers and being accompanied by Canadian goods exported to other health care systems. Another input into the health care system is medical education. Physicians have to be trained so that Canadians have access to appropriate physician resources. There is some concern about the effects of GATS on the medical education enterprise and the quality of medical education currently delivered in Canada. As well, there is international recognition of Canada's expertise in medical education and evaluation and that this is a part of the health care system that Canada should be exporting. 4.0 RESPONDING TO GATS: POTENTIAL IMPLICATIONS In responding to GATS, it is helpful to consider each of the four modes of trade in health services, current levels of trade, and how GATS liberalization, (i.e. commitments by the government of Canada) could impact Canada's health care system. Mode 1 - Cross-border supply Cross border supply of health services, where the provider (health care professional) and consumer (patient) are in different jurisdictions has recently moved from the realm of science fiction to reality with advances in telemedicine. However, certain services, particularly those involving direct patient contact (nursing, rehabilitation professionals) are unlikely to be provided, regardless of advances in telemedicine. Cross-border supply appears most relevant to services involving diagnosis and treatment planning. For example, a physician in Canada may digitize radiology films and send them for interpretation to a radiologist in the Caribbean or South Asia. Similarly, several experiments within Canada have attempted to use telediagnosis to spare families long trips from remote communities to consult with highly specialized paediatricians. If this were to occur across national borders with exchange of payment for services, it would constitute a form of international services trade. Current limits on telemedicine's growth are essentially no longer technological but rather the regulatory/stewardship issues of professional certification and payment systems for services rendered. A commitment under mode 1 would do nothing to address either of these questions, particularly the first as governments retain full authority to establish licensing and certification regimes for professionals. Within Canada, payment has been hampered by provincial insurance plan insistence that the doctor-patient encounter must occur in such a way that both are in the same physical space. At present, efforts have been directed to establishing cross-border recognition of professional accounting certification, fueled in large part by the concentration of accounting services work within a handful of multinational firms on behalf of their increasingly globalized clients. By contrast, similar efforts directed to social sector professions are unlikely given the atomistic nature of the professionals and the institutions and organizations where they work. The absence of a concerted desire for such cross-border recognition, coupled with the powerful role of governments in regulating not only certification but also numbers of health care professionals, suggests cross-border recognition will remain unlikely for the foreseeable future. That having been said, a commitment by Canada and other countries to mode 1 liberalization could increase pressure on licensing authorities to develop programs of cross-border recognition. If this were to happen the export of telemedicine services outside of Canada would represent physician resources that would not be available to Canadians. Given the physician workforce issues that Canada is presently facing such a commitment could exacerbate an already difficult position. In addition, there are other implications that would have to be determined through stakeholder consultation, for example: provider legal liability and malpractice insurance, patient privacy and confidentiality of medical records to name a few. Mode 2 - Consumption abroad Individual Canadians have long sought care in other jurisdictions, most notably the United States. This is typically paid for from private health insurance or out of pocket funds. Changes to provincial insurance reimbursement for out-of-country care have dramatically limited publicly funded consumption abroad by Canadians. Two exceptions to this are treatment for specific rare conditions and, in several provinces, contracting for radiation therapy services with American institutions. Liberalization under mode 2 would do little for Canada in affecting the outward flow of Canadian patients to the US given the ease with which Canadians can cross the Canada-US border to purchase medical care. Similarly, opportunities for Canadian professionals and facilities to attract additional foreign patients are unlikely to grow substantially should a mode 2 commitment be made. The obvious growth potential for Canadian physicians and facilities lies in the USA but has been substantially limited by two synergistic factors. First is the non-portability of insurance coverage, both publicly financed Medicare/Medicaid benefits and most market-purchased insurance. Exclusion from health maintenance organizations' (HMOs) networks of providers are a further impediment for Canadian providers seeking to attract American consumers. Should the United States be willing to commit to the generalized portability of Medicare benefits, Canada would be a logical destination for American consumers seeking care, but that would be contingent on a commitment from the United States or other action regarding portability, rather than a specific mode 2 commitment by Canada. Commitments in this direction may, however, only be made if similar commitments are made by potential trading partners for health services, notably Canada and Mexico. A commitment by Canada and other countries, especially the United States, to mode 2 liberalization could change the business plans or strategies to attract foreign patients by some physicians especially certain niche subspecialists. Such a change could result in access difficulties for Canadian patients as providers substitute higher-paying foreign patients for Canadian ones for which payment is fixed by provincial insurance plans. Mode 3 - Commercial presence Commercial presence, usually through foreign direct investment (FDI), is often necessary for providing services such as banking or supply chain management. FDI in Canada's health service sector is relatively insignificant and that would appear unlikely to change with a mode 3 commitment. As with several of the other modes of trade, the regulatory and stewardship environment creates structural impediments to FDI, specifically concerning which services will be paid for in which facilities, that a mode 3 commitment is unlikely to remove. A related area for the health system is that of consulting services, where multinational, foreign-origin firms already play a substantial role in providing various forms of management consulting services. While some hospital boards are reported to have been approached regarding the outsourcing of their management to foreign management services firms, the extent of implementation to date has been minimal. Should hospital management be outsourced in this way or hospital facilities networked through supra-facility organizations, American based firms are logical candidates for such work and can be expected to bring with them substantial experience in shaping and constraining physician decision-making, particularly around access to expensive procedures. Mode 3 commitments are arguably neither necessary nor sufficient for such a change in hospital governance and management when compared to the power of provincial government regulation and financing mechanisms. If Canada made a mode 3 commitment, provincial governments would still have substantial latitude to regulate financing and provision of services, so long as these regulations applied to all potential suppliers, regardless of country of origin, thus ensuring national treatment. However, the full ramifications of such a commitment remain largely unknown and there appears little to be gained by Canada in making such commitments. Mode 4 - Presence of natural persons Presence of natural persons, specifically physicians and other health professionals, is one of the most pressing issues in health systems around the world. For countries like South Africa, emigration of physicians hamstrings efforts to deliver health services. For parts of Canada, immigration of those physicians has been essential to providing Canadians with health care, particularly in rural and remote areas. Nevertheless, mode 4 commitments are unlikely to be particularly useful for health human resource planning. For destination countries like Canada, a mode 4 commitment to liberalize immigration of natural persons, specifically health sector professionals, does not bind that country to forego national systems of certification and licensure. Moreover, existing systems of visas and work authorizations offer far more effective control over inflows than would a mode 4 commitment. Similarly, Canadian physicians who wish to emigrate, typically to the US, do so in the absence of a Mode 4 commitment by either country. Of concern to Canadians is the increased recognition of physician shortages as demonstrated by the fact that several provinces have increased medical school enrolment. Therefore any measures that would make it easier for physicians and other health care professionals to leave Canada and to practice elsewhere, especially the United States, could exacerbate an already tight supply of human health resources in several provinces. After a decade of efforts to reduce the number of physicians in Canada, assessments of Canadian physician supply are increasingly identifying shortages or, at the very least, chronic undersupply, in rural areas. Substantial numbers of foreign-trained physicians already reside in Canada but are unable to practice due to some combination of limited language skills, insufficient training, or 'queuing' for the various transition requirements imposed on international medical graduates (IMGs) by provincial licensing authorities. Commitments by Canada in this area however could result in pressure on licensing authorities to modify their requirements with potential implications on quality of care. Again, there is little to be gained for Canada to pursue commitments in this area until the ramifications are fully explored. Additional Considerations: Two areas that are to be explored are: 1) cross-sectoral horse trading, and 2) equity perceptions. 'Cross-sectional horse trading' refers to countries offering commitments in one sector in return for commitments in other, unrelated sectors. As an example, Canada may wish to increase its access to foreign markets for financial or telecommunications services and face the choice of putting the health services sector 'into play' as part of negotiating on matters unrelated to health services. This would be potentially disastrous if Canada were to undertake specific health services commitments in the rush to secure benefits in other sectors without attention to the federal-provincial cooperation and coordination to ensure that such commitments did not undermine the foundations of Canada's health system. Such cooperation and coordination appears to be becoming increasingly difficult and the pressure of a GATS commitment perceived to be negotiated by persons outside the health sector and health ministry would seem a surefire way to increase that difficulty. The second issue, equity perceptions, arises from the confluence of increasing concern among Canadians about access to their health care system and the likely additional concern that would arise if Canadian physicians were perceived to be favouring foreign patients over Canadian patients. The clearest example of access concerns to date is likely that of ophthalmology services where the opportunities for these specialists to provide non-insured laser treatment to American citizens may have reduced the services available to provincially insured Canadians. Non-insured care, whether for Canadians or foreign patients is a growing part of physician revenues, but pushing for its expansion through a mode 2 commitment under GATS appears unlikely to generate benefits sufficient to offset the potential negatives when compared with other methods of expanding revenue from non-insured services. 5.0 CONCLUSION The Government of Canada's bargaining position regarding health services in relation to the ongoing liberalization of trade in health services through the GATS will evolve from an assessment of the opportunities and costs associated with various levels of commitment. A major factor in the equation are the values of Canadians and their affinity for the publicly funded health care system. 6.0 RECOMMENDATION "The Canadian Medical Association (CMA) recognizes that trade liberalization can have positive economic impacts on the Canadian economy, however the type of healthcare system that Canadians and health care providers want is of primary concern whereas the goals of trade liberalization in health services is of a secondary nature. Recognizing that the GATS process is an on-going and long-term approach to trade liberalization, the CMA recommends that the Federal government undertake extensive consultative sessions with the Canadian public and healthcare providers. Such a consultation process would help answer questions as to the implications of trade liberalization and would provide feedback as to what level of trade liberalization in health care services is consistent with Canadian values." 1 Mode 4: "Presence of 1Natural Persons" - this covers the conditions under which a service supplier can travel in person to a country in order to supply a service. Source: http://gats-info.eu.int/gats-info/gatscomm.pl?MENU=hhh
Documents
Less detail

The impact of the Goods and Services Tax (GST) and the proposed Harmonized Sales Tax (HST) on Canadian physicians : Brief submitted to the House of Commons Standing Committee on Finance

https://policybase.cma.ca/en/permalink/policy2023
Last Reviewed
2019-03-03
Date
1997-01-21
Topics
Health human resources
Physician practice/ compensation/ forms
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2019-03-03
Date
1997-01-21
Topics
Health human resources
Physician practice/ compensation/ forms
Text
The Canadian Medical Association (CMA) commends the federal government for its clear and open process, and for encouraging a dialogue in areas of tax policy and economics. Canadians from all walks of life look to the government for strong and constructive leadership in this area. The CMA therefore appreciates the opportunity to present its views to the House of Commons Standing Committee on Finance as it considers Bill C-70 "An Act to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account Act and related Acts." The CMA has appeared before the Committee on several occasions when it has considered matters pertaining to federal tax policy in Canada. In addition to our submissions, as part of the government's pre-budget consultation process, the CMA appeared before the Committee when it examined a number of tax policy alternatives to the Goods and Services Tax (GST) in 1994. 1 At that time, the CMA clearly articulated the medical profession's concerns about the need to implement a federal sales tax system that is simplified, fair and equitable for all. The CMA remains strongly committed to the principles that underpin an efficient and effective sales tax system. However, it is of the strong view that there is, on the one hand, a need to review the relationship between sales tax policy and health care policy in Canada, and between the sales tax policy and the physicians as providers of services, on the other. Canada's health care system is a defining characteristic of what makes Canada special. It is no secret that funding for the health care system is under stress and all providers, including physicians, are being asked to shoulder their responsibility in controlling costs and responding to this fiscal challenge. However, physicians have had their costs of providing medical services increased by the federal government through the introduction of the GST. Specifically, the introduction of the GST as it applies to physicians serves as a constant reminder that there still remain some tax policy anomalies - that, without amendment, their consequences will be significantly magnified with the introduction of a proposed harmonized sales tax (HST) on April 1, 1997, as was the case with the introduction of the Quebec Sales Tax (QST) on July 1, 1992. The tax anomaly is a result of the current categorization of medical services as "tax exempt" under the Excise Tax Act. As a consequence, physicians are, on the one hand, in the unenviable position of being denied the ability to claim a GST tax refund (that is, denied the ability to claim input tax credits - ITCs), on the medical supplies (such as medical equipment, medical supplies, rent, utilities) necessary to deliver quality health care, and on the other, cannot pass the tax onto those who purchase such services (i.e., the provincial and territorial governments). Physicians, from coast to coast, are understandably angry that they have been singled out for unfair treatment under the GST, QST and the soon to be implemented HST. II. BACKGROUND The GST was designed to be a " consumer-based tax" where the tax charged for purchases during the "production process" would be refunded - with the consumer, not producer of a good or a service, bearing the full burden of the tax. As a result, self-employed individuals and small businesses are eligible to claim a tax refund of the GST from the federal government on purchases that are required in most commercial activities. It is important to understand that those who can claim a tax refund under the GST in most commercial activities will still be able to do so with the proposed introduction of a harmonized sales tax in Atlantic Canada. The rate is proposed to be set at 15% (7% federal tax, 8% provincial tax). In the case of medical services, the consumer (i.e., the one who purchases such services) is almost always the provincial and territorial governments. Since the provincial and territorial governments do not pay GST (due to their Constitutional exemption), one would have expected the cost of providing medical services to be free of GST. However, this is not the case. It is difficult to reconcile federal health care policies to preserve and protect publicly funded health care with tax policy which singles out and taxes the costs of medical services. Regrettably, physicians find themselves in an untenable situation of "double jeopardy". This is patently unfair and on the basis of the fundamental principles of administering a fair and equitable tax system should be amended accordingly. In an effort to document the impact of the federal government's decision to designate medical services as tax exempt, an independent study by the accounting firm KPMG estimated that physicians' costs increased by $60 million of GST per year. 2 Since 1991, this total is now in excess of $360 million. The recent agreement between the federal government and Atlantic provinces (except Prince Edward Island) to harmonize their sales taxes will make matters significantly worse for physicians as the HST broadens the provincial tax base to essentially that of the GST in those provinces. With no ability to claim a tax refund on the GST they currently pay (and the proposed HST effective April 1, 1997), physicians once again will have to absorb the additional costs associated with the practice of medicine. In assessing the impact of the proposed HST, KPMG has estimated that physicians in New Brunswick, Nova Scotia, and Newfoundland will be out-of-pocket an additional $4.7 million each year because they are not eligible for a tax refund for their purchases. 3 The medical profession, is not looking for special treatment. What we are asking for is to be treated no differently than other self-employed Canadians and small businesses who have the opportunity to claim ITCs, and to be placed on the same footing with other health care providers who have the ability to recoup GST costs. Physicians, as self-employed individuals are considered small businesses for tax purposes, therefore, it seems entirely reasonable that they should have the same tax rules that apply to other small businesses. This is a question of fundamental fairness. III. POLICY CONTEXT Prior to the introduction of the GST, the federal sales tax (FST) was included in the price of most goods (not services) that were produced in, or imported to, Canada. Therefore, when goods were purchased by consumers, the FST was built into the price. At that time, physicians, and other self-employed Canadians and small businesses, were essentially on a level sales tax playing field. Since 1991, however, the introduction of the GST has tilted the table against physicians. Unless this situation is rectified, with the introduction of the HST, physicians in Atlantic Canada will join those in Quebec who experience additional costs due to the GST and their provincial sales tax using the same rules. (i). The Impact of the GST on Good Tax Policy and Good Health Care Policy When it reviews Bill C-70, the Standing Committee on Finance should look for opportunities where tax policy and health care policy go hand-in-hand. The principle of aligning good health policy with sound tax policy is critical to managing change while serving to lay down a strong foundation for future growth and prosperity. Unfortunately, the current GST policy introduces a series of distortions that have tax policy and health policy working against one another. Tax policies that do not reinforce health policy are bad tax policies. Consider, for example: 1. Under the current system, hospitals (under the "MUSH" formula - Municipalities, Universities, Schools and Hospitals) have been afforded an 83% rebate on GST paid for purchases made while physicians must absorb the full GST cost on their supplies. At a time when health policy initiatives across Canada are attempting to expand community-based practices, the current GST policy (and now harmonized sales tax policy) which taxes supplies in a private clinic setting while rebating much of the tax in a hospital setting acts to discourage the shift in emphasis; 2. Prescription drugs are zero-rated. The objective was to ensure that pharmaceutical firms are no worse off than under the previous federal sales tax regime. Recognizing that medical services can play an equally important role as drugs, it appears inconsistent that the government would choose to have drugs as tax free, and medical services absorbing GST; 3. In the current fiscal climate, the current GST policy, and now the proposed harmonized sales tax in Atlantic Canada, is threatening to harm the important role when it comes to recruitment and retention of physicians across Canada, and in particular, the Atlantic provinces - where they are already experiencing difficulty; and, 4. It is estimated that the 55,000 physicians employ up to 100,000 Canadians. Physicians play an important role in job creation. The disproportionate effects of the GST policy could have an adverse effect on the number of individuals employed by physicians. With these issues at hand, it is apparent that good tax policy and good health policy are themselves not synchronized and are working at cross purposes. At this point, when the Standing Committee is reviewing Bill C-70, it is the time to address this situation based on the fundamental principle of fairness in the tax system, while ensuring that good tax policy reinforces good health care policy. (ii). Not All Health Care Services Are Created Equal under the GST/HST Physicians are not the only group of health care providers whose services are placed under the category of "tax exempt", with the result that they incur increased GST costs. For example, the services of dentists, nurses, physiotherapists, psychologists and chiropractors are categorized as "tax exempt". However, there is an important distinction between whether the services are government funded or not. Health care providers who deliver services privately and which are not publicly funded do have the opportunity to pass along the GST in their costs through their fee structures. For these services that are government funded there are no opportunities for physicians to recover the tax paid for purchases unless a specific rebate has been provided (e.g., hospitals). To date, in negotiations with the medical profession, no provincial/territorial government has agreed to provide funding to reflect the additional costs associated with the introduction of the GST. Their position has been that this is a "federal" matter. This becomes important when one considers that under the Canadian Constitution one level of government cannot tax another, and the provincial governments are not prepared to absorb the cost of the GST. It is critical to point out that since doctors receive 99% of their professional earnings from the government health insurance plans, 4 they have absolutely no other option when it comes to recovering the GST - they must absorb it! In summary, while a number of health care services are categorized as tax exempt, it must be emphasized that some providers "are more equal than others" under the GST - contrary to other health care providers, physicians do not have the ability to claim ITCs. This distinction becomes readily apparent when one considers the sources of (private and/or public) funding for such services. IV. THE SEARCH FOR A SOLUTION Like many others in Canadian society, physicians work hard to provide quality health care to their patients within what is almost exclusively a publicly-financed system for medical services. Physicians are no different from Canadians in that they, too, are consumers (and purchasers). As consumers, physicians pay their fair share of taxes to support the wide range of valued government services. By the same token, as providers of health care, physicians have not accepted, nor should they accept, a perpetuation of the fundamental injustices built into the current GST, QST and proposed HST arrangements. To date, the CMA has made representations to two Ministers of Finance and their Department Officials. We have discussed several ways to address a situation that is not sustainable, with no resolution to date. We look to this Committee and the federal government for a fair solution to this unresolved issue. V. RECOMMENDATION This unfair and discriminatory situation can be resolved. There is a solution that can serve to reinforce good economic policy with good health care policy in Canada. An amendment to the Excise Tax Act, the legislation which governs the GST (and proposed HST) can make an unfair situation fair to all Canadian physicians. In its recent submission to the Standing Committee as part of the 1997 pre-budget consultation process, the CMA recommended "that medical services be zero-rated, in order to achieve a fair and equitable GST policy for physicians." In order to achieve this objective all health care services, including medical services, funded by the provinces could be zero-rated. This recommendation serves to place physicians on a level playing field with other self-employed Canadians and small businesses. In addition, from a health care perspective, this would treat medical services in the same manner as that of prescription drugs. This is a reasonable proposition, as in many instances, medical treatments and drug regimens go hand-in-hand. Furthermore, this recommendation would ensure that medical services under the GST and proposed HST would be no worse off than other goods or services that provincial governments' purchase and where suppliers can claim a tax refund (i.e., ITCs). While the recommendation is an important statement in principle of what is required to address the current inequities under the GST, and soon to be HST, the CMA offers a more specific recommendation to the Standing Committee as to how the principles can be operationalized within the context of Bill C-70 and the Excise Tax Act. The CMA respectfully recommends the following: 1. "THAT HEALTH CARE SERVICES FUNDED BY THE PROVINCES BE ZERO-RATED." CMA has been advised that this would be accomplished by amending Bill C-70 as follows: (1). Section 5 of Part II of Schedule V to the Excise Tax Act is replaced by the following: 5. "A supply (other than a zero-rated supply) made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes)." (2). Section 9 of Part II of Schedule V to the Excise Tax Act is repealed. (3). Part II of Schedule VI to the Excise Tax Act is amended by adding the following after section 40: 41. A supply of any property or service but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government under a plan established under an Act of the legislature of the province to provide for health care services for all insured persons of the province. VI. SUMMARY By adopting the recommendation above, the federal government would fulfil, at least two over-arching policy objectives, they are: 1. Strengthening the relationship between good economic policy and good health policy in Canada; and, 2. Applying the fundamental principles that underpin our taxation system (fairness, efficiency, effectiveness), in all cases. ________________________ 1 the Goods and Services Tax: Fairness for Physicians, Presentation to the House of Commons Standing Committee on Finance, Ottawa, Ontario, March 15, 1994. The Canadian Medical Association. 2 Review of the Impact of the Goods and Services Tax on Canadian Physicians, KPMG, June, 1992. 3 Review of the Impact of a Provincial Value Added Tax on Physicians in New Brunswick, Nova Scotia, and Newfoundland and Labrador, KPMG, August, 1996. 4 National Health Expenditures, 1975-1994, Health Canada, January 1996.
Documents
Less detail

National pharmacare in Canada: Getting there from here

https://policybase.cma.ca/en/permalink/policy11959
Date
2016-06-01
Topics
Pharmaceuticals/ prescribing/ cannabis/ marijuana/ drugs
  1 document  
Policy Type
Parliamentary submission
Date
2016-06-01
Topics
Pharmaceuticals/ prescribing/ cannabis/ marijuana/ drugs
Text
On behalf of 83,000 physician members, the Canadian Medical Association (CMA) welcomes this opportunity to provide input to the House of Commons Standing Committee on Health study on the Development of a National Pharmacare Program. Recognizing that the term “pharmacare” is used in different contexts, for the purposes of this brief, pharmacare is defined as a program whereby Canadians have comparable access to medically necessary prescription medications, irrespective of their ability to pay, wherever they live in Canada. The Canadian Medical Association (CMA) is the national voice of Canadian physicians. Founded in 1867, the CMA’s mission is helping physicians care for patients. On behalf of its more than 83,000 members and the Canadian public, the CMA performs a wide variety of functions. Key functions include advocating for health promotion and disease/injury prevention policies and strategies, advocating for access to quality health care, facilitating change within the medical profession, and providing leadership and guidance to physicians to help them influence, manage and adapt to changes in health care delivery. Key Facts According to the Canadian Institute for Health Information (CIHI), in 2014, of the estimated $28.8 billion spent in Canada on prescription medications (representing 13.4% of total health spending), governmentsi accounted for 42.0%, and private insurers and out-of-pocket (OOP) payment accounted for 35.8% and 22.2% respectively.1 The CMA is a voluntary professional organization representing the majority of Canada’s physicians and comprising 12 provincial and territorial divisions and over 60 national medical organizations. i Includes federal. Social security fund and provincial/territorial spending 1 Canadian Institute for Health Information. Prescribed drug spending in Canada, 2013: a focus on public drug programs. https://secure.cihi.ca/free_products/Prescribed%20Drug%20Spending%20in%20Canada_2014_EN.pdf. Accessed 05/15/16. 2 Royal Commission on Health Services. Report Volume One. Ottawa: Queen’s Printer, 1964. 3 Canadian Institute for Health Information. National Health Expenditure Database 1975 to 2015. Table D 3.1.1-D3.13.1 https://www.cihi.ca/en/spending-and-health-workforce/spending/national-health-expenditure-trends. Accessed 05/08/16. 4 Statistics Canada. CANSIM Table 203-0022 Survey of household spending (SHS), household spending, Canada, regions and provinces, by household income quintile. Accessed 05/18/16. 5 Cancer Advocacy Coalition of Canada. 2014-15 Report Card on Cancer in Canada. http://www.canceradvocacy.ca/reportcard/2014/Report%20Card%20on%20Cancer%20in%20Canada%202014-2015.pdf. Accessed 05/08/16. 6 Canadian Cancer Society. Cancer drug access for Canadians. http://www.colorectal-cancer.ca/IMG/pdf/cancer_drug_access_report_en.pdf. Accessed 05/08/16. 7Schoen C, Osborn R, Squires D, Doty M. Access, affordability, and insurance complexity are often worse in the United States compared to ten other countries. Health Affairs 2013;32(12):2205-15. 8 Himmelstein D, Woolhandler S, Sarra J, Guyatt G. Health issues and health care expenses in Canadian bankruptices and insolvencies. International Journal of Health Services 2014;44(1):7-23. 9 Law M, Cheng L, Dhalla I, Heard D, Morgan S. The effect of cost on adherence to prescription medications in Canada. CMAJ 2012. 184)3):297-302. 10 Tamblyn R, Eguale T, Huang A, Winslade N, Doran P. The incidence and determinants of primary nonadherence with prescribed medication in primary care. Ann Inter Med 2014;160:441-50. Pharmacare is clearly part of the unfinished business of Medicare. Numerous authors have pointed out that Canada is the only developed country that does not include prescription medications as part of its universal health program. Table 1 below shows how Canada compares with the 22 member countries of the Organization for Economic Cooperation and Development (OECD) on the proportion of public spending for major categories of health expenditure in 2012. Table 1. Public spending as % of total spending: Major health spending categories, Canada and 22 OECD country average, 2012 % Public Spending Prescription Drugs Hospitals Doctors’ Offices Canada 42 91 99 OECD Average 70 88 72 Source: OECD.Stat, Doctors’ offices figure for Sweden is 2009 In the case of prescription medications, Canada was more than one-third (40%) below the OECD average. The Patchwork Quilt of Public-Private Coverage In 1964 the Hall Commission recommended 50/50 cost-sharing between the federal and provincial governments toward the establishment of a prescription drug program, with a $1.00 charge for each prescription. At the time, prescription medications represented 6.5% of spending on personal health services.2 This recommendation was not implemented. It might be further added that the Hall report contained 25 forward-looking recommendations on pharmaceuticals that remain current to this day, including bulk purchasing, generic substitution and a national formulary.2 As a result of the lack of inclusion of prescription medications in Medicare, there is wide variation today in public per capita spending on prescription drugs across the provinces. It may be seen in Table 2 that, for 2014, CIHI has estimated that public per capita expenditure ranged from $219 in British Columbia and $255 in Prince Edward Island (PE) to $369 in Saskatchewan and $437 in Quebec.3 CIHI does not provide estimates of private per capita prescription drug spending (private insurance plus OOP) below the national level. Table 2: Spending on prescription drugs: Selected indicators by province and territory, 2014 Province/ Territory Public spendinga ($ million) Public per capita spendinga ($ ) Private insuranceb ($ million) Average household out-of-pocketc $ NL 156.7 297 177 454 PE 37.3 255 32 516 NS 302.2 321 337 429 NB 210.8 280 284 477 QC 3,588.7 437 2,369 466 ON 4,730.4 346 4,626 324 MB 411.3 321 249 516 SK 415.4 369 192 514 AB 1,383.7 336 1,065 409 BC 1,015.8 219 894 456 YT 14.0 383 - - NT 17.5 400 - - NU 13.6 372 - - Territories 45.1 385 23 - Canada 12,297.4 334d 10,247 408 a CIHI, National Health Expenditure Database 1975-2015, includes all public funding sources b Canadian Life and Health Insurance Association c Statistics Canada, Survey of Household Spending, 2014 d Provincial/territorial average Table 2 also shows the significant role of private insurance in every region of Canada. Data provided by the Canadian Life and Health Insurance Association, shown in Column 3 of Table 2, show that private health insurance companies paid out $10.2 billion for prescription drug claims in 2014, representing 83% of the $12.3 billion paid for by governments. In three provinces — Newfoundland and Labrador, Nova Scotia and New Brunswick — the amount paid by private insurance exceeds that paid by governments. Table 2 also shows that there is wide variation in average household OOP spending on prescription drugs, according to Statistics Canada’s Survey of Household Spending (SHS). In 2014 this ranged from a low of $324 in Ontario to a high of $516 in PE and Manitoba.4 Even more striking variation is evident when looking at household out-of-pocket spending on prescription drugs by income quintile (detailed data not shown). According to the 2014 SHS the poorest one-fifth (lowest income quintile) of PE households spent more than twice as much ($645) OOP on prescription drugs than the poorest one-fifth in Ontario ($300).4 Aside from overall differences in public spending there are also differences in which medications are covered, particularly in the case of cancer drugs. The Cancer Advocacy Coalition of Canada reported in 2014 that four provinces have fully funded access to cancer medications taken at home. In Ontario and Atlantic Canada however, cancer drugs that must be taken in a hospital setting and are on the provincial formulary are fully funded by the provincial government; if the drug is taken outside of hospital (oral or injectable), the patient and family may have to pay significant costs out-of-pocket.5 More generally the Canadian Cancer Society has reported that persons moving from one province to another may find that a medication covered in their former province may not be covered in the new one. 6 Other sources confirm that prescription medication spending is an issue for many Canadians. On the Commonwealth Fund’s 2013 International Health Policy Survey, 8% of the Canadian respondents said that they had either not filled a prescription or skipped doses because of cost issues.7 Himmelstein et al. reported on a survey of Canadians who experienced bankruptcy between 2008 and 2010. They found that 74.5% of the respondents who had had a medical bill within the last two years reported that prescription drugs was their biggest medical expense.8 At least two Canadian studies have documented the impact that out-of-pocket costs, lack of insurance and low income have on non-adherenceii to prescription regimens. Law et al. examined cost-related non-adherence in the 2007 Canadian Community Health Survey and found that those without drug insurance were more than four times as likely to report non-adherence than those with insurance. The predicted rate of non-adherence among those with high household incomes and drug insurance was almost 10 times as high as that among those with low incomes and no insurance (35.6% vs. 3.6%).9 Based on a large-scale study of the incidence of primary non-adherence (defined as not filing a new prescription within nine months) in a group of some 70,000 Quebec patients, Tamblyn et al. reported that there was a 63% reduction in the odds of non-adherence among those with free medication over those with the maximum level of co-payment. They also reported that the odds of non-adherence increased with the cost of the medication prescribed.10 ii Non-adherence can be defined as doing something to make a medication last longer or failing to fill or renew a prescription. Previous Pharmacare Proposals In a recent monograph Katherine Boothe has contrasted the development of national prescription medication programs in Australia and the United Kingdom with the failure to do so in Canada.11 11 Boothe K. Ideas and the pace of change: national pharmaceutical insurance in Canada, Australia and the United Kingdom. Toronto: University of Toronto Press, 2015. 12 National Forum on Health. Directions for a pharmaceutical policy in Canada. http://www.hc-sc.gc.ca/hcs-sss/pubs/renewal-renouv/1997-nfoh-fnss-v2/index-eng.php. Accessed 05/18/16. 13 National Forum on Health. Canada health action: building on the legacy. Ottawa: Minister of Public Works and Government Services, 1997. 14 Bank of Canada. Inflation calculator. http://www.bankofcanada.ca/rates/related/inflation-calculator/?page_moved=1. Accessed 05/18/16. 15 Statistics Canada. Table 051-0001 Estimates of population, by age group and sex for July 1, Canada, provinces and territories. Accessed 05/15/16. 16 Canadian Institute for Health Information. National health expenditure database 1975 to 2015. Table C.3.1. Public health expenditure by use of funds, Canada, 1975 to 2015. https://www.cihi.ca/en/spending-and-health-workforce/spending/national-health-expenditure-trends. Accessed 05/25/16. 17 Berry C. Voluntary medical insurance and prepayment. Ottawa: Queen’s Printer, 1965. 18 Receiver General for Canada. Volume I Public Accounts of Canada for the fiscal year ended March 31, 1969. Ottawa: Queen’s Printer for Canada, 1969. 19 Receiver General for Canada. Volume I Public Accounts of Canada for the fiscal year ended March 31, 1972. Ottawa: Information Canada, 1972. 20 Privy Council Office. Speech from the Throne to open the first session thirty-sixth Parliament of Canada. http://www.pco-bcp.gc.ca/index.asp?lang=eng&page=information&sub=publications&doc=aarchives/sft-ddt/1997-eng.htm. Accessed 05/18/16. 21 Standing Senate Committee on Social Affairs, Science and Technology. The health of Canadians – the federal role. Volume six: recommendations for reform. Ottawa, 2002. 22 Commission on the Future of Health Care in Canada. Building on values: the future of health care in Canada. Ottawa, 2002. 23 Canadian Intergovernmental Conference Secretariat. 2003 First Ministers’ accord on health care renewal. http://www.scics.gc.ca/CMFiles/800039004_e1GTC-352011-6102.pdf. Accessed 05/18/16. 24 Council of the Federation. Premiers’ action plan for better health care: resolving issues in the spirit of true federalism. Communiqué July 30, 2004. http://canadaspremiers.ca/phocadownload/newsroom-2004/healtheng.pdf. Accessed 05/18/16. 25 Canadian Intergovernmental Conference Centre. A 10-year plan to strengthen health care. http://www.scics.gc.ca/CMFiles/800042005_e1JXB-342011-6611.pdf. Accessed 05/18/16. 26 National Pharmaceuticals Strategy. National Pharmaceuticals Strategy progress report. http://www.hc-sc.gc.ca/hcs-sss/alt_formats/hpb-dgps/pdf/pubs/2006-nps-snpp/2006-nps-snpp-eng.pdf. Accessed 05/18/16. 27 Canadian Intergovernmental Conference Secretariat. Backgrounder: national pharmaceutical strategy decision points. http://www.scics.gc.ca/english/conferences.asp?a=viewdocument&id=112. Accessed 05/18/16. 28 Canada’s Premiers. The pan-Canadian Pharmaceutical Alliance: April 2016 Update. http://www.pmprovincesterritoires.ca/en/initiatives/358-pan-canadian-pharmaceutical-alliance. Accessed 05/18/16. 29 Canadian Medical Association. General Council Resolution GC15-C16, August 26, 2015. 30 Gagnon M. The economic case for universal pharmacare. 2010. https://s3.amazonaws.com/policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2010/09/Universal_Pharmacare.pdf. Accessed 05/18/16. 31 Gagnon M. A roadmap to a rational pharmacare policy in Canada. Ottawa: Canadian Federation of Nurses Unions, 2014. 32 Morgan S, Law M, Daw J, Abraham L, Martin D. Estimated cost of universal public coverage of prescription drugs in Canada. CMAJ. 2015 Apr 21;187(7):491-7. doi: 10.1503/cmaj.141564. 33 Morgan S, Martin D, Gagnon M, Mintzes B, Daw, J, Lexchin, J. Pharmacare 2020. The future of drug coverage in Canada. http://pharmacare2020.ca/assets/pdf/The_Future_of_Drug_Coverage_in_Canada.pdf. Accessed 05/18/16. 34 Canadian Medical Association. Policy resolution GC15-C19, August 26, 2015. 35 Conference Board of Canada. Federal policy action to support the health care needs of Canada’s aging population. https://www.cma.ca/Assets/assets-library/document/en/advocacy/conference-board-rep-sept-2015-embargo-en.pdf. Accessed 05/18/16. 36 Government of the United Kingdom. Written statement to Parliament NHS charges from April 2016. https://www.gov.uk/government/speeches/nhs-charges-from-april-2016. Accessed 05/18/16. 37 Appleby J. Prescription charges: are they worth it? BMJ 2014;348:g3944 doi: 10.1136/bmj.g3944. Among the several Canadian attempts that she describes, the most activity occurred in the decade following the National Forum on Health (NFH), which was struck in 1994 and reported in 1997. A NFH working group paper on pharmaceutical policy recommended first dollar coverage for prescription medications, but acknowledged that it could not occur overnight: “over time we propose to shift private funding on prescribed pharmaceuticals (estimated at $3.6 billion in 1994) to public funding”.12 The NFH included this recommendation in its final report, noting that “the absorption of currently operating plans by a public system may involve transfer of funding sources as well as administrative apparatus”.13 It is instructive to place the 1994 prescription drug expenditure cited by the NFH in today’s context. According to the Bank of Canada’s inflation calculator, the $6.5 billion in 1994 would have cost $9.5 billion in 2014.14 CIHI estimates that actual spending in 2014 was $28.7 billion1 – 203% above the level of 1994 spending, compared to population growth of 23% over the same time period.15 Annual prescription drug spending increases averaged 7.3% over the period, although they have averaged just over 1% since 2009. 16 A significant shift from private to public funding is not without precedent. A study prepared for the Hall Commission estimated that 9.6 million Canadians, representing 53% of the total population, had some form of not-for-profit or commercial insurance coverage for medical and/or surgical services in 1961.17 With the passage of the Medical Care Act in 1966 these plans were all displaced as the provinces joined Medicare. The funding shift did not occur overnight, although it did move quickly. In the first year, 1968/69, Ottawa paid out $33 million to the provinces pursuant to the Medical Care Act, which grew quickly to $181 million in 1969/70, and reaching $576.5 million in 1971/72.18,19 Since the 1997 NFH report the closest that the federal government has come to acting on pharmacare was a commitment in the 1997 Speech from the Throne to “develop a national plan, timetable and a fiscal framework for providing Canadians with better access to medically necessary drugs”, but nothing further was ever made public.20 Pharmacare was subsequently examined in two national studies, both of which recommended federal involvement in reimbursing “catastrophic” prescription drug expenditures above a threshold of household income. The Senate study on the State of the Health Care System in Canada, chaired by Michael Kirby, was authorized in March 2001 and the Commission on the Future of Health Care in Canada, headed by Roy Romanow, was approved in April 2001. Both issued their final reports in 2002. The Kirby plan was designed so as to avoid the necessity of eliminating existing private plans or the provincial/territorial public plans, not unlike the approach taken by Quebec in 1997. In the Kirby plan, in the case of public plans, personal prescription medication expenses for any family would be capped at 3% of total family income. The federal government would then pay 90% of prescription drug expenses in excess of $5,000. In the case of private plans, sponsors would have to agree to limit out-of-pocket costs to $1,500 per year, or 3% of family incomes, whichever was less. The federal government would then agree to pay 90% of drug costs in excess of $5,000 per year. Both public and private plans would be responsible for the difference between out-of-pocket costs and $5,000, and private plans would be encouraged to pool their risk. Kirby estimated that this plan would cost approximately $500 million per year.21 The Romanow Commission recommended a $1 billion Catastrophic Drug Transfer through which the federal government would reimburse 50% of the costs of provincial and territorial drug insurance plans above a threshold of $1,500 per person per year.22 The advantage of these proposals is that they are fully scalable. The federal government could adjust either the out-of-pocket household income threshold, the ceiling above which it would assume costs, or the percentage of costs that it would pay above the ceiling. Following the Kirby and Romanow reports there was a back and forth exchange between the federal and provincial-territorial (PT) governments on a plan for catastrophic coverage. In their February 2003 Accord, First Ministers agreed to ensure that Canadians would have reasonable access to catastrophic drug coverage by March 2006.23 At their annual summer meeting in 2004 the Premiers later called on the federal government to “assume full financial responsibility for a comprehensive drug program for all Canadians”, with compensation to Quebec for its drug program.24 In the September 2004 Health Accord, First Ministers directed health ministers to develop a nine-point National Pharmaceuticals Strategy (NPS), including costing options for catastrophic coverage.25 A federal-provincial-territorial Ministerial Task Force on the NPS was struck and a progress report was issued in June 2006. The estimates of catastrophic spending were markedly higher than those of the Kirby and Romanow reports. Using a variable percentage of income threshold it estimated that, based on public plan costs, only catastrophic spending represented 42% of total prescription drug spending. If private plan costs were also considered, catastrophic spending would represent 55% of total prescription drug spending. This report proposed four options for catastrophic coverage with estimates for new public funding ranging from $1.4 to $4.7 billion.26 Although no account of the methods was provided it is evident that a significant proportion of existing plan costs were included in the estimates of catastrophic expenditure. At their September 2008 meeting, the PT health ministers called for a national standard for drug coverage not to exceed 5% of net income and for the federal government to share 50/50 in the estimated $5.03 billion cost.27 The uncertainty about the projected cost of a pharmacare plan resulting from widely varying estimates has doubtless contributed to a reluctance of governments to engage on advancing this issue. Recent Developments At the PT level, there has been a concerted effort on price negotiations during the past few years through the pan-Canadian Pharmaceutical Alliance (pCPA) that was established in 2010. As of March 31, 2015, the pCPA reported that price reductions in generic and brand-name prescription medications result in annual savings of an estimated $490 million.28 The federal drug plans are now participating in the pCPA and the CMA has recommended that the pCPA should also invite the participation of private health insurance companies.29 The prospect of savings through lower prices has been foundational to two recent studies that have made the case that a single public payer pharmacare program with little or no co-payment is affordable. The first was by Marc-André Gagnon in 2010. The proposal was developed on the basis of a review of cross-provincial and international practices in pharmaceutical policy. The review formed the basis of a set of 11 assumptions that were used to develop four scenarios that resulted in estimates of prescription drug cost savings over the 2008 baseline expenditure of $25.1 billion that ranged to $2.7 billion to $10.7 billion.30 In a 2014 update Gagnon estimated that a first dollar coverage program would save 10% to 41% of prescription drug costs, representing savings of as much as $11.4 billion annually on a 2012-13 base of $27.7 billion.31 Steve Morgan and colleagues (2015) have estimated that a universal public plan with small co-payments could reduce prescription drug spending by $7.3 billion.32 Subsequently, in Pharmacare 2020 Morgan et al. set out five recommendations calling for the implementation of a single payer system with a publicly accountable management agency by 2020.33 Taking a First Step Forward At its 2015 annual meeting, the CMA adopted a policy resolution that supports the development of an equitable and comprehensive national pharmacare program.34 Reflecting on the experience of the past 40 years since the enactment of the Established Programs Financing Act in 1977 that eliminated 50:50 cost-sharing, it seems highly unlikely that the federal government would take on a new open-ended program in the health and social arena, cost-shared or not. However, notwithstanding the progress of the pCPA, we are unlikely to address the significant access gaps in prescription medication coverage without the involvement of the federal government. These are fiscally challenging times for both levels of government, with budget deficits expected for several years to come. As noted previously, the Kirby and Romanow proposals for a federal funding role in pharmacare are scalable. In 2015 the CMA commissioned the Conference Board of Canada to model the cost of covering prescription medication expenditure beyond a household spending threshold of $1,500 or 3% of gross household income, based on Statistics Canada’s 2013 Survey of Household Spending. The projected costs over the 2016 to 2020 are shown in Table 3 below. The cost to the federal government of covering the entire amount above the ($1,500 – 3%) threshold would be $1.6 billion in 2016.35 Recommendation 1: The Canadian Medical Association recommends that the House of Commons Standing Committee on Health request the Parliamentary Budget Officer to conduct a detailed examination of the financial burden of prescription medication coverage across Canada and to develop costing options for a federal contribution to a national pharmacare program. Recommendation 2: As a positive step toward comprehensive, universal coverage for prescription medications, the Canadian Medical Association recommends that the federal government establish a cost-shared program of coverage for prescription medications. First dollar coverage? The issue of co-payment arises in most discussions of pharmacare. Hall recommended a $1.00 prescription charge in 1964. In England, which does include prescription medications in the National Health Service (NHS), the current prescription charge is £8.40, although the government has previously noted that 90% of prescription items are provided free of charge.36 Appleby has noted however that the NHS’s in Wales, Northern Ireland and Scotland have eliminated prescription charges.37One observational study of dispensing rates in Wales found that the overall impact of removing prescription charges was minimal.38 Table 4 shows the total volume of prescriptions dispensed in Scotland over the period 2009-2015, which straddles the removal of prescription charges on April 1, 2011. It indicates that percentage increases in the annual dispensing volume diminished after 2012 and the increase observed in 2015 was just 1.4%. It should be added, however, that patient charges accounted for less than 4% of Scotland’s dispensing expenditures in 2010.39 It will be interesting to see the results of further studies in these jurisdictions. 38 Cohen D, Alam M, Dunstan F, Myles S, Hughes D, Routledge P. Abolition of prescription copayments in Wales: an observational study on dispensing rates. Value in Health 2010;13(5):675-80. 39 ISD Scotland. Prescribing and medicines. Data tables. http://www.isdscotland.scot.nhs.uk/Health-Topics/Prescribing-and-Medicines/Publications/data-tables.asp?Co=Y. Accessed 05/15/16. 40 Canadian Medical Association. A prescription for optimal prescribing. http://policybase.cma.ca/dbtw-wpd/Policypdf/PD11-01.pdf. Accessed 05/18/16. 41 Canadian Medical Association. Vision for e-prescribing; a joint statement by the Canadian Medical Associaiton and the Canadian Pharmacists Association. http://policybase.cma.ca/dbtw-wpd/Policypdf/PD13-02.pdf. Accessed 05/18/16. 42 Department of Finance Canada. Growing the middle class. http://www.budget.gc.ca/2016/docs/plan/budget2016-en.pdf. Accessed 05/18/16. Table 4 Prescription Dispensing in Scotland, 2009 – 2015 Year Number of Prescriptions % increase from previous year (million) 2009 88.4 3.8 2010 91.0 3.0 2011 93.8 3.1 2012 96.6 3.0 2013 98.4 1.9 2014 100.6 2.2 2015 102.0 1.4 Source: annual tabulations - Remuneration and reimbursement details for all prescribing made in Scotland.39 Other Elements of a National Pharmaceuticals Strategy It was noted previously that the Hall Report contained 25 recommendations on pharmaceuticals, and the 2004 Health Accord called for a 9-point National Pharmaceuticals Strategy. Two of the NPS points that the CMA would emphasize are the need to influence prescribing behaviour and the need to advance electronic prescribing (e-prescribing). The CMA refers to the first of these points as “optimal prescribing” and defines it as the prescription of a medication that is: the most clinically appropriate for the patient’s condition; safe and effective; part of a comprehensive treatment plan; and the most cost-effective available to best meet the patient’s needs. Toward this end the CMA has identified principles and recommendations to promote optimal prescribing, including the need for current information on cost and cost-effectiveness.40 The CMA believes that e-prescribing has the potential to improve patient safety, to support clinical decision-making and medication management, and to increase awareness of cost and cost-effectiveness considerations. In 2012 the CMA and the Canadian Pharmacists Association adopted a joint vision statement calling for e-prescribing to be the means by which prescriptions are generated for Canadians by 2015.41 Clearly that date has come and gone and we are not there yet. The current state primarily consists of demonstration projects and “workarounds”. The CMA was pleased to see an amount of $50 million allocated to Canada Health Infoway in the 2016 federal budget to support the advancement of e-prescribing and telehomecare.42 Finally the CMA remains very concerned about ongoing shortages of prescription drugs. We would caution that whatever measures governments might take to implement a pharmacare program these must not exacerbate drug shortages. Recommendation 3: The Canadian Medical Association recommends that the Federal/Provincial/Territorial health Ministers direct their officials to convene a working group on a comprehensive National Pharmaceuticals Strategy that will consult widely with stakeholders representing patients, prescribers, and the health insurance and pharmaceutical industries to report with recommendations by spring 2017. Conclusion In conclusion, few would argue that prescription medications are less vital to the health and health care of Canadians than hospital and medical services. We would not have had the Medicare program that Canadians cherish today without the leadership and financial contribution of the federal government, and similarly without it now we will not have any form of a national pharmacare program.
Documents
Less detail

A new mission for health care in Canada: Addressing the needs of an aging population. 2016 pre-budget submission to the Minister of Finance

https://policybase.cma.ca/en/permalink/policy11803
Date
2016-02-09
Topics
Population health/ health equity/ public health
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Date
2016-02-09
Topics
Population health/ health equity/ public health
Health systems, system funding and performance
Text
The Canadian Medical Association (CMA) is pleased to confirm its strong support for the federal government's health and social policy commitments, as identified in the ministerial mandate letters. In this brief, the CMA outlines seven recommendations for meaningful and essential federal action to ensure Canada is prepared to meet the health care needs of its aging population. The CMA's recommendations are designed to be implemented in the 2016-17 fiscal year in order to deliver immediate support to the provinces and territories and directly to Canadians. Immediate implementation of these recommendations is essential given the current and increasing shortages being experienced across the continuum of care in jurisdictions across Canada. In 2014, the CMA initiated a broad consultative initiative on the challenges in seniors care, as summarized in the report A Policy Framework to Guide a National Seniors Strategy for Canada. This report highlights the significant challenges currently being experienced in seniors care and emphasizes the need for increased federal engagement. Finally, if implemented, the CMA's recommendations will contribute to the federal government's strategic commitments in health, notably the commitment to the development of a new Health Accord. 1) Demographic Imperative for Increased Federal Engagement in Health Canada is a nation on the threshold of great change. This change will be driven primarily by the economic and social implications of the major demographic shift already underway. The added uncertainties of the global economy only emphasize the imperative for federal action and leadership. In 2015, for the first time in Canada's history, persons aged 65 years and older outnumbered those under the age of 15 years.1 Seniors are projected to represent over 20% of the population by 2024 and up to 25% of the population by 2036.2 It is increasingly being recognized that the projected surge in demand for services for seniors that will coincide with slower economic growth and lower government revenue will add pressure to the budgets of provincial and territorial governments.3 Today, while seniors account for about one-sixth of the population, they consume approximately half of public health spending.4 Based on current trends and approaches, seniors care is forecast to consume almost 62% of provincial/territorial health budgets by 2036.5 The latest National Health Expenditures report by the Canadian Institute of Health Information (CIHI) projects that health spending in 2015 was to exceed $219 billion, or 10.9% of Canada's gross domestic product (GDP).6 To better understand the significance of health spending in the national context, consider that total federal program spending is 13.4% of GDP.7 Finally, health budgets are now averaging 38% of provincial and territorial global budgets.8 Alarmingly, the latest fiscal sustainability report of the Parliamentary Budget Officer explains that the demands of Canada's aging population will result in "steadily deteriorating finances" for the provinces and territories, who "cannot meet the challenges of population aging under current policy."9 Taken together, the indicators summarized above establish a clear imperative and national interest for greater federal engagement, leadership and support for the provision of health care in Canada. 2) Responses to Pre-Budget Consultation Questions Question 1: How can we better support our middle class? A) Federal Action to Help Reduce the Cost of Prescription Medication The CMA strongly encourages the federal government to support measures aimed at reducing the cost of prescription medication in Canada. A key initiative underway is the pan-Canadian Pharmaceutical Alliance led by the provinces and territories. The CMA supports the federal government's recent announcement that it will partner with the provinces and territories as part of the pan-Canadian Pharmaceutical Alliance. In light of the fact that the majority of working age Canadians have coverage for prescription medication through private insurers10, the CMA recommends that the federal government support inviting the private health insurance industry to participate in the work of the pan-Canadian Pharmaceutical Alliance. Prescription medication has a critical role as part of a high-quality, patient-centred and cost-effective health care system. Canada stands out as the only country with universal health care without universal pharmaceutical coverage.11 It is an unfortunate reality that the affordability of prescription medication has emerged as a key barrier to access to care for many Canadians. According to the Angus Reid Institute, more than one in five Canadians (23%) report that they or someone in their household did not take medication as prescribed because of the cost during the past 12 months.12 Statistics Canada's Survey of Household Spending reveals that households headed by a senior spend $724 per year on prescription medications, the highest among all age groups and over 60% more than the average household.13 Another recent study found that 7% of Canadian seniors reported skipping medication or not filling a prescription because of the cost.14 The CMA has long called on the federal government to implement a system of catastrophic coverage for prescription medication to ensure Canadians do not experience undue financial harm and to reduce the cost barriers of treatment. As a positive step toward comprehensive, universal coverage for prescription medication, the CMA recommends that the federal government establish a new funding program for catastrophic coverage of prescription medication. The program would cover prescription medication costs above $1,500 or 3% of gross household income on an annual basis. Research commissioned by the CMA estimates this would cost $1.57 billion in 2016-17 (Table 1). Table 1: Projected cost of federal contribution to cover catastrophic prescription medication costs, by age cohort, 2016-2020 ($ million)15 Age Cohort 2016 2017 2018 2019 2020 Share of total cost Under 35 years 113.3 116.3 119.4 122.5 125.2 7% 35 to 44 years 177.2 183.5 190.5 197.8 204.3 11% 45 to 54 years 290.2 291.9 298.0 299.2 301.0 18% 55 to 64 years 383.7 400.6 417.6 433.1 444.6 25% 65 to 74 years 309.2 328.5 348.4 369.8 391.6 21% 75 years + 303.0 315.5 329.8 345.2 360.1 20% All ages 1,566.8 1,617.9 1,670.5 1,724.2 1,773.1 100% B) Deliver Immediate Federal Support to Canada's Unpaid Caregivers There are approximately 8.1 million Canadians serving as informal, unpaid caregivers with a critical role in Canada's health and social sector.16 The Conference Board of Canada reports that in 2007, informal caregivers contributed over 1.5 billion hours of home care - more than 10 times the number of paid hours in the same year.17 The economic contribution of informal caregivers was estimated to be about $25 billion in 2009.18 This same study estimated that informal caregivers incurred over $80 million in out-of-pocket expenses related to caregiving in 2009. Despite their tremendous value and important role, only a small fraction of caregivers caring for a parent receive any form of government support.19 Only 5% of caregivers providing care to parents reported receiving financial assistance, while 28% reported needing more assistance than they received.20 It is clear that Canadian caregivers require more support. As a first step, the CMA recommends that the federal government amend the Caregiver and Family Caregiver Tax Credits to make them refundable. This would provide an increased amount of financial support for family caregivers. It is estimated that this measure would cost $90.8 million in 2016-17.21 C) Implement a new Home Care Innovation Fund The CMA strongly supports the federal government's significant commitment to deliver more and better home care services, as released in the mandate letter for the Minister of Health. Accessible, integrated home care has an important role in Canada's health sector, including addressing alternate level of care (ALC) patients waiting in hospital for home care or long-term care. As highlighted by CIHI, the majority of the almost 1 million Canadians receiving home care are aged 65 or older.22 As population aging progresses, demand for home care can be expected to increase. Despite its importance, it is widely recognized that there are shortages across the home care sector.23 While there are innovations occurring in the sector, financing is a key barrier to scaling up and expanding services. To deliver the federal government's commitment to increasing the availability of home care, the CMA recommends the establishment of a new targeted home care innovation fund. As outlined in the Liberal Party of Canada's election platform, the CMA recommends that the fund deliver $3 billion over four years, including $400 million in the 2016-17 fiscal year. Question 2: What infrastructure needs can best help grow the economy...and meet your priorities locally? Deliver Federal Investment to the Long-term Care Sector as part of Social Infrastructure All jurisdictions across Canada are facing shortages in the continuing care sector. Despite the increased availability of home care, research commissioned for the CMA indicates that demand for continuing care facilities will surge as the demographic shift progresses.24 In 2012, it was reported that wait times for access to a long-term care facility in Canada ranged from 27 to over 230 days. More than 50% of ALC patients are in these hospital beds because of the lack of availability of long-term care beds25. Due to the significant difference in the cost of hospital care (approximately $846 per day) versus long-term care ($126 per day), the CMA estimates that the shortages in the long-term care sector represent an inefficiency cost to the health care system of $2.3 billion a year.26 Despite the recognized need for infrastructure investment in the continuing care sector, to date, this sector has been unduly excluded from federal investment in infrastructure, namely the Building Canada Plan. The CMA recommends that the federal government include capital investment in continuing care infrastructure, including retrofit and renovation, as part of its commitment to invest in social infrastructure. Based on previous estimates, the CMA recommends that $540 million be allocated for 2016-17 (Table 2), if implemented on a cost-share basis. Table 2: Estimated cost to address forecasted shortage in long-term care beds, 2016-20 ($ million)27 Forecasted shortage in long term care beds Estimated cost to address shortage Federal share to address shortage in long term care beds (based on 1/3 contribution) 2016 6,028 1,621.5 540.5 2017 6,604 1,776.5 592.2 2018 8,015 2,156.0 718.7 2019 8,656 2,328.5 776.2 2020 8,910 2,396.8 798.9 Total 38,213 10,279.3 3,426.4 In addition to improved delivery of health care resources, capital investment in the long-term care sector would provide an important contribution to economic growth. According to previous estimates by the Conference Board of Canada, the capital investment needed to meet the gaps from 2013 to 2047 would yield direct economic benefits on an annual basis that include $1.23 billion contribution to GDP and 14,141 high value jobs during the capital investment phase and $637 million contribution to GDP and 11,604 high value jobs during the facility operation phase (based on an average annual capital investment). Question 3: How can we create economic growth, protect the environment, and meet local priorities while ensuring that the most vulnerable don't get left behind? Deliver new Funding to Support the Provinces and Territories in Meeting Seniors Care Needs Canada's provincial and territorial leaders are struggling to meet health care needs in light of the demographic shift. This past July, the premiers issued a statement calling for the federal government to increase the Canada Health Transfer (CHT) to 25% of provincial and territorial health care costs to address the needs of an aging population. It is recognized that as an equal per-capita based transfer, the CHT does not currently account for population segments with increased health needs, specifically seniors. The CMA was pleased that this issue was recognized by the Prime Minister in his letter last spring to Quebec Premier Philippe Couillard. However, the CMA is concerned that an approach to modify the transfer formula would potentially delay the delivery of federal support to meet the needs of an aging population. As such, rather than the transfer formula, the CMA has developed an approach that delivers support to jurisdictions endeavoring to meet the needs of their aging populations while respecting the transfer arrangement already in place. The CMA commissioned the Conference Board of Canada to calculate the amount for the top-up to the CHT using a needs-based projection. The amount of the top-up for each jurisdiction is based on the projected increase in health care spending associated with an aging population. To support the innovation and transformation needed to address the health needs of the aging population, the CMA recommends that the federal government deliver additional funding on an annual basis beginning in 2016-17 to the provinces and territories by means of a demographic-based top-up to the Canada Health Transfer (Table 3). For the fiscal year 2016-17, this top-up would require $1.6 billion in federal investment. Table 3: Allocation of the federal demographic-based top-up, 2016-20 ($million)28 Jurisdiction 2016 2017 2018 2019 2020 All of Canada 1,602.1 1,663.6 1,724.2 1,765.8 1,879.0 Ontario 652.2 677.9 692.1 708.6 731.6 Quebec 405.8 413.7 418.8 429.0 459.5 British Columbia 251.6 258.7 270.3 270.1 291.3 Alberta 118.5 123.3 138.9 141.5 157.5 Nova Scotia 53.6 58.6 62.3 64.4 66.6 New Brunswick 45.9 50.7 52.2 54.1 57.2 Newfoundland and Labrador 29.7 30.5 33.6 36.6. 46.1 Manitoba 28.6 30.6 33.5 32.5 36.6 Saskatchewan 3.5 4.9 7.3 12.7 15.4 Prince Edward Island 9.1 9.7 10.6 10.9 11.5 Yukon 1.4 2.6 2.1 2.5 2.5 Question 4: Are the Government's new priorities and initiatives realistic; will they help grow the economy? Ensure Tax Equity for Canada's Medical Professionals is Maintained Among the federal government's commitments is the objective to decrease the small business tax rate from 11% to 9%. The CMA supports this commitment to support small businesses, such as medical practices, in recognition of the significant challenges facing this sector. However, it is not clear whether as part of this commitment the federal government intends to alter the Canadian-Controlled Private Corporation (CCPC) framework. The federal government's framing of this commitment, as released in the mandate letter for the Minister of Small Business and Tourism, has led to confusion and concern. Canada's physicians are highly skilled professionals, providing an important public service and making a significant contribution to our country's knowledge economy. Canadian physicians are directly or indirectly responsible for hundreds of thousands of jobs across the country, and invest millions of dollars in local communities, ensuring that Canadians are able to access the care they need, as close to their homes as possible. In light of the design of Canada's health care system, the majority of physicians are self-employed professionals and effectively small business owners. As self-employed small business owners, they typically do not have access to pensions or health benefits. In addition, as employers, they are responsible for these benefits for their employees. In addition to managing the many costs associated with running a medical practice, Canadian physicians must manage challenges not faced by many other small businesses. As highly-skilled professionals, physicians typically enter the workforce with significant debt levels and at a later stage in life. For some, entering practice after training requires significant investment in a clinic or a practice. Finally, it is important to recognize that physicians cannot pass on the increased costs introduced by governments, such as changes to the CCPC framework, onto patients, as other businesses would do with clients. For a significant proportion of Canada's physicians, the CCPC framework represents a measure of tax equity for individuals taking on significant personal financial burden and liability as part of our public health care system. As well, in many cases, practices would not make economic sense if the provisions of the CCPC regime were not in place. Given the importance of the CCPC framework to medical practice, changes to this framework have the potential to yield unintended consequences in health resources, including the possibility of reduced access to much needed care. The CMA recommends that the federal government maintain tax equity for medical professionals by affirming its commitment to the existing framework governing Canadian-Controlled Private Corporations. 3) Conclusion The CMA recognizes that the federal government must grapple with an uncertain economic forecast and is prioritizing measures that will support economic growth. The CMA strongly encourages the federal government to adopt the seven recommendations outlined in this submission as part of these efforts. In addition to making a meaningful contribution to meeting the future care needs of Canada's aging population, these recommendations will mitigate the impacts of economic pressures on individuals as well as jurisdictions. The CMA would welcome the opportunity to provide further information and its rationale for each recommendation. Summary of Recommendations 1. The CMA recommends that the federal government establish a new funding program for catastrophic coverage of prescription medication; this would be a positive step toward comprehensive, universal coverage for prescription medication. 2. The CMA recommends that the federal government support inviting the private health insurance industry to participate in the work of the pan-Canadian Pharmaceutical Alliance. 3. The CMA recommends that the federal government amend the Caregiver and Family Caregiver Tax Credits to make them refundable. 4. To deliver the federal government's commitment to increasing the availability of home care, the CMA recommends the establishment of a new targeted home care innovation fund. 5. The CMA recommends that the federal government include capital investment in continuing care infrastructure, including retrofit and renovation, as part of its commitment to invest in social infrastructure. 6. The CMA recommends that the federal government deliver additional funding on an annual basis beginning in 2016-17 to the provinces and territories by means of a demographic-based top-up to the Canada Health Transfer. 7. The CMA recommends that the federal government maintain tax equity for medical professionals by affirming its commitment to the existing framework governing Canadian-Controlled Private Corporations. References 1 Statistics Canada. Population projections: Canada, the provinces and territories, 2013 to 2063. The Daily, Wednesday, September 17, 2014. Available: http://www.statcan.gc.ca/daily-quotidien/140917/dq140917a-eng.htm 2 Statistics Canada. Canada year book 2012, seniors. Available: www.statcan.gc.ca/pub/11-402-x/2012000/chap/seniors-aines/seniors-aines-eng.htm 3 Conference Board of Canada. A difficult road ahead: Canada's economic and fiscal prospects. Available: http://canadaspremiers.ca/phocadownload/publications/conf_bd_difficultroadahead_aug_2014.pdf. 4 Canadian Institute for Health Information. National health expenditure trends, 1975 to 2014. Ottawa: The Institute; 2014. Available: www.cihi.ca/web/resource/en/nhex_2014_report_en.pdf 5 Calculation by the Canadian Medical Association, based on Statistics Canada's M1 population projection and the Canadian Institute for Health Information age-sex profile of provincial-territorial health spending. 6 CIHI. National Health Expenditure Trends,1975 to 2015. Available: https://secure.cihi.ca/free_products/nhex_trends_narrative_report_2015_en.pdf. 7 Finance Canada. Update of Economic and Fiscal Projections 2015. http://www.budget.gc.ca/efp-peb/2015/pub/efp-peb-15-en.pdf. 8 CIHI. National Health Expenditure Trends,1975 to 2015. Available: https://secure.cihi.ca/free_products/nhex_trends_narrative_report_2015_en.pdf. 9 Office of the Parliamentary Budget Officer. Fiscal sustainability report 2015. Ottawa: The Office; 2015. Available: www.pbo-dpb.gc.ca/files/files/FSR_2015_EN.pdf 10 IBM for the Pan-Canadian Pharmaceutical Alliance. Pan Canadian Drugs Negotiations Report. Available at: http://canadaspremiers.ca/phocadownload/pcpa/pan_canadian_drugs_negotiations_report_march22_2014.pdf . 11 Morgan SG, Martin D, Gagnon MA, Mintzes B, Daw JR, Lexchin J. Pharmacare 2020: The future of drug coverage in Canada. Vancouver: Pharmaceutical Policy Research Collaboration, University of British Columbia; 2015. Available: http://pharmacare2020.ca/assets/pdf/The_Future_of_Drug_Coverage_in_Canada.pdf 12 Angus Reid Institute. Prescription drug access and affordability an issue for nearly a quarter of Canadian households. Available: http://angusreid.org/wp-content/uploads/2015/07/2015.07.09-Pharma.pdf 13 Statistics Canada. Survey of household spending. Ottawa: Statistics Canada; 2013. 14 Canadian Institute for Health Information. How Canada compares: results From The Commonwealth Fund 2014 International Health Policy Survey of Older Adults. Available: www.cihi.ca/en/health-system-performance/performance-reporting/international/commonwealth-survey-2014 15 Conference Board of Canada. Research commissioned for the CMA, July 2015. 16 Statistics Canada. Family caregivers: What are the consequences? Available: www.statcan.gc.ca/pub/75-006-x/2013001/article/11858-eng.htm 17 Conference Board of Canada. Home and community care in Canada: an economic footprint. Ottawa: The Board; 2012. Available: http://www.conferenceboard.ca/cashc/research/2012/homecommunitycare.aspx 18 Hollander MJ, Liu G, Chappeel NL. Who cares and how much? The imputed economic contribution to the Canadian health care system of middle aged and older unpaid caregivers providing care to the elderly. Healthc Q. 2009;12(2):42-59. 19 Government of Canada. Report from the Employer Panel for Caregivers: when work and caregiving collide, how employers can support their employees who are caregivers. Available: www.esdc.gc.ca/eng/seniors/reports/cec.shtml 20 Ibid. 21 Conference Board of Canada. Research commissioned for the CMA, July 2015. 22 CIHI. Seniors and alternate level of care: building on our knowledge. Available: https://secure.cihi.ca/free_products/ALC_AIB_EN.pdf. 23 CMA. A policy framework to guide a national seniors strategy for Canada. Available: https://www.cma.ca/Assets/assets-library/document/en/about-us/gc2015/policy-framework-to-guide-seniors_en.pdf. 24 Conference Board of Canada. Research commissioned for the CMA, January 2013. 25 CIHI. Seniors and alternate level of care: building on our knowledge. Available: https://secure.cihi.ca/free_products/ALC_AIB_EN.pdf 26 CMA. CMA Submission: The need for health infrastructure in Canada. Available: https://www.cma.ca/Assets/assets-library/document/en/advocacy/Health-Infrastructure_en.pdf. 27 Ibid. 28 Conference Board of Canada. Research commissioned for the CMA, July 2015.
Documents
Less detail

Reducing barriers to physician mobility and for a more uniformed healthcare system in Canada

https://policybase.cma.ca/en/permalink/policy11850
Date
2016-05-12
Topics
Health human resources
  1 document  
Policy Type
Parliamentary submission
Date
2016-05-12
Topics
Health human resources
Text
On behalf of 83,000 physician members, the Canadian Medical Association (CMA) welcomes this opportunity to provide input to the Standing Senate Committee on Banking, Trade and Commerce study on internal barriers to trade. For the purposes of this brief, an internal barrier to trade is any regulation or policy that restricts mobility or otherwise creates a perverse incentive for mobility. Basic Facts on the Canadian Physician Workforce The physician workforce in Canada has always been a mobile one. As of January 2016, just over one in four (26%) licensed physicians who graduated from one of Canada’s 17 medical schools was practising in a different province from the one where they obtained their medical degree.1 It might be added that only 8 of Canada’s 13 provinces and territories have medical schools. Another important dimension of mobility is the fact that Canada continues to rely to a significant degree on the medical services provided by International Medical Graduates (IMGs). Presently, IMGs represent 24% of practising physicians in Canada, and this figure has remained steady over the past two decades (and previously) despite significant increases in medical enrolment.1 A key reason for this dependence is that Canada trains fewer physicians relative to population than other developed countries. According to the Organization for Economic Cooperation and Development (OECD), in 2013, Canada ranked 28th out of 34 member countries in terms of medical graduates per 100,000 population; at 7.5 graduates per 100,000, Canada was one-third below the OECD average of 11.1.2 Another key consideration of the physician workforce in Canada is that beyond the tuition that medical students pay at the undergraduate level, it is virtually exclusively publicly funded. By way of illustration, in 2012, 99% of physician professional incomes came from the public purse in Canada, compared to an average of 72% for the 22 OECD countries for which data were available.3 1 Canadian Medical Association Physician Masterfile, January 2016. 2 Organization for Economic Cooperation and Development. OECD Health Statistics, 2015. http://stats.oecd.org/Index.aspx?DataSetCode=HEALTH_REAC. Accessed 05/05/16. 3 Organization for Economic Cooperation and Development. OECD. Stat. Accessed 05/05/16. 4 Internal Trade Secretariat. Agreement on Internal Trade. http://www.ait-aci.ca/agreement-on-internal-trade/. Accessed 05/05/16. 5 Federation of Medical Licensing Authorities of Canada, Association of Canadian Medical Colleges, Medical Council of Canada. Licensure, postgraduate training and the Qualifying Examination. Can Med Assoc J 1992;146(3):345. 6 Federation of Medical Regulatory Authorities of Canada. Model standards for medical registration in Canada. Ottawa, 2016. 7 Federal/Provincial/Territorial Advisory Committee on Health Delivery and Human Resources. Report of the Canadian Task Force on Licensure of International Medical Graduates. Ottawa, 2004. 8 Medical Council of Canada. Practice-ready assessment. http://mcc.ca/about/collaborations-and-special-projects/practice-ready-assessment/. Accessed 05/08/16. 9 Canadian Heritage. The Canadian Charter of Rights and Freedoms. http://publications.gc.ca/collections/Collection/CH37-4-3-2002E.pdf. Accessed 05/08/16. 10 Canada. Canada Health Act R.S.C., 1985, c. C-6. http://laws-lois.justice.gc.ca/PDF/C-6.pdf. Accessed 05/08/16. 11 Canadian Institute for Health Informaiton. Prescribed drug spending in Canada, 2013: a focus on public drug programs. https://secure.cihi.ca/free_products/Prescribed%20Drug%20Spending%20in%20Canada_2014_EN.pdf. Accessed 05/08/16. National Standards for Eligibility for Licensure The medical profession was well out in front of the 1994 Agreement on Internal Trade (AIT) and its objective in Chapter Seven of eliminating or reducing measures maintained by the provinces and territories that restrict or impair labour mobility in Canada.4 In 1992, the Federation of Medical Licensing Authorities of Canada, the Association of Canadian Medical Colleges and the Medical Council of Canada adopted a standard for portable eligibility of licensure in all provinces except Quebec.5 When the AIT was revisited in the late 2000s, the Federation of Medical Regulatory Authorities of Canada (FMRAC) worked on the development of an agreement on national standards that was endorsed in all jurisdictions in 2009. This has continued to evolve, and presently, the Model Standards for Medical Registration in Canada set out the: . Canadian standard for full licensure; . route from a provisional license to a full license (which would apply to most IMGs that do not come through the post-MD system in Canada); and . requirements for provisional licensure.6 The result of this effort is that the number of different medical licences in Canada has been reduced from more than 140 to fewer than 5. Since the early 2000s the federal government has played a strong leadership role in assisting the professions to come into compliance with the labour mobility provisions of the AIT. In the case of the medical profession, the key issue has been the mobility of IMGs. In 2002, the federally funded Advisory Committee on Health Delivery and Human Resources established the Task Force on Licensure of International Medical Graduates, which brought together representatives from national and provincial/territorial health ministries, medical regulatory and certifying bodies and medical schools with a mandate to aid in the integration of IMGs into the Canadian medical workforce. The recommendations in the 2004 final report of the Task Force essentially set out a workplan that has resulted in considerable progress on several initiatives.7 Federal funding through programs such as Employment and Social Development Canada’s (ESDC) Foreign Credential Recognition Program and Health Canada’s Internationally Educated Health Care Professional Program, in addition to significant investments by the medical bodies themselves, has contributed to several successful initiatives on the part of the Medical Council of Canada (MCC) and FMRAC and its provincial/territorial members. These have included: . $3.5 million from Health Canada to MCC to develop programs to facilitate the integration of IMGs into the physician workforce such as the National Assessment Collaboration examination, a standardized examination that assesses the readiness of an IMG for entrance into the Canadian post-MD training system; . $8.4 million from Human Resources and Skills Development Canada/ESDC to MCC to streamline and standardize the processes of application for medical licensure and to develop physiciansapply.ca, a single electronic web-based application process for registration with each of the 13 medical regulatory authorities; and . $6.7 million from ESDC to MCC to develop a more flexible MCC Qualifying Examination Part I that can be administered internationally, which will enable IMGs thinking of immigrating to Canada to assess whether they have one of the requirements for full licensure. The work to date has contributed significantly to the integration of IMGs but much remains to be done. Many IMGs enter practice in Canada without entering the post-MD system through a process of provisional licensure. One process that jurisdictions have developed over the past decade to facilitate this route to practice is called Practice Ready Assessment (PRA). PRA is an assessment process to determine if an IMG is able to provide safe medical care to the Canadian public under provisional licensure. This consists of a period of practice under supervised direct observation of a licensed physician in a clinical setting with patients. This has the advantage of expediting the process of assessment to approximately 12 weeks versus 2+ years in a residency program. To the present, PRA programs have been developing in a non-standardized way across jurisdictions. With support from Health Canada, an initiative is underway at the MCC with collaboration from FMRAC, the regulatory bodies, the certifying colleges and provincial IMG assessment programs to develop a pan-Canadian PRA program.8 The goal of this program is to address pan-Canadian specialty areas of need, including family medicine, psychiatry and internal medicine. The elements of this program will include: . IMG candidate orientation to the Canadian health care context; . identification of core competency for each specialty; . clinical assessor training; . standardized assessment tools; and . guidelines. This initiative is presently in the implementation phase, and the plan includes development of additional work-based assessment tools.i i For further information contact MCC – www.mcc.ca or FMRAC – www.fmrac.ca Recommendation one: The Canadian Medical Association recommends that the federal government continue to support the Medical Council of Canada and the Federation of Medical Regulatory Authorities of Canada in the implementation of a pan-Canadian Practice Ready Assessment Program for International Medical Graduates and the development of work-based assessment tools. Mobility and Medicare The right of Canadian citizens and permanent residents to move freely and pursue a livelihood in any jurisdiction is set out in the 1982 Canadian Charter of Rights and Freedoms.9 This is supported in the objectives of the AIT that refer to an “open domestic market” and “free movement of persons”. 4 This is certainly the spirit in which Canada’s Medicare program was established, beginning in the 1950s, and which has now come to be regarded as a much-cherished basic right by Canadians. The preamble of the 1984 Canada Health Act (CHA) includes the objective “to facilitate reasonable access to health services without financial or other barriers”, and portability of health insurance from one jurisdiction to another is one of five criteria for eligibility for federal funding (subject to a three month waiting period in which benefits are paid for by the originating jurisdiction).10 However, the letter of the CHA defines insured health services as “hospital services, physician services and surgical-dental services provided to insured services”10 and that is how it continues to be interpreted by the provinces and territories. An issue that has been identified in many recent reports is the uneven access to prescription drugs. The Canadian Institute for Health Information (CIHI) has estimated that in 2014, the federal and provincial governments accounted for 42% of prescription drug spending, with the majority accounted for by private insurance (36%) or out-of-pocket (22%) spending.11 There is wide variation in public per capita spending on prescription drugs across the provinces. In 2015, CIHI has estimated that expenditure ranged from $219 in British Columbia and $256 in Prince Edward Island (PEI) to $369 in Saskatchewan and $441 in Quebec.12 Even more striking variation is evident when looking at household out-of-pocket spending on prescription drugs by income quintile. Statistics Canada’s 2014 Survey of Household Spending shows that the poorest one-fifth (lowest income quintile) of PEI households spent more than twice as much ($645) on prescription drugs than the poorest one-fifth in Ontario ($300).13 Aside from overall differences in public spending, there are also differences in which drugs are covered, particularly in the case of cancer drugs. For example, the Cancer Advocacy Coalition of Canada reported in 2014 that in Ontario and Atlantic Canada, cancer drugs that must be taken in a hospital setting and are on the provincial formulary are fully funded by the provincial government; if the drug is taken outside of hospital (oral or injectable), however, the patient and family may have to pay significant costs out-of-pocket.14 More generally, the Canadian Cancer Society has reported that persons moving from one province to another may find that a drug covered in their former province may not be covered in the new one. 15 12 Canadian Institute for Health Information. National Health Expenditure Database 1975 to 2015. Table A.3.1.1. https://www.cihi.ca/en/spending-and-health-workforce/spending/national-health-expenditure-trends. Accessed 05/08/14. 13 Statistics Canada. CANSIM Table 2013-0026 Survey of household spending (SHS), household spending, by age of reference person. Accessed 03/27/16. 14 Cancer Advocacy Coalition of Canada. 2014-15 Report Card on Cancer in Canada. http://www.canceradvocacy.ca/reportcard/2014/Report%20Card%20on%20Cancer%20in%20Canada%202014-2015.pdf. Accessed 05/08/16. 15 Canadian Cancer society. Cancer drug access for Canadians. http://www.colorectal-cancer.ca/IMG/pdf/cancer_drug_access_report_en.pdf. Accessed 05/08/16. 16 Ipsos Reid. Supplementary health benefits research. Final report, 2012. 17 Conference Board of Canada. Federal policy action to support the health care needs of Canada’s aging population. https://www.cma.ca/Assets/assets-library/document/en/advocacy/conference-board-rep-sept-2015-embargo-en.pdf. Accessed 05/08/16. 18 Hall E. Canada’s national-provincial health program for the 1980’s ‘A commitment for renewal’. 1980. 19 Canada. Statutes of Canada 2012 Chapter 19. http://laws-lois.justice.gc.ca/PDF/2012_19.pdf. 20 Canadian Medical Association. Submission to the Minister of Finance: Small Business Perspectives of Medical Practice in Canada. https://www.cma.ca/Assets/assets-library/document/en/advocacy/submissions/cma-brief-medical-practice-as-small-business-march-17-2016.pdf Another consequence of the “patchwork quilt” of prescription drug coverage in Canada is the potential for “job lock” among those with employer sponsored benefits. Research carried out by Ipsos Reid for the CMA in 2012 among Canadian adults found that 51% of respondents had employer-sponsored supplementary benefits, with almost all of them reporting prescription drug coverage. Among those with employer benefits, just over four in 10 (42%) indicated that their employer benefits program would be a factor in whether or not they would switch jobs.16 Uneven access to and coverage of prescription drugs across Canada raises two concerns with respect to population mobility. On one hand, there could be a temptation to move to another jurisdiction with better access and coverage, and on the other, there could be a reluctance to move to another jurisdiction for fear of lesser access and coverage. Uncertainty about health care coverage should not be a factor in Canadians’ decisions about where they choose to live and work. One concrete step that the federal government could take to mitigate these concerns would be to introduce a program of drug coverage that would cap high out-of-pocket drug costs for individual Canadians. In 2015, the Conference Board of Canada conducted research for the CMA to estimate the cost of a drug program that would cover prescription drug costs that are greater than either $1,500 per year or 3% of household income (so-called catastrophic costs). They estimated that this would cost the federal government $1.6 billion in 2016.17 Recommendation two: As a positive step toward comprehensive, universal coverage for prescription medication, the Canadian Medical Association recommends that the federal government establish a new program for catastrophic coverage of prescription medication. The Canada Health Act and Physician Mobility In his 1979 review of the Medicare program that led to the CHA, Justice Emmett Hall clearly recognized the power imbalance of the shift to an exclusive public payer for physician services, stating “I reject totally the idea that physicians must accept what any given Province may decide unilaterally to pay. I reject too, as I did in the report of the Royal Commission, the concept of extra-billing.” Justice Hall’s recommended solution to this imbalance was provision for that “when negotiations fail and an impasse occurs, the issues in dispute must be sent to binding arbitration, to an arbitration board consisting of three persons, with an independent chairperson to be named by the chief justice of the relevant Province and one nominee from the profession and one from the Government”.18 Provision for reasonable compensation was built into the CHA in sections 12 (1) and (2). In most jurisdictions, bargaining disputes between the government and the medical association over the amounts that physicians should be paid are subject to a binding dispute resolution mechanism that includes some form of arbitration, as Justice Hall envisioned. However, in Ontario, the physicians have been without a contract since March 31, 2014, and Nova Scotia has given Royal Assent to, but not yet proclaimed the Public Services Sustainability (2015) Act, which suspends the right of the medical association (Doctors Nova Scotia) to arbitration. As noted in the basic facts enumerated above, Canadian physicians are highly mobile, but they should not be motivated to move on the basis of unfair treatment by the government, as is currently the case in Ontario. There is recent precedent for amending the CHA. In 2012, the Jobs, Growth and Long-term Prosperity Act amended the CHA to remove members of the Royal Canadian Mounted Police from the list of exclusions of insured persons.19 Recommendation three: The Canadian Medical Association recommends that Section 12(2) of the Canada Health Act be amended to require: (a) Provincial and territorial governments to enter into an agreement with the provincial/territorial organization(s) that represent(s) practising medical practitioners in the province; and (b) The settlement of disputes relating to compensation through, at the option of the provincial/territorial organization(s) referred to in paragraph (a), conciliation or binding arbitration that is equally representative of the provincial/territorial organization(s) and the province/territory and that has an independent chairperson, to satisfy the “reasonable compensation” criterion in s. 12(1)(c) of the Act for full federal funding. Incorporation Eligibility and Access to the Small Business Deduction A significant proportion of Canada’s physicians are self-employed, small business owners, whose medical practices are incorporated as Canadian-Controlled Private Corporations (CCPCs). The ability to incorporate and access to the small business taxation rate play an important role in the allocation of resources in Canada’s health care system. As explained in the CMA’s recent submission to the Minister of Finance20, incorporation eligibility for medical professionals has been advanced by provincial governments to support the achievement of health policy objectives and, in part, to level the playing field with other self-employed individuals. The CMA strongly welcomed the federal government’s recognition in the budget of the contribution of health care practitioners as small businesses. However, the CMA has significant concerns with the proposed amendments (clause 54 of the Notice of Ways and Means Motion to Amend the Income Tax Act and Other Tax Legislation) to alter eligibility to the small business deduction. It is not clear whether these measures will impact group medical structures. The results of a recent survey by the CMA of its membership confirms that the CCPC framework provides a critical tax equity measure that recognizes the unique challenges they face as small business owners and is critical to the operation of the practice model, particularly supporting community-based care. In some cases, the practice model is only economical within this framework. An important fact is that unlike other small business owners, physicians cannot pass on any increases in compliance or operating costs to patients, given the design of Canada’s public health care system. Of significance to the committee’s study on internal trade, approximately 26% of survey respondents indicated that they would be very or somewhat likely to relocate to another provincial/territorial jurisdiction (26%) or to the U.S. or another country (22%) if they were no longer able to incorporate under the CCPC framework. Recommendation four: Given the potential for negative unintended consequences, such as rendering group medical structures economically unviable or introducing perverse incentives for mobility, particularly out of country, the Canadian Medical Association strongly encourages the federal government to provide clarification regarding the 2016 budget measures with regard to the Canadian-Controlled Private Corporation framework.
Documents
Less detail

Restoring access to quality health care : Brief Submitted to the House of Commons Standing Committee on Finance 1998 pre-budget consultations

https://policybase.cma.ca/en/permalink/policy1985
Last Reviewed
2019-03-03
Date
1997-11-07
Topics
Health human resources
Health systems, system funding and performance
Population health/ health equity/ public health
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2019-03-03
Date
1997-11-07
Topics
Health human resources
Health systems, system funding and performance
Population health/ health equity/ public health
Text
I. INTRODUCTION The Canadian Medical Association (CMA) commends the federal government, in its second mandate, for continuing the pre-budget consultation process. This open process encourages public dialogue in the finance and economics of the country and the CMA appreciates the opportunity to submit its views to the House of Commons Standing Committee on Finance. Many issues were raised by the CMA and other health organizations, with members of the Standing Committee, at the "health roundtable" held on October 28, 1997. This brief provides greater detail of those concerns that were discussed by the members of the CMA delegation. II. BACKGROUND "Good health is fundamental to the quality of life of every Canadian. In this century, we have learned a great deal about the effective treatment of illness and disease, which requires early access to appropriate and high-quality health care services." 1 Over the past year, Canadians, their physicians and the provincial/territorial governments have all been voicing their concerns about the state of the health care system across the country. In every instance it is a united voice that shares concerns about access to quality health care services as well as the sustainability of the health care system. A consistent theme is "will the health care system be there for me or my family when needed"? Canadians perceive that access to services has further deteriorated over the past year. CMA surveys undertaken by the Angus Reid Group between the spring of 1996 and 1997 clearly demonstrate that Canadians perceive a deterioration in many critical areas of the health care system. If one looks at indicators such as waiting times over the past two years it is quite clear that Canadians have felt the cutbacks in the health care sector: * in 1997 65% reported that waiting times in emergency departments had worsened, up from 54% in 1996, * 63% reported that waiting times for surgery had worsened, up from 53% in 1996, * 50% reported that waiting times for tests had worsened, up from 43% in 1996, * 49% reported that access to specialists had worsened, up from 40% in 1996, * 64% reported that availability of nurses in hospital had worsened, up from 58% in 1996. Physicians not only provide direct care to their patients but are also concerned about their patients' access to quality health care. In Ontario, more than 16,000 were reported to be waiting for placement in long-term care institutions 2. In Newfoundland patients requiring heart surgery have had to be sent to other provinces to alleviate growing waiting lists 3 . The Conference of Provincial/Territorial Ministers of Health has expressed concerns about the ability of provinces and territories to maintain current services. The Ministers state that "Federal reductions in transfer payments have created a critical revenue shortfall for the provinces and territories which has accelerated the need for system adjustments and has seriously challenged the ability of provinces and territories to maintain current services. Federal funding reductions are forcing the acceleration of change beyond the system's ability to absorb and sustain adjustments". 4 The concerns of the Provincial/Territorial Ministers of Health about the ability of the system to absorb and sustain adjustments are well founded as demonstrated by the anxieties expressed by the public and by physicians. The CMA has clearly stated and continues to state that "health cuts hurt everyone". III. FEDERAL HEALTH CARE FUNDING AND THE CANADA HEALTH AND SOCIAL TRANSFER (CHST) (i). Getting the facts straight Prior to April 1, 1996 the federal government's commitment to insured health services, post-secondary education and social assistance programs could be readily determined since the federal government made separate payments 5 to the provinces/territories in each of these areas. However, with the introduction of the Canada Health and Social Transfer (CHST), on April 1, 1996, the federal government combined all of its payments into one transfer payment to the provinces and territories. The net result is that there are no separately identifiable contributions to health, post-secondary education or social assistance programs. The federal government's accountability and commitment to health care have been blurred. However, prior to the CHST, the federal government's diminishing commitment to health care could at least be documented. Under the Established Programs Financing (EPF) arrangements the federal government has unilaterally revised the EPF funding formula eight times over the past decade. During the period 1986/87 to 1995/96, it was estimated that $30 billion in cash transfers has been withheld from health care (and an additional $12.1 billion for post-secondary education - for a total of $42.1 billion) 6. Federal "offloading" has forced all provinces/territories to make do with significantly less resources for their health care systems. [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 1: Canada Health and Social Transfer (in $ billions) Year Total Entitlement (1) Tax Point Transfer (2) Cash Entitlement (3) Quebec Abatement (4) Cash Payments (5) Cumulative Reductions from 95/96 (6) 1997 Budget Health Items (7) 1995-96 29.7 11.2 18.5 1.9 16.6 0.0 1996-97 26.9 11.9 15.0 2.0 13.0 (3.6) 1997-98 25.1 12.6 12.5 2.1 10.4 (9.8) 0.1 1998-99 25.8 13.3 12.5 2.2 10.3 (16.1) 0.1 1999-00 26.5 14 12.5 2.3 10.2 (22.5) 0.1 2000-01 27.1 14.6 12.5 2.4 10.1 (29.0) 2001-02 27.8 15.3 12.5 2.5 10.0 (35.6) 2002-03 28.6 16.1 12.5 2.6 9.9 (42.3) [TABLE END] The September 1997 Throne Speech stated that the government "... will introduce legislation to increase to $12.5 billion a year the guaranteed annual cash payment to provinces and territories under the Canada Health and Social Transfer" 7. Table 1 illustrates what the $12.5 billion cash entitlement will mean in terms of actual cash payments in 2002-03. The important point to remember is that this so called "increase" in the cash entitlement (3) is merely a stop in cuts . For 1998-99 the previous cash entitlement would have dropped to $11.8 billion with a further drop in 1999-00 to $11.1 billion, whereas cash entitlements are now stabilized at $12.5 billion. However, cash payments will continue to drop into the foreseeable future. Cash payments (5) exclude the Quebec abatement which is comprised of tax points not cash payments. For Canadians the CHST has meant, and continues to mean, less federal government commitment to our health care system and has compromised the federal government's ability to preserve and enhance national standards. (ii). Implications for the future of health care in Canada The reduction in federal government funding has not only compromised the federal government's ability to preserve and enhance national standards but this continued policy of "under-funding" has compromised access to quality health care for Canadians. As previously mentioned, declining public sector resources allocated to health care has manifested itself in the form of longer waiting times in emergency departments, for surgery, for diagnostic tests and in decreased access to specialists and decreased availability of nurses in hospitals. In the federal government's 1997/98 budget released this past February much fanfare was made about sustaining and improving Canada's health care system. The government announced three health care initiatives 8 totalling $300 million in expenditures over 3 years, or $100 million per year. If, on the other hand, one looks at the accumulated reduction in CHST cash payments to the provinces/territories during the same 3 years when the federal government will spend this $300 million it can be seen that the accumulated reductions total $18.9 9 billion. Therefore, during the same 3-year period the "investment" in health care by the federal government represents 1.5% of the reductions to cash payments to the provinces and territories during the same period. For the longer term, the federal government can demonstrate its commitment to health care by linking growth in CHST cash payments to factors other than the economy. The factors that are becoming increasingly important are those such as technological change, population growth and aging. Such linkage of cash payments would be less subject to fluctuations in the economy and would be an acknowledgement of the impact of technological and population structure changes on the need for health care services. From Table 2, which shows 1994 per capita provincial government health expenditures by age group, it can be concluded that as the population of Canada ages the cost structure of health care increases reflecting the fact that as we age we make greater use of the health care system to maintain our health. The age group 65 and over continues to grow, in 1994 11.9% of the population was over the age of 65, in 2016 this is projected to increase to 16% and by 2041 to 23%. 10 [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 2: Per Capita Provincial Government Expenditures by Age Group, Canada 1994 11 Age Group $ per Capita Increase 0-14 514 15-44 914 77.8% 45-64 1446 58.2% 65+ 6,818 371.5% Total 1,642 [TABLE END] In other areas of health care the CMA commends the federal government for their recent commitments to applied health services research. On an international basis however, Canada does not fare very well. In fact, on a per capita basis Canada came in last out of the five G-7 countries for which recent data were available. Figure 1 shows the per capita health R&D expenditures for G7 countries for which 1994 data are available. Canada's per capita spending was $22 (U.S.), compared with $35 for Japan, $59 for the U.S., $63 for France and $78 for the U.K. 12 While applied health services research is important, it must be recognized that research is a continuum beginning with basic biomedical research, moving to clinical research and ending with applied health services research. The CMA is concerned with the governments plans to cut the annual budget of the Medical Research Council (MRC) from $238 million in 1997-98 to $219 million in 2000-01. In Prime Minister Jean Chrétien's reply to the Speech from the Throne on September 24, 1997 he states that there is " . . . no better role for government than to help young Canadians prepare for the knowledge-based society of the next century." He then makes a commitment to establish, ". . . at arms-length from government, a Canada Millennium Scholarship Endowment Fund." which is to reward academic excellence. The Government of Canada should also be reminded that a knowledge-based society and scholarship also requires a commitment to research funds. Therefore the CMA calls on the Federal Government to establish national targets for spending and an implementation plan for health care research. Such an approach would buttress the other initiatives as announced by the Prime Minister. To restore access to quality health care for all Canadians, the CMA respectfully recommends: 1. At a minimum, that the federal government restore CHST cash entitlements to 1996/97 levels. 2. That, beginning April 1, 1998, the federal government fully index CHST cash payments through the use of a combination of factors that would take into account: technology, economic growth, population growth and demographics. 3. That the federal government establish a national target (either in per capita terms or as a proportion of total health spending) and an implementation plan for health research and development spending including the full spectrum of basic biomedical to applied health services research, with the objective of improving Canada's position relative to other G-7 countries where we now rank last among the five G-7 countries for which recent data are available. IV. HEALTHY PUBLIC POLICY The federal role in funding health care is clearly important to physicians and to their patients given its influence on access to quality health care services. However, there are other important issues that the CMA would like to bring to the attention of the Standing Committee on Finance. (i). Tobacco Taxation Smoking is the leading preventable cause of premature mortality in Canada. The most recent estimates suggest that more than 45,000 deaths annually in Canadaaredirectlyattributable to tobacco use., The estimated economic cost to society from tobacco use in Canada has been estimated from $11 billion to $15 billion. Tobacco use directly costs the Canadian health care system $3 billion to $3.5 billion annually. These estimates do not consider intangible costs such as pain and suffering. CMA is concerned that the 1994 reduction in the federal cigarette tax has had a significant effect in slowing the decline in cigarette smoking in the Canadian population, particularly in the youngest age groups - where the number of young smokers (15-19) is in the 22% to 30% range and 14% for those age 10-14. A 1997 Canada Health Monitor Survey found that smoking among girls 15-19 is at 42%. A Quebec study found that smoking rates for high school students went from 19% to 38%, between 1991 and 1996. The CMA understands that tobacco tax strategies are extremely complex. Strategies need to consider the effects of tax increases on reduced consumption of tobacco products with increases in interprovincial/territorial and international smuggling. In order to tackle this issue, the government could consider a selective tax strategy. This strategy requires continuous stepwise increases to tobacco taxes in those selective areas with lower tobacco tax (i.e., Ontario, Quebec and Atlantic Canada). The goal of selective increases in tobacco tax is to increase the price to the tobacco consumer over time (65-70% of tobacco products are sold in Ontario and Quebec). The selective stepwise tax increases will approach but may not achieve parity amongst all provinces however, the tobacco tax will attain a level such that inter-provincial/territorial smuggling would be unprofitable. The selective stepwise increases would need to be monitored so that the new tax level and US/Canadian exchange rates does not make international smuggling profitable. The objectives of this strategy are: * reduce tobacco consumption; * minimize interprovincial/territorial smuggling of tobacco products; and * minimize international smuggling of tobacco products. The selective stepwise increase in tobacco taxes can be combined with other tax strategies. The federal government should apply the export tax and remove the exemption available on shipments in accordance with each manufacturers historic levels. The objective of implementing the export tax would be to make cross-border smuggling unprofitable. The ultimate goals for implementing this strategy are: * reduce international smuggling of tobacco products; * reduce and/or minimize Canadian consumption of internationally smuggled tobacco products. The federal government should establish a dialogue with the US federal government. Canada and the US should hold discussions regarding harmonizing US tobacco taxes to Canadian levels at the factory gate. Alternatively, US tobacco taxes could be raised to a level that when offset with the US/Canada exchange rate differential renders international smuggling unprofitable. The objective of implementing the harmonizing US/Canadian tobacco tax levels (at or near the Canadian levels) would be to increase the price of internationally smuggled tobacco products to the Canadian and American consumers. The ultimate goals for implementing this strategy are: * reduce risk of international smuggling of tobacco products from both the Canadian and American perspective; * reduce and/or minimize Canadian/American consumption of internationally smuggled tobacco products. 4. The Canadian Medical Association is recommending that the federal government follow a comprehensive integrated tobacco tax policy: (a) That the federal government implement selective stepwise tobacco tax increases to achieve the following objectives: * reduce tobacco consumption, * minimize interprovincial/territorial smuggling of tobacco products, * minimize international smuggling of tobacco products; (b) That the federal government apply the export tax on tobacco products and remove the exemption available on tobacco shipments in accordance with each manufacturers historic levels; (c) That the federal government enter into discussions with the US federal government to explore options regarding tobacco tax policy, bringing US tobacco tax levels in line with or near Canadian levels, in order to minimize international smuggling. The Excise Act Review, A Proposal for a Revised Framework for the Taxation of Alcohol and Tobacco Products (1996), proposes that tobacco excise duties and taxes (Excise Act and Excise Tax Act) for domestically produced tobacco products be combined into a new excise duty and come under the jurisdiction of the Excise Act. The new excise duty is levied at the point of packaging where the products are produced. The Excise Act Review also proposes that the tobacco customs duty equivalent and the excise tax (Customs Tariff and Excise Tax Act) for imported tobacco products be combined into the new excise duty [equivalent tax to domestically produced tobacco products] and come under the jurisdiction of the Excise Act. The new excise duty will be levied at the time of importation. The CMA supports the proposal of the Excise Act Review. It is consistent with previous CMA recommendations calling for tobacco taxes at the point of production. (ii). Tobacco Control Taxation should be used in conjunction with other strategies for promoting healthy public policy, such as, programs for tobacco prevention and cessation. The Liberal party, recognising the importance of this type of strategy , promised: "...to double the funding for the Tobacco Demand Reduction Strategy from $50 million to $100 million over five years, investing the additional funds in smoking prevention and cessation programs for young people, to be delivered by community organizations that promote the health and well-being of Canadian children and youth". The CMA applauds the federal government's efforts in the area of tobacco prevention and cessation. However, a time limited investment is not enough. More money is required for investment in this area. Program funding is required for more efforts and programs in tobacco prevention and cessation. A possible source for this type of program investment could come from tobacco tax revenues or the tobacco surtax. 5. In the short term, the Canadian Medical Association calls upon the federal government to fulfil the its promise to invest $100 million, over five years, into the Tobacco Demand Reduction Strategy. In the longer term, the Canadian Medical Association calls upon the federal government to establish stable program funding for its comprehensive tobacco control strategy, including smoking prevention and cessation. (iii). Non-taxable health benefits The federal government is to be commended for its decision to maintain the non-taxable status of supplementary health benefits. This decision is an example of the federal governments' commitment to maintain good tax policy that supports good health policy (the current incentive fosters risk pooling). Approximately 70% or 20 million Canadians rely on full or partial private supplementary health care benefits (e.g., dental, drugs, vision care, private duty nursing, etc.). As governments reduce the level of public funding, the private component of health expenditures is expanding. Canadians are becoming increasingly reliant on the services of private insurance. In the context of funding those health care services that remain public benefits, the government cannot strike yet another blow to individual Canadians and to Canadian business by taxing the very benefits for which taxes were raised. In terms of fairness, it would seem unfair to "penalize" 70% of Canadians by taxing supplementary health benefits to put them on an equal basis with the remaining 30%. It would be preferable to develop incentives to allow the remaining 30% of Canadians to achieve similar benefits attributable to the tax status of supplementary health benefits. If supplementary health benefits were to become taxable, it is likely that young healthy people would opt for cash compensation instead of paying taxes on benefits they do not receive. These Canadians would become uninsured for supplementary health services. It follows that employer-paid premiums may increase as a result of this exodus in order to offset the additional costs of maintaining benefit levels due to diminishing ability to achieve risk pooling. In addition, 6. That the current federal government policy with respect to non-taxable health benefits be maintained. V. FAIR AND EQUITABLE TAX POLICY CMA has demonstrated that good economic policy reinforces good health policy in past submissions to the Standing Committee on Finance. The CMA again reiterated the important role that fair tax policy plays in supporting healthy public policy. (i). The Goods and Services Tax (GST)& the Harmonized Sales Tax (HST) The CMA strongly believes in a tax system that is fair and equitable. This point has been made on several occasions to the Standing Committee on Finance. In particular, the point was stressed as part of the Standing Committee's consultation process leading to the report "Replacing the GST: Options for Canada". In the case of the GST, however, the reality is that physicians as self-employed Canadians are singled out and discriminated against by virtue of not being able to claim input tax credits (ITCs) since medical services are designated as "tax exempt". The CMA does not dispute the importance that the federal government has attached to medical services such that Canadians are not subject to GST/HST for having availed themselves of such medical services from their physician. However, the GST/HST are consumption taxes and as such are paid for by the end consumer. If, however, government determines that such a consumption tax should not be applied to the consumers (in this case physicians' patients) of a particular good or service it behooves government not to implement half measures that bring into question the equity and fairness of the Canadian tax system. While other self-employed professionals and small business claim ITCs, an independent (KPMG) study has estimated that physicians have "over contributed" in terms of unclaimed ITCs to the extend of $57.2 million per year. Since the inception of the GST and by the end of this calendar year, physicians will have been unfairly taxed in excess of $400 million. All this for providing a necessary service that has been deemed so important by government. Physicians are not asking for special treatment. What they are asking for, however, is to be treated in a fair and equitable manner like other self-employed Canadians and small businesses. Unlike other businesses and professionals, physicians cannot recoup the GST/HST by claiming ITCs or passing the GST/HST onto customers/patients. The federal government has acknowledged the inequitable impact of the GST/HST on other providers in the health care sector. Municipalities, universities, schools and hospitals have been given special consideration because they, like physicians, are not able to pass the GST/HST on to their clients. Hospitals have been afforded an 83% rebate for purchases made in providing patient care while physicians must absorb the full GST/HST costs on purchases also made in providing patient care. At a time when health policy measures are attempting to expand community-based practices, the current tax policy (and now harmonized tax policy) which taxes supplies in a clinical practice setting but not in a hospital setting acts to discourage this shift in emphasis. To complicate matters further, the recent agreement between the federal government and some Atlantic provinces to harmonize their sales taxes will make matters worse for physicians. With no ability to claim ITCs, physicians will, once again, have to absorb the additional costs associated with the practice of medicine. It has been estimated that harmonization will cost physicians in Atlantic Canada an additional $4.7 million each year (over and above the current GST inequity). In the current fiscal environment, this unresolved issue does not help matters when it comes to physician recruitment and retention across the country. Furthermore, for established physicians who have had to live with the current policy, the GST/HST serves as a constant reminder that the basic and fundamental principles of equity and fairness in the tax system is not being extended to the physicians of Canada. To date, the CMA has made representations to the Minister of Finance and Finance Department Officials but yet to no avail. We look to this Committee and to the federal government to not only ensure that the tax system is perceived to be fair and equitable but that it is in fact fair and equitable to all members of society. The unfairness of the GST/HST, as applied to medical services, has raised the ire of physicians and has made them question their sense of fair play in Canada's tax system. In the interests of fairness and equity, the CMA respectfully recommends the following: 7. The CMA recommends that health care services funded by the provinces and territories be zero-rated. The above recommendation could be accomplished by amending the Excise Tax Act as follows: (1). Section 5 part II of Schedule V to the Excise Tax Act is replaced by the following: 5. "A supply (other than a zero-rated supply) made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes)." (2). Section 9 Part II of Schedule V to the Excise Tax Act is repealed. (3). Part II of Schedule VI to the Excise Tax Act is amended by adding the following after section 40: 41. A supply of any property or service but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government under a plan established under an Act of the legislature of the province to provide for health care services for all insured persons of the province. Our recommendation fulfils at least two over-arching policy objectives: 1) strengthening the relationship between good economic policy and good health policy in Canada; and 2) applying the fundamental principles that underpin our taxation system (fairness, efficiency, effectiveness), in all cases. (ii). Registered Retirement Savings Plan (RRSP) Experts have stated that there are (at least) two fundamental goals of retirement savings: (1) to guarantee a basic level of retirement income for all Canadians; and, (2) to assist Canadians in avoiding serious disruption of their pre-retirement living standards upon retirement. Looking at the demographic picture in Canada, we can see that an increasing portion of society is not only aging, but is living longer. Assuming that current demographic trends will continue and peak in the first quarter of the next century, it is important to recognize the role that private RRSPs savings will play in ensuring that Canadians may continue to live dignified lives well past their retirement from the labour force. This becomes even more critical when one considers that Canadians are not setting aside sufficient resources for their retirement. Specifically, according to Statistics Canada, it is estimated that 53% of men and 82% of women starting their career at age 25 will require financial aid at retirement age - only 8% of men and 2% women will be financially secure. The 1996 federal government policy changes with respect to RRSP contribution limits run counter to the White Paper released in 1983 (The Tax Treatment of Retirement Savings), where the House of Commons Special Committee on Pension Reform recommended that the limits on contributions to tax-assisted retirement savings plans be amended so that the same comprehensive limit would apply regardless of the retirement savings vehicle or combination of vehicles used. In short, the Liberal government endorsed the principle of "pension parity". According to three more recent papers released by the federal government, the principle of pension parity would have been achieved between money-purchase (MP) plans and defined benefit (DB) plans had RRSP contribution limits risen to $15,500 in 1988. The federal government postponed the scheduling of the $15,500 limit for seven years, that is achieving the goal pension parity was delayed until 1995. In its 1996 Budget Statement, the federal government altered its course of action and froze the dollar limit of RRSPs at $13,500 through to 2003/04, with increases to $14,500 and $15,500 in 2004/05 and 2005/06, respectively. As well, the maximum pension limit for defined benefit registered pension plans will be frozen at its current level of $1,722 per year of service through 2004/05. This is a de facto increase in tax payable. The CMA is frustrated that ten years of careful and deliberate government planning around pension reform has not come to fruition, in fact if the current policy remains in place will have taken more than 17 years to implement (from 1988 to 2005). As a consequence, the current policy of freezing RRSP contribution limits and RPP limits without making adjustments to RRSP limits to achieve pension parity serves to maintain inequities between the two plans until 2005/2006. This is patently unfair for self-employed Canadians who rely on RRSPs as their sole vehicle for retirement planning. CMA respectfully recommends to the Standing Committee: 8. That the dollar limit of RRSPs at $13,500 increase to $14,500 and $15,500 in 1998/1999 and 1999/2000, respectively. Subsequently, dollar limits increase at the growth in the yearly maximum pensionable earnings (YMPE). VI. SUMMARY OF RECOMMENDATIONS With the future access to quality health care for all Canadians at stake, the CMA strongly believes that the federal government must demonstrate that it is prepared to take a leadership role and re-invest in the health care of Canadians. The CMA therefore makes the following recommendations to the Standing Committee in its deliberations: Canada Health and Social Transfer (CHST) 1. At a minimum, that the federal government restore CHST cash entitlements to 1996/97 levels. 2. That, beginning April 1, 1998, the federal government fully index CHST cash payments through the use of a combination of factors that would take into account: technology, economic growth, population growth and demographics. 3. That the federal government establish a national target (either in per capita terms or as a proportion of total health spending) and an implementation plan for health research and development spending including the full spectrum of basic biomedical to applied health services research, with the objective of improving Canada's position relative to other G-7 countries where we now rank last among the five G-7 countries for which recent data are available. Tobacco Taxation 4. The Canadian Medical Association is recommending that the federal government follow a comprehensive integrated tobacco tax policy: (a) That the federal government implement selective stepwise tobacco tax increases to achieve the following objectives: < reduce tobacco consumption, < minimize interprovincial/territorial smuggling of tobacco products, < minimize international smuggling of tobacco products; (b) That the federal government apply the export tax on tobacco products and remove the exemption available on tobacco shipments in accordance with each manufacturers historic levels; (c) That the federal government enter into discussions with the US federal government to explore options regarding tobacco tax policy, bringing US tobacco tax levels in line with or near Canadian levels, in order to minimize international smuggling. Tobacco Control 5. In the short term, the Canadian Medical Association calls upon the federal government to fulfil the its promise to invest $100 million, over five years, into the Tobacco Demand Reduction Strategy. In the longer term, the Canadian Medical Association calls upon the federal government to establish stable program funding for its comprehensive tobacco control strategy, including tobacco prevention and cessation. Non-Taxable Health Benefits 6. That the current federal government policy with respect to non-taxable health benefits be maintained. The Goods and Services Tax (GST)& the Harmonized Sales Tax (HST) 7. The CMA recommends that health care services funded by the provinces and territories be zero-rated. Registered Retirement Savings Plan (RRSP) 8. That the dollar limit of RRSPs at $13,500 increase to $14,500 and $15,500 in 1998/1999 and 1999/2000, respectively. Subsequently, dollar limits increase at the growth in the yearly maximum pensionable earnings (YMPE). 13 1 Liberal Party, Securing Our Future Together. The Liberal Party of Canada, , Ottawa, 1997. p. 71. 2 Lipovenko, D,1997: Seniors face shortage of care. Globe & Mail [Toronto]; Feb 26 Sect A:5 3 Joan Marie Aylward, Minister of Health, Newfoundland and Labrador, public statement, May 14, 1997 4 Conference of Provincial/Territorial Ministers of Health, A Renewed Vision for Canada's Health System. January 1997. p. 7. 5 Thomson, A., Diminishing Expectations - Implications of the CHST, [report] Canadian Medical Association, Ottawa. May, 1996. 6 Thomson A: Federal Support for Health Care: A Background Paper. Health Action Lobby, June 1991. 7 Speech from the Throne to Open the First Session Thirty-Sixth Parliament of Canada. Ottawa; 1997 Sept 23. 8 Health Transition Fund: $150 million over 3 years - to help provinces to test ways to improve their health system, for example, new approaches to home care, drug coverage, and other innovations. Canada Health Information System: $50 million over 3 years - to create a network for health care providers and planners for sharing information. Community Action Program for Children: $100 million over 3 years - for support of community groups for parent education for children at risk and for Canada Prenatal Nutrition Program to ensure the birth of healthy babies. 9 See Table 1: Cumulative reductions to 1999/00 of $22.5 billion subtracting $3.6 billion for 1996/97 gives a cumulative reduction during 1997/98 to 1999/00 of $18.9 billion. 10 Statistics Canada, Population Projections for Canada, Provinces and Territories 1993-2016. Ottawa: Statistics Canada; 1994. p. 73. Cat no 91-520 [occasional]. 11 Health Canada, National Health Expenditures in Canada, 1975-1994 [Full Report]. Ottawa: Health Canada; January 1996. p. 41. 12 Organization for Economic Cooperation and Development. OECD Health Data 97. Paris: OECD; 1997. 13 Cunningham R, Smoke and Mirrors: The Canadian War on Tobacco, International Development Research Centre, Ottawa, Canada, 1996. p. 8. "Restoring Access to Quality Health Care" 1998 Pre-Budget Consultations Page " 1998 Pre-Budget Consultations Page
Documents
Less detail

Small business perspectives of physician medical practices in Canada

https://policybase.cma.ca/en/permalink/policy11846
Date
2016-03-21
Topics
Physician practice/ compensation/ forms
Health human resources
  1 document  
Policy Type
Parliamentary submission
Date
2016-03-21
Topics
Physician practice/ compensation/ forms
Health human resources
Text
The Canadian Medical Association (CMA) is the national voice of Canada's doctors, representing more than 83,000 physicians across all regions in the country. With this brief, the CMA provides a portrait of medical practice as small businesses in Canada. A significant proportion of Canada's physicians are self-employed, small business owners, whose medical practices are incorporated as Canadian-Controlled Private Corporations (CCPCs). Reflecting the significance of the CCPC framework to medical practice in Canada, the CMA strongly supports the federal government's commitment to reduce the small business taxation rate from 11% to 9%. However, the CMA has been concerned with some statements regarding the incorporation of professionals. In response to the federal government's statement, the CMA has received a significant volume of correspondence from its membership; unprecedented in our almost 150 year history. Presented within this brief are the results of a survey undertaken by the CMA to explore physician incorporation. The survey was distributed to a sample of 25,000 physicians on Dec. 21, 2015 and closed on Jan. 8, 2016 with a response rate of 9%. Among the key findings of the CMA's survey on incorporation was that more than 8 out of 10 respondents indicated that they were incorporated and reported an average of 2 full-time employees in their professional corporation, including themselves. When part-time employees where included, this increased to an average of 3 employees. Survey respondents confirmed that physician gross (pre-tax) salary is not representative of net salary; where overhead expenses were reported to be 29%, on average, of gross (pre-tax) professional income. Of note, there have been several studies at the provincial level that specifically researched overhead expenses; these studies found average overage expenses to exceed 40% of gross salary. The results of the CMA's survey confirms that the CCPC framework provides a critical tax equity measure that recognizes the unique challenges they face as small business owners and critical to the operation of the practice model, particularly supporting community-based care. In some cases, the practice model is only economical within this framework. An important fact is that unlike other small business owners, physicians cannot pass on any increases in compliance or operating costs to patients, given the design of Canada's public health care system. When asked to consider the likelihood of various actions they may take should the federal government alter the CCPC framework, a large majority (75%) of the respondents indicated that they would be very or somewhat likely to take one or more of these actions: * more than half (54%) of practicing physicians said that they would be very or somewhat likely to reduce the number of hours worked; * 42% would be very or somewhat likely to reduce office staff; and, * about one quarter indicated that they would be very or somewhat likely to pursue other measures such as closing their practice and retiring (24%) or relocating their practice to another provincial/territorial jurisdiction (26%) or to the U.S. or another country (22%). This brief also highlights the policy imperative for extending incorporation to medical professionals. As captured in Ontario's 2000 budget document, it is "to level the playing field with other self-employed individuals who can choose whether to operate their businesses through a corporation".1 Finally, the CMA's core recommendation to the federal government is to maintain tax equity for medical professionals by affirming its commitment to the existing framework governing Canadian-Controlled Private Corporations. Introduction The Canadian Medical Association (CMA) is the national voice of Canada's doctors. The CMA is the voluntary professional organization representing more than 83,000 physicians across all regions in Canada and comprising 12 provincial and territorial medical associations and more than 60 national medical organizations. The CMA's mission is helping physicians care for patients. The purpose of this brief is to provide an overview of medical practice as small businesses in Canada. As is discussed herein, a significant proportion of Canada's physicians are self-employed, small business owners, whose medical practices are incorporated as Canadian-Controlled Private Corporations (CCPCs). As such, the CMA strongly supports the federal government's commitment to reduce the small business taxation rate from 11% to 9%, as outlined in the mandate letter for the Minister of Small Business and Tourism.2 1) Most Physicians are Small Business Owners Canada's physicians are highly skilled professionals, providing an important public service and making a significant contribution to the knowledge economy. In light of the design of Canada's health care system, the vast majority of physicians are self-employed professionals operating medical practices as small business owners. More than 8 out of 10 respondents to the CMA's survey indicated that they were incorporated; 81% indicated that they were incorporated individually while 4% indicated they were incorporated in a group. Nationally, it is estimated that approximately 60% of physicians are incorporated.3 Physician-owned and run medical practices ensure that Canadians are able to access the care they need, as close to their homes as possible. In doing so, Canadian physicians are directly and indirectly responsible for hundreds of thousands of jobs across the country, and invest millions of dollars in local communities. Respondents to the CMA's survey on incorporation reported an average of 2 full-time employees in their professional corporation, including themselves. When part-time employees where included, this increased to an average of 3 employees. In operating their medical practices, Canada's physicians rent, lease or own office space and further contribute to local economies through municipal taxes on these properties. Like other self-employed small business owners, physicians typically do not have access to pensions or health benefits. In addition, as employers, physicians are responsible for the provision of payroll taxes and benefits for their employees. 2) Increased Cost-Burden for Canada's Doctors Canada's physicians face unique, additional financial and personal burdens in owning and operating medical practices in comparison with other small businesses. First, amongst Canada's small business owners4, Canada's physicians are highly skilled and trained professionals. On average, physicians enter the workforce at a later age with significant debt from education. The average age that family physicians enter practice is over 30 years and over 33 years for specialists.5 The 2013 National Physician Survey explored the issue of debt levels. It found that the proportion of medical students expecting debt of $100,000 or more doubled from 15% in 2004 to 30% in 2012.6 Further, a third of medical residents expect debt to be over $100,000 and 19% expect debt to exceed $160,000 before entering practice.7 For Canada's doctors, the high level of education-related debt and the later age they are able to initiate professional earnings represents a significant challenge for personal financial planning, notably retirement planning. Second, it is not well known that physician gross (pre-tax) salary is not representative of net salary. In addition to the expenses of running a medical practice, such as salaries and rent, physicians have a range of professional fees that are required by regulation to be submitted. According to the respondents to the CMA's survey on incorporation, these overhead expenses were reported to be 29%, on average, of gross (pre-tax) professional income. Of note, there have been several studies at the provincial level that specifically researched overhead expenses; these studies found average overage expenses to exceed 40% of gross salary.8 Finally, unlike most small business owners, as providers within a public health care systems, Canada's physicians cannot pass on any cost increases associated with operating their medical practice. The majority of physician remuneration in Canada is through "fee-for-service" systems9 whereby fees for insured physician services10 are set by the province following negotiations with the provincial medical association. Any increases in the cost of operating a medical practice, including changes in taxation, would be borne by the physician directly, as would the potential additional resource burden incurred in responding to a change to the CCPC regulatory framework. It is not surprising then that one study found that "high-income, self-employed physicians are much more sensitive to the marginal tax rate than would be suggested by previous labor-supply studies".11 The results of the CMA's survey on incorporation with respect to personal financial planning highlight the concerns associated with the unique burdens facing physicians in operating a medical practice. A strong majority (92%) of respondents rated the ability to save for retirement as very important for personal financial planning. A majority (61%) of respondents indicated the ability to pay off debt and half (50%) indicated the ability to manage practice overhead costs as very important for personal financial planning. 3) Role of Incorporation for Ensuring Tax Equity for Medical Professional As reviewed above, in light of the design of Canada's health care system, the majority of physicians are self-employed professionals and small business owners. Like other small business owners, physicians do not have access to pension and health benefits, despite investing in local communities and providing employment. Unlike other small business owners, physicians commence professional income later in life and carry high debt levels associated with education and training. In light of these significant considerations, the CCPC framework represents a measure of tax equity for Canada's physicians. In Canada, the 12 jurisdictions have extended the ability to incorporate to medical professionals. As stated in Ontario's 2000 budget document, the underlying policy purpose of extending incorporation to medical professionals is "to level the playing field with other self-employed individuals who can choose whether to operate their businesses through a corporation".12 For self-employed professionals, incorporation offers many well recognized benefits. As highlighted by most taxation guidance, the application to the small business deduction and the ability to retain income in the corporation are significant benefits of incorporation for small businesses.13 For self-employed medical professionals without access to an employer pension or benefits, the ability to retain income in the corporation contributes to retirement and pension planning capabilities. Finally, the CCPC framework allows for income splitting with family members in almost all jurisdictions. The CMA's survey on incorporation explored the benefits of the CCPC framework. The top rated benefit of incorporation was the ability for professional income to be taxed at the small business taxation rate, with 85% rating it as very important. In comparison, 60% of respondents indicated that income splitting with a family member was very important. 4) Changes to the CCPC Framework and Potential Unintended Consequences As noted above, the federal government has committed to reducing the small business taxation rate from 11% to 9%. In recognition of the significant financial pressures managed by physicians owning and operating medical practices, the CMA strongly supports this commitment. However, along with this commitment, the federal government has made concerning statements regarding professionals and the CCPC framework. While the federal government has not indicated a specific measure or timeline, the statements on their own have yielded significant uncertainty and concern. In response to the federal government's statement, the CMA has received a significant volume of correspondence from its membership; unprecedented in our almost 150 year history. The CMA cannot emphasize enough the need for caution in considering changes to the CCPC framework. The CCPC framework and the ability of incorporated physicians to maintain access to the small business rate is fundamental to the business model for these medical practices. Changes to the framework could have real and far-reaching impacts. Beyond the immediate impact to a physician, employees of a medical practice, and the region the medical practice serves, depending on the scope of changes to the CCPC framework, impacts could be at the health-sector level, particularly in terms of shifting the delivery of care away from institutionalized care toward community-based care. The physicians surveyed by the CMA were asked to consider the likelihood of various actions they may take should the federal government alter the CCPC framework. A large majority (75%) of the respondents indicated that they would be very or somewhat likely to take one or more of these actions: * more than half (54%) of practicing physicians said that they would be very or somewhat likely to reduce the number of hours worked; * 42% would be very or somewhat likely to reduce office staff; and, * about one quarter indicated that they would be very or somewhat likely to pursue other measures such as closing their practice and retiring (24%) or relocating their practice to another provincial/territorial jurisdiction (26%) or to the U.S. or another country (22%). The responses to the CMA's survey on incorporation align with the limited research available on this issue. In a study that explored the interprovincial migration of physicians confirmed that "the differences in real income have a positive and significant effect on a physician's decision to migrate from one province to another".14 Another study that explored the impacts of taxation on physicians, noted that "it has been demonstrated in the literature that physicians in higher-tax states work less on average".15 These studies emphasize the potential for unintended consequences should changes to the CCPC framework impact physician medical practice. Conclusion As outlined in this brief, the majority of Canada's doctors are self-employed, highly skilled professionals providing a critical health care contribution in communities across the country. For these physicians, the CCPC framework provides a critical tax equity measure that recognizes the unique challenges they face as small business owners. For the vast majority of incorporated physicians, the benefits of the CCPC framework are critical to the operation of the practice model, particularly supporting community-based care. In some cases, the practice model is only economical within this framework. In light of the intrinsic role of the CCPC framework to medical practice, and therefore the provision of medical care in Canada, the CMA encourages significant caution in considering any potential changes to this framework. The CMA's core recommendation to the federal government is to maintain tax equity for medical professionals by affirming its commitment to the existing framework governing Canadian-Controlled Private Corporations. References 1 Ontario Budget 2000 https://www.poltext.org/sites/poltext.org/files/discours/ON/ON_2000_B_37_01.pdf 2 Mandate Letter for the Minister of Small Business and Tourism http://www.pm.gc.ca/eng/minister-small-business-and-tourism-mandate-letter 3 CMA. 2014. Environmental Scan. 4 Industry Canada. Key Small Business Statistics 2013 https://www.ic.gc.ca/eic/site/061.nsf/eng/02814.html 5 Canadian Post M.D. Registry. 6 National Physician Survey http://nationalphysiciansurvey.ca/wp-content/uploads/2013/03/C3PR-Bulletin-StudentResidentDebt-201303-EN.pdf 7 National Physician Survey http://nationalphysiciansurvey.ca/wp-content/uploads/2013/03/C3PR-Bulletin-StudentResidentDebt-201303-EN.pdf 8 Alberta Medical Association. Setting the record straight on physician compensation. https://www.albertadoctors.org/Media%20PLs%202013/Feb1_2013_PL_Backgrounder.pdf and Ontario Medical Association. Payments to physicians and practice overhead expenses: separating facts from fiction in Ontario. https://www.oma.org/resources/documents/paymentsphysicians_pp18-19.pdf. and R.K. House & Associates Ltd. Executive Summary for the British Columbia Medical Association: 2005 Overhead Cost Study. 9 CIHI. Physicians in Canada, 2014: Summary Report. https://secure.cihi.ca/free_products/Summary-PhysiciansInCanadaReport2014_EN-web.pdf 10 Health Canada. Canada Health Act Annual Report 2014-15. http://www.hc-sc.gc.ca/hcs-sss/pubs/cha-lcs/2015-cha-lcs-ar-ra/index-eng.php 11 Mark H. Showalter and Norman K. Thurston. Taxes and labor supply of high-income physicians. Journal of Public Economics 66 (1997) 73-97. 12 Ontario Budget 2000 https://www.poltext.org/sites/poltext.org/files/discours/ON/ON_2000_B_37_01.pdf 13 Manulife. The Professional's Option - Professional Incorporation. https://repsourcepublic.manulife.com/wps/wcm/connect/02b56600433c4887b94dff319e0f5575/ins_tepg_taxtopicproopt.pdf?MOD=AJPERES&CACHEID=02b56600433c4887b94dff319e0f5575 14 Michael Benarroch and Hugh Grant. The interprovincial migration of Canadian physicians: does income matter? Applied Economics, 2004, 36, 2335-2345. 15 Norman K. Thurston and Anne M. Libby. Taxes and Physicians Use of Ancillary Health Labor. The Journal of Human Resources, XXXV 2.
Documents
Less detail

Statement to the House of Commons Committee on Health addressing the opioid crisis in Canada

https://policybase.cma.ca/en/permalink/policy13936
Date
2016-10-18
Topics
Pharmaceuticals/ prescribing/ cannabis/ marijuana/ drugs
Population health/ health equity/ public health
Health care and patient safety
  1 document  
Policy Type
Parliamentary submission
Date
2016-10-18
Topics
Pharmaceuticals/ prescribing/ cannabis/ marijuana/ drugs
Population health/ health equity/ public health
Health care and patient safety
Text
Thank you Mr. Chair. I am Dr. Jeff Blackmer, the Vice-President of Medical Professionalism for the Canadian Medical Association. On behalf of the CMA, let me first commend the committee for initiating an emergency study on this public health crisis in Canada. As the national organization representing over 83,000 Canadian physicians, the CMA has an instrumental role in collaborating with other health stakeholders, governments and patient organizations in addressing the opioid crisis in Canada. On behalf of Canada’s doctors, the CMA is deeply concerned with the escalating public health crisis related to problematic opioid and fentanyl use. Physicians are on the front lines in many respects. Doctors are responsible for supporting patients with the management of acute and chronic pain. Policy makers must recognize that prescription opioids are an essential tool in the alleviation of pain and suffering, particularly in palliative and cancer care. The CMA has long been concerned with the harms associated with opioid use. In fact, we appeared before this committee as part of its 2013 study on the government’s role in addressing prescription drug abuse. At that time, we made a number of recommendations on the government’s role – some of which I will reiterate today. Since then, the CMA has taken numerous actions to contribute to Canada’s response to the opioid crisis. These actions have included advancing the physician perspective in all active government consultations. In addition to the 2013 study by the health committee, we have also participated in the 2014 ministerial roundtable and recent regulatory consultations led by Health Canada — specifically, on tamper resistant technology for drugs and delisting of naloxone for the prevention of overdose deaths in the community. 3 Our other actions have included: · Undertaking physician polling to better understand physician experiences with prescribing opioids; · Developing and disseminating new policy on addressing the harms associated with opioids; · Supporting the development of continuing medical education resources and tools for physicians; · Supporting the national prescription drug drop off days; and, · Hosting a physician education session as part of our annual meeting in 2015. Further, I’m pleased to report that the CMA has recently joined the Executive Council of the First Do No Harm strategy, coordinated by the Canadian Centre on Substance Abuse. In addition, we have joined 7 leading stakeholders as part of a consortium formed this year to collaborate on addressing the issue from a medical standpoint. I will now turn to the CMA’s recommendations for the committee’s consideration. These are grouped in four major theme areas. 1) Harm Reduction The first of them is harm reduction. Addiction should be recognized and treated as a serious, chronic and relapsing medical condition for which there are effective treatments. Despite the fact that there is broad recognition that we are in a public health crisis, the focus of the federal National Anti-Drug Strategy is heavily skewed towards a criminal justice approach rather than a public health approach. In its current form, this strategy does not significantly address the determinants of drug use, treat addictions, or reduce the harms associated with drug use. The CMA strongly recommends that the federal government review the National Anti-Drug Strategy to reinstate harm reduction as a core pillar. Supervised consumption sites are an important part of a harm reduction program that must be considered in an overall strategy to address harms from opioids. The availability of supervised consumption sites is still highly limited in Canada. The CMA maintains its concerns that the new criteria established by the Respect for Communities Act are overly burdensome and deter the establishment of new sites. 4 As such, the CMA continues to recommend that the act be repealed or at the least, significantly amended. 2) Expanding Pain Management and Addiction Treatment The second theme area I will raise is the need to expand treatment options and services. Treatment options and services for both addiction as well as pain management are woefully under-resourced in Canada. This includes substitution treatments such as buprenorphine-naloxone as well as services that help patients taper off opioids or counsel them with cognitive behavioural therapy. Availability and access of these critical resources varies by jurisdiction and region. The federal government should prioritize the expansion of these services. The CMA recommends that the federal government deliver additional funding on an emergency basis to significantly expand the availability and access to addiction treatment and pain management services. 3) Investing in Prescriber and Patient Education The third theme I will raise for the committee’s consideration is the need for greater investment in both prescriber as well as patient education resources. For prescribers, this includes continuing education modules as well as training curricula. We need to ensure the availability of unbiased and evidenced-based educational programs in opioid prescribing, pain management and in the management of addictions. Further, support for the development of educational tools and resources based on the new clinical guidelines to be released in early 2017 will have an important role. Finally, patient and public education on the harms associated with opioid usage is critical. As such, the CMA recommends that the federal government deliver new funding to support the availability and provision of education and training resources for prescribers, patients and the public. 4) Establishing a Real-time Prescription Monitoring Program Finally, to support optimal prescribing, it is critical that prescribers be provided with access to a real-time prescription monitoring program. 5 Such a program would allow physicians to review a patient’s prescription history from multiple health services prior to prescribing. Real-time prescription monitoring is currently only available in two jurisdictions in Canada. Before closing, I must emphasize that the negative impacts associated with prescription opioids represent a complex issue that will require a multi-faceted, multi-stakeholder response. A key challenge for public policy makers and prescribers is to mitigate the harms associated with prescription opioid use, without negatively affecting patient access to the appropriate treatment for their clinical conditions. To quote a past CMA president: “the unfortunate reality is that there is no silver bullet solution and no one group or government can address this issue alone”. The CMA is committed to being part of the solution. Thank you.
Documents
Less detail

Supporting the enactment of Bill C-14, Medical Assistance in Dying

https://policybase.cma.ca/en/permalink/policy13693
Last Reviewed
2019-03-03
Date
2016-05-02
Topics
Ethics and medical professionalism
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2019-03-03
Date
2016-05-02
Topics
Ethics and medical professionalism
Text
In this submission to the House of Commons Standing Committee on Justice and Human Rights, the CMA’s feedback is focused on three of the legislative objectives of Bill C-14, given their relevance to the CMA’s Principles-based Recommendations for a Canadian Approach to Assisted Dying. On behalf of its more than 83,000 members and the Canadian public, the CMA performs a wide variety of functions. Key functions include advocating for health promotion and disease/injury prevention policies and strategies, advocating for access to quality health care, facilitating change within the medical profession, and providing leadership and guidance to physicians to help them influence, manage and adapt to changes in health care delivery. i) Robust Safeguards First, the CMA supports the legislative objective of ensuring a system of robust safeguards to the provision of medical assistance in dying. The safeguards proposed by Bill C-14 include: patient eligibility criteria, process requirements to request medical assistance in dying, as well as monitoring and reporting requirements. The CMA is a voluntary professional organization representing the majority of Canada’s physicians and comprising 12 provincial and territorial divisions and over 60 national medical organizations. ii) Consistent, Pan-Canadian Framework Second, the CMA supports the legislative objective that a consistent framework for medical assistance in dying in Canada is desirable. In addition to robust safeguards, key measures proposed by Bill C-14 support the promulgation of a consistent framework across jurisdictions include legislating definitions for “medical assistance in dying” and “grievous and irremediable condition.” The CMA’s Principles-based Recommendations reflect on the subjective nature of what constitutes “enduring and intolerable suffering” and a “grievous and irremediable condition” as well as the physician’s role in making an eligibility determination. iii) End-of-Life Care Coordination System Thirdly, the CMA supports the objective to develop additional measures to support the provision of a full range of options for end-of-life care and to respect the personal convictions of health care providers. The fulfilment of these commitments with federal non-legislative measures will be integral to supporting the achievement of access to care, respecting the personal convictions of health care providers, and developing a consistent, pan-Canadian framework. The CMA encourages the federal government to rapidly advance its commitment to engage the provinces and territories in developing a pan-Canadian end-of-life care coordinating system. It will be essential for this system to be in place for June 6, 2016. At least one jurisdiction has made a system available to support connecting patients with willing providers. Until a pan-Canadian system is available, there will be a disparity of support for patients and practitioners across jurisdictions. iv) Respect Personal Convictions Finally, it is the CMA’s position that Bill C-14, to the extent constitutionally possible, must respect the personal convictions of health care providers. In the Carter decision, the Supreme Court of Canada emphasized that any regulatory or legislative response must seek to reconcile the Charter rights of patients wanting to access assisted dying and physicians who choose not to participate in medical assistance in dying on grounds of conscientious objection. The CMA’s Principles-based Recommendations achieves an appropriate balance between physicians’ freedom of conscience and the assurance of effective and timely patient access to a medical service. From the CMA’s significant consultation with our membership, it is clear that physicians who are comfortable providing referrals strongly believe it is necessary to ensure the system protects the conscience rights of physicians who are not. While the federal government has achieved this balance with Bill C-14, there is the potential for other regulatory bodies to implement approaches that may result in a patchwork system. The CMA’s position is that the federal government effectively mitigate this outcome by rapidly advancing the establishment of the pan-Canadian end-of-life care coordinating system. CMA Supports Cautious Approach for “Carter Plus” The CMA must emphasize the need for caution and careful study in consideration of “Carter Plus”, which includes: eligibility of mature minors, eligibility with respect to sole mental health conditions, and advance care directives. The CMA supports the federal government’s approach not to legislate these issues, rather to study them in greater detail. Word count: 750
Documents
Less detail

10 records – page 1 of 1.