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Towards a Sustainable Health Care System in the New Millennium : Submission to the House of Commons Standing Committee on Finance 2000 Pre-Budget Consultation Process

https://policybase.cma.ca/en/permalink/policy1977
Last Reviewed
2018-03-03
Date
1999-09-10
Topics
Population health/ health equity/ public health
Health systems, system funding and performance
  2 documents  
Policy Type
Parliamentary submission
Last Reviewed
2018-03-03
Date
1999-09-10
Topics
Population health/ health equity/ public health
Health systems, system funding and performance
Text
On the cusp of the new millennium, it is appropriate to reflect with pride on our nation's past and to plan with compassion, innovation and creativity for our nation's future. The new century will present us with many challenges-an ageing population, increased knowledge with corresponding advances in technology and research, competitiveness at home and abroad- to meet the needs of Canadians. CMA recognizes that we live in a world that is increasingly interdependent. A world where globalization has meant that we, as a country, must look forward and beyond our borders when it comes to determining how we can reach our collective potential. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] As we plan for the future it is vital to recognize the importance of the social programs that must remain essential features of our society. Our health care system is an important and defining feature of what it is to be Canadian. CMA believes a well funded, sustainable, quality health care system must be at the forefront of the federal government's strategic priorities. The haste to reduce health care costs over the past several years has left a destabilized and demoralized health system in its wake. Diminished access to critical health care services and insufficient human resources are only part of the legacy. Rebuilding Canadians' confidence in the health care system will not be easy. CMA noted the important first step that was taken by the federal government in its 1999 budget. A reinvestment of $11.5 billion earmarked for health care was an important signal to Canadians. However, with the complete restoration of funds in 2003/04 the health care system will only be back to its 1995 nominal spending levels, some seven years after the fact - with no adjustment for the increasing health care needs of an increased number of more aged Canadians, inflation or economic growth. CMA is encouraged with federal government's recent initiatives to increase health research funding. This is of direct benefit to the health of Canadians; to the health care system; to foster the development of health care as an industry and to ensure our best and brightest medical scientists and health researchers are educated and remain in Canada. However, we know that more needs to be done to ensure innovation and competitiveness. We would like to echo the words of the Prime Minister who said we consider Medicare to be the best example of how good social policy can be good economic policy, too. While reflecting the desire of Canadians to show compassion for their fellow citizens, Medicare also serves as one of our key competitive advantages. A sustained health care system will ensure a healthy population, and a healthy labour force that contributes to the productivity of the nation. In seeking to place the health care system on the road to long-term sustainability, the CMA is committed to working in close partnerships with the federal government and others in identifying, developing and implementing policy initiatives that serve to strengthen Canadians' access to quality health care The CMA looks forward to contributing to the search for solutions. To work with the federal government and others in building a responsive, flexible and sustainable health care system for all Canadians. In this spirit of co-operation the CMA offers the following recommendations: 1. That the federal government fund Canada's publicly financed health care system on a long-term, sustainable basis to ensure quality health care for all Canadians. 2. That the federal government introduce a health-specific portion of federal cash transfers to the provinces and territories to promote greater public accountability, transparency and visibility. 3. That the federal government, at a minimum, increase federal cash for health care by an additional $1.5 billion, effective April 1, 2000. 4. That beginning, April 1, 2001, the federal government fully index the total cash entitlement allocated to health care through the use of a combination of factors that would take into account the changing needs of Canadians based on population growth, ageing, epidemiology, current knowledge and new technologies, and economic growth. 5. That the federal, provincial and territorial governments adopt the guiding principle of national self-sufficiency in the production and retention of physicians to meet the medical needs of the population, including primary to highly specialized medical care, and the requirements for a critical mass for teaching and research. 6. That the federal government establish and fund a national pool of re-entry positions in postgraduate medical education. 7. That the federal government establish a National Centre for Health Workforce Research. 8. That the federal government enhance financial support systems, such as the Canada Student Loans Program, for medical students in advance of any future tuition increase, and ensure that these support systems are set at levels that meet the financial needs of students. 9. That health care services funded by the provinces and territories be zero-rated. 10. That the federal government establish a National Health Technology Fund to increase country-wide access to needed health technologies. 11. That the federal government continue to increase funding for health research on a long-term, sustainable basis. 12. That the federal government commit stable funding for a comprehensive tobacco control strategy; this strategy should ensure that the funds are invested in evidence-based tobacco control projects and programs, which would include programs aimed at prevention and cessation of tobacco use and protection of the public from tobacco's harmful effects. 13. That the federal government support the use of tobacco tax revenues for the purpose of developing and implementing tobacco control programs. 14. That the federal government place a high priority for funding tobacco prevention and evidence-based cessation programs for young Canadians as early as primary school age. 15. That the federal government follow a comprehensive integrated tobacco tax policy a) To implement selective stepwise tobacco tax increases to achieve the following objectives: (1) reduce tobacco consumption, (2) minimize interprovincial/territorial smuggling of tobacco products, and (3) minimize international smuggling of tobacco products; b) To apply the export tax on tobacco products and remove the exemption available on tobacco shipments in accordance with each manufacturers historic levels; and c) To enter into discussions with the US federal government to explore options regarding tobacco tax policy, raising Canadian tobacco price levels in line with or near the US border states, in order to minimize international smuggling. 16. That the dollar limit of RRSPs at $13,500, increase to $15,500 for the year 2000/01. 17. That the federal government explore mechanisms to increase RRSP contribution limits in the future given the delay in achieving pension parity, since 1988. 18. That the 20% Foreign Property Rule for deferred income plans such as Registered Retirement Savings Plans and Registered Retirement Income Funds be increased in 2% annual increments to 30% over a five year period, effective the year 2000. 19. That the federal government explores the regulatory changes necessary to allow easier access to RRSP funds for investment in small and medium-size businesses. 20. That the federal government undertake the necessary steps to creditor-proof RRSPs and RRIFs. I. INTRODUCTION The Canadian Medical Association (CMA) commends the federal government in its second mandate, for continuing with the pre-budget consultation process. This visible and accountable process encourages public dialogue in the consideration and development of finance, economic and social policies of the country. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] As part of the 2000 pre-budget consultation process, the CMA welcomes the opportunity to submit its views to the House of Commons Standing Committee on Finance, and looks forward to meeting with the Committee at a later date to discuss our recommendations and their rationale in greater detail. II. POLICY CONTEXT Over the past few years, there has been a significant amount of attention placed on the fact that Canada is living in a world that is increasingly interdependent. A world where globalization has meant that we, as a country, must look forward, outward and with others when it comes to determining how we can reach our collective potential. While further political and economic change is likely to continue, it is important to recognize that there are important social programs that must remain essential features of our society. One such program is our health care system - an important and defining feature of what it is to be Canadian. The CMA believes that when it comes to maintaining and enhancing the health of Canadians, a well-funded, sustainable health care system must be at the forefront of the federal government's strategic priorities. By 2002, it is estimated that there will be 2.3 million more Canadians and 444,000 more Canadians over the age of 65. As a consequence, Canada's health care system will continue to face significant challenges in the near future. The pan-Canadian haste of governments across the country to reduce health care costs as quickly as possible over the past several years left a destabilized and demoralized health system in its wake. Diminished access to critical health care services and insufficient human resources are only part of the legacy. The initial federal reinvestment will help ease some of the pressures but it will not be much more than a short-term solution given that expectations and demands on the system will continue to rise. Rebuilding Canadians' confidence in the health care system will not be easy. Reports of overcrowded emergency rooms, physician and nursing shortages, and of patients being sent to the United States for treatment to reduce waiting times will not help restore their faith. The CMA fully recognises the importance of the first step taken by the federal government. However, fundamental questions remain about future steps needed to sustain our cherished health care system over the short-, medium- and long-term - ensuring that all Canadians will have ready access when they or their families are in need. Given this first step, the CMA believes that we must shift our focus to the vision and overarching strategic framework the federal government must develop to ensure that the health care system will be funded on a sustainable basis. In seeking to place the health care system on the road to long-term sustainability, the CMA is committed to working closely with the federal government in identifying, developing and implementing policy initiatives that serve to strengthen Canadians' access to quality health care. III. TOWARDS A SUSTAINABLE HEALTH CARE SYSTEM In its 1999 budget, the federal government took an important first step forward toward stabilizing Canada's health care system. The government announced a five-year fiscal framework, effective April 1, 1999 that reinvested $11.5 billion, on a cumulative basis, in the health care system. While this is an important first step, it must be placed in perspective. The $11.5 billion is a cumulative figure over five consecutive years. On an annual basis, this means that federal cash for health care is scheduled to increase by $2.0 billion for 1999/2000; it will remain at the same level for 2000/01 and then increase by $500 million (to $2.5 billion) in 2001/02, and remain at that level for the years 2002/03 and 2003/04. Only in year 4 does the CHST cash floor increase by a total of $2.5 billion. 1 Restoring $2.5 billion to the Canada Health and Social Transfer (CHST) cash floor in 2002/03, the fourth year of the government's five-year timetable, means that the health system will only be back to its 1995 nominal spending levels, 7 years after the fact - with no adjustment for the increasing health care needs of Canadians, inflation or economic growth. 2 [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [TABLE END] In current dollars, it is estimated that the federal government allocates approximately 41% of CHST cash for health care. Based on a cash floor of $12.5 billion this amounts to $5.13 billion. The CMA recognizes that the federal amount has increased cash by a minimum of $2.0 billion in 1999/00 to $7.13 billion, however, once again this figure must be placed in context; $7.13 billion represents only 9 cents of each dollar spent on health care in Canada. Another way to express the $11.5 billion is to adjust the figure by the number of Canadians (i.e., a per capita basis - see Figure 1). 3 Scenario 1 illustrates nominal per capita federal CHST cash for health care prior to the 1999 budget with projections to 2003/04. In absence of a five-year fiscal framework introduced by the government, federal CHST cash (formerly Established Programs Financing and the Canada Assistance Plan) would have gone from $247 in 1990/01 to $163 per Canadian in 2003/04 - a decrease of 34%. Adjusting for inflation, federal CHST cash for health care would have dropped from $247 to $131 per Canadian - a decrease of 47%. With the introduction of the $11.5 billion in 1999 (Scenario 2), nominal per capita CHST cash for health care increases from $168 to $233 in 1999/00. This, however, falls short of the $258 per capita in 1995/96. With an estimated population of 30.6 million Canadians, the CHST shortfall is estimated to be $765 million (i.e., $258 - $233 x 30.6 million). Recognizing that inflation since 1995 has eroded the value of the federal CHST cash in 1999, the figure is estimated to be closer to $1.5 billion than $1.0 billion. Furthermore, there is no escalator attached to the federal CHST cash to account for inflation, a growing and ageing population, epidemiological trends or the diffusion of new technologies. This is a departure from previous formulae under Established Programs Financing (EPF) and the CHST which included an escalator (i.e., a three-year moving average of nominal Gross Domestic Product) to grow the value of the cash transfer. 4 In summary, the context placed around $11.5 billion is important, for it underscores the importance of the initial step that has been taken by the federal government when it comes to shoring up funding for health care in Canada. However, the critical issue now becomes what immediate and successive steps will be taken by the government to place the funding of our health care system on a longer-term and sustainable basis. The CMA is not alone in its view that there must be a full restoration of CHST cash. The Communiqué issued by the First Ministers at the recent 40th Annual Premiers Conference in Quebec City was clear in the interpretation of sustainability. While we consider how to ensure that the health care system will be here for all Canadians over the short, medium and long-term, we know that our society is growing and ageing. It is projected that individuals over the age of 65 will increase from just over one in ten (12.2%) in 1996 to one in five (21.7%) in 2031. 5 [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] The combination of population growth and ageing will place additional pressure on health expenditures. Estimated per capita health expenditures by age for 1994 (see Table 1), shows that per capita expenditures for the 65 and over age group were $8,068, in comparison to $2,478 for the population as a whole-just over a three-to-one ratio. 6 Of interest, while the 65 and over population represented less than 12% of the population in 1994, it is estimated to have accounted for almost 40% of total health expenditures. The Auditor General of Canada, using age-specific per capita health spending, has projected that government health expenditures may reach 12% of GDP. 7 This is a large estimated increase given that the 1998 total health expenditures, which includes both government and private sources, is approximately 9% of GDP. [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 1 Per Capita Health Expenditures By Age Group, 1994 Age Group Expenditures per capita 0-14 $1,156 15-44 $1,663 45-64 $2,432 65+ $8,068 Source: National Health Expenditures, CIHI, 1996. [TABLE END] While it may be argued that those are only estimates, the OECD study on population shows that they are not at all atypical of the international experience. 8 This information alone will present the health care system with a number of challenges when it comes to meeting the future needs of the population. Given the current and impending pressures on the health care system, it is incumbent on the federal government - the guardian of Medicare - to think how we, as a society, will be able to maintain our health care system well beyond the new millennium. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] The CMA therefore recommends: 1. That the federal government fund Canada's publicly financed health care system on a long-term, sustainable basis to ensure quality health care for all Canadians. 2. That the federal government introduce a health-specific portion of federal cash transfers to the provinces and territories to promote greater public accountability, transparency and visibility. 3. That the federal government, at a minimum, increase federal cash for health care by an additional $1.5 billion, effective April 1, 2000. 4. That beginning April 1, 2001, the federal government fully index the total cash entitlement allocated to health care through the use of a combination of factors that would take into account the changing needs of Canadians based on population growth, ageing, epidemiology, current knowledge and new technologies, and economic growth. Recommendation 1 is principle-based and speaks to the importance of moving away from managing Canada's health care system on a crisis-to-crisis basis. While the balance between affordability and sustainability of our system should be at the forefront of our thinking, it must not deny Canadians reasonable access to quality health care. It also recognizes that although the federal government has an essential role to play, it cannot do it alone; it must work in close partnership with the provinces and territories. Consistent with the Minister of Health's call for increased accountability and transparency in our health care system, Recommendation 2 calls on the federal government to be measured by the very same principle when it comes to funding Canada's health care system. It is also consistent with the Social Union Agreement calling for greater public accountability on all levels of government. While last year's allocation under the CHST for health care sends an important message, consideration must be given as to how the CHST can be restructured to promote greater transparency and linkage between the sources of federal funding for health care and their intended uses at the provincial/territorial level. This is particularly important when one considers the need to better understand the relationship between defined health care expenditures and their relationship to health outcomes. In fact, it could be argued that last year's federal budget implicitly re-introduced the concept of earmarking CHST cash to health care. At a time of increased demand for accountability, the CHST mechanism appears to be anachronistic by having one indivisible cash transfer that does not recognize explicitly the federal government's contribution to health in a post-Social Union Agreement world. Last year, the CMA recommended to the federal government that it reinvest a total of $3.5 billion effective April 1, 1999 into the health care system with the principal objectives of: stabilizing the health care system; and assisting in the transitional process of expanding the continuum of care. As part of the $3.5 billion, the CMA recommended the creation of a Health System Renewal Fund which focused on four discrete areas of need: (1) acute care infrastructure; (2) community care infrastructure; (3) support Canadians at risk; and (4) health information technology. Given that the government reinvested $2.0 billion in 1999/2000, the CMA recommends that the federal government move immediately to reinvest an additional $1.5 billion for health care to facilitate continued system stabilization as well as further development toward an expanded continuum of care. These additional and necessary resources would be welcomed in addressing strategic policy challenges related to health human resource requirements - particularly those associated with the need for an adequate and stable supply of physicians and nurses; the cornerstone of our health care system. Furthermore, these resources would assist in the development of necessary capital infrastructure required to assist in the transition from institutional to community-based models of care, within a more integrated framework. While more specific and substantial funding announcements would be expected with any new shared programs announced by the federal and provincial/territorial governments (e.g., home care and pharmacare), there is a need now, while the system is in flux to ensure that no one falls through the cracks. This transitional funding will assist in the stabilization of the system and will also serve to ensure that as the system evolves toward an expanding continuum of care, it will remain accessible, with minimal interruption of service to Canadians. Based on recent estimates of the government's surplus in 1999 (standing at $4.8 billion through the first three months of fiscal 1999) and beyond, (9) it would appear that the government has an opportunity to make good on its commitment to make health care a key priority for future action. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] Recommendation 4 addresses the need for a fully indexed escalator to ensure that the federal cash contribution will continue to grow to meet the future health needs of Canadians. The escalator formula recognizes that health care needs are not always synchronized with economic growth. In fact, in times of economic hardship (e.g., unemployment, stress, and familial discord), a greater burden is placed on the health care system. If left as is, the current federal cash value will continue to erode over time with increasing demands from an ageing and growing population, and inflation. Combined, these recommendations speak not only to the fundamental principles of the necessity of having a sustainable health care system, but also in terms of the federal government continuing to take the necessary concrete leadership steps to ensure that adequate and long-term funding is available to meet the health care needs of all Canadians. The recommendations are strategic and targeted, and serve to build on and strengthen the core foundation of our health care system. If Canada's health care system is not only to survive, but thrive in the new millennium, we must give serious consideration to a range of possible solutions that place our system, and the federal role in that system, on a more secure and sustainable financial foundation. The CMA is prepared to continue to work with governments and others in developing innovative and lasting solutions to the challenges that face the health care system. IV. SUSTAINABLE HEALTH CARE AND PRODUCTIVITY In last year's report tabled in the House of Commons, the Standing Committee on Finance proposed the development of a productivity covenant. The Covenant "should subject all existing government initiatives (spending, taxation, regulation) to an assessment which evaluates their expected effects on productivity and hence the standard of living of Canadians. Every new budgetary initiative should be judged according to this productivity benchmark." 10 [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] In the context of reinvesting in health care, the Standing Committee's Covenant asks that a "business case" be made. The CMA is of the view that there exists an important relationship between a well-funded, sustainable, public health care system and economic productivity. Just as strong economic fundamentals are generally viewed as an essential requirement for Canada's prosperous future, stable, adequate and where required, increased resources for health and health care funding should also be considered as an investment in the future well-being of Canadians, and by extension, our economic ability to compete. Framed in this context, these "investments" strengthen the capacity of Canadians to live rewarding and productive lives. From a structural perspective, studies have recognized the link between a well-funded, sustainable health care system as an important contributor to Canada's economic performance. 11 [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] The studies suggest that the nature in which Canada largely finances its health care system through general taxes is more efficient compared to the United States which finances its system predominantly through employer-sponsored programs. Compared to the United States, Canada finances its health care system more equitably by spreading the financial risk across all taxpayers. As well, issues related to job mobility and the portability of health care benefits are not in question in the Canadian system. However, recent federal underfunding in health care has significantly contributed to impaired access to care by injured and sick workers delaying their return to work, decreasing productivity and increasing the cost of doing business and the cost to society. 12 A well-funded, sustainable health care system can be viewed as an important component in the decision-making process of businesses to locate in Canada. 13 In this context, there are a number of benefits that may accrue to Canadians at the individual and societal level, for example: * it can attract medium- and long-term business investment; * lead to the development of new infrastructure (e.g., facilities, equipment); * nurture the development of new long-term (value-added) jobs; * generate real and growing incomes; * increase individual and societal economic activity/consumption, wealth and investment capital; * reduce overall dependence on publicly funded social programs (e.g., employment insurance, income support programs); and * contribute to a growing and sustainable tax base. Underscoring the important linkages between the quality of life of Canadians and productivity is the important role of an efficient and well-funded public health care system and sustained economic growth. Given that policy decisions impact on the economy, health and health care should not necessarily be considered in isolation. In fact, wherever possible, good economic policy and good health and health care policy should be mutually reinforcing, or at a minimum, better synchronized. In an increasingly global, interdependent and competitive marketplace, businesses are not looking to assume greater costs. When it comes to health care, they are not looking to absorb high risk and high cost cases that are currently funded through the public sector. Instead, it would appear that they prefer a well-funded, sustainable health care system that is responsive to the health and health care needs of Canadians. 14 As well, a sustainable publicly funded health care system affords Canadians full mobility (i.e., portability) when it comes to pursuing job opportunities, which in turn, improves productivity. Good economic policy and good health care policy are compatible Canadian societal priorities. One need not be sacrificed to achieve the other nor should they be considered to be in competition with each other. Access to quality health and health care services is an important contributor towards Canada's ability to remain competitive in an increasingly complex global economic environment. Governments at all levels, must take responsibility to ensure that the health system remains on a long-term sustainable financial footing to the extent that it continues to benefit Canadians at the individual and societal level, and in terms of maximizing our quality of life and our ability to be productive. V. PHYSICIAN WORKFORCE ISSUES Canada is now beginning to experience a physician shortage that will be significantly exacerbated in the early decades of the next century. One of the chief contributing factors to the emerging shortage of physicians has been the almost singular focus of governments in their efforts to contain health care costs in the 1990s. A key policy approach introduced by governments to reduce cost growth in health has been to decrease the supply of physicians. A 12-point accord on physician resource management reached by Health Ministers in Banff, Alberta in 1992 included a recommendation for a 10% reduction in undergraduate enrolment in medical schools, which was implemented in the fall of 1993, and a recommendation for a similar percentage reduction in the number of postgraduate training positions. In addition, the introduction in 1992 of the requirement for a minimum of 2 years of prelicensure training removed most of the flexibility that used to exist in the number of postgraduate training slots. For instance, the opportunity for re-entry was no longer available to practising physicians; these re-entry opportunities ensured that young graduates (in general and family medicine) who had opted to go out and do locums or rural placements could then come back into the system at a later date for skills enhancement or speciality training. What the federal/provincial/territorial Ministers of Health did not take into account, however was that the output of Canada's medical schools peaked in the mid-1980s. Between 1986 and 1989, physician supply increased on average by 1,900 per year. This growth was halved between 1989 and 1993 - dropping to an average increase of 960 physicians per year. After 1993, total physician supply dropped in three successive years. This period of declining growth occurred well before the 1993 reductions have had an opportunity to work through the undergraduate education and post-MD training systems. Part of the reason for the decrease in supply is fewer Canadian medical graduates, but a significant part is due to increased attrition from the physician population. One factor has been increased retirement of physicians. The annual number of physicians retiring increased by 40% between the 1985-1989 and 1990-1995 periods. Although there have been up turns in the total supply of physicians in 1997 (285) and 1998 (960), this is unlikely to be sustained, given our lower levels of output from the educational system and higher attrition. The removal of most of these positions was unfortunate because re-entry can provide for more flexibility in the system and can allow for a more rapid adjustment in the physician workforce to meet the health needs of the public. For the Committee's information, appended to the Brief is the CMA's Draft Principles for a Re-entry System in Canadian Postgraduate Medical Education. According to the CMA's projection via the Physician Resource Evaluation Template (PRET), if the current levels of enrolment and attrition patterns continue, Canada will definitely experience a physician shortage in the first decades of the next century, especially after 2011, when the baby-boomer cohort of physicians will begin to retire. There is additional evidence that Canada is experiencing a physician shortage. First, it can be demonstrated that physicians are working harder than ever. Data from the CMA Physician Resource Questionnaire survey show that the mean hours per week worked by physicians (excluding on-call) have increased from 46.9 per week in 1993 to 54.1 hours in 1999 - an increase of 15.4%. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] Second, population-based data suggest that it is becoming more difficult to access physician services. Tracking surveys conducted by the Angus Reid group on behalf of CMA show that in 1998, an estimated 60% of the population believed that access to specialist services has worsened in the past couple of years - up from 41% in 1996. Similarly, in 1998 27% of Canadians reported that access to services from a family physician had worsened - almost double the level of 14% that was reported in 1996. 15 An August 1999 poll conducted by Angus Reid asked Canadians to assess the availability of physicians in their own communities. Only a little over one half of Canadians (52%) feel there are enough physicians available to meet their community's needs. Furthermore, they expect the situation to worsen over the next five years. Less than one third (29%) feel that five years from now there will be enough physicians to meet the health care needs in their communities. 16 In summary, there is ample evidence that not only is Canada heading for a severe physician shortage, but that a shortage has been developing over the past few years. At the same time, it must be recognized that it takes on average six years to train a general practitioner and 8-12 years to train a specialist from the time one enters medical school. If we are to avoid what appears to be a significantly worsening crisis, planning for the future must begin immediately. The CMA therefore recommends: 5. That the federal, provincial and territorial governments adopt the guiding principle of national self-sufficiency in the production and retention of physicians to meet the medical needs of the population, including primary to highly specialized medical care, and the requirements for a critical mass for teaching and research. 6. That the federal government establish and fund a national pool of re-entry positions in postgraduate medical education. In close consultation and collaboration with the provinces and territories, the federal government could play an increasingly vital role when it comes to ensuring that Canada produces an adequate supply of physicians. Furthermore, it could play a role in giving physicians the flexibility they need should they require additional training to meet the emerging needs of Canadians. Cost containment initiatives have also led to decreased numbers of other health care providers all across the country, particularly nurses. The federal government could play a major role in funding and coordinating research across all jurisdictions in Canada on the appropriate supply, mix and distribution of the entire health workforce. Strategic planning in the short, medium and long-term would be greatly facilitated through the establishment of a national institution that could draw on existing national databases and compile research from all the centres in the jurisdictions across the land. The CMA therefore recommends: 7. That the federal government establish a National Centre for Health Workforce Research. RURAL-REMOTE ISSUES While there are physician shortages across the country, it is particularly acute in rural and remote regions of Canada. For a number of personal and professional reasons, physicians are not finding rural and remote practice as rewarding nor sustainable. In 1999, CMA conducted a survey of rural physicians who were asked to rate their level of satisfaction with rural medical practice both from a personal and professional perspective; this study was funded by Health Canada. A similar survey was previously done in 1991. 17 There has been little change in the level of satisfaction for the personal and family factors. However, the level of satisfaction with the professional factors has fallen significantly. In 1991, the proportion indicating they were very satisfied with work hours, professional backup, availability of specialty services and continuing medical education opportunities all decreased by at least 10 percentage points. Similarly, the percentage who were very satisfied with hospital services fell by more than half from 40% in 1991 to 17% in 1999. Likewise, in 1991 42% were very satisfied with their earning potential compared with 23% in 1999. ESCALATION AND DEREGULATION OF TUITION FEES The CMA remains very concerned about high, and rapidly escalating, medical school tuition fee increases across Canada. The CMA is particularly concerned about their subsequent impact on the physician workforce and the Canadian health care system. In addition to the significant impact of high tuition fees on current and potential medical students, the CMA believes that high tuition fees will have a number of consequences, they will: (1) create barriers to application to medical school and threaten the socioeconomic diversity of future health care providers serving the public; and (2) exacerbate the physician 'brain drain' to the United States so that new physicians can pay down their large and growing debts more quickly. In support of this priority matter, the CMA Board has struck a working group to develop a position paper on tuition fee escalation and deregulation; the working group is also planning a national, multiprofession stakeholder conference on this issue. In addition to the recommendation that follows, the CMA believes that governments should increase funding to medical schools to alleviate the pressures driving tuition increases, and that any further tuition increases should be regulated and reasonable. The CMA decries tuition deregulation in Canadian medical schools and recommends: 8. That the federal government enhance financial support systems, such as the Canada Student Loans Program, for medical students in advance of any future tuition increase, and ensure that these support systems are set at levels that meet the financial needs of students. BRAIN DRAIN The net loss of physicians from Canada to other countries has doubled since the beginning of the 1990s. Whereas a net loss of 223 physicians due to migration was recorded in 1991, the corresponding figure for 1997 was 432 physicians - which represents roughly the annual output of four to five medical schools. While these physicians leave for a variety of professional and personal reasons, what is particularly telling is that the figure has doubled over the course of the 1990s. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] For several years, the CMA has warned governments and policy makers about the impending crisis of physician shortages and their implications for the health care system. Regrettably, the calls for a more measured, responsible and deliberate approach to physician resource planning has fallen on deaf ears. There are a number of factors that contribute to physicians leaving Canada. While they would appear to be a combination of personal, professional and economic considerations, the bottom line is our brain drain is a de facto brain gain for another country - predominantly the United States. In reviewing the brain drain issue, Statistics Canada concludes that "there is significant net brain drain in the health professions. Brain gain in health is not enough to make up for brain drain to the United States." 18 This issue is very real for physicians - who are being asked to do more where colleagues are no longer practising; and to the public - who are being asked to be patient as access to the system is delayed or compromised. In the absence of timely, strategic and lasting policy measures, we are likely to continue to risk losing physicians - many of them our best and brightest - to other countries. In this regard, the CMA is of the view that the federal government has an important role to play when it comes to synchronizing policy in the areas of health care, finance and economics. One factor that may contribute to a physician's decision to leave or think about leaving Canada is our tax structure. It is important to note that Canada relies more heavily on personal income taxes than any other G-7 country. 19 While this is important, what is more of concern is how Canada's marginal tax structure compares to that of the United States. While it is understood that Canada has taken a fundamentally different approach with regard to the magnitude and role of the tax system in social policy, the gap between the two systems can no longer be ignored in a world of increasing globalization, economic interdependence and labour mobility. While Canada's personal income tax schedule should be reviewed, it should not come as a surprise to this Committee that other tax policies - such as the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) only serve to remind physicians of the severity and inequity of the problem. GOODS AND SERVICES TAX (GST) In its 1997 report to the House of Commons the Standing Committee noted the concerns of the medical profession about the application of the GST and by 1998 indicated that this issue merits further consideration by the government. The CMA believes that it has rigorously documented its concerns and further study is not required (20) - the time has come for concerted action from the federal government to remove this tax impediment. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] When it comes to tax policy and the tax system in Canada, the CMA is strongly of the view that both should be administered in a fair and equitable manner. This principle-based statement has been made to the Standing Committee on a number of different occasions. While these principles are rarely in dispute, the CMA has expressed its strong concerns regarding their application - particularly in the case of the goods and services tax (GST) and the recently introduced harmonized sales tax (HST) in Atlantic Canada. By designating medical services as "tax exempt" under the Excise Tax Act, physicians are in the unenviable position of being denied the ability to claim a GST refund (i.e., input tax credits - ITCs) on the medical supplies necessary to deliver quality health care, and on the other, cannot pass the tax onto those who purchase such services. This is a critical point when one considers the raison-d'être of introducing the GST: to be an end-stage consumer-based tax, and not having a producer of a good or a service bear the full burden of the tax. Yet this tax anomaly does precisely that. As a result, physicians are "hermetically sealed" - they have no ability to claim ITCs due to the Excise Tax Act, or pass the costs to consumers due to the Canada Health Act. The CMA has never, nor is currently asking for, 'special treatment' for physicians under the Excise Tax Act. However, if physicians, as self-employed individuals are considered as small businesses for tax purposes, then it is clearly reasonable that they should have the same tax rules extended to them that apply to other small businesses. This is a fundamental issue of tax fairness. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] While other self-employed professionals and small businesses claim ITCs, an independent (KPMG) study has estimated that physicians have "overcontributed" in terms of unclaimed ITCs by $57.2 million per year. Furthermore, with the introduction of the HST in Atlantic Canada, KPMG has estimated that it will cost physicians an additional $4.686 million per year. By the end of this calendar year, physicians will have been unfairly taxed in excess of $500 million. As it currently applies to medical services, the GST is bad tax policy and the HST will make a bad situation much worse for physicians. There are other health care providers (e.g., dentists, physiotherapists, psychologists, chiropractors, nurses) whose services are categorized as tax exempt. However, there is an important distinction between whether the services are publicly insured or not. Health care providers who deliver services privately have the opportunity to pass along the GST costs through their fee structures. It must be remembered that physicians are in a fundamentally different position given that 99% of their professional earnings come from the government health insurance plans: under the GST and HST, "not all health care services are created equal". There are those who argue that the medical profession should negotiate the GST at the provincial/ territorial level, yet there is no province or territory that is prepared to cover the additional costs that are being downloaded onto physicians as a result of changes to federal tax policy. Nor do these governments feel they should be expected to do so. The current tax anomaly, as it affects the medical profession, was created with the introduction of the GST - and must be resolved at the federal level. The principles that underpin the fundamental issue of tax fairness outlined by Chief Justice Hall are unassailable and should be reflected in federal tax policy. Clearly, it is fairness, not special treatment that the profession is seeking. As it currently stands for medical services, the GST and HST is bad tax policy that does not reinforce good health care policy in Canada. The CMA strongly recommends: 9. That health care services funded by the provinces and territories be zero-rated. This recommendation would 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: "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. The CMA's recommendation fulfils at least two over-arching policy objectives: (1) it strengthens the relationship between good economic policy and good health policy in Canada; and (2) it applies the fundamental principles that underpin our taxation system (fairness, efficiency, effectiveness), in all cases. In this regard, the CMA is committed to working closely, and on an ongoing basis, with the government to develop collaborative solutions to this tax anomaly. DIFFUSION OF HEALTH TECHNOLOGIES Recently, concerns have been raised about the lack of access to necessary diagnostic and treatment technologies in Canada. Many of the technologies are essential in the early detection of cancers (e.g., breast, prostate, lung), tumours, circulatory complications (e.g., stroke, hardening of the arteries) and other illnesses. A recent study concluded that Canada is generally in the bottom third of OECD countries in availability of technology. Canada ranks 18th (of 29 OECD countries) in making available computed tomography; 19th (of 24 OECD countries) in lithotriptor availability; and 18th (of 27 OECD countries) in availability of magnetic reasonance imagers. Canada ranks favourably only in the availability of radiation equipment (5th out of 16 OECD countries). 21 [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] Given the very real concerns that have been raised with regard to waiting lists across the country, Canadians deserve better when it comes to making available needed health technologies that can effectively diagnose and treat disease. Furthermore, it is clear that we must facilitate the diffusion of new cost-effective health technologies that are properly evaluated and meet defined standards of quality. While physicians are trained to provide quality medical care to all Canadians- they must, at the same time, have the "tools" to do so. In this context, the federal government should establish a National Health Technology Fund that would allow the provinces and territories to access funds. While the provinces and territories would be responsible for determining their respective technological priorities, the federal government would very clearly link the sources of funding with their intended uses, with full recognition for an essential investment in the health care of Canadians. The CMA recommends: 10. That the federal government establish a National Health Technology Fund to increase country-wide access to needed health technologies. The CMA is prepared to work closely with the federal government to assist in the development of objectives and deliverables of such a fund within a reasonable period of time. In so doing, the federal government would work in a strategic partnership with the provinces and territories such that monies from the fund to purchase equipment would be supported by ongoing operational resources at the site of delivery. VI. SYNCHRONIZING FEDERAL GOVERNMENT POLICY: WHERE FINANCE, ECONOMICS AND HEALTH CARE COME TOGETHER In appearing before the House of Commons Standing Committee on Finance, the CMA is well aware that policy considerations in finance and economics have an important and direct impact on the funding and delivery of health care in Canada. In the world of public policy, rarely are difficult decisions portrayed as simply being black or white. In most instances, where tough choices are made amongst a series of competing ends, they are often in varying shades of grey. While this is true when it comes to health care policy in Canada or any other discipline, it is important that it be placed in a broader context in terms of being consistent with, or reinforcing other good policy choices that have been implemented. This concept is critical to ensure that, if possible, all policy decisions are moving consistently in the same direction. In effect, synchronized in a way that the "policy whole" is greater than the sum of its individual parts. Such an approach also ensures that policy decisions taken in one sector are not countering decisions taken in other sectors. HEALTH RESEARCH IN CANADA In previous submissions to the Standing Committee on Finance, the CMA has encouraged the federal government to take the necessary steps to establish a national target and implementation plan for health research in Canada. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] The CMA was very encouraged with the federal government's announcement in last year's budget to set aside significant resources to develop the Canadian Institute for Health Research (CIHR). By 2001, funding for the CIHR is expected to increase to $484 million. The CMA was also pleased with the Minister's recent announcement to earmark $147 million to attract and retain health researchers in Canada. In offering a vision and structure to facilitate health research in Canada, the government should be congratulated. The CMA believes that significantly increasing funding in support of health research is of direct benefit to: (1) the health of Canadians; (2) Canada's health care system; and (3) to foster the development of health care as an industry. This is where good economic policy goes hand-in-hand with good health and health care policy in Canada. The CMA strongly supports the CIHR model and is prepared to work closely with government and others to do what is necessary to make this become a reality. Recognizing that Canada is moving into a new phase when it comes to funding and undertaking health research, the government is taking an important step to ensure our best and brightest medical scientists and health researchers are developed and remain in Canada. [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] As a national organization representing the views of practising physicians across the country, the CMA strongly believes it has a meaningful contribution to make in moving the CIHR model forward. Specifically, in the areas of: * knowledge management (the CMA contributed greatly to stimulating clinical and health services research in Canada) * contributing to the research agenda (the CMA contributes to the research agenda in health services research, for example the Western Waiting List project funded by the Health Transition Fund) * ensuring quality peer-reviewed research (the CMA publishes the leading peer-reviewed medical journal in Canada) * research transfer (the CMA plays a leading role in developing tools to transfer research into practice - such as the Clinical Practice Guideline Database) * ethics (the CMA maintains a standing committee on ethics) * sustainability (the CMA has advocated for a strong Canadian presence in health research) While the CIHR will have a broad mandate for health research, physicians will have a key role to play in medical and health services research. The CMA looks forward to playing a more substantive role as the model moves to become reality. The CMA recommends: 11. That the federal government continue to increase funding for health research on a long-term, sustainable basis. TOBACCO CONTROL PROGRAMS Tobacco taxation policy should be used in conjunction with other strategies for promoting health public policy, such as public education programs to reduce tobacco use. The CMA continues, however, to maintain that a time-limited investment is not enough. Substantial and sustainable fund-ing is required for programs in prevention and cessation of tobacco use. 22 [BOX CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [BOX END] A possible source for this type of program investment could be tobacco tax revenues or the tobacco surtax. The CMA believes that that the federal government should designate 0.6 cents per cigarette sold to a fund to defray the costs of tobacco interventions, including those provided by physicians with the expertise in the treatment of nicotine addiction. This would generate approximately $250 million per year to help smokers quit. 23 The CMA recommends: 12. That the federal government commit stable funding for a comprehensive tobacco control strategy; this strategy should ensure that the funds are invested in evidence-based tobacco control projects and programs, which would include programs aimed at prevention and cessation of tobacco use and protection of the public from tobacco's harmful effects. 13. That the federal government support the use of tobacco tax revenues for the purpose of developing and implementing tobacco control programs. 14. That the federal government place a high priority for funding tobacco prevention and evidence-based cessation programs for young Canadians as early as primary school age. TOBACCO TAXATION POLICY Smoking is the leading preventable cause of premature mortality in Canada. The most recent estimates suggest that more than 45,000 deaths annually in Canada are directly attributable to tobacco use. The estimated economic cost to society from tobacco use in Canada has been estimated from $11 billion to $15 billion. 24 Tobacco use directly costs the Canadian health care system $3 billion to $3.5 billion (25) 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 aged 10-14. 26 A 1997 Canada Health Monitor Survey found that smoking among girls 15-19 is at 42%. 27 A Quebec study found that smoking rates for high school students went from 19% to 38%, between 1991 and 1996. 28 The CMA congratulates the federal government's initiatives to selectively increase federal excise taxes on cigarettes and tobacco sticks. This represents the first step toward the development of a federal integrated tobacco tax strategy, and speaks to the importance of strengthening the relationship between good health policy and good tax policy in Canada. 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 interprovincial/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 do not make international smuggling profitable. The selective stepwise increase in tobacco taxes can be combined with other tax strategies. The federal government should be congratulated for reducing the export exemption available on shipments in accordance with each manufacturers' historic levels, from 3% of shipments to 2.5%. However the CMA believes that the federal government should remove the exemption. The objective of implementing the export tax would be to make cross-border smuggling unprofitable. The federal government should establish a dialogue with the US federal government. Canada and the US should hold discussions regarding harmonizing US tobacco taxes with Canadian levels at the factory gate. Alternatively, Canadian tobacco tax policy should raise price levels such that they approach US tobacco prices. The CMA therefore recommends: 15. That the federal government follow a comprehensive integrated tobacco tax policy (a) To implement selective stepwise tobacco tax increases to achieve the following objectives: (1) reduce tobacco consumption, (2) minimize interprovincial/territorial smuggling of tobacco products, and (3) minimize international smuggling of tobacco products; (b) To apply the export tax on tobacco products and remove the exemption available on tobacco shipments in accordance with each manufacturers' historic levels; and (c) To enter into discussions with the US federal government to explore options regarding tobacco tax policy, raising Canadian tobacco price levels in line with or near the US border states, in order to minimize international smuggling. REGISTERED RETIREMENT SAVINGS PLANS (RRSPS) 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 standard of living upon retirement. Reviewing the demographic picture in Canada, we know that an increasing portion of society is not only aging, but is living longer. Assuming that current trends will continue and peak in the first quarter of the next century, it is important to recognize the role that private RRSP savings will play in ensuring that Canadians may continue to live in dignity well past their retirement from the labour force. In its 1996 budget statement, the federal government announced that the contribution limits of RRSPs was to be frozen at $13,500 through to 2002/03, with increases to $14,500 and $15,500 in 2003/04 and 2004/05 respectively. As well, the maximum pension contribution 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. This policy runs counter to the 1983 federal government White Paper on 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 principle of 'pension parity' was explicitly recognized and endorsed. Since that time, in three separate papers released by the federal government (1983, 1984, 1987), the principle of pension parity would have been achieved between money-purchase (MP) plans (i.e., RRSPs) and defined-benefit (DB) plans (i.e., Registered Pension Plans) had RRSP contribution limits risen to $15,500 in 1988. As a founding member of the RRSP Alliance, the CMA, along with others has been frustrated that eleven years of careful and deliberate planning by the federal government around pension reform has not come to fruition. In fact, if the current policy remains in place it will have taken more than 17 years to implement needed reforms to achieve parity (from 1988 to 2005). While pension parity will be achieved between RRSP plans and RPP plans in 2004/05, it will have been accomplished on the backs of Canadians whose RRSP contribution levels have been frozen for far too long. As a consequence, the current policy of freezing RRSP contribution limits and RPP limits without adjusting the RRSP contribution limits to achieve pension parity serves to maintain inequities between the two plans until 2004/05. This situation is further compounded by the implementation of this policy because the RRSP/RPP plans are frozen and therefore unable to grow at the rate in the yearly maximum pensionable earnings (YMPE) Specifically, if the recommended policy of pension parity had been implemented in 1988, the growth in RRSP and RPP contribution limits could have grown in line with the yearly maximum pensionable earnings - and would be approximately $21,000 today. [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] TABLE 2 - RRSP Contribution Limits Adjusted by the Yearly Maximum Pensionable Earnings (YMPE Earnings (YMPE) Year YMPE % change RRSP Limits 1988 $27,700 $15,500 1989 $28,500 2.89 $15,948 1990 $28,900 1.40 $16,171 1991 $30,500 5.54 $17,067 1992 $32,200 5.57 $18,018 1993 $33,400 3.73 $18,690 1994 $34,400 2.99 $19,249 1995 $34,900 1.45 $19,529 1996 $35,400 1.43 $19,809 1997 $35,800 1.13 $20,032 1998 $36,900 3.07 $20,648 1999 $37,400 1.36 $20,928 YMPE Source: Revenue Canada, April 1999 [TABLE END] Each year the Department of Finance publishes revenue cost to the federal treasury of a number of policy initiatives. For RRSP contributions, the net tax expenditure (i.e., tax revenue not collected) is estimated to be $7.5 billion in 1998. The net tax expenditure associated with registered pension plans is estimated to be $6.2 billion in 1998. In this context, it is critical to understand the difference between tax avoidance and tax deferral. RRSPs allow Canadians to set aside necessary resources to provide for their retirement years. In the medium and longer-term, when RRSPs are converted to annuities, they bring increased tax revenues to government. While current contributions exceed withdrawals, this will not continue indefinitely as the baby boom generation retires at an accelerated rate. In sum, at a time when the government is reviewing the role of public benefits in society, there is a social responsibility placed on government to ensure a stable financial planning environment is in place which encourages greater self-reliance on private savings for retirement. From the standpoint of synchronizing good tax policy with good social policy, it is essential that the RRSP system be expanded such that it gives Canadians the means and incentive to prepare for retirement, while at the same time, lessening any future burden on public programs. The CMA recommends: 16. That the dollar limit of RRSPs at $13,500 increase to $15,500 for the year 2000/01. 17. That the federal government explore mechanisms to increase RRSP contribution limits in the future given the delay in achieving pension parity, since 1988. Under current federal tax legislation, 20% of the cost of an RRSP, RRIF or Registered Pension Plan's investments can be made in 'foreign property'. The rest is invested in 'Canadian' investments. If the 20% foreign content limit is exceeded at the end of a month, the RRSP pays a penalty of 1% of the amount of the excess. In its December 1999 pre-budget consultation, the Standing Committee on Finance made the following recommendation (p. 58): "The Committee recommends that the 20% Foreign Property Rule be increased in 2% increments to 30% over a five year period. This diversification will allow Canadians to achieve higher returns on their retirement savings and reduce their exposure to risk, which will benefit all Canadians when they retire." A study by Ernst and Young demonstrated that Canadian investors have experienced substantially better investment returns over the past 20 years with higher foreign content limits. As well, the Conference Board of Canada concluded that lifting the foreign content limit to 30% would have a neutral effect on Canada's economy. The CMA strongly supports the Standing Committee's position that there is sufficient evidence to indicate that Canadians would benefit from an increase in the Foreign Property Rule, from 20% to 30%. The CMA therefore recommends: 18. That the 20% Foreign Property Rule for deferred income plans such as Registered Retirement Savings Plans and Registered Retirement Income Funds be increased in 2% annual increments to 30% over a five year period, effective the year 2000. As part of the process to revitalize and sustain our economy, greater expectations are being placed on the private sector to create long-term employment opportunities. While this suggests that there is a need to re-examine the current balance between public and private sector job creation, the government nonetheless has an important responsibility in fostering an environment that will accelerate job creation. In this context, the CMA strongly believes that current RRSPs should be viewed as an asset rather than a liability. With proper mechanisms in place, the RRSP pool of capital funds can play an integral role in bringing together venture capital and small and medium-size business and entrepreneurs. The CMA would encourage the federal government to explore current regulatory impediments to bring together capital with small and medium-size businesses. The CMA recommends: 19. That the federal government explores the regulatory changes necessary to allow easier access to RRSP funds for investment in small and medium-size businesses. Currently, if an individual declares bankruptcy, creditors are able to launch a claim against their RRSP or RRIF assets. As a consequence, for self-employed Canadians who depend on RRSPs for retirement income, their quality of life in retirement is at risk. In contrast, if employees declare bankruptcy, creditors are unable to lay claim on their pensionable earnings. This is an inequitable situation that would be remedied if RRSPs were creditor-proofed. The CMA recommends: 20. That the federal government undertake the necessary steps to creditor-proof RRSPs and RRIFs. ENDNOTES: 1. It is important to keep in mind that in addition to the CHST, a separate accounting procedure was established through what is called a CHST Supplement. The Supplement, which totals $3.5 billion, was charged to the 1998 federal government public accounts, but is allocated over a three-year period (i.e., $2.0 billion, $1.0 billion, and $0.5 billion). However, at any point in time, a province or territory can take its portion of the $3.5 billion. 2. The $2.5 billion dollars to be reinvested represents the amount of federal cash that was removed with the introduction of the Canada Health and Social Transfer (CHST) beginning in April 1996 through to 1998. The amount is calculated on the basis of the recent historical federal cash allocation (approximately 41%) under EPF and CAP (now the CHST) to health care as a proportion of the $6.0 billion required to restore the CHST cash floor to $18.5 billion (1995/96 level). 3. The data sources for Figure 1 are: (1) CHST: Canadian Medical Association, Looking Toward Tomorrow, September 1998, p. 4.; (2) Historical national cash transfer to health from Established Programs Financing Reports, Federal-Provincial Relations Division, Department of Finance; (3) Population Statistics: Statistics Canada Catalogue no. 91-213; (4) CPI annual % change: Source for 1990-96 is Canadian Economic Observer, cat. No. 11-210-XPB, Historical Statistical Supplement 1996/97, p. 45. For 1996, 1997 and 1998 the source is Canadian Economic Observer, cat. No. 11-010-XPB, April 1999. For 1999 and 2000 the source is Royal Bank of Canada Econoscope, May 1999, p.14. For 2001, 2002 and 2003 CPI % change is assumed to stay constant at the 2000 level of 1.3%. 4. Thomson A. Federal Support for Health Care. Health Action Lobby. June 1991, p. 13. 5. Statistics Canada, Population Projections for Canada, Provinces and Territories, Medium Growth Scenario, 1993-2016, December, 1994 (Catalogue #91-520). 6. Health Canada. National Health Expenditures in Canada, 1975-1994. January 1996. 7. 1998 Report of the Auditor General of Canada, Chapter 6, Population Aging and Information for Parliament: Understanding the Choices, April. WWW: http://www.oag-bvg.gc.ca/domino/reports.nsf/html/9860xe12.html, available on 06/09/99 at 17:38:37. 8. Maintaining Prosperity in an Ageing Society. Organization for Economic Cooperation and Development, Paris, 1998. 9. The Fiscal Monitor, Department of Finance. August 1999. Current Analysis, The Royal Bank of Canada, August 1999. The Bank estimates that the fiscal dividend will reach $25.9 billion in 2004/05, and $41.2 billion in 2007/08. 10. Facing the Future - Challenges and Choices for A New Era. Report of the Standing Committee on Finance, December 1998, p. 30-31. 11. Green JP, MacBride-King J. Corporate Health Care Costs in Canada and the U.S.: Does Canada's Medicare System Make a Difference? Conference Board of Canada, 1999. Purchase B. Health Care and Competitiveness. School of Policy Studies, Queen's University, 1996. KPMG. The Competitive Alternative: A Comparison of Business Costs in Canada and the United States, 1996. Amanor-Boadu, Martin LJ. Canada's Social Programs, Tax System and the Competitiveness of the Agri-Food Sector, Guelph, Agri-Food Competitiveness Council, 1994. 12. Green JP, MacBride-King J. Corporate Health Care Costs in Canada and the U.S.: Does Canada's Medicare System Make a Difference? Conference Board of Canada, 1999. 13. KPMG. The Competitive Alternative: A Comparison of Business Costs in Canada and the United States, 1996. 14. Baillie C. Health Care in Canada: Preserving a Competitive Advantage, Speech to the Vancouver Board of Trade, April, 1999. 15. National Angus Reid Poll, 1998. 16. National Angus Reid Poll, 1999. 17. Canadian Medical Association. The 1991 Survey of Physicians in Rural Medical Practice, 1991. Canadian Medical Association. Survey on Rural Medical Practice in Canada, 1999. 18. Presentation by Statistics Canada Officials to the Standing Committee on Industry, May 1999. 19. Business Council on National Issues: Creating Opportunity, Building Prosperity. October 1998, p. 6. 21. KPMG, Review of the Goods and Services Tax on Canadian Physicians, June 12, 1992. KPMG, Review of the Impact of a Provincial Value Added Tax on Physicians in New Brunswick, Nova Scotia and Newfoundland, August 12, 1996. 21. Harriman D, McArthur W, Zelder M. The Availability of Medical Technology in Canada: An International Comparative Study. The Fraser Institute. August 1999. 22. In California, between 1988 and 1993, when the state was carrying on an aggressive public anti-smoking campaign, tobacco consumption declined by over 25%. Goldman LK, Glantz SA. Evaluation of Antismoking Advertising Campaigns. JAMA 1988; 279: 772-777. 23 In 1998, 45.613 billion cigarettes were sold in Canada. Statistics Canada, Catalogue #32-022, December, 1998. In 1997/98, total tobacco revenues were $2.04 billion, Public Accounts, Volume II, Part 1, Excise Tax Revue. The rationale for 0.6 cents per cigarette is based on a total amount of 25 cents per pack, of which the federal and provincial/territorial governments would contribute on an equal basis (i.e., 12 cents each). Recently, California passed Proposition 99 which added 25 cents to each pack of cigarettes. 24. Health Canada, Economic Costs Due to Smoking (Information Sheet). Ottawa: Health Canada, November 1996. 25. Health Canada, Economic Costs Due to Smoking (Information Sheet). Ottawa: Health Canada, November 1996. 26. Health Canada, Youth Smoking Behaviour and Attitudes (Information Sheet). Ottawa: Health Canada, November 1996. 27. Canada Health Monitor, Highlights Report, Survey #15. Price Waterhouse, January-February 1997. 28. Editorial. Raise Tobacco Taxes. The Gazette [Montreal] 1997 Sept 23. Sect B:2.
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A Prescription for Productivity: Toward a more efficient, equitable and effective health system : CMA’s 2005 Pre-Budget Submission to the Standing Committee on Finance

https://policybase.cma.ca/en/permalink/policy1946
Last Reviewed
2013-03-02
Date
2005-10-24
Topics
Health systems, system funding and performance
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Policy Type
Parliamentary submission
Last Reviewed
2013-03-02
Date
2005-10-24
Topics
Health systems, system funding and performance
Text
Introduction This pre-budget submission makes the case that healthier Canadians are more productive Canadians. It also recognizes that the delivery of quality health care, in a timely manner, is paramount and is not mutually exclusive to any productivity agenda. As Emerson once said, “the first wealth is health.” 1 Last fall, the First Ministers recognized this by agreeing on a plan that will, over the next 10-years, add an additional $41 billion federal dollars into our health care system. The Canadian Medical Association applauds the government for spearheading this renaissance in federal health care funding. But like the human body, that is always evolving, the health care system needs to be monitored and trained for optimal performance. The consequences of under investing in health care in the past are haunting us today. Better health … better Canada Canada, which at one time was the most attractive place on earth to live, is falling behind. According to the Conference Board of Canada, Canada’s overall economic performance has fallen from 3rd best in the world, to 6th and now to 12th. One of the drivers of this precipitous fall is – according to the Conference Board’s analysis – the weakened state of our health care system. For example, our infant mortality rates are rising, not falling, in relative terms. We have tumbled from our top-five ranking in the 1980s — to where we are today in the 22nd spot out of 27 countries of the Organization for Economic Co-operation and Development (OECD). That is why, now more than ever, Canada’s economy is in need of strategic federal direct investments in health care as part of an overall productivity enhancing package. The CMA is not alone in linking health care investments to better economic performance. According to the latest economic research, “There is now strong empirical evidence to suggest a two-way relationship: improved health significantly enhances economic productivity and growth. 2 ” Furthermore, the Royal Institute of International Affairs states that, “…improved health supports labour productivity; by augmenting life expectancy, it encourages savings and private investment. Health expenditures are an investment not a cost. It is crucial that governments develop a long-term perspective.” The health care sector in Canada employs over a million people or 7.5% of the labour force. In 2004, Canada invested $130 billion in health care representing 10% of our GDP. The benefits of the health care investments not only accrue to a higher quality of life for all Canadians, but the economic multiplier effect of the initial investment is estimated to create an additional $65 billion in economic activity. 3 The CMA has identified a number of key issues related to health human resources and infrastructure that require immediate attention if the Canadian economy is to retain its competitive position in the global economy. We will make the case that, by making strategic federal direct investments in health human resources and public health, the federal government can make a great leap forward in reinforcing a critical foundation for a healthier more productive Canadian economy. These initiatives involve investments in physical, human and entrepreneurial capital, which if sustained over the long-term, will pay dividends in terms of improved population health. The competition for world class health care labour is becoming more global and will intensify. Unless Canada can provide excellent training, tools and working conditions international demand threatens to undermine the foundations of our system. For example, if Canada were to move today to cap working hours on physicians to 48 hours per week as the European Union has done, Canada would be short a whopping 12,780 physicians. Not only is there international demand for world class medical professionals, but also the stock of these professionals especially in Canada is aging. The United States is expected to be short by 200,000 physicians by 2020. They have looked to Canada before to fill the gap, and they may again. This is why the federal government must play a leadership role in supporting health human resources (HHR) while at the same time sustaining Canadian health care industries. When investments in health are aligned with technology at the right time, they can, as Federal Reserve Chairman Allan Greenspan suggests, “provide key insights into clinical best practices and substantially reduce administrative costs.” One of the key health infrastructure investments that has to be made is the electronic medical record (EMR). For too long Canada has lagged all major industrialized countries in adopting an EMR. A pan-Canadian EMR would deliver higher quality care, faster and at a higher value. An EMR would also allow Canada’s health care system to dramatically increase communication between jurisdictions. Communication and coordination of resources are keys to dealing with natural disasters such as Hurricane Katrina which devastated New Orleans. We need these investments sooner rather than later to avoid making the mistakes (e.g. in the case of SARS) as pointed out by the Naylor Report 4 . One of the key areas where the federal government can make a difference is the creation of a secure communications network linking up public health authorities and health providers across the country. According to Dr. Klaus Stöhr, project leader of the Global Pandemic Project at the World Health Organization, “Once a pandemic virus emerges, it is too late to begin planning or to begin collaboration.” 5 In spite of the imminent threat of a pandemic influenza, there are $34.3 millions in planned cuts to the Public Health Agency of Canada, over the next two years, as a result of program review. We need only look as far as New Orleans to see what an under-funded federal emergency preparedness system can reap. The loss of life in New Orleans was tragic and many agree unnecessary. In Canada we had SARS. Canada did squelch SARS and learned a lot about our capacities, yet we still have not lived up to the potential of being better prepared. Looking ahead, “In the event of a pandemic, the economic effects could be severe, affecting virtually all sectors and regions,” according to Dr. Sherry Cooper Chief Economist, BMO Nesbitt Burns. Dr. Cooper goes on to say that “Awareness is key to preparedness and proper surveillance, planning and preparation are essential to effective response and containment.” 6 Over the last several years, the CMA raised serious concerns about the ability of Canada’s public health system to respond to disasters and made a number of recommendations to address national preparedness in terms of security, health and capacity of the system. The CMA firmly believes that there remain significant shortcomings in our capacity to respond to health care emergencies. As we look to the future it is critical that the federal government make a stronger commitment to public health. Public health programming is too important to be sacrificed in the short-term expenditure review exercises. The continued application of the GST on physician practices is an unfair tax on health. Because physicians cannot recapture the GST paid on goods and services for their practices in the same way most other businesses can, the GST distorts resource allocation for the provision of medical care. As a result, physicians end up investing less than they otherwise could on goods and services that could improve patient care and enhance health care productivity such as information management and information technology systems. Zero-rating the GST on physician practices would remove an unfair tax on health and allow for greater investment in technologies that would result in better care. Summary The CMA’s pre-budget submission has presented the facts on how investments in physical, human and entrepreneurial capital can enhance our health care system and, in turn, make our economy more productive. As our health care system efficiencies improve, the benefits not only accrue to health care workers, but also the ultimate dividend is better patient care and improved population health. Improvements in the quality of care, and especially speed of care, enable the Canadian labour force to increase its performance and fully reach its potential. These health care investments ultimately translate into a stronger, more competitive and more productive economy. CMA’s 10 point productivity plan (with estimated investment) Efficiency Recommendation #1: That Health Canada, in collaboration with Citizenship and Immigration Canada, provincial and territorial governments and Canada’s medical schools, provide funding for 600 postgraduate training positions to enable qualified international medical graduates who are Canadian citizens or landed immigrants to complete medical training requirements. Investment: $45 million per year for 3 years. [600 x $75k (approximate annual training cost per resident]. Recommendation #2: That Health Canada, in collaboration with Foreign Affairs Canada and provincial and territorial governments, carry out a direct ad campaign in the United States to encourage expatriate Canadian physicians and other health professionals to return to practice in Canada. Investment: A one-time investment of $10 million. Recommendation #3: That the Minister of Finance in collaboration with the Minister of Health allocate $1 billion over 5 years to a Health Human Resource Reinvestment Fund. This fund would be used to implement a needs-based, pan-Canadian, integrated health human resources plan based on the principle of self-sufficiency for Canada. Investment: $1 billion over 5 years. Recommendation #4: That Health Canada, in collaboration with the Department of Human Resources and Skills Development and the provincial and territorial governments, create the Canadian Coordinating Office for Health Human Resources to facilitate pan-Canadian planning of health human resource needs. Investment: $3 million per year. Equity Recommendation #5: That the Minister of Finance introduces legislation to amend the federal Excise Tax Act to zero-rate the Goods and Services Tax (GST) on physician practices. Investment: $84 million per year or 0.27 % of total $31.5 billion GST revenues in 2005/06. Recommendation #6 That the Minister of Finance in collaboration with the Minister of Health provide additional financial support to Canada Health Infoway, to realize the vision of a secure interoperable pan-Canadian electronic medical record, with a targeted investment toward physician office automation. Investment: $1.5 billion over 10 years. Recommendation #7: That the Department of Human Resources and Skills Development introduce changes to the Canada Student Loans Program to extend the interest free status on Canada student loans for medical residents pursuing postgraduate training. Investment: $5 million per year. Recommendation #8: That the Minister of Finance in collaboration with the Minister of Health increase the base budget of the Canadian Institutes of Health Research to enhance research efforts in the area of population health and public health as well as significantly accelerating the pace of knowledge transfer. Investment: $600 million over 3 years. Effectiveness Recommendation #9: In order to ensure that adequate emergency preparedness and public health capacity is built at both federal and provincial levels, the federal government should provide sustained additional funding, to the Public Health Agency of Canada, and exempt it from expenditure review contributions. Investment: $684.3 million over 3 years (details in Appendix 1). Recommendation #10: That Health Canada and the Public Health Agency of Canada provide a one-time infusion of $100 million, to improve technical capacity to communicate with front-line public health providers in real-time during health emergencies. Investment: A one time investment of $ 100 million. The first wealth is health Canada, which at one time was the most attractive place on Earth to live, is falling behind. According to the Conference Board of Canada, Canada’s overall economic performance has fallen from 3rd best in the world, to 6th and now to 12th. One of the drivers of this precipitous fall is – according to the Conference Board’s analysis – the weakened state of our health care system. For example, our infant mortality rates are rising, not falling, in relative and absolute terms. We have tumbled from our top-five ranking in the 1980s — to where we are today; in the 22nd spot out of 27 OECD countries. That is why, now more than ever, Canada’s economy is in need of strategic federal direct investments in health care as part of an overall productivity enhancing package. According to the latest economic research, “There is now strong empirical evidence to suggest a two-way relationship: improved health significantly enhances economic productivity and growth. 7 ” The health care sector in Canada employs over a million people or 7.5% of the labour force. In 2004, Canada invested $130 billion in health care, representing 10% of our GDP. The benefits of the health care investments not only accrue to a higher quality of life for all Canadians, but the economic multiplier effect of the initial investment is estimated to create an additional $65 billion in economic activity. 8 I. Efficiency – providing tools to improve patient care and productivity A healthy and productive health workforce is the key to a well performing health care system and sets the foundation for a productive labour force. That is the ideal. However, there is a shortage of physicians across Canada. This shortage is creating a tremendous amount of pressure on the health care system. As demand for health care increases and the supply of health care workers is fixed, the pressure on these workers to do “more with less” is enormous. That is why Canadian physicians need the federal government’s support to have the tools and time to build on their productivity. Making human capital investments in physicians (value centres) Federal Health Minister Ujjal Dosanjh acknowledged the value of physicians in his speech to the Canadian Medical Association’s General Council this August 2005 by saying, “I want you to know that our government sees physicians … not as cost centres but as value centres”. It is in this spirit that we urge the government to invest in HHR. In order for the First Ministers Meeting (FMM) Agreement to be successful in improving access to care, governments must make the health workforce a major priority. In particular, the $1 billion in HHR funding in the Wait Times Reduction Fund should be made available immediately to address the crisis in health human resources rather than in the last 4 years of the 10-year agreement as currently projected. Given the current shortages in health human resources, action on HHR must begin now — not in 2010. Investing in physicians, or as Minister Dosanjh eloquently put, “value centres” will have real dividends for Canadians and the health care system. Accordingly, the CMA calls upon the federal government to play a key role in improving the availability of health human resources by developing a pan-Canadian HHR strategy that includes the involvement of health care providers. 9 For as Minister Dosanjh acknowledged, "It is clear to me that, if we are going to achieve the kind of solutions that have the support of Canadians, that our physicians must be engaged as active and valued partners.” The cost of under-investing in health human resources The pressures on human capital within the health care system are clear. Since the cutbacks in medical school admissions in the early 1990s, the gap between the growing demand for medical care and physician supply has widened. Canada’s ratio of 2.1 physicians per 1,000 population remains one of the lowest among the Organization for Economic Co-operation and Development (OECD) countries and below the OECD average of 2.9. With this ratio, Canada ranks 24th out of 30 OECD countries. In addition, as more doctors enter retirement age the shortage of physicians is becoming acute. The cost to patients — and their employers — is manifested in wait times, increasing difficulty to access primary care. In spite of these pressures Canada still does not educate enough doctors to replace those about to retire. The status quo threatens capital stock within the health sector, the general labour force, and even the world. “In the face of a global shortage of health care workers … can a country in which 24% of practicing doctors were educated outside its own borders continue to rely on physicians from countries that can least afford to lose them?” — Dr. Peter Barrett, CMA past president, August 2005 CMA annual meeting. Social and economic dividends of investing in HHR The CMA recommends that Canada’s long-term objective should be to increase enrolments in health disciplines to achieve greater self-sufficiency. The dividend of investing in HHR is a better, more efficient health care workforce who will deliver higher quality care in a timely manner. A well funded public health care system makes all Canadians healthier and more productive in their economic and social roles. In addition, becoming HHR self-sufficient also has the potential benefit of eventually exporting made-in-Canada health sector goods and services. But beyond re-stocking the pool of HHR for the future, attention also needs to be paid to the current stock of physicians. The issue of retention, or keeping physicians interested in working, is especially important now considering that a record number of physicians are about to retire. (i) Maximizing our existing health human capital — providing more training opportunities for international medical graduates As noted earlier, Canada ranks at the bottom among OECD countries in physicians per capita. As blunt an indicator as this may be the recent Supreme Court ruling in the Zeliotis case is a poignant reminder that there is an imbalance in the system between supply (HHR) and demand. We need more health care workers to protect, or save from burnout, the health care human capital investments that Canada has made already. We also need to ensure that Canada’s labour force — our macro human capital — has access to quality care without reasonable delays. Since it takes anywhere from 7 to 10 years to train a new physician, there are limits to how much can be done in the short term to address shortages. One short-term response would be to facilitate the training of qualified international medical graduates (IMGs) who are already in Canada. The CMA has welcomed the federal government’s recent investment of $75 million in the 2005 budget for the integration of internationally trained health workers, and notes that federal funding has already produced tangible results as some medical schools have increased the number of postgraduate training positions available to IMGs. However, there is an issue of clinical training capacity at Canada’s medical schools; consequently this initial investment is insufficient to provide training opportunities for over 600 IMGs and countless other qualified internationally trained health workers who are already in Canada. Accordingly, the CMA recommends that the federal government provide sufficient funding to provide additional training positions to train the existing supply of IMGs who would be eligible to begin a post-MD residency training immediately. The capacity to train these Canadian citizens or landed immigrants exists in Canadian medical schools. Currently, Canadian medical schools are providing postgraduate training opportunities to close to 900 visa trainees from abroad, largely from Persian Gulf countries. The federal government helps redeploy some of this capacity by offering medical schools, on a time-limited basis, to purchase some of these visa trainee positions to train IMGs that can then be deployed in Canada’s health care system. Such funding could also provide for the comprehensive assessments of IMGs that have been developed in several jurisdictions. The CMA also strongly supports the initiative of the Medical Council of Canada (MCC) in developing a pilot for the off-shore electronic administration of the MCC’s evaluation exams. Recommendation #1: That Health Canada, in collaboration with Citizenship and Immigration Canada, provincial and territorial governments and Canada’s medical schools, provide funding for 600 postgraduate training positions to enable qualified international medical graduates who are Canadian citizens or landed immigrants to complete medical training requirements. Investment: $45 million per year for 3 years. [600 x $75k (approximate annual training cost per resident]. (ii) Repatriating human capital - getting our Canadian physicians back home from the US Canada has been a net exporter of physicians to the United States for a generation. As government funding for health care fell in the 1990s exports of Canadian physicians to the US rose. Last year was the first year in which Canada gained more physicians than it sent to the US. There is a window of opportunity to repatriate Canadian physicians from the United States. The quality of Canadian life, competitive remuneration packages and a practice commitment that is characterized by greater physician autonomy are many of the chief drawing points for such a campaign. As the Canadian dollar approaches US $0.90 advertising in the US has also become much more affordable. Recommendation #2: That Health Canada, in collaboration with Foreign Affairs Canada and provincial and territorial governments, carry out a direct ad campaign in the United States to encourage expatriate Canadian physicians and other health professionals to return to practice in Canada. Investment: A one-time investment of $10 million. (iii) Diligence on HHR As Canada’s population ages and as health care technology improves, demand for health care will increase. Health care in economic terms is a superior good: as the population’s standard of living improves, so does the demand for superior goods. But will this increased demand be met with an adequate supply of physicians to provide the kind of care Canadians need in a timely manner? Not likely, but we don’t know for sure because Canada does not currently have a way to assess the ability of our medical schools to meet these future needs across the country. An inadequate physician supply has important implications for human, physical and entrepreneurial capital in Canada’s economy. If the physician supply is not properly aligned with the demographic needs of the population the result is a loss (calculations vary and depend on the individual) in potential human capital as patients postpone treatment or wait too long for treatment. Investments in future physical capital investments may also be misallocated or not made at all if the proper health human resources are not in place. In addition, entrepreneurial capital may also very well flow to places where the optimal health human resources are in place. Why we need a Health Human Resources Reinvestment fund Canada lags behind other countries in the education and training of physicians. For example, as of 2002-2003 there were 12.2 first-year medical school places per 100,000 population in England compared with only 6.5 per 100,000 in Canada. It should be added that the United Kingdom has aggressively expanded medical enrolment since the late 1990s by opening 4 new medical schools and increasing medical school intake by some 2,300 places (60%) between 1997 and 2004. The CMA and other major national medical organizations have called on governments to increase medical school capacity to 3,000 first-year training positions per year in order to stabilize Canada’s physician supply. With recent increases in positions at a number of medical schools, current indications suggest that we have reached about 2,300 positions per year. However, given the growing demand for health services and changing patterns of medical practice, it is likely that medical school capacity will have to be increased much more significantly. For example, if Canada were to move today to cap working hours on physicians to 48 hours per week as the European Union has done, Canada would be short a whopping 12,780 physicians. Accordingly, as was done in the 1960s when the federal government introduced the Health Resources Fund, the CMA urges the federal government to create a Health Human Resource Reinvestment Fund in order to implement a needs-based, pan-Canadian, integrated health human resources plan based on the principle of self-sufficiency for Canada. Recommendation #3: That the Minister of Finance in collaboration with the Minister of Health allocate $1 billion over 5 years to a Health Human Resource Reinvestment Fund. This fund would be used to implement a needs-based, pan-Canadian, integrated health human resources plan based on the principle of self-sufficiency for Canada. Investment: $1 billion over 5 years. (iv) Creation of the Canadian Coordinating Office for Health Human Resources At a broader level, there is also a need for continued coordination of pan-Canadian HHR needs for today and the future. Governments are investing very large sums of funding in health care without having the benefit of a national long-term health human resources strategy. Since health human resources are increasingly mobile in the global economy, it is essential that Canada’s 14 provincial, territorial and federal health care systems devise a coordinated approach to training, recruiting and retaining health human resources. The Canadian Coordinating Office for Health Human Resources would be modeled along the same lines as the Canadian Coordinating Office for Health Technology Assessment (CCOHTA) created in 1989. Presently, there is no overall national coordinating body to assist provinces and territories in the planning of health human resources, particularly one that includes all pertinent stakeholders including physicians and other health care professionals. Building on previous federal investments in health sector studies across a number of health disciplines, the CMA urges the federal government to establish a Canadian Coordinating Office for Health Human Resources involving representation from health care professions — something both the Romanow and Senator Kirby reports recommended. Recommendation #4: That Health Canada, in collaboration with the Department of Human Resources and Skills Development and the provincial and territorial governments, create the Canadian Coordinating Office for Health Human Resources to facilitate pan-Canadian planning of health human resource needs. Investment: $3 million per year. II. Equity: improving health infrastructure and technology to provide better care (v) Freeing-up entrepreneurial capital and retaining physicians Why the GST should not apply to physician practices The CMA is calling on the federal government to remove an insidious tax on health by zero-rating (10 ) the GST on physician practices. The introduction of the GST was never intended to fall onto the human and physical capital used to produce goods and services. The GST is a value-added tax on consumption that was put into place to remove the distorting impact that the federal manufacturers sales tax was having on business decisions. However, the GST was applied to physician practices in a way that does exactly the opposite. The federal government must rectify the situation once and for all. Based on estimates by KPMG, physicians have paid $1.1 billion in GST related to their medical practice. This is $1.1 billion that could have been invested in better technology to increase care and productivity. Re-investing the zero-rating of the GST for physician practices Zero-rating the GST would initially cost the federal government $84 million (11) or 0.27% of total GST revenues for 2005/06. However, as physicians across Canada re-invest the zero-rated GST tax back into their practices — and especially in their patients — there would be considerable dividend back to the federal government in terms of healthier Canadians and a more efficient economy. Zero-rating the GST for physician practices is about properly calibrating the tax system with the health care delivery system, in order to help meet our national health and economic goals. Dispelling the myth of a GST precedent Some bureaucrats and politicians believe that zero-rating the GST for physician practices may set a precedent. In fact, the precedent has already been set: significant elements of publicly-funded health care are already zero-rated or qualify for a rebate on GST. For example, prescription drugs, a significant and growing driver of total health care costs, have been zero-rated since 1996. Hospitals have benefited from an 83% rebate since the inception of the GST, and the 2005 budget extended the reach of this rebate to not-for-profit organizations delivering services that were previously delivered in the hospital setting. In addition to hospitals, rebates have been extended to other public and para-public sectors such as municipalities, universities and schools (the so-called “MUSH” sector). The 2004 federal budget confirmed that municipalities would be able to recover 100% of the GST and the federal component of the harmonized sales tax (HST) immediately. Recommendation #5: That the Minister of Finance introduces legislation to amend the federal Excise Tax Act to zero-rate the Goods and Services Tax (GST) on physician practices. Investment: $84 million per year or 0.27 % of total $31.5 billion GST revenues in 2005/06. (vi) Electronic Medical Record — increasing health and productivity In the words of Finance Minister Goodale, “Top-notch physical infrastructure is essential to a successful economy and a rising quality of life.” To be sure, Canada needs better highways, bridges and sewer systems. We need this basic infrastructure to enjoy a basic quality of life. But we want more than a basic life. To achieve a higher quality of life and to ensure international competitiveness, Canada needs to invest in the infrastructure of the 21st century, this is e-infrastructure. A pan-Canadian Electronic Medical Record (EMR) would deliver higher quality care, faster and at higher value. An EMR will save lives and improve efficiencies When investments in health are aligned with technology at the right time, they can as Federal Reserve Chairman Allan Greenspan suggest, “provide key insights into clinical best practices and substantially reduce administrative costs.” Health care delivery in Canada is a $130 billion industry. It represents more than 10% of our country’s gross domestic product. And it continues to grow. Yet we are managing the system with technology that would have been unacceptable to the banking industry even 20 years ago. Studies show (12) that the sooner we have a pan-Canadian EMR in place, the sooner the quality of health care will improve. For too long Canada has lagged all major industrialized countries in adopting an EMR (see Table 2). [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 2 Canada has fallen behind in EMR investments Percent of physicians using electronic records and prescriptions Country Records Prescriptions Britain 59% 87% New Zealand 52% 52% Australia 25% 44% United States 17% 9% Canada 14% 8% Harris Interactive Survey (2001) conducted for Harvard School of Public Health and the Commonwealth Fund's International Health Care Symposium. [TABLE END] An adequate health information infrastructure with pan-Canadian connectivity With an initial investment of $1.2 billion, Canada Health Infoway (CHI) has been working with provincial and territorial governments to put in place key components of a pan-Canadian health information infrastructure. While significant investments have been made in provincial and territorial health information systems, two key concerns have emerged. First, the $1.2 billion investment in CHI, while significant, is only 15% of the estimated cost of implementing a fully interoperable electronic medical record system in Canada. Second, CHI has made very limited progress in building a common, secure and interoperable platform - the backbone of a pan-Canadian system. Accordingly the CMA endorses the recommendations put forward by the Association of Canadian Academic Healthcare Organizations (ACAHO), the Canadian Nurses Association and the Canadian Healthcare Association to provide CHI with significant funding so that it may fulfill its core mission. Empowering investments in e-entrepreneurship for better health One of the gaps in the pan-Canadian EMR is the lack of attention paid to health information infrastructure on the front lines of health care delivery. While medical services across the country are largely publicly – funded, most physicians run their own practices. As entrepreneurs doctors take on the responsibility and risk of investing in new capital equipment from diagnostics to EMRs. Like any other business, doctors must calculate the return on investment for any capital equipment that they buy. In the case of the EMR, most of the return benefits the government, according to a Center for Information Technology Leadership in the United States 13 . A physical capital investment in an EMR improves care and deepens entrepreneurial capital By making all relevant patient information immediately available at the time of any encounter, and by providing equally rapid access to general medical information that assists in clinical decision-making, an EMR significantly enhances a clinician's ability to make good decisions, which will reduce medical errors and their associated costs. The timeliness of information also means that diagnoses are made more quickly, which significantly reduces the amount of time that patients need to spend using costly hospital beds or emergency room resources. Further cost reductions come from diminished duplication: all too often, time is lost and money is spent repeating diagnostic tests that were recently done but whose results are unavailable. Recovery of health information technology investments is almost immediate A Booz, Allan, Hamilton study on the Canadian health care system estimates that the benefits of an EMR could provide annual system-wide savings of $6.1 billion, due to a reduction in duplicate testing, transcription savings, fewer chart pulls and filing time, reduction in office supplies and reduced expenditures due to fewer adverse drug reactions. The study went on to state that the benefits to health care outcomes would equal or surpass these annual savings. Mobilizing physicians to operationalize a pan-Canadian EMR The physician community can play a pivotal role in helping the federal governments make a connected health care system a realizable goal in the years to come. Through a multi stakeholder process encompassing the entire health care team, the CMA will work toward achieving cooperation and buy-in. This will require a true partnership between provincial medical associations, provincial and territorial governments and CHI. The CMA is urging the federal government to allocate an additional investment of $1.5 billion to Canada Health Infoway. Criteria would be set for the fund that would restrict investment to automating physician offices through an agreement between the medical division and the appropriate province or territory. The $1.5 billion federal investment would be leveraged on the basis of a 75:25 sharing with physicians to generate $1.5 billion in physician office automation investment over the next 10 years. Specific modalities of disbursements of these funds would be set up by agreements with the provincial medical associations. CHI already has stringent financial controls and processes in place and can extend them to manage this program. Recommendation #6: That the Minister of Finance in collaboration with the Minister of Health provides additional financial support to Canada Health Infoway, to realize the vision of a secure interoperable pan-Canadian electronic medical record, with a targeted investment toward physician office automation. Investment: $1.5 billion over 10 years. (vii) Alleviating medical resident debt ? extend the interest relief on Canada student loans for medical residents Medical students are accumulating unprecedented levels of debt as tuition fees for medical school continue to sky rocket. The increase in debt influences the kind of practice young physicians pursue as well as where they practice. The Canadian Medical Association commends the federal government for its commitment to reduce the financial burden on students in health care professions as announced in the 2004 FMM Agreement and encourages it to act on this promise by extending the interest relief on Canada student loans for medical residents. Extending the interest relief on Canada student loans for medical residents would avoid distorting medical students’ career choices and encourage new graduates to stay in Canada. Deregulation of tuition => increased debt burden => drag on entrepreneurship It wasn’t always this way. The deregulation of medical school tuition fees in some provinces dramatically increased the debt burden of medical students. It is important to note that medical residents are in a unique situation not faced by other students who graduate from university programs. Once students graduate from medical school, they earn the right to be called physicians. However, they cannot practice until they complete a residency program. The program, which takes between 2-10 years to complete, certifies them as a specialist in a number of disciplines ranging from family medicine to radiology to rheumatology. During the compulsory residency program they must act as both student and employee. Table 1 includes the annual salary of medical residents and fellow hospital employees. Medical residents are not paid by the hour; otherwise their wages would be higher as there is no limit on the hours (80+) they work. [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 1. Medical residents learn a lot but don’t earn a lot Resident stipend versus fully qualified health care employees Status, Ottawa, Ontario Annual Stipend or Fulltime Salary (as applicable) Minimum Postsecondary Education Requirement Minimum Related Experience Requirement Ontario Resident, PGY-1 (national average is $42,862) $ 44,230 7 + years 7+ years related clinical and other experience acquired through undergraduate medical education and pre-professional experiences, including clerkships, electives, etc. Locksmith/Door Mechanic, Ottawa Hospital $44,051 None. High school diploma required and a course or certificate in locksmithing 5-years relevant experience Supervisor of Housekeeping, Ottawa Hospital $ 41,165 - $48,000 2 years OR certified member of the OHHA CAHA, or related 3-years general supervisory experience [TABLE END] The Cost of under-investing in medical residents hits rural Canada hard As medical debt increases more physicians are choosing to go into some specialties (remunerated at a much higher rate) as opposed to family medicine. This has an impact on the accessibility, quality and overall cost of the health care system. Family practitioners are on the front-lines of medical care, and they treat and prevent millions of illnesses across Canada every year. The fall in demand for family practice in general, and rural family practice in particular, is now having a significant impact on health care and economic performance. The lack of a local family physician is often a determining factor in a company’s decision to make a direct investment in a community. For example, a multi-national company would likely not invest in a multi-billion dollar ski hill if there were no doctors available to treat ski related accidents. Improving access to medical education Canada’s future depends on ensuring that all Canadians have access to our medical schools. This sentiment was recently echoed by Finance Minister Ralph Goodale, “...but such skills are still confined to a minority of our population. We must do better. Canada’s future depends upon it.” Extending the interest-free status on Canada student loans would be an important signal to young Canadians from all socio-economic backgrounds that want to become a doctor. Drawing from a smaller portion of the population limits the experience and variety of community contact. Specific knowledge of a patient group allows a future physician adapt their care for that group. Thus, we should be graduating residents from all across the country from diverse socio-economic backgrounds. This is not unlike an entrepreneur who by tailoring services to a clients need that were previously unmet delivers better service and captures market share. Recommendation #7: That the Department of Human Resources and Skills Development introduce changes to the Canada Student Loans Program to extend the interest free status on Canada student loans for medical residents pursuing postgraduate training. Investment: $5 million per year. (viii) Making medical research investments count – supporting knowledge transfer The Canada Institutes of Health Research (CIHR) was created to be Canada's premier health research funding agency. One of the most successful aspects of the CIHR is its promotion of inter-disciplinary research across the four pillars of biomedical, clinical, health systems and services as well as population health. This has made Canada a world leader in new ways of conducting health research. However, with its current level of funding, Canada is significantly lagging other industrialized countries in its commitment to health research. Knowledge transfer is one of the areas where additional resources would be most usefully invested. Knowledge Translation (KT), a prominent and innovative feature of the CIHR mandate, has the potential to: * Significantly increase and accelerate the benefits flowing to Canadians from their investments in health research; and  * Establish Canada as an innovative and authoritative contributor to health-related knowledge translation. Population and public health research is another area where increased funding commitments would yield long-term dividends. For example, “Researchers (and research funders) should create more opportunities for interactions with the potential users of their research. They should consider such activities as part of the 'real' world of research, not a superfluous add-on.”(Lavis et al., 2001) 14 Recommendation #8: That the Minister of Finance in collaboration with the Minister of Health increase the base budget of the Canadian Institutes of Health Research to enhance research efforts in the area of population health and public health as well as significantly accelerating the pace of knowledge transfer. Investment: $600 million over 3 years. III. Effective - an ounce of prevention is worth a pound of cure A little preparation before a crisis occurs is preferable to a lot of fixing up afterward. According to the World Health Organization and the Public Health Agency of Canada (PHAC) an influenza pandemic is inevitable. The consequences of not being adequately prepared will result in more lost lives and a multi-billion dollar hole in our economy, as was the experience in Toronto as a result of SARS in 2003. Looking ahead, PHAC estimates that the impact of pandemic influenza in Canada, if vaccines are not available, is between 11,000 and 58,000 deaths and economic costs of $5 to $38 billion. (ix) Protecting our capital infrastructure through emergency preparedness When SARS hit Canada in the spring of 2003 people got very sick and died. There was public confusion that quickly spilled into the economy. Internal and external trade in Canada was disrupted. According to the Conference Board of Canada the economic impact of the outbreak of SARS in the Greater Toronto Area equaled $1.5 billion. Investments in public health and emergency preparedness will allow the system to function more effectively and alleviate the impact of novel infectious diseases. We have expert advice how to do it – the Naylor Report. Reduce the economic burden of pandemics — close the Naylor Gap The National Advisory Committee on SARS and Public Health (the Naylor Report) estimated that approximately $1 billion in annual funding is required to implement and sustain the public health programming that Canada requires. Although representing an important reinvestment in this country’s public health system, the funding announced in the 2005 budget falls well short of this basic requirement. Dr. Jeffrey Koplan 15 , the past Director of the US Centers for Disease Control and Prevention laid out 7 areas for building capacity and preparedness within a public health system: 1. A well trained, well staffed public health workforce. 2. Laboratory capacity to produce timely and accurate results for diagnosis and investigation. 3. Epidemiology and surveillance to rapidly detect health threats. 4. Secure accessible information systems to help analyze and interpret health data. 5. Solid communication to ensure a secure two-way flow of information. 6. Effective policy evaluation capability. 7. A preparedness and response capability that includes a response plan and testing and maintaining a high state of preparedness. These points apply for both the day-to-day functioning of the public health system and its ability to respond to threats whether it is a new infectious disease, a natural disaster or a terrorist attack. Public health must be ready for all such threats. It is crucial, that the federal government build and maintain its stockpile of supplies for emergency use, its public health laboratories for early detection, its capacity to rapidly train and inform front-line health workers of emerging threats, its ability to assist the provinces and territories, and coordinate provincial responses in the event of overwhelming or multiple simultaneous threats. Vaccination is the most cost-effective health intervention available When a pandemic hits Canada vaccinations are a key component in reducing the impact. According to the Centers for Disease Control and Prevention (CDC) vaccination against childhood diseases is one of the most cost effective health interventions available. For example the measles-mumps-rubella vaccination saves $16.34 in direct medical costs for every dollar spent. The CMA urges the federal government to continue to support the National Immunization Strategy and the consistent availability of National Advisory Committee on Immunization recommended vaccines in all provinces and territories. A clear role for federal leadership – protecting our future The idea that public health is a federal responsibility “is based on the premise that public health matters - particularly emergencies - are so important that the federal government should simply use its powers for ”peace, order and good government” to unilaterally direct how public health matters should be addressed, and to ensure they are fully addressed.” 16 Consequently, the CMA recommends the enactment of a Canada Emergency Health Measures Act that would consolidate and enhance existing legislation to allow for a more rapid national response in cooperation with the provinces and territories, based on a graduated systematic approach to emergencies that pose an acute an imminent threat to human health and safety across Canada. Regardless of how well prepared any municipality is, under certain circumstances public health officials will need to turn to the provincial, territorial or the federal government for help. The success of such a multi-jurisdictional approach is contingent upon good planning beforehand between the federal, provincial and territorial and local-level governments. There is an important role for the federal government to urgently improve the coordination among authorities and reduce the variability between various response plans in cooperation with provincial authorities. Public health investments take time Public health must be funded consistently in order to reap the full benefit of the initial investment. Investments in public health will produce healthier Canadians and a more productivity workforce for the Canadian economy. But this takes time. By the same token, neglect of the public health system will cost lives and hit the Canadian economy hard. As the federal government examines ways of achieving efficiencies and cost savings in federal programs through the Cabinet Committee on Expenditure Review it is critical that the Public Health Agency of Canada be protected from any cuts. Recommendation #9: In order to ensure that adequate emergency preparedness and public health capacity is built at both federal and provincial levels, the federal government should provide sustained additional funding, to the Public Health Agency of Canada, and exempt it from expenditure review contributions. Investment: $684.3 million over 3 years (details in Appendix 1). (x) Investments in effective public health communication are crucial The effectiveness of the public health system is dependent, in large part, on its capacity to communicate authoritative information in a timely way. A two-way flow of information between public health experts and the practicing community is necessary at all times. It becomes essential during emergency situations. The rapid, effective, accessible and linked (REAL) health communication and coordination initiative improves the ability of the public health system to communicate in a rapid fashion by: * Providing a focal point for inter-jurisdictional communication and coordination to improve preparedness in times of emergency. * Developing a seamless communication system leveraging formal and informal networks. * Researching the best way to disseminate emergency information and health alerts to targeted health professionals and public health officials in a rapid, effective and accessible fashion. Recommendation #10: That Health Canada and the Public Health Agency of Canada provide a one-time infusion of $100 million, to improve technical capacity to communicate with front-line public health providers in real-time during health emergencies. A one time investment of $100 million. Conclusion — the economic impact of investments in health care The CMA’s pre-budget submission has presented the facts on how investments in physical, human and entrepreneurial capital can enhance our health care system and, in turn, make our economy more productive. Improvements in the quality of care, and especially speed of care, enable the Canadian labour increase their performance and reach their potential. The 2004 First Minister Health Accord is a positive step in renewing the federal government’s commitment to publicly funded health care, more needs to be done. Like the human body, that is always evolving, the health care system needs to be calibrated for optimal performance. Targeted investments in health human resources as well as health care infrastructure will result in an optimal allocation of resources, better health and a stronger economy. Appendix 1 [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY]  CMA’s 10 point productivity plan    (in millions of dollars) 3-year 2006/07 2007/08 2008/09 Total   Efficiency i. Improving access -opening-up training positions for International Medical Graduates 45.0 45.0 45.0 135.0   ii. Repatriating our human capital -getting Canadian physicians home from the U.S. 10.0 0.0 0.0 10.0   iii. Health Human Resource Reinvestment Fund* 100.0 200.0 300.0 600.0   iv. Creating the Canadian Coordinating Office for Health Human Resources 3.0 3.1 3.2 9.3   Efficiency total 158.0 248.1 348.2 754.3   Equity v. Freeing-up entrepreneurial capital -zero-rating the GST on physician practices 84.0 86.1 88.3 258.4 vi. Investing in physical and human capital through physician office automation (CHI transfer)** 1,463.7 0.0 0.0 1,463.7   vii. Providing debt-relief to medical residents - an investment in human capital 5.0 5.1 5.3 15.4   viii. Making health research investments count -supporting knowledge transfer 100.0 200.0 300.0 600.0   Equity total 1,652.7 291.2 393.6 2,337.5   Effectiveness ix. Planning for the worst -pandemic preparation 25.0 25.0 25.0 75.0   Closing the Naylor Gap 75.0 150.0 250.0 475.0   Protection from expenditure review committee reductions*** 16.4 17.9 0.0 34.3   x. Ensuring effective public health communication 100.0 0.0 0.0 100.0   Effectiveness total 216.4 192.9 275.0 684.3   Total 2,027.1 732.2 1,016.8 3,776.1 * Note: additional 2 years of funding at $200 million per year. ** Note: the physician office automation financing plan is a 1-time transfer to Canada Health Infoway (CHI). CHI would deliver funding directly. Estimates are based on information from CHI (October 2005). *** Working Group on a Public Health Agency for Canada In Report: A Public Health Agency of Canada Ottawa: Public Health Agency of Canada; Apr 2004. Available: www.phac-aspc.gc.ca/rpp-2005-06/index.html#2b (accessed Oct 2005). [TABLE END] Appendix 2 10 year Costing of the Physician Automation [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [TABLE END] 1. There are approximately 60,000 licensed physicians in Canada. It is estimated that 20% already have an Electronic Medical Record (EMR) in their clinical office. Therefore this costing analysis is to support the other 48,000 physicians to automate their offices. 2. The cost to automate an office is based on the work carried out by the Alberta government and the Alberta Medical Association through the Physician Office Support Program (POSP).They have used a four year cost of $41,000 which covers capital, installation, training and operational costs over the four years. First year costs are $26,000 with $5,000 over the remaining three years. References 1 Ralph Waldo Emerson (1803–1882), essayist, poet, philosopher. “Power,” The Conduct of Life (1860). 2 According to the Royal Institute of International Affairs who also quote two Nobel Laureates in Economics. In, Health Expenditure and Investment Rather than a Cost? International Economics Program, Chatham House. 07/05. Available: www.chathamhouse.org.uk/index.php?id=189&pid=245 (accessed Oct 2005). 3 The additional economic activity generated by the health care sector is based on a conservative 1.5 multiplier. The CMA is pursuing precise estimates of the benefits of health care investments in Canada. 4 Learning from SARS - Renewal of Public Health in Canada A report of the National Advisory Committee on SARS and Public Health. Ottawa: Health Canada; Oct 2003. Available: www.phac-aspc.gc.ca/publicat/sars-sras/naylor/(accessed October 2005) 5 5 Cooper S. Don’t fear fear or panic panic an economist’s view of pandemic flu Toronto: BMO Nesbitt Burns; October 2005. Avalable www2.bmo.com/news/article/0,1257,contentCode-5047_divId-4_langId-1_navCode-112,00.html 6 ibid 7 According to the Royal Institute of International Affairs who also quote two Nobel Laureates in Economics. In, Health Expenditure and Investment Rather than a Cost? International Economics Program, Chatham House. 07/05. Available: www.chathamhouse.org.uk/index.php?id=189&pid=245 (accessed Oct 2005). 8 The additional economic activity generated by the health care sector is based on a conservative 1.5 multiplier. The CMA is currently pursuing precise economic multiplier estimates of the benefits of health care investments in Canada. 9 The CMA and the Canadian Nurse Association go into greater depth concerning the pressures on a strategy for HHR in, “Planning Framework for Health Human Resources. A Green Paper. June 2005 Available: www.cna-nurses.ca/CNA/documents/ pdf/publications/CMA_CNA_Green_Paper_e.pdf. 10 Zero-rated supplies refer to a limited number of goods and services that are taxable at the rate of 0%. This means there is no GST/HST charged on the supply of these goods and services, but GST/HST registrants can claim an input tax credit (ITC) for the GST/HST they pay or owe on purchases and expenses made to provide them. Available: www.cra-arc.gc.ca/tax/business/topics/gst/glossary-e.html (accessed September 2005) 11 An independent study by KPMG estimated that physicians have “overcontributed” in terms of unclaimed ITCs by approximately $57.2 million in 1992. In 2005, this comes to an inflation adjusted figure of $84 million. 12 Booz, Allan, Hamilton Study, Pan-Canadian Electronic Health Record, Canada’s Health Infoway’s 10-Year Investment Strategy, March 2005-09-06 13 The Center for Information Technology Leadership (www.citl.org) is non-profit research organization established in 2002 to guide the health care community in making more informed strategic IT investment decisions. 14 Lavis, J., Ross, S., Hurley, J., Hohenadel, J., Stoddart, G., Woodward, C., Abelson, J. Reflections on the Role of Health-Services Research in Public Policy-Making. Paper 01-06. 15 Koplan JP. Building Infrastructure to Protect the Public’s Health. Public Health Training Network Broadcast Available: www.phppo.cdc.gov/documents/KoplanASTHO.pdf (accessed Oct 2005). 16 Report: A Public Health Agency for Canada Building a Foundation for Intergovernmental Harmony and Cooperation Available: www.phac-aspc.gc.ca/publicat/phawg-aspgt-noseworthy/2_e.html (accessed Oct 2005)
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Building a Comprehensive Post-Market Surveillance System : Canadian Medical Association Response to Health Canada’s Discussion Paper “Designing a Mandatory System for Reporting Serious Adverse Reactions”

https://policybase.cma.ca/en/permalink/policy1951
Last Reviewed
2012-03-03
Date
2005-07-28
Topics
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2012-03-03
Date
2005-07-28
Topics
Health systems, system funding and performance
Text
Building a Comprehensive Post-Market Surveillance System Canadian Medical Association Response to Health Canada’s Discussion Paper “Designing a Mandatory System for Reporting Serious Adverse Reactions” Submitted to Health Canada July 28, 2005 Overview The CMA believes that all stakeholders should work together to improve adverse drug reaction (ADR) reporting, in the interests of improving patients’ safety and health. However, we believe that activity in pursuit of this end must be based on two fundamental premises: a) Reporting is only one part of a comprehensive post-market surveillance system. In order to effectively monitor the safety of Canada’s drug supply, this system should include: * a simple, comprehensive and user-friendly reporting process; * rigorous analysis of reports to identify significant threats to drug safety; * a communications system that produces useful information, distributed to health care providers and the public in a timely, easily understood manner. There is no point in enacting a mandatory reporting requirement until all of these elements are in place. We wonder why mandatory reporting has been singled out for discussion when a holistic approach to reforming Canada’s drug safety system is called for. b) Health care providers should be encouraged to participate willingly and voluntarily in the reporting process. To be successful, Canada’s post-market surveillance system will depend on the active participation of physicians and other health professionals. Experience with health system quality and safety improvement efforts over the past several years has demonstrated that meaningful acceptance is most effectively obtained when those involved are willing participants. If you build a comprehensive, efficient and effective post-market surveillance system, physicians will participate actively in it. Forcing them to participate before the system has been built will result in alienation, frustration and failure. Comments on Discussion Paper a) Is Mandatory Reporting Necessary? This is a fundamental question and the discussion paper does not satisfactorily address it. There are two reasons why we question the necessity for imposing an ADR reporting requirement on health professionals. First, as awareness of the drug-safety system’s importance has increased, the number of ADR reports has increased along with it - more than 10% in 2004, as the discussion paper notes - without a mandatory reporting requirement. Given this trend, it is highly probable that time, education, adequate resources and increasing familiarity with the surveillance system will raise reporting rates to the desired level (however defined) without mandatory reporting. Second, as the discussion paper points out, there is no evidence that mandatory reporting has been effective in other jurisdictions where it has been implemented. The paper offers no clear explanation for this lack of success. More importantly, it does not indicate how Health Canada plans to ensure that mandatory reporting will succeed in this country when it has proven ineffective elsewhere. A primary principle of any system change is that we should not repeat the mistakes of others. Before launching a program whose success has not been proven, other viable, and possibly more effective, alternatives should be examined. b) Addressing known barriers to reporting The CMA acknowledges that ADRs are under-reported, in Canada and worldwide. The discussion paper identifies a number of barriers to reporting, and its list mirrors the observations and experiences of our own members. We believe most of these barriers can, and should, be overcome. We also agree that it is necessary to raise health professionals’ awareness of the importance of, and process for, ADR reporting. But we question the curious assertion that “Mandatory reporting could raise awareness of the value of reporting simply by virtue of the public debate.” Surely there are more positive ways to raise awareness than publicly speculating about the punitive consequences of non-compliance. We suggest that instead, Health Canada work with physicians and other health professionals to address the existing barriers to reporting. Specifically, we recommend that Health Canada implement: * a well-funded and targeted awareness-raising campaign focused on provider education and positive messaging, * a user-friendly reporting system, including appropriate forms, efficient processes and adequate fees. These measures are within Health Canada’s purview in the existing policy and legislative environment. We believe they would increase reporting without the need for coercive measures. At a minimum, positive system improvements should be tried first before considering a mandatory-reporting requirement. With regard to specific questions posed in the discussion paper: Question 1: Health professionals should be explicitly protected from any liability as a result of reporting an adverse drug reaction. This should be the case regardless of whether reporting is voluntary or mandatory. Question 2: Professionals should be compensated for all meaningful work including the completion of forms and any follow-up required as a result of the information they have provided. We would be happy to expand further on this issue on request. Question 3: Issues of confidentiality should be covered in legislation. The CMA has developed an extensive and authoritative body of knowledge on privacy issues in health care, which we would be pleased to share with Health Canada. c) Improved report quality We agree that increasing the quality and richness of ADR reports is as important as increasing their number. Perhaps it is even more important, since high-quality reports allow for high-quality analysis. Mandatory reporting will not improve the quality of ADR reports; it will simply increase their quantity. It may even compromise the system’s efficiency and effectiveness by increasing the volume of clinically insignificant reports. Experience elsewhere has taught us that true quality cannot be legislated or imposed; any attempt to do so would be pointless. If ADR reports included the information listed in Table 4, this would improve their usefulness and the effectiveness of the overall surveillance process. However, it is unrealistic to expect all reports to contain this level of information. The treating physician may not be able to provide all of it, especially if he or she is not the patient’s regular primary care provider. Some of this information, particularly about outcomes, may not be available at the time of the reporting, and gathering it would require follow-up by Health Canada. Health Canada should consider measures other than mandatory reporting to improve the quality of ADR reports. The CMA suggests that consideration be given to: * Improving follow-up capacity. We agree that it should be made easier for Health Canada officials to contact reporters and request details on follow-up or outcomes. This should be considered as part of a comprehensive initiative to improve Health Canada’s capacity to analyze ADR reports. * Establishing a sentinel system. Another option for increasing high-quality reports would be to establish a “sentinel” group of practicing physicians who would contract to report all ADRs in detail. These physicians, because of their contractual obligation, would be committed to assiduous reporting. Sentinel systems could be established concurrently with efforts to increase voluntary ADR reporting by the broader health professional community. In addition to the current information provided, consideration should be given to including on reporting forms the option to allow Health Canada officials to act on information the physician provides; for example, in the reporting of sexually transmitted diseases physicians provide certain information and have the option to request that public health officials undertake follow-up and contact tracing. d) Minimize administrative burden We agree that Health Canada should give consideration to making the ADR reporting system user-friendly, non-complex and easy to integrate into the patient-care work stream. These reforms can and should be implemented regardless of whether a mandatory requirement is in place. They do not need mandatory reporting to make them work; in fact, they are more likely to encourage ADR reporting than any form of coercive legislation. Rather than making a mandatory reporting requirement “fit” with the traditional patient-care framework, we invite Health Canada to work with us to increase health professionals’ capacity to report ADRs voluntarily. We are already working with Health Canada to improve physicians’ access to drug safety material. Health Canada’s ADR reporting form can now be downloaded from the cma.ca web site, which also posts the latest drug alerts from Health Canada and from the Food and Drug Administration in the U.S. We have developed an on-line course in partnership with Health Canada, to teach physicians when and how to make ADR reports. We hope to build on this collaboration, with the goal of making it possible for physicians to report ADRs online via cma.ca. This will permit them to fit reporting more conveniently into their daily workflow. (Note: the “MedEffects” Web portal now being developed at Health Canada does not fit well into the workflow and therefore will not make reporting easier for health professionals.) In the future, we hope that ADR reporting can be built directly into the Electronic Medical Record (EMR). We think this will be a critical element in the bi-directional communicating that ADR reporting requires. It will also enable rapid integration of advisories into the EMR so that they can be available to physicians at the time they are writing a prescription. Before electronic ADR reporting can work, a standard for electronic data should be in place (at present it is not) and Health Canada should develop the capacity to accept data electronically. Health Canada’s discussion paper makes reference to cost-benefit analysis. We recommend that you take great care not to over-emphasize cost-benefit when it comes to enhancing patient safety. Meaningful improvements in the post-market surveillance system will be costly whatever solution Health Canada eventually embraces, and it is impossible to measure financially the value of safety. What is an acceptable cost for one life saved? e) Minimize Over-Reporting The discussion paper acknowledges that not all adverse reactions need be reported. We strongly agree that one of the dangers of mandatory reporting is its potential to overwhelm the system with an unmanageable flood of reports. There is no reason to require reports of minor side effects that are already known to be associated with given drugs. We agree that the reactions Health Canada most needs to know about are those which are severe and/or unexpected. If Health Canada insists on implementing a mandatory reporting system, it should be limited to these reactions (possibly with the corollary that well known serious ADRs would not need to be reported). However, the operating definitions may need clarification, and we recommend that Health Canada consult with health professionals and others on operational guidelines for defining “serious adverse reaction.” Health Canada’s desire to encourage reports on drugs approved within the last 5 years is understandable (though some drugs may be on the market for longer than this before their true risks are known). In practice, however, many physicians do not know which drugs these are, and seeking out this information may impose a heavy administrative burden. As we move toward an EMR-based reporting system, a tag on the Drug Identification Number to tell when the drug was approved will allow physicians to identify which medications require special vigilance. Appropriate reporting could be encouraged, and over-reporting discouraged, by clear guidelines as to what should be reported as well as appropriate compensation for reporting. f) Match Assessment Capacities In our opinion, this is one of the most important sections in the document. What happens once the reports have been received is crucial if we want to identify a serious drug risk as quickly as possible. Under the current system, one of the most significant barriers to physicians’ reporting is lack of confidence that anything meaningful will be done with their reports. Enhancements to the analysis function must be made concurrently with efforts to increase ADR reporting. ADR reports are only cyber-bytes or stacks of paper unless we can learn from them. This requires rigorous data analysis that can sort “signal from noise” – in other words, sift through thousands of reports, find the ones that indicate unusual events, investigate their cause, and isolate those that indicate a serious public health risk. This requires substantial resources, including an adequate number of staff with the expertise and sensitivity required for this demanding task. Unless Health Canada has this capacity, increasing the number of reports will only add to the backlog in analysts’ in-boxes. The CMA recommends that Health Canada allocate sufficient resources to enable it to effectively analyze and respond to ADR reports and other post-market surveillance information. g) Respect privacy Privacy of both patient and physician information is a significant concern. Physicians’ ethical obligation to maintain patient confidentially is central to the patient-physician relationship and must be protected. We acknowledge that issues of privacy and confidentiality must be resolved when designing an ADR reporting system, particularly as we work toward electronic communication of drug surveillance data and its incorporation into an EMR. For example, regulations should explicitly state that ADR reports are to be used only for the purpose for which they were submitted, i.e. for post-market drug surveillance. In addition, Health Canada should ensure that any privacy provisions it develops meet the legislative test outlined in Section 3.6 of CMA’s Health Information Privacy Code (Attachment I). Health Canada can be assured that physicians take their privacy obligations seriously. The CMA has been a strong and pro-active player in debate on this issue, and our Privacy Code lays the groundwork on which we believe any privacy policies involving ADR reporting should be based. h) Compliance through sanctions Physicians are motivated to report ADRs by their concern for public health and their patients’ well-being. In addition, they are guided by the CMA Code of Ethics and governed by regulatory authorities in every province. A clear ethical and professional obligation already exists to report anything that poses a serious threat to patient safety. If physicians do not comply with this obligation, sanctions are available to the provincial regulatory authorities. In fact, the most serious threat for physicians is loss of standing with the professional regulatory authority, not the courts or any external judicial system. It would be superfluous to add a second level of regulation or scrutiny when remedies already exist. The discussion paper presents few alternatives to the existing self-regulatory system. As the paper itself acknowledges, it is unrealistic to impose sanctions based on failure to report an ADR, since it is not always easy to determine whether an adverse effect is attributable to a health product. But the only suggested alternatives - requiring physicians to demonstrate knowledge, or to have the required reporting forms in their office - seem intrusive, crude and unreasonable; they are also meaningless since they have no direct relation to a physician’s failure to report. If Health Canada is considering a large outlay of taxpayers’ dollars for post-market surveillance, we suggest they target those funds to education and awareness raising, and to enhancing the system’s ability to generate and communicate meaningful signal data, rather than to enforcing a mandatory reporting system based on weak compliance measures, with no evidence of its effectiveness in other jurisdictions. Physicians who are in serious breach of their ethical and legal responsibility to report are subject to sanctions by provincial regulatory authorities. Most provincial colleges have policies or guidelines regarding timely reporting and appropriate enforcement mechanisms. Medicine’s tradition of self-regulation has served it well, and we recommend that Health Canada respect and support existing regulatory authorities as they maintain the standards for appropriate professional behaviour. As we have said before - the preferred quality improvement tools to enhance performance and encourage compliance are education and positive reinforcement, not legislation and the threat of sanctions. Conclusion In its discussion paper Health Canada has invited stakeholders to provide their input on how best to develop a mandatory system for reporting ADRs. The Canadian Medical Association believes that the best way to do this is not to develop one at all. Instead, we believe stakeholders should concentrate on building a sustainable, robust and effective post-market surveillance system which: * encourages and facilitates voluntary reporting, by designing a simple and efficient process that can be incorporated into a physician’s daily workflow; * effectively uses reporting data to identify major public health risks; * communicates drug safety information to providers and the public in a timely, meaningful and practical way. The CMA is committed to working, in partnership with Health Canada and other stakeholders, toward the ultimate goal of a responsive, efficient and effective post-market drug surveillance system. This is part of our long-standing commitment to optimizing Canadians’ safety and health, and achieving our vision of a healthy population and a vibrant medical profession.
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