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Budget 2009: Economic Stimulus through Targeted Investments in Health Infrastructure - Brief to the Minister of Finance's Roundtable

https://policybase.cma.ca/en/permalink/policy9401

Date
2009-01-12
Topics
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Date
2009-01-12
Topics
Health systems, system funding and performance
Text
With economic growth having slowed, Budget 2009 provides an historic opportunity to invest in initiatives that will stimulate the Canadian economy in the short term while also strengthening it in the long term. With the federal government now considering several areas for potential fiscal stimulus, the Canadian Medical Association (CMA) views infrastructure spending as the government's best option. In order to provide much-needed immediate economic stimulus and a responsible, long-term strategy to achieve economic stability, the CMA recommends the federal government invest $2.4 billion in health infrastructure upgrade initiatives to be carried out over the next two years. These initiatives fall into three priority areas: 1) Accelerating existing or "construction-ready" capital projects in health care facilities. The CMA recommends a federal investment of $1.5 billion over two years to accelerate existing hospital and health facility construction projects. While investments in physical infrastructure are required across the continuum of care, a focus on hospital construction - specifically on construction-ready projects already approved at the provincial level - will allow funds to flow more quickly and thus provide a more immediate economic stimulus. Federal investment in hospital and health facility construction will create 16,500 jobs over two years and 11,000 jobs in 2009 alone. These projects may be financed through existing public-private partnerships (P3s). With targeted and strategic federal investment, health facility capital projects would also stimulate further investment in the form of private-sector financing of these capital projects. 2) Accelerating implementation of electronic medical records. Health system information technology is an area where infrastructure investments are needed and would provide significant return on investment through immediate economic stimulus and improved health system efficiency in the medium and long term. CMA recommends that the federal government make a strategic "strings attached" $225-million investment in an Electronic Medical Record Patient Transition Fund that could be managed by the Canada Health Infoway. 3) Modernizing information systems in small- and medium-sized health care facilities. A federal investment of $700 million over two years to upgrade information system hardware and software in small- and medium-sized hospitals could be implemented within the next eight quarters and begin to create 7,700 jobs and rapidly improve health care efficiency. These health infrastructure investments would create 27,000 new jobs over the next two years: 1. 16,500 jobs for existing hospital building projects that are "construction ready"; 2. 4,950 jobs for electronic medical records (EMR) implementation for community-based health care offices; 3. 7,700 jobs for hospital information systems in small- and medium-sized hospitals. Introduction In these challenging economic times, the federal government is to be commended for casting a wide net in search of effective and immediate measures to stimulate Canada's economy. Of course, Canadians must also be assured that we will not be mortgaging our future by doing so. In order to both provide much-needed immediate economic stimulus and a responsible, long-term strategy to achieve economic stability, the CMA recommends that the federal government invest $2.4 billion in health infrastructure upgrade initiatives to be carried out over the next two years. These investments would stimulate further provincial/territorial and private-sector investment. To be clear: these recommendations are in the context of a fiscal stimulus plan and do not encompass CMA's entire long-term vision for high-quality and patient-focused health care. The CMA initiatives fall into three priority areas: 1) Accelerating existing or "construction-ready" capital projects in health care facilities; 2) Accelerating implementation of electronic medical records; 3) Modernizing information systems in small- and medium-sized health care facilities. A critical factor in these recommendations is the fact that the federal government already has in place funding mechanisms to deliver stimulus funds rapidly in all three areas. Canada Health Infoway is such an established vehicle for the EMR initiative and the upgrading of hospital information systems. The Canada Foundation for Innovation or an expanded "Building Canada" program are initiatives that have organizations in place to administer the investments in hospital construction projects. Additionally, these initiatives are flexible in both size and duration. Most economists agree that increasing infrastructure spending generally will boost the economy by creating jobs. In no sector is this more true than health care. Infrastructure investments, will lead to higher employment and more spending on products and services, and generate higher overall demand.i (See Appendix A for investment and job creation quarterly forecasts 2009/2010ii). The Business Register of Statistics Canada reports there were 75,615 establishments in the health service delivery (HSD) industry in 2003, employing 1.3 million people. That year, they accounted for 3.3% of all Canadian business establishments and 7.6% of total employment. In 2003, the GDP of the HSD industry was larger than wholesale trade, retail trade, and the upstream oil and gas mining industry, and almost as large as the construction sector. Physicians' offices (30,120 establishments) accounted for almost 39% of all HSD establishments and employed 142,000 people, or almost 11% of all HSD employees. By targeting investment in the three areas outlined above, the government will respond to Canadians' desire for a strengthened health care system, support Canada's competitive advantage and create 27,000 jobs in the next two years (Figure 1). 1. Accelerating Health Facility Construction Projects The CMA recommends that the federal government invest $1.5 billion over two years to accelerate hospital and/or health facility projects that are "construction ready". In 2001 the CMA identified inadequate investment in buildings, machinery and equipment and in scientific, professional and medical devices as major hurdles to timely access to health care services. While spending has increased in health care since then, governments have placed a lower priority on capital investment when allocating financial resources for health care. The CMA recommends a federal investment of $1.5 billion over two years to accelerate existing hospital and health facility construction projects. This does not capture all the capital requirements in the health system in the medium- and long-term. While investments in physical infrastructure are required across the continuum of care, a focus on hospital construction - specifically on construction-ready projects - will allow funds to flow more quickly and thus provide a more immediate stimulus to the economy. Federal investment in hospital and health facility construction will create 16,500 jobs over a two-year period and 11,000 jobs in 2009 alone. These projects may be financed through existing public-private partnerships (P3s). With targeted and strategic federal investment, health facility capital projects can also stimulate further investment in the form of private-sector financing of capital projects. Across Canada hospitals are seeking to develop innovative approaches to financing capital infrastructure. The CMA agrees with other organizations such as the Canadian Healthcare Association about the need to explore the concept of entering into public-private partnerships to address capital infrastructure needs as an alternative to relying on government funding. Joint ventures and hospital bonds are but two examples of P3 financing. As these types of partnerships are pursued, the CMA recommends that governments establish uniform requirements and regulations to ensure the transparency of the tendering process and adequate measuring of quality of care and cost-effectiveness in both public and private settings.iii The federal government has long showed great leadership in partnering to build Canada's health care system - the Hospital Construction Grants Program of 1948 and the Health Resources Fund Act of 1966. Today our country and our health care system need a new vision for replacing aging physical infrastructure. 2. Electronic Medical Records - Accelerating Coverage for 26 Million Patients CMA recommends that the federal government invest $225 million over two years to accelerate the implementation of an interoperable electronic medical record across Canada. International studies confirm that Canada lags behind nearly every major industrial country when it comes to the adoption of health information technology (Figure 8). The Conference Board of Canadaiv, the Organization for Economic Co-operation and Development (OECD)v, the World Health Organizationvi, the Commonwealth Fundvii, and the Frontier Centre for Public Policy all rate Canada's health care system poorly in terms of value for money and efficiency. The impact of this underinvestment is longer wait times, poorer quality, greater health system costs and a severe lack of financial accountability - especially when it comes to federal dollars. Health system information technology is an area where infrastructure investments are needed and would provide significant return on investment through immediate economic stimulus and improved health system efficiency in the medium- and long-term. CMA recommends that the federal government make a strategic, "strings attached,"1 $225-million investment in an Electronic Medical Record Patient Transition Fund that could be managed by the Canada Health Infoway.2 The fund would finance EMR capital equipment acquisition and EMR change management and transition support, specifically the conversion of 26 million patient records in 30,000 physician offices. This federal investment would be matched by provincial-territorial funds and would thus provide a total of $450 million in economic stimulus and create 5000 new jobs over two years. While public funds would kick-start this initiative, they would stimulate considerable private sector activity in the provision of EMR capabilities across Canada. Assuming the current trend prevails, the ongoing management of the data holdings would be outsourced to private sector companies based on application service provider arrangements. Moreover, these investments are consistent with the Building Canada plan's focus on broadband and connectivity, and with Advantage Canada's goals of creating a knowledge advantage and an infrastructure advantage. Beyond providing immediate stimulus to the Canadian economy, a fully realized EMR system will improve patient outcomes, system efficiency and accountability and save billions of dollars annually. Technology consulting firm Booz Allen Hamilton found that the benefits of an interconnected Electronic Health Record (EHR) in Canada could provide annual system-wide savings of $6.1 billion.viii These savings would come from reduced duplicate testing, transcription savings, fewer chart pulls and less filing time, reductions in office supplies and reduced expenditures due to fewer adverse drug reactions. The study also found that the benefits to health care outcomes would equal or surpass these annual savings, thus providing a possible combined annual savings of $12.2 billion. By reducing wait times, an interoperable EMR will contribute to saving the Canadian economy billions of dollars each year. A study commissioned by the CMA conservatively calculated that excessive wait times involving just four procedures (joint replacements, cataract surgery, coronary artery bypass grafts and MRIs) cost the economy over $14 billion in 2007 due to lost output and government revenues.ix The Electronic Medical Record Patient Transition Fund focuses on community care and the physician offices where most patient visits occur. Most of the emphasis on connectivity in Canadian health care to date has not focused on the point of care, even though the number of patient interactions with hospitals is greatly exceeded by the number of visits to physicians' offices.x Thus, patient-physician office interactions outnumber patient-hospital interactions by a ratio of 18 to 1. In Ontario (Figure 2), just 3,000 of an average of 247,000 patient visits per day, or 1.2%, are made in hospitals. Figure 2 Patient visits per day in Ontario (Canada Health Infoway) 3. Modernizing Hospital Information Systems The federal government should invest $700 million over two years to modernize information systems in small- and medium-sized hospitals. Aging information systems in small hospitals (fewer than 100 beds) and medium-sized hospitals (100 to 300 beds) create considerable inefficiency in patient care and administration. While larger hospitals have upgraded their information systems, hundreds of smaller facilities have information systems that are at least 10 years old. This means that patients are often forced to provide their personal and health information many times: when checking in to the emergency department, then when having a diagnostic test performed, and again when being admitted to hospital. Each step creates room for error and needlessly wastes the time of health care staff and patients. In addition, these discrete systems may not be networked, a situation that risks compromising patient care. A federal investment of $700 million over two years to upgrade information system hardware and software in small- and medium-sized hospitals could be implemented within the next eight quarters and begin to create 7,700 jobs and rapidly improve health care efficiency. The $700 million investment is based on a recent conservative estimate for outfitting hospitals across the country (see Appendix B). There are at least 70 medium-sized Canadian hospitals requiring major system upgrades immediately at a cost of $15 million per hospital. The distribution of these hospitals would help spread out the fiscal stimulus regionally and mitigate against potential labour shortages. The $700-million recommendation assumes that the majority of hospital information system investments (64%) would need to be focused on the hardware and professional services related to implementing the new systems, with the rest focused on system software. It is important to note that these investments would help support related Canadian software, hardware and professional services firms over the next 24 months and beyond. More importantly, the hospital information system sector is a multibillion dollar global industry. A fiscal stimulus investment in this sector now would help Canadian firms to capitalize on a golden opportunity to export these goods and services, which are increasingly in high demand.xi It is also important that patients be involved in evaluating these systems in order to improve care and system efficiencies. As Roger Martin, Dean of the Rotman School of Business noted: "We can dramatically improve the production of globally competitive health care product and services firms, but only if we work to significantly improve the demand side (patients) of our innovation equation."xii This is in line with the CMA's call for patient-focused funding. Conclusion That these are extraordinary economic times is beyond question, but the CMA contends that it is precisely during such times that opportunities often present themselves. We think the federal government must continue to examine and leverage all available policy levers at its disposal, including studying how the tax system could be used to support renewal within the health care sector. The tax system's level of support for people facing high out-of-pocket expenses remains a particularly pressing question. Currently, the medical expenses tax credit provides limited relief to those whose expenses exceed $1,637, or 3% of net income. The 3% threshold was established before medicare was introduced. Does it still make sense in 2009? Are there ways to enhance this provision to reduce financial disincentives facing many Canadians when they have to pay for health services? The CMA encourages the federal government to undertake a comprehensive review of these and other tax questions pertaining to health. By itself, tax policy will not solve all the challenges facing Canada's health care system, but the CMA believes that the tax system can play a key role in helping the system adapt to changing circumstances, thereby complementing the other two components of our renewal strategy. Similarly, the government must remember that almost five million Canadians do not have a family physician and that Canada needs 26,000 more doctors to meet the OECD average of physicians per population. The federal government wisely recognized the urgency of this situation when it committed to several targeted and affordable measures to begin to address the doctor shortage. It should follow through on its election commitment to take first steps towards addressing the shortage, including contributing $10 million per year over four years to provinces to allow them to fund 50 new residencies per year in Canada's major teaching hospitals, and $5 million per year over four years to help Canadian physicians living abroad who wish to relocate to Canada. These initiatives would begin to increase the supply and retention of physicians in areas of priority need, and could bring back as many as 300 Canadian physicians over four years. Today, the federal government is focused on instituting specific, strategic and immediate economic stimulus measures, and rightfully so. However, we must not let the urgent crowd out the important in terms of building a sustainable health care system that provides timely access to quality health care services for all Canadians. Appendix A. Investment and job creation profile estimates 2009-10 B. Projected Costs to Implement / Upgrade Hospital Information Systems3 Assumptions 1. Total number of hospitals in Canada = 734 a. % small hospitals (< 100 beds) = 69% b. % medium hospitals (< 300 beds) = 18% 2. Components in hospital information systems a. Finance & Administration b. Admission, Discharge, Transfer (ADT) System c. Patient Information System d. Radiology Information System e. Laboratory Information System f. Pharmacy Information System g. Coding & Abstracting System 3. Cost to implement complete HIS for medium size hospital = $15 million a. Ratio of software to hardware and professional services - 1:1.8 b. Software = $5,357,143 c. Hardware & Professional Services = $9,642,857 4. Small hospitals (i.e. < 25 beds) would not have the resources to manage a full HIS a. Cluster implementations among 8 hospitals b. Number of clusters = 33 (total # of hospitals = 270) 5. Small hospitals would have greater requirement for full implementation of HIS a. % of hospitals requiring full implementations = 50% b. Number of hospitals (exclusive of clusters in #4) = 117 c. Total number including clusters in # 4 requiring full implementation = 91 d. Cost to implement full HIS - 60% of medium hospital implementation = $9 million 6. Medium sized hospitals with systems > 10 years old would require full implementation a. % of hospitals requiring full HIS implementation = 30% b. Number of hospitals= 40 7. Major system upgrades are estimated at 40% of cost of a full HIS a. Cost to complete system upgrade = $6 million b. % small hospitals (# of beds between 25 - 99) requiring upgrade = 30% c. Number of hospitals = 70 d. % of medium hospitals requiring upgrade = 30% e. Number of hospitals = 40 Investment Needed 1. Investment required for small hospitals - full implementation $ 9,000,000 x 91 = $ 819,000,000 2. Investment required for small hospitals - system upgrade $ 6,000,000 x 70 = $ 420,000,000 3. Investment required for medium hospitals - full implementation $ 15,000,000 x 40 = $ 600,000,000 4. Investment required for medium hospitals - system upgrades $ 6,000,000 x 40 = $ 240,000,000 5. Total investment for HIS for small and medium size hospitals $ 2,079,000,000 References 1 The conditions of this health information investment should include: * Fifty-fifty FPT cost sharing; * Involvement of the clinical community in the input and oversight of the program; * Use of consistent standards. 2 See Table l in Appendix A for full investment horizon details. 3 Prepared for the Canadian Medical Association by Branham Group December 2008 see: http://www.branhamgroup.com/company.php i Will Stimulus Help Employment in a 21st Century Economy? Wall Street Journal, Dec. 5, 2008. ii These estimates were derived using the principle of an employment multiplier and adapted using the methodology applied by Informetrica for an infrastructure study they prepared for the Federation of Canadian Municipalities (05/08). iii Improving performance measurement, quality assurance and accountability in the public-private interface - CMA Policy Statement, It's still about access! Medicare Plus, July 2007 iv A Report Card on Canada see: http://sso.conferenceboard.ca/HCP/overview/health-overview.aspx v Organization for Economic Co-operation and Development [OECD] (2007). OECD Health Data 2007. Version 07/18/2007. CD-ROM. Paris: OECD. vi World Health Organization [WHO] (2007). World Health Statistics 2007. see: http://www.who.int. vii Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care May 15, 2007 (updated May 16, 2007)
Volume 59 Authors: Karen Davis, Ph.D., Cathy Schoen, M.S., Stephen C. Schoenbaum, M.D., M.P.H., Michelle M. Doty, Ph.D., M.P.H., Alyssa L. Holmgren, M.P.A., Jennifer L. Kriss, and Katherine K. Shea Editor(s):Deborah Lorber see: www.commonwealthfund.org/publications/publications_show.htm?doc_id=482678 viii Booz, Allan, Hamilton. Canada Health Infoway's 10-Year Investment Strategy: pan-Canadian electronic health record, March 2005-09-06. ix The economic cost of wait times in Canada, January 2008. This study was commissioned by the Canadian Medical Association to analyze the economic costs of wait times in Canada's medical system. The CMA's membership includes more than 67,000 physicians, medical residents and medical students. It plays a key role by representing the interests of these members and their patients on the national stage. Located in Ottawa, the CMA has roots across the country through its close ties to its 12 provincial and territorial divisions. See: www.cma.ca/multimedia/CMA/Content_Images/Inside_cma/Media_Release/pdf/2008/EconomicReport.pdf x Sources: Physician visits - CIHI - Physicians in Canada: Fee-for-Service Utilization 2005-2006. Table 1-21. Hospital contacts - CIHI - Trends in Acute Inpatient Hospitalizations and Day surgery Visits in Canada 1995-1996 to 2005-2006 and CIHI -National Ambulatory Care Reporting System - Visit Disposition by Triage Level for All Emergency Visits - 2005-2006. xi Canada boasts a sophisticated network of providers, many globally-recognized hospitals, and a number of major centres for health research. We spend aggressively in global terms on health research, which is supported nationally by the Canadian Institutes of Health Research (CIHR). But against this backdrop lies a mystery: why do so few Canadian health care firms sell their products and services in the international market? Only nine sell as much as $100 million of any product or service to customers outside the country, with total sector sales outside Canada of less than $5 billion. This sector total compares unfavourably with the foreign sales of individual firms such as Bombardier at $22 billion, and Magna International at $14 billion; overseas health-care sales are even dominated by the export of sawn logs, at $9 billion. see: http://www.rotman.utoronto.ca/rogermartin/Canadianhealthcaremystery.pdf (accessed January 7, 2009) From: Roger, Martin, The Canadian Health Care Mystery: Where Are the Exports? Rotman magazine (Winter 2006). xii Ibid.

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"More Doctors. More Care:" A Promise Yet Unfulfilled - The Canadian Medical Association's brief to the House of Commons Standing Committee on Health concerning health human resources

https://policybase.cma.ca/en/permalink/policy9438

Date
2009-04-28
Topics
Health systems, system funding and performance
Health human resources
  1 document  
Policy Type
Parliamentary submission
Date
2009-04-28
Topics
Health systems, system funding and performance
Health human resources
Text
The Canadian Medical Association (CMA) brief submitted to the House of Commons Standing Committee on Health makes 12 practical recommendations within the jurisdiction of the federal government for investing in the capacity needed to expand and retain our practising physician population. These recommendations are a clarion call for pan-Canadian planning and innovative thinking to meet an ever-increasing demand for physician services from the Canadian public. CMA's research on Health Care Transformation has shown that a commitment to ensuring an adequate supply of health human resources (HHR) is a common trait shared by high-performing European health systems. The last federal election campaign saw most political parties pledge to urgently address HHR shortages. Now is the time to keep those election commitments. A. Capacity Cuts to medical school enrolment in the 1990s contributed to Canada's significant shortage of physicians. Growing demand for physician services, the aging of the physician population and changing practice styles among younger physicians are further compounding the problem. Seriously addressing HHR shortages is crucial to transforming Canada's health care system into one that is truly patient focused. Canada should strive for self-sufficiency in physician supply and do more to repatriate Canadians studying and practising medicine abroad. The CMA supports bringing into practice qualified international medical graduates (IMGs) already in Canada. IMGs should be assessed according to the same evaluation standards as Canadian graduates and more should be done to reduce the backlog in assessing IMGs. With recent increases to medical school enrolment, more support must also be given for the capital infrastructure and faculty required to ensure the highest standard of medical education. B. Retention Competition for physicians is an issue with both international and inter-provincial/territorial facets. The revised Agreement on Internal Trade (AIT) and bilateral agreements will ease the movement of health professionals across jurisdictions, but may exacerbate retention difficulties in underserviced areas. Canada should be active in retaining and repatriating our health care professionals, particularly since the predicted physician shortage in the United States may result in a return to the physician out-migration seen in the 1990s. C. Innovation Canada must do more to encourage innovation within our health care system. Collaborative care - including care delivered with the assistance of Physician Assistants (PAs) - and advances in information technology hold the promise of helping create a more efficient health care system that provides higher quality care. Introduction Canada has suffered from a significant physician shortage since the mid-1990s. Nationally, we rank 26th of 30 Organisation for Economic Co-operation and Development (OECD) member countries in physician-to-population ratio. We would need 20,000 new physicians just to meet the OECD average. Figure 1: Physicians per 1000 population (including residents) Source: OECD 2008 Health Data; CMA Physician Resources Evaluation Template During the 2008 federal election campaign, four of the five parties represented in the House of Commons recognized the urgency of this situation and promised measures that would address HHR shortages. Following through on these promises is critical if we are to transform Canada's health care system into one that truly puts the needs of patients first. Research conducted for CMA's Health Care Transformation initiative demonstrates that European countries whose health care systems outperform our own all share a strong commitment to HHR, as demonstrated by their higher physician-to-population rankings. A. Capacity First-year medical school enrolment was already in decline when health ministers imposed a further 10% cut resulting in a low of 1,577 places in 1997. While there have been substantial increases since then, it took a decade to rebound. In 2007, first-year enrolment stood at 2,569 - 63% higher than a decade earlier. If we had left our domestic production unchanged, we would have almost 1,300 more physicians than we have today. Canada remains well behind other industrialized countries in the education and training of physicians. In 2005, Canada graduated 5.8 physicians per 100,000 population, 40% below the 9.6 average for the OECD. Currently, between 4 and 5 million Canadians do not have a family physician. Over one-third of all Canadian physicians are over the age of 55. Many will either retire soon or reduce their practice workload. Most are not accepting new patients. Ironically, advances in medicine and lifestyle that are helping Canadians live better and longer also mean increased demand for health care professionals. An aging population with high expectations of the health care system is increasing pressure on health care providers to ensure they maintain a high quality of life through their elder years. A growing culture of 'health consumerism,' facilitated by the Internet has resulted in a very knowledgeable patient population that expects top quality care delivered in a timely manner by the appropriate health professional. Advances in medical diagnostics and technology, new and evolving diseases and increasingly complex protocols and guidelines for medical care all increase the demand for physician services. Declining mortality rates for patients with diseases such as cancer have increased treatment of what have become 'chronic' diseases. In a collaborative care setting, physicians often take responsibility for the most complex patients. There is evidence of a cultural change among physicians to place greater importance on their home life by working less. This trend may have a positive effect on the health of the profession but it means Canada will need more physicians to provide the same volume of services. Greater coordination among jurisdictions is needed to facilitate HHR planning on a national scale. Canada's doctors and other health professions are ready to assist policy-makers in their planning and coordination to better meet the health care needs of Canadians. During the 2008 federal election campaign, most political parties recognized the urgency of addressing HHR shortages. The Conservative Party, specifically, promised to fund 50 new residency positions to increase supply of physicians in areas of priority need. Recommendation 1: The federal government should fulfill its promise to fund 50 new residency positions at a cost of $10 million per year for four years. Support for IMGs The CMA fully supports bringing into practice qualified IMGs already in Canada. Canada has historically benefited from a steady flow of IMGs to our country. In fact, close to one quarter of all physicians in Canada and over 50% of doctors in Saskatchewan are IMGs. Many areas in Canada would have no physicians if not for the contribution of these practitioners. While IMGs are a boon to Canada, actively recruiting from developing countries is not an acceptable solution to our physician shortage. Canada must strive for greater self-sufficiency in the education and training of physicians. In fact, self-sufficiency is a key principle of the government's Advisory Committee on Health Delivery and Human Resources' Framework for Collaborative Pan-Canadian Health Human Resources Planning. CMA supports online assessment tools and websites that provide information to foreign-trained physicians so they know what standards they must meet once they arrive in Canada. In 2006, over 1700 people used the online assessment tool established by the Medical Council of Canada (MCC). CMA also supports applying the same evaluation standards to international graduates as it does to graduates of Canadian medical schools. Despite a four-fold increase in the number of IMGs in ministry-funded postgraduate training programs over the last decade, there is still a backlog of IMGs awaiting entry into these programs. About 1300 IMGs applied for a postgraduate training position last year but only 350 (27%) were successful. CMA recommends that funding be made available to provinces for use in mentoring IMGs towards licensure. This could lower costs for the IMGs, pay the community preceptors, cover operational costs and defray other expenses. It is estimated that up to 1500 Canadians are studying medicine abroad. Two-thirds of these IMGs want to come home to complete their postgraduate training. Canada turns away four good applicants for every student accepted into medical school. Increased training opportunities for all groups of IMGs will ensure that Canada fully utilizes the skills and knowledge of its citizens who have studied medicine. Recommendation 2: The federal government should make $5 million (over five years), available to provinces/territories to address the backlog of IMGs through community preceptorship programs that mentor and assess IMGs for integration into the physician community. Recommendation 3: The federal government should take concrete steps to ensure Canada becomes self-sufficient when it comes to the supply of health care professionals. Recommendation 4: The federal government should continue to fund information tools such as the IMG-Canada website to better inform offshore physicians. Infrastructure and faculty Canada's teaching centres have had to absorb increases in operational and infrastructure costs to accommodate increased enrolment. This includes instructors, space, overhead and supplies. While it appears that the number of faculty members has kept pace with the increased number of medical students, part-time faculty now make up a much larger proportion of the total than 10 years ago. i In addition to the traditional academic centres, much of the training of doctors now occurs in a community environment. Mentoring is provided by physicians who may have less experience or resources than do those in the larger centres. Those who teach often experience lost productivity in their practice and receive little or no remuneration. This deficiency must be addressed to achieve a sustainable educational workforce. Recommendation 5: The federal government should implement a Health Human Resources Infrastructure Fund in the amount of $1 billion over 5 years to expand health professional education and training capacity by providing funding to support the: * Direct costs of training providers; * Indirect or infrastructure costs associated with the educational enterprise; and * Resources that improve Canada's data collection and management capacity in the area of health human resources. B. Retention of Canadian Physicians Competition for physicians is both an international and an inter-jurisdictional challenge. The new Agreement on Internal Trade within Canada and numerous bilateral agreements will no doubt ease the movement of health professionals. This may exacerbate the already difficult task of retaining physicians in underserviced areas. On the positive side, it is hoped this will facilitate the movement of physicians who provide short-term relief for physicians needing time off for continued professional development and vacation (i.e., locum tenens). Repatriation As the political situation and health care plans evolve south of our border, Canada should remain active in the quest to retain the health professionals we have educated and trained and make it easier for those who have emigrated to return to practice in Canada. The Conservative Party committed in the 2008 election campaign to create a repatriation fund for Canadian physicians practising abroad. The federal government should keep this important commitment. Migration to the United States peaked in the late 1990s when Canada lost between 600 and 700 physicians per year. While some physicians returned to Canada each year, our net losses for this period were over 400 per year. Today we are enjoying small net gains each year but this may not last given the predicted shortages in the U.S. of between 80,000 and 100,000 physicians in the years ahead. We can expect U.S. recruiters to ramp up activities in Canada in the near future. Recommendation 6: The federal government should fulfill its election promise to establish a fund of $5 million per year over four years to help Canadian physicians living abroad who wish to relocate to Canada. It is thought this initiative could bring back as many as 300 Canadian physicians over four years. Recommendation 7: The federal government should establish a Health Professional Repatriation Program in the amount of $30 million over 3 years that would include the following: * A secretariat within Health Canada that would include a clearinghouse function on issues associated with health care workers returning to practise in Canada. * An ad campaign in the United States. * A program of one-time relocation grants for returning health professionals. Physician Health and Well Being Ultimately, we hope that healthier physicians will create a more vibrant profession. Hopefully these healthier physicians will in turn create a more healthful professional environment that will support their ability to provide patient care of the highest quality. Through programs and conferences, the CMA has contributed to growing efforts to reduce the stigma surrounding physician ill-health and to support a new, healthier culture for the profession. Given the myriad other issues that contribute to our doctor shortage, it is clear that Canada cannot afford to lose a single physician to ill health. Our research shows that the most stressful aspect of the medical profession is being on call after hours. Physicians average 50 hours a week in the usual settings of office, hospital or clinic but then 70% are on call for another 30 hours per week. In small communities, physicians are often on call all the time. A quarter of all physicians face some form of mental health challenge that makes their work difficult. This is higher than the 1 in 5 Canadians that will face a mental illness over their lifetime.ii The ongoing pressures experienced by overworked physicians can result in stress related disorders and burn-out and are frequently a precursor to more significant physical and mental health problems. If not addressed early, these conditions can lead to physicians taking prolonged periods of time off work, changing their practice patterns or leaving the practice of medicine altogether. Prevention programs are the key to assisting physicians before they are at significant risk. The CMA visited such a program in Norway which has been shown to significantly reduce burn-out and reduce the subsequent time-off work related to stressiii. A program to enhance physician resiliency and prevent stress related disorders, based on the Norway model, could be expanded to include services for all health professionals. The potential impact would be improved provider health and morale, reduced sick days and fewer long-term leaves. Recommendation 8: The federal government should invest in research directed at assessing the quality of work life among health workers through an interprofessional survey at a cost of $1.5 million. Recommendation 9: The federal government should explore the feasibility of developing a 'made in Canada' Resiliency Program for Health Professionals that would include the development of a feasibility study, including a business case, and a pilot curriculum, at a cost of $500,000. C. Innovation While Canada must do more to increase both our supply and retention of HHR, we must also encourage innovation within our health care system to make better use of our existing health resources. Collaborative models of interprofessional care and advances in information technology hold the promise of helping create a more efficient health care system that provides higher quality care. Physician Assistants Increasingly physicians are working in interprofessional teams that may include professions that are relatively new to Canada's health workforce such as physician assistants (PAs). The CMA accredits PA curricula and has held two conferences to promote the use of PAs in all levels of care. Recommendation 10: The federal government should fund a study to evaluate the impact of physician assistants on access to health care and to determine their cost effectiveness relative to other providers at cost of $150,000. Technology to Support Health Care Delivery Information technology will continue to create a more efficient and effective health care system. It will lead to more patient safety, more Canadians finding a physician, better care, cost avoidance such as eliminating duplicate tests and the establishment of collaborative interprofessional health care teams. Canada's adoption of electronic medical records lags behind other OECD countries. We only spend a third of the OECD average on information technology in our hospitals. The adoption of EMRs in community settings (primary care, home care and long-term care facilities) also trails most other countries (Figure 2iv). This is not due to any general resistance by providers, but rather a combination of: a lack of evidence on how best to use electronic records to improve care delivery; a need to improve the return on investment for physicians by providing value-added solutions such as greater connectivity to lab results, drug data and colleagues; the time it takes to implement a new electronic record capability and a lack of funds to acquire new technology. Recent investments in Canada Health Infoway (CHI) will help address some of these issues but it is estimated that for Canada to have a fully automated health care delivery system we need to invest $ 10 to $12 billionv. An overall investment of $2 billion is required to fully IT enable the community-based health care delivery sector. While Budget 2009 provided $500 million to CHI for EMRs, more is still required. Recommendation 11: The federal government should provide a further investment of $500 million for new technology to fully enable all points of care in the community settings and an enhanced change management program to speed up EMR adoption. Recommendation 12: The federal government should create a $10-million fund to establish an applied research program for the next five years that will provide evidence on how best to integrate information technology into the health care delivery system. D. Conclusion Canada's doctors believe that we can build a health care system where all Canadians can get timely access to quality health care services regardless of their ability to pay. Developing a comprehensive HHR strategy that assures an adequate supply of all health care providers, including physicians, is a pillar of achieving timely access to high quality care. Building such a system requires that we shift our attitude and move to implement new strategies, new ideas and new thinking. That new thinking must begin with a commitment to act now to address Canada's physician shortage. A promise made must be a promise fulfilled. References i Canada's Health Care Providers 2007, Ottawa: CIHI, 2007 ii Frank E. Canadian physicians healthy - national survey finds. A report from the 2008 International Conference on Physician Health. London, UK Nov 2008. iii Isaksson Ro, K et al. Counselling for burnout in Norwegian doctors : One year cohort study. BMJ. November 2008. Vol 337, 1146-9. iv * Count of 14: EMR, EMR access other doctors, outside office, patient; routine use electronic ordering tests, prescriptions, access test results, access hospital records; computer for reminders, Rx alerts, prompt test results; easy to list diagnosis; medications, patients due for care. v Vision 2015 - Advancing Canada's Next Generation of Healthcare, Canada Health Infoway, 2008

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Transforming Health Care, Securing Canada's Competitive Advantage: The Canadian Medical Association's brief to the Standing Committee on Finance's pre-budget consultation

https://policybase.cma.ca/en/permalink/policy9585

Date
2009-08-14
Topics
Health systems, system funding and performance
Health human resources
  1 document  
Policy Type
Parliamentary submission
Date
2009-08-14
Topics
Health systems, system funding and performance
Health human resources
Text
As signs of economic recovery begin to emerge, both in Canada and globally, the Canadian Medical Association is pleased to put forward three recommendations that will initiate a needed transformation of our health care system so that it is truly patient focused and sustainable. Additionally, these measures will create 17,000 jobs and solidify Canada's health care competitive advantage. Although related to the health care sector, these recommendations are within the context of ensuring a prosperous, and sustainable economic, social and environmental future for Canada in the short, medium and long-term. Each of these three recommendations also takes into account the finance committee's questions: 1. What federal tax and program spending measures are needed to ensure prosperity and a sustainable future for Canadians from an economic, social and/or environmental perspective? 2. What federal stimulus measures have been effective and how might relatively ineffective measures be changed to ensure that they have the intended effects? CMA research demonstrates that it is possible to maintain a universally accessible health care system without long waits for care. In 2007 alone, waiting for care in just four clinical areas cost the Canadian economy $14.8 billion. In particular, two areas require federal attention: 1. ENHANCING PATIENT ACCESS ACROSS THE CONTINUUM OF CARE Continuing care (ie. long-term care and home care) and prescription drug coverage need urgent attention. Many Canadians do not have access to as wide a range of insured care as citizens in other highly industrialized countries. Recommendation 1: The federal government should expand the Building Canada Plan to include 'shovel-ready' health facility construction projects including ambulatory, acute and continuing care facilities. Cost: $1.5 billion over 2 years 2. HELPING PROVIDERS HELP PATIENTS a. Accelerating physician EMR adoption: Both national and international studies confirm that Canada lags behind nearly every major industrialized country when it comes to health information technology. Accelerating physician EMR adoption will reduce wait times, improve quality, and improve financial accountability especially of federal dollars. Budget 2009 proposed $500 million in additional funding to Canada Health Infoway and a temporary, accelerated capital cost allowance for computer hardware. Transfer of these funds to Infoway is imperative. Together, transferring the funding to Infoway and further improving of the capital cost allowance will ensure these initiatives have the intended effects of improving EMR adoption and stimulating the economy. b. Boosting Health Human Resources: Canada does not have enough physicians, nurses, technicians or other health care professionals to provide the care patients need. Addressing HHR shortages is critical to ensuring sustainable, accessible, responsive and high-quality health care. Recommendation 2: The federal government should expand the 2-year time-limited accelerated Capital Cost Allowance for hardware costs related to health information technologies by extending it to five years; removing the 50% half-year rule on related software; and including electronic tools involved in connecting patient records from physician offices to laboratories and hospitals. Cost: $50 million over four years. Recommendation 3: The federal government should fulfill its 2008 election promise, beginning in 2010, of investing $65 million in health human resources over four years to fund 50 new residencies per year; repatriate Canadian physicians living abroad; and launch pilot projects with nursing organizations to promote recruitment and retention. 1. INTRODUCTION - HEALTHY ECONOMICS: THE FOUNDATION OF FUTURE PROSPERITY The CMA believes that by being innovative in its actions Canada can sustain a publicly funded, universal health care system. In fact, doing so provides Canadian industry with a significant competitive advantage in the global marketplace. Despite having one of the richest health care programs in the industrialized world (eighth among 28 Organization for Economic Co-operation and Development [OECD] countries), international benchmarking studies consistently report that the Canadian program is not performing as well as it should. The Euro-Canada Health Consumer Index ranked Canada 30th out of 30 countries in terms of value for money spent on health care in both 2008 and 2009.The CMA's recent review of several European health systems illustrates that a sustainable, patient-centred approach to health care is possible on a system-wide level without compromising founding principles such as universality, and without causing financial difficulty for the country or its citizens. However, getting there will require transformational change to refocus our system. The Canadian Medical Association's 2010 pre-budget submission puts forward three recommendations in the areas of health care infrastructure, health human resources (HHR) and electronic medical records (EMRs).1 These three affordable, strategic initiatives fall within the jurisdiction of the federal government and recognize both the ongoing and promising economic recovery and the current fiscal capacity of the federal government. CMA's recommendations help to chart a course toward a prosperous, and sustainable economic, social and environmental future for Canada in the short, medium and long terms. These proposals will kickstart a transformation of the health care system and create over 17,000 jobs that will ensure a competitive economic foundation for the future. Based on CMA's research, transforming Canada's health care system to better meet the needs of Canadians hinges on five directions for a reorientation of the system: 1. Building a culture of patient-centred care; 2. Incentives for enhancing access and improving quality of care; 3. Enhancing patient access across the continuum of care; 4. Helping providers help patients; 5. Building accountability/responsibility at all levels. While each of the five directions is important to reorienting the system, points 3 and 4 are directly relevant to the Finance Committee's deliberations. 2. ENHANCING PATIENT ACCESS ACROSS THE CONTINUUM OF CARE While all elements of the continuum of care are important, the CMA believes that continuing care (long-term care and home care) and prescription drug coverage need urgent attention. Many Canadians do not have access to as wide a range of insured care as citizens in other highly industrialized countries. In fact, many of these other industrialized countries count access to prescription drugs and home care/long-term care among their basic insured services. a. Continuing care: Augmenting the Building Canada Plan to include health care infrastructure Recommendation 1: The federal government should expand the Building Canadai Plan to include 'shovel-ready' health facility construction projects including ambulatory, acute and continuing care facilities. Cost: $1.5 billion over two years Continuing care in Canada faces three key challenges: capacity and access; informal caregiver support and long-term care funding. At 91%, Canada has the highest hospital occupancy rate in the OECD.ii Roughly 25-30% of hospital acute care beds are occupied by patients who do not require hospital or medical care but rather need 24-hour supervised care. Scarce long-term care facilities and home-care services dictate that patients remain in hospital, delaying hospitals from performing elective surgeries and restricting the movement of other patients from the emergency room to acute care wards. Much of the burden of continuing care falls on informal (unpaid) caregivers who need to be better supported. Statistics Canada reported that in 2007 about 2.7 million Canadians aged 45 and over, or approximately one-fifth of the total in this age group, provided some form of unpaid care to seniors (people 65 years of age or older) who had long-term health problems iiiIt seems unlikely that future requirements for long-term care can be funded on the same "pay-as-you-go" basis as other health expenditures. The seven-year, $33-billion Building Canada Plan announced in Budget 2007 and augmented in Budget 2009, could better support a smart economic recovery and the health needs of Canadians if it were to be expanded to include health facility construction.iv Federal investment in hospital and health facility construction will create 16,500 jobs over a two-year period and 11,000 jobs in 2010 alone. (Appendix: Table 1). Although CMA's $1.5 billion recommendation does not eliminate the entire health-facility infrastructure gap in Canada, estimated at over $20 billionv, it does provide additional stimulus aimed at shovel-ready projects. It also better prepares our health system to deal with the needs of an aging population. Federal government investment in health infrastructure has two important precedents - the first in 1948 (Hospital Construction Grants Program) and the second in 1966 (Health Resources Fund Act). Infrastructure funding should be directed toward projects that deliver long-term value and enhance Canadians' lives. b. Prescription drugs: 3.5 million Canadians underinsured Prescription drugs represent the fastest growing item in the health budget, and the second largest category of health expenditure. More than 3.5 million Canadians have no prescription drug coverage or are underinsured against high prescription drug costs. In 2006 almost one in 10 (8%) of Canadian households spent more than 3% of their after-tax income on prescription drugs; and almost one in 25 (3.8%) spent more than 5%. It is estimated that less than one-half of prescription drug costs were publicly paid for in 2008. Canada must strive for a program of comprehensive pharmaceutical coverage that is universal and effectively pools risks across individuals and public and private plans throughout Canada. 3. HELPING PROVIDERS HELP PATIENTS Canada's health care workforce needs more people and more tools to care for Canadians. a. Accelerating physician EMR adoption Recommendation 2: The federal government should expand the 2-year, time-limited accelerated Capital Cost Allowance for hardware costs related to health information technologies by extending it to 5-years; removing the 50% half-year rule on related software; and including electronic tools involved in connecting patient records from physician offices to laboratories and hospitals. Cost: $50 million over four years. Both national and international studies confirm that Canada lags behind nearly every major industrialized country when it comes to health information technology (see Figure 1 and Figure 22). The impact of this underinvestment is longer wait times, reduced quality, and a severe lack of financial accountability, especially of federal dollars. The Conference Board of Canadavi, the Organization for Economic Co-operation and Development (OECD) vii, the World Health Organizationviii, the Commonwealth Fundix, and the Frontier Centre for Public Policyx all rate Canada's health care system poorly in terms of "value for money" as well as efficiency. The CMA applauds the temporary 100% Capital Cost Allowance (CCA) rate for computer hardware and systems software acquired after January 27, 2009 and before February 1, 2011 that was proposed in Budget 2009. The measure will provide stimulus by helping businesses to increase or accelerate investment in computers. It will also help boost Canada's productivity through the faster adoption of newer technology. However, for this initiative to provide the greatest benefit, the 100% CCA rate should be extended to five years and expanded to include related EMR software. The benefits of EMR investments are clear. International strategy and technology consulting firm Booz Allen Hamilton found the benefits of an interconnected Electronic Health Record (EHR) in Canada could save the health system $6.1 billionxi a year. The CMA's recommendation of delivering incentives through the tax system to adopt EMRs is a bottom-up approach that has gained widespread support. John Halamka, the chief information officer at Harvard Medical School, thinks that reformers need to take a bottom-up approach and listen to both doctors and patients. Studies showxiithat most of the benefits of EMRs flow to the payer. Incentives for hardware, software and as importantly the time that it takes to implement these e-systems must be taken into account and incented. The urgency for e-health is being recognized in the United States and needs to be in Canada. Beyond tax incentives, Budget 2009 also provided Canada Health Infoway (Infoway) with $500 million to support the goal of having 50 % of Canadians with an electronic health record by 2010. As of March 31, 2009, Infoway and its partners had put in place an electronic health record for 17% of the population. Budget 2009 funding will allow Infoway to extend EHRs to 38% of the population by March 31, 2010. xiii This investment will not only enhance the safety, quality and efficiency of the health care system, but will also result in a significant positive contribution to Canada's economy, including the creation of thousands of sustainable, knowledge-based jobs throughout Canadaxiv. Infoway has not yet received this funding and the CMA strongly encourages the federal government to transfer the funds promised in Budget 2009 as soon as possible. b. Boosting Health Human Resources Recommendation 3: The federal government should fulfill its 2008 election promisexv, beginning in 2010, of investing $65 million in health human resources over four years to fund 50 new residencies per year; repatriate Canadian physicians living abroad; and launch pilot projects with nursing organizations to promote recruitment and retention. Canada does not have enough physicians, nurses, technicians or other health care professionals to provide the care patients need. Addressing health workforce shortages is critical to ensuring sustainable, accessible, responsive and high-quality health care across the nation. Canada has suffered from a significant physician shortage since the mid-1990s. Nationally, we rank 26th of 30 OECD member countries in physician-to-population ratio (see Figure 3). The lack of physicians in Canada puts the system under pressure and the impact of this is being felt by patients across the country. Currently, approximately five million Canadians do not have a family physician. In 2008, a study commissioned by the CMA found that the Canadian economy lost $14.8 billion as a result of excessive wait times for just four procedures: joint replacements, MRIs, coronary artery bypass surgery and cataract surgery. As health care reform plans evolve south of our border, Canada should be proactive in order to retain the health professionals we have educated and trained and make it easier for those who have emigrated to return to practice in Canada. In the 2008 federal election, most parties recognized the urgency of HHR shortages and committed to address the situation. The Conservative Party committed to fund additional medical residency positions, create a repatriation fund for Canadian physicians practising abroad and fund nursing recruitment and retention pilot projects. It is thought this repatriation program could bring back as many as 300 Canadian physicians over four years. The federal government should keep this important commitment. Migration to the United States peaked in the late 1990s when Canada lost between 600 and 700 physicians per year. While some physicians returned to Canada each year, our net losses for this period were over 400 per year. Today we are enjoying small net annual gains but this may not last. With predicted shortages in the U.S. of between 80,000 and 100,000 physicians in the years ahead, we can expect U.S. recruiters to ramp up activities in Canada soon. 4. CONCLUSION The emerging economic recovery offers an excellent opportunity for the federal government to create a more patient-focused and sustainable health care system. Enhancing patient access across the continuum of care by bolstering the Building Canada infrastructure plan and helping providers help patients by enhancing EMR tax incentives and addressing health workforce shortages are important first steps in transforming our health care system. Looking ahead, it will be important to continue to honour the financial transfers of the 2004 Health Care Accord, including the annual 6% escalator, through to 2014. Past cuts to health care funding at all levels have had significant negative effects that continue to be felt to this day. Now is the time to begin thinking ahead to the fiscal needs of the health care system in the post-2014 era. Appendix Table 1 [For correct dispaly of table information, see PDF] References 1 A full schedule of the recommended federal investments as well as their job creation potential is included at the end of the document in the Appendix, Table 1. 2 14 functions are: EMR, EMR access, access other doctors, outside office, patient: routine use, electronic ordering tests, prescriptions, access test results, access hospital records, computer for reminders, Rx alerts, prompt test results; easy to list diagnosis, medications, patients due for care. i Building Canada Plan., Announced in Budget 2007, the seven-year, $33-billion Building Canada plan consists of a suite of programs to meet the varying needs of infrastructure projects across Canada. See page 142 of the 2009 Federal Budget. www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf ii Hospital Occupancy Rates. Organization for Economic Co-operation and Development [OECD] (2008). OECD Health. Data 2007. Version 07/18/2007. CD-ROM. Paris: OECD. iii.Cranswick, Kelly, Donna Dosman. "Eldercare: What we Know Today" Canadian Social Trends.No. 86. Statistics Canada iv Building Canada Plan, Federal Budget 2009 page 142. . www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf v This estimate is based on survey work in a forthcoming publication commissioned by the Association of Canadian Academic Healthcare Organizations. vi How Canada Performs 2008: A Report Card on Canada, The Conference Board of Canada see: http://sso.conferenceboard.ca/HCP/overview/health-overview.aspx vii Organization for Economic Co-operation and Development [OECD] (2007). OECD Health Data 2007. Version 07/18/2007. CD-ROM. Paris: OECD. viii World Health Organization [WHO] (2007). World Health Statistics 2007. see: http://www.who. ix Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care May 15, 2007 (updated May 16, 2007)
Volume 59 Authors: Karen Davis, Ph.D., Cathy Schoen, M.S., Stephen C. Schoenbaum, M.D., M.P.H., Michelle M. Doty, Ph.D., M.P.H., Alyssa L. Holmgren, M.P.A., Jennifer L. Kriss, and Katherine K. Shea Editor(s):Deborah Lorber see: www.commonwealthfund.org/publications/publications_show.htm?doc_id=482678 x Euro-Canada Health Consumer Index 2008, Health Consumer Powerhouse, Frontier Centre for Public Policy, FC Policy Series No. 38 see:www.fcpp.org/pdf/ECHCI2008finalJanuary202008.pdf xi Booz, Allan, Hamilton Study, Pan-Canadian Electronic Health Record, Canada's Health Infoway's 10-Year Investment Strategy, March 2005-09-06. xii Although the savings would accrue to different stakeholders, in the long run they should accrue to payers. If we allocate the savings using the current level of spending from the National Health Accounts (kept by the Centers for Medicare and Medicaid Services), Medicare would receive about $23 billion of the potential savings per year, and private payers would receive $31 billion per year. Thus, both have a strong incentive to encourage the adoption of EMR systems. Providers face limited incentives to purchase EMRs because their investment typically translates into revenue losses for them and health care spending savings for payers. From: Can Electronic Medical Record Systems Transform Health Care? Potential Health Benefits, Savings, And Costs, by Richard Hillestad, James Bigelow, Anthony Bower, Federico Girosi, Robin Meili, Richard Scoville and Roger Taylor, Health Affairs, 24, no. 5 (2005): 1103-1117 http://content.healthaffairs.org/cgi/content/full/24/5/1103#R14 xiii Corporate Business Plan 2009/2010, Canada Health Infoway, "Anticipated Progress to March 31, 2010" page 7 see:www2.infoway-inforoute.ca/Documents/bp/Business_Plan_2009-2010_en.pdf xiv Federal Budget 2009 page 152. see: www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf xv Health Care Certainty for Canadian Families, the Conservative Party of Canada, backgrounder 10/08/08. See: http://www.conservative.ca/?section_id=1091&section_copy_id=107023&language_id=0

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Supply of Medical Isotopes : CMA's Presentation to the House of Commons Standing Committee on Health

https://policybase.cma.ca/en/permalink/policy9703

Date
2009-11-23
Topics
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Date
2009-11-23
Topics
Health systems, system funding and performance
Text
It is my pleasure to address the committee as part of its monitoring of the situation related to the supply of medical isotopes. While I am not an expert in nuclear medicine, I do refer patients for diagnostic and treatment services that require the use of medical isotopes. First and foremost, I want to note that the CMA is proud of the efforts and dedication of health care providers from across the country who have stepped up to help meet patients' needs during this ongoing, stressful and demanding time. Through their concerted efforts, and those of the industry and governments, the system appears to be "coping." Patients are receiving needed diagnostic and treatment services, either through radiopharmaceutical models or their alternatives. However, there are reports of sporadic adverse events, as has been the case since the beginning of this situation. These include delays of 48-72 hours and suboptimal imaging due to the extensive use of thallium-201 rather than technetium-99m, which is in short supply. The CMA and representatives from the nuclear medical community continue to work with Health Canada to mitigate the impact of the shortage of medical isotopes. Scheduling appropriate care commensurate with the expected supply of isotopes has been aided by the efforts of Lantheus and Covidien, suppliers of generators and radiopharmaceuticals, who regularly share vital production information with the nuclear medical community. This has improved communications and allowed for the better predictability of supply than had been the case last May and June. Lest you interpret my comments to mean "all is well", let me be clear: Much is being done, but the current situation is neither optimal nor sustainable and there appears to be no long term plan. Canada's physicians are concerned about the toll the current shortage of isotopes is taking on the health care system as a whole. In particular, the resulting increased demand on resources - both human and financial - and especially now in the midst of a pandemic, is not sustainable. Therefore, we have called upon governments to invest in a five-year action plan, that includes an emergency fund, to increase the use of positron emission technology and the production of associated radiopharmaceuticals across Canada. At our annual meeting this August, Canada's physicians expressed their concerns by passing a series of motions calling for government action. This action included demands that the federal government: * retain Canada's leadership and ability to produce and export medical isotopes, and reconsider its decision to withdraw from their production; * appoint an international independent expert panel to assess thoroughly the decision to abandon the MAPLE I & II nuclear reactors at Chalk River: and * release promptly the conclusions and recommendations of the panel to the public. Our delegates also demanded that the federal government conduct open, meaningful and ongoing consultations with nuclear medicine physicians and their respective national associations on any and all federal decisions directly affecting the supply of medical isotopes. Concern was expressed that decisions have been, and will continue to be, made for political and financial expediency without taking into account medical ramifications of those decisions. We appreciated having the opportunity to participate in discussions with the Expert Review Panel on Medical Isotope appointed by the Minister of Natural Resources. While it is anticipated the panel will report to the Minister by the end of this month, we do not know when that report will be made public and how long it will take to move recommendations to action. Canadian physicians also urge the federal government to invest immediately in research in basic and clinical science to find viable alternative solutions to the production and use of technetium-99m. The announcement of $6 million for research into alternatives to medical isotopes through a partnership between the Canadian Institutes of Health Research (CIHR) and the Natural Sciences and Engineering Research Council of Canada (NSERC) is a good start. We must emphasize that bench to bedside research is critical - there must be a clinical translation of new technology to the provision of care. To conclude, the CMA remains concerned about health care providers' and the health care system's ability to sustain the current shortage; Canada's ability to ensure a long-term stable and predictable supply of medically necessary isotopes and our lack of contingency planning for the next shortage. The CMA will continue to work with all involved to ensure Canadians have access to the best possible care and treatment.

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Aligning health and economic policy in the interest of Canadians : CMA’s 2004 Pre-Budget Submission to the Standing Committee on Finance

https://policybase.cma.ca/en/permalink/policy1949

Last Reviewed
2012-03-03
Date
2004-11-18
Topics
Health systems, system funding and performance
  2 documents  
Policy Type
Parliamentary submission
Last Reviewed
2012-03-03
Date
2004-11-18
Topics
Health systems, system funding and performance
Text
For the past several years, the Canadian Medical Association (CMA) has been delivering two overall messages to the Standing Committee on Finance. First, we believe that Canadians’ health and their health care system must be recognized as ongoing priorities. Second, we have been making the case that economic policy, including tax policy, must be better aligned with national health policy. This year’s brief provides specific examples of how the federal government can take action to address both of these issues. We begin with an assessment or a “check up” of the health of our health system. We then provide constructive suggestions on how to successfully implement the health agreement reached at the September 13-15, 2004 meeting of First Ministers. Finally, we draw attention to the need for continued investments in public health and healthy public policy. Canadians remain increasingly concerned about the future state of their health care system, particularly in terms of accessing essential care. While their health status has improved over the past decades, international comparisons suggest there is considerable room for improvement. The significant announcements made over the past year related to reinvestments in health care and public health are a welcomed start to support health stakeholders in facing these challenges. The next steps must build on this progress. INVESTING IN HEALTH CARE Build on The First Ministers Meeting Agreement In terms of health care, we must begin by noting that the First Ministers Meeting Agreement (FMM Agreement) was a significant achievement. It represents a positive policy framework to run with, but it must now receive the necessary fiscal, political and legislative follow-through. Legislation should be enacted that specifies the accountability framework for the Agreement. The Wait Times Reduction Fund should be subject to contribution agreements that specify how provinces and territories will use their share of this fund to reduce wait times. Critical to future success is the need for health care stakeholders to be actively involved with all facets of the Agreement, particularly in developing clinically derived wait time benchmarks. Make Health Human Resources a Priority At the same time, the federal government can do more to address accessibility to health care services by making a stronger commitment to increasing Canada’s health human resources capacity. Several strategies are outlined in this brief, beginning with the need to ensure that the Wait Times Reduction Fund in the FMM Agreement is used immediately to address the crisis in health human resources rather than in the last four years of the ten-year Agreement as currently projected. One specific health human resources strategy that the federal government should pursue is providing greater support for the training of students in health care professions as part of an overall health human resources strategy. High student debt is a key health human resource issue. It is estimated that, by the time medical students enter their pre-practice postgraduate training period, many are doing so with a debt of at least $120,000 or more. This high debt load is affecting both the kind of specialty that physicians-in-training choose, and ultimately where they decide to practice. As a result, the CMA calls upon the federal government to implement a national strategy to extend the Canada Student Loans interest payment benefit to eligible health professional students pursuing postgraduate training. Such action would provide a fairer approach and would alleviate some of the problems associated with our current training system of health professionals. ALIGNING TAX POLICY WITH HEALTH POLICY The CMA has highlighted the need to better align tax policy with national health policy goals for some time and we believe this challenge remains a priority. One example of where tax policy and health policy can be better aligned is how the GST is currently applied to the health care sector and to physicians—something the Finance Committee has acknowledged in previous reports. Hospitals in Canada must still pay a portion of the GST on their purchase of goods and services siphoning away millions of dollars that would otherwise be used for patient care. The federal government recognized in the 2004 budget the need to provide a full GST rebate to municipalities, one of the four sectors covered by the so-called “MUSH” formula (Municipalities, Universities, Schools and Hospitals). We call on the government to apply the same logic and provide a full GST rebate to the health care sector. Another problem exists with how the GST is applied to independent health professionals, such as physicians, providing care to Canada’s publicly funded system. By virtue of being “tax exempt” under The Excise Act, physicians cannot claim any input tax credits to offset the GST costs they pay on their purchases of equipment, rent and utilities. Unlike other self-employed people, physicians cannot pass on any of these additional costs. This is a fundamental issue of tax fairness. It can be resolved by zero rating the GST on publicly funded health services provided by independent health providers thereby making them eligible to receive input tax credits. INVESTING IN HEALTH This past year saw many positive developments made to Canada’s public health system. The CMA was pleased to see the creation of the position of Minister of State, Public Health. We commend the Government of Canada for its establishment of the Public Health Agency of Canada and for its selection of Dr. David Butler-Jones as the new Chief Public Health Officer of Canada. However, the government must continue to reinvest in public health to ensure that the country has a system that earns the trust of Canadians. Investing in public health also makes good economic policy. We have seen in recent years the incredible economic impact that public health outbreaks can have on a country’s economy. Close the Naylor Gap in Public Health 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. While representing an important reinvestment in this country’s public health system, the funding announced in the 2004 Budget falls well short of this basic requirement. Accordingly, the CMA calls on the federal government to address the $450 million “Naylor Gap” as soon as possible. Establish National Health Goals Guiding this country’s efforts to improve the health of Canadians should be the establishment and monitoring of national health goals. Thus, the CMA fully supports the First Ministers’ call to establish a Pan-Canadian Public Health Strategy that includes the setting of health goals that are independently monitored. These goals should also cover environmental health goals given their direct implication on Canadians’ health status. Invest in Health Not Tobacco Another key area for the CMA where current economic policy is not aligned with national health policy is the Canada Pension Plan’s investment in tobacco stocks. Despite the fact that tobacco continues to kill approximately 45,000 Canadians a year and costs Canadian society approximately $11 billion per year in net cost, the Canada Pension Plan continues to invest millions ($94 million) in the tobacco industry. We strongly believe that the CPP Investment Board should be prohibited from investing in the tobacco industry and that it divest its current tobacco holdings. Other major pension and investment plans have successfully executed this policy including the MD Funds held for Canada’s physicians at MD Management Ltd. a wholly-owned subsidiary of CMA. Accordingly, we call on the Standing Committee on Finance along with the Standing Committee on Health to jointly review the CPP investment policy as it relates to investments in tobacco. The FMM Agreement and last year’s funding announcements for public health must be seen as for what they are—first steps to sustaining Canada’s health care system and its public health infrastructure. Canada’s physicians and the CMA are committed to working with governments and other health care stakeholders to ensure that these financial investments lead to positive and enduring change, and ultimately improved health for all Canadians. RECOMMENDATIONS Recommendation 1 The federal government move quickly to enact legislation to implement the funding and accountability provisions of the First Ministers’ Agreement. The legislation should specify that the $4.5 billion Wait Times Reduction Fund be subject to contribution agreements with the provinces and territories. Recommendation 2 The federal government work with relevant stakeholders to extend interest free status on Canada Student Loans for all eligible health professional students pursuing postgraduate training. Recommendation 3 As part of an effort to ensure that its tax policy is consistent with the goals of its health policy and the sustainability of Canada’s health care system, the federal government should: - increase the GST rebate for publicly funded health care institutions and clinics to 100% ($90 million annually for hospitals) - zero rate GST on publicly funded health services provided by independent health care providers ($75 million annually for medical services). Recommendation 4 The Standing Committees on Finance and Health hold a joint review of the CPP policy as it relates to investments in tobacco (both current and potential) by the CPP Investment Board. II. CMA’S ANNUAL CHECKUP Much has happened over the past year in regards to Canada’s health and health care systems. First, we witnessed the creation of the Health Council of Canada, an institution that can play a significant role in improving the accountability of Canada’s health system. Second, we saw several announcements aimed at rebuilding Canada’s public health system including the establishment of the Public Health Agency of Canada and the subsequent appointment of Canada’s first Chief Public Health Officer. And in September, federal, provincial and territorial First Ministers reached a historic agreement on a 10-year plan to strengthen health care. Canadians no doubt welcome these developments. They have made it known to governments and health care providers alike that access to health care has become their top public policy issue. Not surprisingly, health was the top issue during the recent federal election campaign. For four years, the CMA has been tracking Canadians’ assessment of our health care system through our National Report Card on the Sustainability of Health Care. We are sad to report that the number of Canadians giving the nation's health care system a grade of C or F this year increased by a dramatic 9% over last year. While Canadians still give the system an overall B grade, the percentage of C and F grades was the highest since Ipsos-Reid began conducting the survey on behalf of the CMA in 2001. Moreover, our survey results found that 97% agreed that any discussion to make the system more sustainable needs to guarantee timely access for essential health services. As our fact sheet on Canadians’ health and their health care system illustrates (see Appendix A), improving access remains a major challenge for our health care system. Canada has one of the poorest physician-to-population ratios among all OECD countries. It is therefore not surprising that in 2003, 14% of Canadians reported not having a regular family physician (25% in Quebec). A recent Statistics Canada survey on wait times found that the proportion of patients who considered their wait time unacceptable was 17% for non-emergency surgery, 21% for diagnostic tests and 29% for specialist visits. 1 Over the past year, CMA has been very active in bringing attention to the issue of access and wait times. The CMA co-sponsored a colloquium on managing wait times last April that culminated in the recently released report, The Taming of the Queue: Toward a Cure for Health Care Wait Times. 2 But what about the state of Canadians’ health itself? Certainly our health status has improved greatly over the past decades. However, while Canadians are among the healthiest people in the world, citizens in several industrialized countries are enjoying better health status. For example, disability-free life expectancy, that is quality of life years lived, for Canadian males is 18th among the 30 OECD countries and 16th for Canadian females. Canada’s rate of infant mortality—deaths during the first year of life—is among the highest in the OECD. But we need not compare ourselves to other countries to find differences in levels of health status. Significant discrepancies in health status also exist among Canadians, be it between provinces, between regions, between communities or between neighbourhoods. For example, there remain significant inequities in health status between Aboriginal Canadians and non-Aboriginal Canadians—the incidence of hepatitis and tuberculosis among Aboriginal Canadians are five and ten times higher respectively than for other Canadians. It has now been over a year since the Report of the National Advisory Committee on SARS and Public Health or the “Naylor Report” was released. The report has lead to some positive developments in rebuilding Canada’s public health system. It will be needed as some serious public health issues continue to face the country including: * the spread of infectious diseases (e.g., C. difficile bacterium); * the rise in the number of Canadians with unhealthy body weights including rising levels of obesity; * high levels of physical inactivity; * smoking, particularly among youth; * relatively low rates of immunization; and * threats to environmental health including those that threaten our clean air, and safe food and drinking water. In summary, notwithstanding all that has transpired this year, Canadians’ health and their health care system remain high public priorities. While their health status has improved over the past decades, there is considerable room for improvement, some of which can be addressed through public health measures and better access to care. The significant announcements made over the past year related to health system and public health financing are a welcomed start to support health stakeholders in facing these challenges. III. THE FIRST MINISTERS’ MEETING AGREEMENT The CMA closely followed the September 13-15, 2004 First Ministers Meeting on the Future of Health Care. In fact, we worked with our health care colleagues leading up to the meeting to identify possible strategies for improving the system. 3 For instance, we recommended the development and adoption of pan-Canadian benchmarks for wait times based on clinical evidence and the creation of a special Canada Health Access Fund to support Canadians’ access to medically necessary care in other regions. While not all of our proposals were accepted, the September First Ministers’ Meeting Agreement (herein referred to as the FMM Agreement) features many aspects that the CMA has been championing for some time and is certainly a positive achievement. In particular, we are happy to see a desire “to make timely access to quality care a reality for all Canadians.” We applaud the leadership shown by the government in this regard. We also believe that the Agreement provides an opportunity for a new era of cooperative medicare by engaging physicians and other providers meaningfully. Contrary to belief, health care providers have not been offered many opportunities to participate at federal, provincial and territorial planning tables. We therefore welcome the opportunity to work collaboratively on identifying clinically derived wait time benchmarks. Canada’s physicians can and desire to play a significant role in this regard. We therefore believe the FMM Agreement is a necessary first step or “a framework to go with” towards strengthening our health care system. But as we said in September following the release of the Agreement, “the real heavy lifting begins now.” Accordingly, we believe that a number of requirements are necessary to ensure this Agreement fulfills its objectives. We see these requirements as putting words to actions for realizing the full potential of the FMM Agreement. Enact Legislation to Confirm Financial Support and Accountability Provisions The CMA supports enacting federal legislation to confirm the budgetary allocations in the Agreement ($18 billion over 6 years and $41 billion over 10 years). This includes a 6% escalator to the Canada Health Transfer (CHT) that will provide predictable funding for provincial and territorial health care systems. This is a provision that we have been recommending for many years. While $41 billion is a lot of money, we must remind ourselves that this amounts to little more than a 3% increase over 10 years of provincial government health expenditures based on projections of current government spending. Moreover, we estimate that the Agreement will add only .2% to Canada’s spending levels per GDP during this period. In other words, the FMM Agreement, while necessary and appreciated, will not propel Canada into the top echelon of health care spenders among the leading industrialized countries. As health care has become a dominant public policy issue, we expect to see future high level discussions in coming years on both future funding levels and on the direction of health care reform efforts. We are also pleased to see a new Equalization agreement that will complement the FMM Agreement. The Equalization program plays a key role in ensuring that all provinces have adequate and comparable levels of health care and other social services. The issue of Equalization payments to the provinces was identified in discussions leading up to the September First Ministers Meeting over concern that increased federal transfers to health care could be offset by decreases in Equalization payments. The subsequent agreement on Equalization will therefore serve to support the FMM Agreement given that increases in health care transfers to provinces will not be offset by decreases in equalization payments while providing predictable multi-year funding. A strong accountability framework also needs to be included in the legislation. The FMM Agreement specifies several process accountabilities such as a commitment by governments to report on access indicators and establish wait time benchmarks by December 31, 2005. The CMA believes that the Wait Times Reduction Fund should be subject to contribution agreements that specify how provinces and territories will use their share of this fund to reduce wait times. For the Agreement to mean something commitments have to backed up—financial and/or political consequences must follow if commitments are not met. It will be important to have an independent, third party organization assess progress in an open and transparent manner. The Health Council of Canada, identified in the FMM Agreement, could be the body to undertake an annual independent assessment, providing it receives the necessary resources to do so. The Canadian Institute for health Information also has an important role to play in ensuring comparable indicators are used to measure progress. It is essential to involve practicing physicians throughout the implementation of the FMM Agreement, particularly in the development of clinically derived wait time benchmarks. The determination of clinically derived wait time benchmarks means just that—they must be clinically derived and must not be based on political or financial considerations. To this end, the CMA will play a leadership role in developing consensus with physicians and other expert organizations on acceptable wait-time standards and protocols based on the best available clinical evidence. RECOMMENDATION 1 The federal government move quickly to enact legislation to implement the funding and accountability provisions of the First Ministers’ Agreement. The legislation should specify that the $4.5 billion Wait Times Reduction Fund be subject to contribution agreements with the provinces and territories. Improve Access by Addressing Health Human Resources The CMA is pleased to see the First Ministers acknowledge for the first time the current and worsening shortage of health human resources (HHR) in this country. However, the FMM Agreement does not adequately provide a strategy for addressing this crisis beyond the development of health human resources action plans and support for an Aboriginal Health Human Resources Initiative. The CMA believes that the lack of immediate action on HHR is one area where the Agreement falls short. As noted in our fact sheet, Canada is currently experiencing a shortage in health human resources. Canada’s ratio of 2.1 physicians per 1,000 population remains one of the lowest among OECD countries and below the OECD average of 2.9. Initial results from the 2004 National Physician Survey—the largest census survey of physicians ever conducted in Canada—find that up to 3,800 physicians will retire in the next two years, more than double the existing rate. Furthermore, 26% of physicians intend to reduce the number of hours they work. 4 One must remember that timely access to health care services is first and foremost about the people who provide quality care and the tools and infrastructure they need to meet the growing demand for medical services in Canada. In order for the FMM Agreement to be successful in improving access to care, governments must make health human resources a major priority beginning by ensuring that the Wait Times Reduction Fund is used immediately to address the crisis in health human resources rather than in the last four years of the ten-year Agreement as currently projected. 5 Given the current shortages in health human resources, action on HHR must begin now—not in 2010. In addition, 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. Specifically, we need a three pronged pan-Canadian HHR strategy that would address: (1) HHR planning; (2) increasing the supply of health professionals; and, (3) retention issues. Planning Despite the large sum of funding that governments invest in health care, they do so without having the benefit of a national long-term health human resources strategy. Canada has 14 provincial/territorial and federal health care systems in operation. Yet, our immigration policies are largely conducted on a national basis and there is a high degree of labour mobility between provinces. Presently, there is no overall national coordinating committee 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. We believe a National Coordinating Committee for Health Human Resources involving representation from health care professions should be established for such purposes—something both the Romanow and Senator Kirby reports recommended. Research is required to support long-term planning in HHR. The CMA has previously proposed the creation of an arm’s length Health Institute for Human Resources (HIHuR) that would promote collaboration and the sharing of HHR research among the well-known university-based centres of excellence as well as research communities within professional associations and governments. Supply Canada’s HHR policy goal should be to ensure Canada is self-sufficient in the supply of physicians and other health care professionals. Several strategies are required to fulfill this goal. They include: * Dedicating a specific fund to increase enrollment in undergraduate and postgraduate medical education (especially re-entry positions). Medical school enrollment should be increased to a minimum of 2,500 positions by 2007. * Expanding the post-MD system to accommodate the increase in graduates for training including the several hundred international medical graduates (IMGs) in Canada who have been deemed eligible for post-MD training here. The goal should be to increase the number of first-year residency training positions to a level of 120% of the graduates produced annually by Canadian medical schools. See Appendix B for how this can be implemented. The estimated cost of adding 500 positions is $75 million over five years. In fact, this government’s election platform included a commitment to provide funding to top-up training for 1,000 foreign trained medical professionals. * Expediting the integration of international medical graduates by funding a fast-track on-line assessment program administered by the Medical Council of Canada. It would determine the suitability and eligibility of IMGs for completion of post-MD training (estimated cost $20 million over 5 years). * Implementing a national strategy to extend the Canada Student Loans interest payment benefit to postgraduate trainees in medicine. High student debt impacts both the kind of specialty that physicians-in-training choose, and ultimately where they decide to practice—making it a key health human resource issue (see box below). 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 FMM Agreement. Did you know? Becoming a full-fledged, practicing physician is an arduous and expensive endeavor. It requires a minimum of 9 years (6) of post-secondary education and training that is often financed through sizeable government and private loan debt, such as lines of credit. It is estimated that, by the time medical students enter their pre-practice postgraduate training period, many are doing so with a debt of at least $120,000 (7) or more. RECOMMENDATION 2 The federal government work with relevant stakeholders to extend interest free status on Canada Student Loans for all eligible health professional students pursuing postgraduate training. Retention Retention remains a major concern for the health care workforce including physicians. We speak not only in terms of losing physicians to other countries but to other professional pursuits as well (i.e., opportunities away from the front line delivery of care). There is little point in recruiting new physicians at the front end if we lose sight of how to keep them once they are highly skilled and are in their most productive years. Retention issues are crosscutting. Indeed, a major frustration for physicians today are the difficulties faced trying to access other types of care for their patients such as diagnostic testing, specialty care or community services. Thus, improving access to a comprehensive range of health care providers and services and reducing wait times—as previously addressed—can help. We also believe that investments in information technologies (IT) can help improve the coordination of health care and allow physicians to spend more time with their patients to provide quality care. There is currently limited connectivity among community-based physicians, community based services, specialists, hospitals and diagnostic facilities. IT investments can improve the integration of care, improve patient safety and improve the management of wait times. They can link regional and provincial wait time management systems while supporting more comprehensive scheduling systems. Prescriptions can be sent electronically to the local pharmacist while public health warnings can be sent electronically to physicians’ offices. We recognize that investments in IT are already occurring and systems will be put in place over the next decade. However, we believe that by accelerating IT investments today, system efficiencies and savings can be achieved sooner along with improvements to health care delivery and coordination. The application of tax policy to the health care sector is another retention issue that greatly frustrates physicians. This issue is discussed in the next section. Align Tax Policy With Health Policy The CMA continues to advocate for a review of the relationship between federal tax policy and health care policy in Canada. Taxation is a powerful instrument of public policy. Good tax policy should reinforce and support good health care policy. Yet, it has been 40 years since the federal government last undertook an overarching review of Canada’s tax system (the 1962-1966 Royal Commission on Taxation -the Carter Commission). Standard public finance theory suggests that two objectives of effective tax policy are distributive equity and correcting inefficiencies in the private sector. 8 For some time, the CMA has expressed concern over inequities in tax policy and inconsistencies between national health policy goals and tax policy. We are aware that the committee is looking for ideas on tax changes that can lead to a more productive economy. At the same time, we recognize that the government is committed to improving Canadians’ access to health care. Ensuring this country’s tax policy is supporting our health care system is a good way to achieve both objectives. Specifically, the CMA calls on the federal government to remove the application of the Goods and Services Tax (GST) to the health care sector. Currently, not-for-profit hospital services receive an 83% rebate on the GST they pay on goods and services, while not-for-profit health organizations receive a rebate of 50%. Health care professionals working in free-standing clinics do not qualify for any GST relief (discussed below). The estimated portion of funding paid by hospitals alone back to the federal government in the form of GST revenue is estimated to be $90 million per year. That is the equivalent of the purchase cost of almost 40 MRI machines! The CMA believes that all publicly funded health care services should be spared from having to use scarce health care resources to remit GST and should receive the full GST rebate. Would this be setting a precedent? The answer is “no”. Prescription drugs, a significant proportion of total health care costs, have been zero-rated since 1996. Furthermore, 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. As part of the “MUSH” sector (municipalities, universities, schools and hospitals), we believe the time has come to extend the full rebate to the health care sector. The federal government must stop taxing publicly funded health care. The uneven application of the GST rebate to different health services is also impeding efforts to renew and reorient the delivery of health services. Currently, community-based services such as clinics and nursing homes receive a GST rebate of only 50% while hospitals receive a rebate of 83%. Does it make sense that a nursing home or a home care service should pay more for GST than a hospital, particularly when trying to move to a more accessible community-based system? The variability of GST rebates makes no sense for organizations such as regional health authorities that oversee a range of health services but which pay differing rates. The government acknowledged in its 2003 Budget that there was a need to review how the GST is applied to care settings outside of hospitals. We await this review. Such inconsistencies distort the efficiency of the health care sector yet are relatively simple to address. 9 Physician services, on the other hand, are deemed “tax exempt” under The Excise Act. This means that physicians cannot claim any input tax credits despite the fact they must pay GST on their purchases of equipment, rent and utilities. And unlike other self-employed individuals or small businesses, physicians cannot pass on any of these additional costs as approximately 98% of physician compensation is from government health insurance plans. To date, provincial governments have been unwilling to provide funding to reflect the additional costs associated with the GST (insisting that it is a federal matter). Physicians are not asking for special treatment. They are looking for fairness within the tax system. If physicians, as self-employed individuals, are considered small businesses for tax purposes, then it only seems reasonable that they should have the same tax rules extended to them that apply to other small businesses (i.e., eligibility to receive input tax credits). This is a fundamental issue of tax fairness. In fact, this committee has twice before acknowledged the need to reassess the application of the GST on physician services. 10 The unfair manner in which the GST is applied to the health care sector has been an on-going source of major frustration to the physician community and remains unresolved. We believe that addressing this matter would be helpful in the country’s efforts to retain its physicians. Other self-employed health care providers that provide publicly funded services face a similar problem. RECOMMENDATION 3 As part of an effort to ensure that its tax policy is consistent with the goals of its health policy and the sustainability of Canada’s health care system, the federal government should: - increase the GST rebate for publicly funded health care institutions and clinics to 100% ($90 million annually for hospitals) - zero rate GST on publicly funded health services provided by independent health care providers ($75 million annually for medical services). IV PUBLIC HEALTH: HEALTHY PUBLIC As previously noted, much has happened over the past year with respect to Canada’s public health system. The CMA was pleased to see the creation of the position of Minister of State, Public Health. We commend the Government of Canada for its establishment of the Public Health Agency of Canada and for its selection of Dr. David Butler-Jones as the new Chief Public Health Officer of Canada. The 2004 Budget’s commitment to approximately $665 million for investments for public health over the next 3 years was also a welcomed announcement. The CMA will provide its full support to work with Dr. Butler-Jones and the Public Health Agency of Canada, Ministers Bennett and Dosanjh to develop a coordinated and integrated plan to manage and improve public health in Canada. These developments certainly represent a good step towards rebuilding the country’s public health system. Address the “Naylor Gap” In spite of these initiatives, it remains essential to remind this government and Canadians that further attention to public health is necessary. As a member of the Canadian Coalition for Public Health in the 21st Century (CCPH21), the CMA calls on the federal government to enhance its financial commitment to the renewal of Canada’s public health system The public health system is a vital component of a sustainable health system by reducing pressures on the health care system and providing a net benefit to society. 11 Two thirds of total deaths in Canada are due to chronic diseases such as cardiovascular disease, cancer, lung disease and diabetes (Type II melitus)—many of which are preventable. Investing in public health also makes good economic policy. We have seen in recent years the incredible economic impact that public health outbreaks can have on a country’s economy. For instance, it has been estimated that the SARS outbreak cost the Canadian economy over $1.5 billion in 2003 alone with its impact still being felt. 12 As stated in the Report of the National Advisory Committee on SARS and Public Health (the Naylor Report), “we are constantly a short flight away from serious epidemics.” 13 Accordingly, we were pleased to hear the government’s Speech from the Throne state that the government will proceed with the development of the Pan-Canadian Public Health Network. But we have to overcome several years of inattention to public health issues and the public health infrastructure—something that cannot be rectified in a year. Spending levels on public health in Canada are meager. International comparisons are difficult to find and to compare, but it appears that this is one instance where Canada could learn from its neighbour to the south with its higher level of spending on public health (see Box comparing public health spending between Canada and the United States). 14 While the role of public health was referred to in the FMM Agreement, no additional funding for public health was included. Comparing Levels of Public Health Spending: Canada vs. the United States Using data from CIHI and the US Centers for Medicare and Medicaid Services, the CMA has developed the following comparative estimates of spending on public health in Canada versus the United States in 2002. [TABLE CONTENT DOES NOT DISPLAY POPERLY. SEE PDF FOR PROPER DISPLAY] Canada United States 1. Per capita spending on public health services ($CDN, PPP adjusted) $138 $207 2. Share of spending on public health as a % of public health care spending 5.5% 7.2% 3. Share of spending on public health as a % of total health care spending 3.9% 3.3% [TABLE END] The United States spends approximately 50% more on public health than Canada when comparing per capita payments. The United States also spends more on public health when considering public health spending as a percentage of all publicly funded services (due in part to a proportionately smaller publicly funded sector). Conversely, Canada spends more on public health if looking at the percentage of spending on public health as a percentage of total health care spending. This is due in part to a proportionately larger privately funded sector in the United States. Since public health is predominately a public good paid by governments, we believe it is most appropriate to compare the results from the first two indicators. The Naylor Report estimated that public health in Canada accounted for 2.6% to 3.5% of total publicly funded health expenditures in Canada and 1.8% to 2.5% of total health expenditures. While these estimates are lower than those provided above, they still support our observation that public health spending in Canada is lower than in the United States. The Naylor report provided a blue print for action and reinvestment in the public health system for the 21st century. It estimated that approximately $1 billion in annual funding would be required to implement and sustain the public health programs that Canada requires. In its submission to the National Advisory Committee on SARS and Public Health, the CMA also identified an essential range of comprehensive public health programming and initiatives totaling an estimated $1.5 billion over 5 years. 15 The federal government has thus far committed approximately $665 million in new programming (one-time funding, over 2 years, and over 3 years), well short of Dr. Naylor’s $1 billion per year. This “Naylor Gap” of approximately $450 million per year is identified below in Table A. [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table A: Estimating “The Naylor Gap” Naylor Funding Recommendations (by 2006-07) Budget 2004 Naylor Gap Public Health Agency of Canada Related Funding - $300 million per year core budget of PPHB and other related federal services to be transferred to new agency - core functions to be expanded by $200 million per year within 3-5 years - $404 million transferred from Health Canada to Agency - $165 million over 2 years to assist in setting up new agency, increase emergency response capacity, enhance surveillance, establish regional centres of excellence, expand laboratory capacity, strengthen international coordination and collaboration $117.5 million per year ($200 million by Naylor minus $82.5 million per year committed by the federal government averaged out). Moreover, nothing earmarked beyond 2005-06. System Funding 3 programs of transfers at a cost of $500 million per year: - $300 million for Public Health Partnerships Program to build capacity at local level - $100 million for communicable disease surveillance - $100 million to bolster national immunization strategy - $100 million (one-time) to Canada Health Infoway to pay for real-time public health surveillance system - $400 million over three years for: - $300 million for national immunization strategy - $100 million for provinces to address immediate gaps in capacity Approximately $333 million per year ($500 million per year request by Naylor less Budget 2004 commitments of $500 million over 3 years or $167 million per year averaged out.) Total: $1 billion per year $404 million annually plus $665 million in new programming (one-time funding, over 2 years, or over 3 years) Total “Naylor Gap”: $450.5 million per year [TABLE END} We acknowledge that the Public Health Agency of Canada is just being created. We also recognize that Budget 2004 noted that: “The Government of Canada expects to make further investments once the new Canada Public Health Agency is operational, the Chief Public Health Officer has developed a comprehensive public health plan, and the Government has had the opportunity to evaluate the need for additional resources.” 16 Nevertheless, it is critical that reinvestment in Canada’s public health system continue as soon as possible to protect and promote the health of Canadians. These additional investments are needed to fully implement Dr. Naylor’s recommendations. This includes operating costs for a real time communication system for front line public health providers during health emergencies. It would ensure a two-way flow of information between front-line health care providers and public health professionals at the local public health unit, the provincial public health department and the Public Health Agency of Canada. The CMA has recently submitted a proposal to Canada Health Infoway to develop a system (the Health Emergency Communication and Co-ordination Initiative) that would link Canada’s physicians with governmental authorities. The additional investments should also be used to help address the recruitment and retention of public health practitioners. 17 In contrast with other areas of health expenditures, we know very little about how public health dollars are allocated and with what results. Presently, public health expenditures are lumped together with some health system administration costs. We believe there is a need for a better tracking and public reporting of public health expenditures. Set and Meet National Health Goals The CMA was pleased to see support by First Ministers in the FMM Agreement to establish a Pan-Canadian Public Health Strategy and health goals that are independently monitored. We believe health goals are a key component in addressing the serious public health challenges that lie ahead. Goals stimulate action and improve system accountability. Unlike Canada, many other countries—including the United States, the UK and Australia—have set health goals for their populations at the national level. At the CMA’s August 2004 General Council meeting, physicians agreed on health goals for physical activity, healthy body weights and obesity (see box below). These goals are already having an effect. Recently, the BC Minister of Health, Colin Hansen, accepted the challenge from the President of the British Columbia Medical Association, Dr. Jack Burak, to increase fitness levels by 10 per cent by 2010. We also need to be more preoccupied with setting, meeting and monitoring environmental health goals. Let us look at drinking water for example. As hard as it may be for Canadians to believe, a safe supply of water is a key health concern for Canadians today just as it was at the turn of the 20th century. The polluting of our water supply—including the presence of antibiotic-resistant bacteria through the use of antibiotics in human and animal health—and a lack of adequate water treatment infrastructure systems have contributed to the problem. Above all, we as Canadians need to recognize that a large natural supply of water and other natural resources do not eliminate the need for strong environmental governance. Public health officials play an important role in this respect. But it is pointless to set goals without any intention of meeting them. Resources will be necessary to meet the selected health goals such as the training and hiring of public health workers, as well as funding to support public advertising and marketing campaigns. Physical Activity and Healthy Body Weight Goals for Canada (Endorsed at CMA General Council, August 2004, Toronto) The Canadian Medical Association urges all levels of government to commit to a comprehensive, integrated and collaborative national strategy for increasing the physical activity levels of all Canadians, with a target of a 10% increase in each province and territory by the year 2010. The Canadian Medical Association calls on all stakeholders to develop, as an urgent priority, an action plan to address the obesity epidemic in Canada, with a goal of increasing by 15% within ten years the proportion of Canadians who are at a healthy weight. Invest in Health Not in Tobacco Improving health status is more than promoting healthy lifestyle behaviour. A healthy society also requires public policy that supports health (e.g. adequate income and education, proper housing, adequate nutrition, a clean and safe environment.) Tobacco use is a good example of a health risk that has been significantly reduced with the help of public policy measures, such as higher tobacco taxes, continued restrictions on tobacco advertising and promotion, and restrictions on smoking in public places. But there remains inconsistency in Canada's public policies—in this case between the investment policies of the CPP Investment Board and Canada's health policy goals. Canadians are very proud of their public pension plan, the Canada Pension Plan (CPP). It is a well-supported social program that has been viewed as a best practice model by several countries. Yet, despite the fact that tobacco continues to kill approximately 45,000 Canadians a year and costs Canadian society approximately $11 billion per year in net cost, (18) the Canada Pension Plan holds $94 million worth of tobacco investments. Canada’s physicians see the toll that tobacco consumption creates. We see the physical and mental suffering that tobacco-caused diseases bring to patients and their families. Accordingly, the CMA has consistently recommended a wide range of measures to control tobacco use such as higher tobacco taxes, continued restrictions on tobacco advertising and promotion, restrictions on smoking in public places, enforcement of bans on sales to minors, reduction of the level of toxic ingredients in tobacco and the provision of smoking cessation programs. We are pleased with the efforts to date but we are by no means finished in our battle. As our fact sheet shows, there are still segments of the population, particularly among our youth, that have high rates of smoking. The federal government in recent years has spent hundreds of millions of dollars on a tobacco reduction strategy that, when combined with efforts being taken by the provinces and municipalities, is making a difference for Canadians. However, the CPP Investment Board is investing and voting as shareholders in a pattern that is inconsistent with both public health policy, and the tobacco reduction measures being implemented across Canada. It is inconsistent and illogical for one arm of government to expend many millions of dollars of public money in an effort to reduce tobacco use, while another arm invests many millions of dollars of money in tobacco companies and supports these companies in their drive to be profitable. Resolution of the Canadian Medical Association General Council, August 2004: …the government amend the Canada Pension Plan Investment Board Act so that CPP investments in the tobacco industry are prohibited and the CPP Investment Board divests itself of existing tobacco holdings. The CMA is prepared to back up what it is prescribing—MD Management Ltd’s “MD Funds” which are managed for Canada’s physicians has followed this policy for almost ten years. Other major pension and investment plans have successfully followed this policy as well including several US State retirement and pension funds and the American Medical Association Pension Fund. While the CMA clearly believes that the CPP Investment Board should not invest in the tobacco industry and that existing tobacco holdings should be divested, we recognize that this committee might want to look at the matter in greater context to assess its full impact. We suggest that this be done in conjunction with the Standing Committee on Health. RECOMMENDATION 4 The Standing Committees on Finance and Health hold a joint review of the CPP policy as it relates to investments in tobacco (both current and potential) by the CPP Investment Board. IV. CONCLUSION The Finance Committee’s last report on the pre-budget hearings noted that the CMA’s submission identified relatively small, one-time investments that can support the health care system. 19 This year’s submission once again puts forward strategic investments that we believe support Canada’s health policy goals and which serve to effectively implement the FMM Agreement. Our recommendations are also directed at improving the alignment of Canada’s economic policy with its health policy. It is natural to think of an agreement as an end point. But in reality, the FMM Agreement and last year’s funding announcements for public health must be seen as for what they are—first steps to sustaining Canada’s health care system and its public health system. Canada’s physicians and the CMA are committed to working with governments and other health care stakeholders to ensure the financial investments announced over the past year lead to positive and enduring change, and ultimately improved health for all Canadians. END NOTES 1 Claudia Sanmartin et al. Access to Health Care Services in Canada, 2003. Statistics Canada, 2004. 2 Canadian Medical Association. The Taming of the Queue: Toward a Cure for Health Care Wait Times. Discussion Paper. July 2004. Ottawa. 3 CMA, Better Access for Better Health, September 2004; Canadian Healthcare Association, Canadian Medical Association, Canadian Nurses Association, Canadian Pharmacists Association. “Common Vision for the Canadian Health System,” September, 2004. 4 National Physician Survey, “Initial Data Release of the 2004 Physician Survey”, October 2004. 5 A note listed under the funding schedule indicates that moneys flowing to the Wait Times Reduction Fund for health human resources ($250 million for four years) will come only during the final four years of the Agreement. 6 Average duration. Only 2/16 medical schools have a 3 (versus 4) year program. 7 This estimate is based on federal government actual and estimated costs as well as current actual national average tuition fees in undergraduate programs in medicine. Data sources: (1) Statistics Canada, The Daily, April 26, 2004, National Graduates Survey: Student Debt, p. 3. (2) Government of Canada, Canlearn. Saving for your child's education, The projected cost of your child's education. University Tuition. Typical 1996 university cost living away from home: $13,000 - $3,500 tuition = $9,500 x 24% (8 years x 3% inflation cited in reference above) = $11 780. see: http://www.canlearn.ca/financing/saving/guaranteefuture/clcos.cfm?langcanlearn=en (3) Association of Canadian Medical Colleges for tuition 8 For a further discussion of the role of taxation in public policy, refer to Musgrave, Richard A. and Peggy B. Musgrave’s Public Finance in Theory and Practices. 1973. New York: McGraw-Hill. 9 Canadian Medical Association, Tax and Health—Taking Another Look. Discussion Paper, May 2002. 10See Keeping the Balance, 1997 Report of the Standing Committee on Finance; Facing the Future: Challenges and Choices for a New Era, 1998 Report of the Standing Committee on Finance. 11 See for example, Laurie J. Goldsmith, Brian Hutchinson and Jeremiah Hurley, Economic Evaluation Across the Four Faces of Prevention: A Canadian Perspective. (Hamilton: Centre for Health Econoimcs and Policy Analysis, McMaster University), May 2004. 12 The Conference Board of Canada, “The Economic Impact of SARS”, Ottawa, May 2003. 13 Report of the National Advisory Committee on SARS and Public Health, Learning From SARS: Renewal of Public Health in Canada, October 2003. 14 Based on data from the Center for Medicare and Medicaid Services (http://www.cms.hhs.gov/statistics/nhe/). 15 Canadian Medical Association, Answering the Wake Up Call: CMA’s Public Health Action Plan. Submission to the National Advisory Committee on SARS and Public Health, June 2003. 16Government of Canada, Department of Finance Canada, The Budget Plan 2004, p. 101. 2004. 17 See Answering the Wake-up Call: CMA’s Public Health Action Plan for other initiatives that should be funded to rebuild Canada’s public health system. 18 Adapted from estimates provided by Murray J. Kaiserman, “The Cost of Smoking in Canada, 1991”, Chronic Diseases in Canada, Vol. 18, No. 1, 1997. Available at http://www.phac-aspc.gc.ca/publicat/cdic-mcc/18-1/c_e.html. 19 Report of the Standing Committee on Finance, Canada: People, Places and Priorities, November 2002.

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Canadians’ Access to Quality Health Care: A System in Crisis : Submitted to the House of Commons Standing Committee on Finance 1999 Pre-budget consultations

https://policybase.cma.ca/en/permalink/policy1987

Last Reviewed
2019-03-03
Date
1998-08-31
Topics
Health human resources
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2019-03-03
Date
1998-08-31
Topics
Health human resources
Health systems, system funding and performance
Text
I. INTRODUCTION The Canadian Medical Association (CMA) commends the federal government, in its second mandate, for continuing the public pre-budget consultation process. This visible and accountable process encourages public dialogue in the development of finance and economic policies of the country. As part of the 1999 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 While the current and future status of our health care system is a top priority for all Canadians, it is evident that their faith in the system’s ability to ensure access to quality care is eroding. In May 1991, 61% of Canadians rated the system as excellent/very good. By February 1998 that rating had slipped to 29% - a dramatic decrease in the confidence level of Canadians in the health care system. 1 Unfortunately, their outlook on the future of the health care system is not much better. Some 51% of Canadians believe that their health care will be in worse condition in 10 years than it is today. 2 It is not surprising that Canadians are losing confidence in the future sustainability of the health care system. They have experienced firsthand the decline in access to a range of health care services (see Table 1): * 73% reported that waiting times hospital emergency departments had worsened, up from 65% in 1997, and 54% in 1996 * 72% reported that waiting times for surgery had lengthened, up from 63% in 1997, and 53% in 1996 * 70% reported that availability of nurses in hospitals had worsened, up from 64% in 1997, and 58% in 1996 * 61% reported that waiting times for tests had increased, up from 50% in 1997, and 43% in 1996 * 60% reported that access to specialist physicians has worsened, up from 49% in 1997, and 40% in 1996 [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 1 (a) [TABLE END] [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Table 1 (b) [TABLE END] Clearly, these findings are significant, and demonstrate the public’s increasing concerns regarding current access to quality health care, as well as the future sustainability of our health care system. Canadians have made it clear that it is not, nor can it be, “business as usual” in attempting to meet their health care needs as we move into the next millennium. Medicare, Canada’s crowning social policy achievement, is in crisis. It is time for the federal government to re-establish its leadership role in this strategic priority area. The CMA has repeatedly placed its concerns about access to quality health care on the public record. Physicians, as patient advocates, have consistently expressed their frustration with the difficulties faced in accessing medically necessary services - only to fall on the deaf ears of the federal government. In surveying Canadian physicians on the front lines, they know the degree of difficulty in accessing services that their patients need: 3 * only 27% of physicians surveyed rated as excellent/very good/good their access to advanced diagnostic services (e.g., MRI) * only 30% of physicians surveyed rated as excellent/very good/good their access to long-term institutional care * only 45% of physicians surveyed rated as excellent/very good/good their access to psychosocial support services * only 46% of physicians surveyed rated as excellent/very good/good their access to acute institutional care for elective procedures These findings are cause for concern. Particularly troublesome is that only 63% of physicians surveyed rated as excellent/very good/good their access to acute institutional on an urgent basis. The cause for this crisis of confidence is clear - the federal government's unilateral and repeated decreases in the rate of increase in transfer payments beginning with Established Financing Programs (EPF), established in 1977, and continuing for the next decade-and-a-half. It culminated, in April, 1996, with the severe and successive cuts in cash transfers for health, post-secondary education (PSE) and social assistance via the Canada Health and Social Transfer (CHST). The CMA is not alone in its view. In addition to the public, other health groups and the Provincial and Territorial Premiers have expressed serious concern about the sustainability of the health care system and the urgent need for Federal leadership and reinvestment. Following their meeting in August, 1998, the Premiers "re-affirmed their commitment to maintaining and enhancing a high quality universal health care system for all Canadians and observed that every government in Canada but one - the federal government - has increased its funding to health care - the people's priority". 4 Underscoring the Premiers' view was a detailed proposal submitted to the federal government calling for an immediate increase in CHST cash transfers. From Federal Government Acknowledgement to Action At the 1997 Annual General Meeting of the CMA in Victoria, the federal minister of health, Allan Rock, stood before delegates and acknowledged "the very real anxiety that's being felt by Canadians" over the future of the health care system. 5 The minister also conceded that cuts to transfer payments have not been insignificant and have had an impact on the system, a point on which the CMA wholeheartedly agrees. The CMA recognizes that the federal government has made a series of difficult decisions when it comes to its funding priorities in order to restore our country’s fiscal health. However, the time has come to consider the fundamental issue of reinvesting in the health of Canadians. The federal government must move beyond the rhetoric in terms of acknowledging the pain and suffering that the cuts have caused, and move to an agenda of action by showing leadership and making the necessary and overdue re-investments in our health care. At a time when the federal government is beginning to reap the benefits of a fiscal dividend, it must recognize that health care is not simply a consumption good that, once spent, provides no additional benefits. Investments in the health care system provide a substantial and lasting social rate of return in terms of restoring, maintaining and enhancing Canadians health. Furthermore, in an increasingly interdependent and global marketplace, a sustainable health care system must be viewed as a necessary precondition for Canadians to excel, thus strengthening the link between good economic policy and good health care policy in Canada. They should not be viewed as competing against each other or that one must be sacrificed at the expense of the other. The 1998 federal budget ignored Canadians' number one concern and did nothing to bolster their confidence that the system will be there when they or their family need it. In responding to the massive reductions in cash transfers to the provinces and territories, in his February 24, 1998, budget speech, federal finance minister Paul Martin announced that he had increased the floor under cash transfers to the provinces in support of health and other programs from the $11.0 billion to $12.5 billion annually and further that it "will provide provinces with nearly $7 billion more in cash over the 1997/98 to 2002/03 period”. 6 While this was announced as an "increase" these statements are misleading. It must be remembered that this is not “new” money; the $12.5 billion represents nothing more than a partial restoration, which falls $6.0 billion (or 32%) short of the cash floor of $18.5 billion prior to the introduction of the CHST in 1996/97. To date, the cumulative impact of cuts to the Canada Health and Social Transfer (CHST) in 1996 and 1997 amounts to a $15.5 billion withdrawal in federal cash from health and social transfers. Their impact is still working its way through the system and being felt in patients' pain and suffering and unfortunately, even death. The CMA has consistently stated publicly that the integrity of the health care system is being jeopardized by reductions to federal cash transfer payments for health. The federal government, however, has failed to respond to these concerns. Unless the federal government reinvests in health care, it will only deepen the crisis of confidence Canadians share about the future sustainability of the health care system. III. HEALTH CARE FUNDING AND THE FEDERAL ROLE The Federal Role When it comes to the health care system, the federal government’s role is aimed at ensuring that Canadians have access to health care services under “uniform terms and conditions”. This derives from the government’s right to exercise its spending power and has been manifested over the past 40 years through a number of cash-transfer mechanisms to the provinces and territories, framed more precisely by the principles of the Canada Health Act (i.e., public administration, comprehensiveness, universality, portability and accessibility). Since the inception of national health insurance in Canada, the federal government has played a central role in the funding of health care. Until 1977, the government reimbursed each province 50 cents on each dollar spent in the areas of hospital and medical care insurance. Following a renegotiated formula, government moved from a “cost-sharing” to a “block funding” formula from 1977/78 to 1995/96. Federal-provincial transfers were distributed through a funding mechanism known as Established Programs Financing (EPF). Under EPF, a combination of (basic) cash and tax points were transferred to the provinces for health care and post-secondary education (PSE). While both the tax points and cash components are important in funding health care, there are those who argue that the level of federal cash should be viewed as a true reflection of the government’s commitment to health care. This is significant for two reasons. First, it demonstrates the priority the government places on our health care system, and secondly, the cash component (which can be withheld under the Canada Health Act) can play an important role in preserving and enhancing national standards. 7 The Origins of Federal Cash Withdrawal The genesis for the crisis in confidence about the future of Canada’s health care system can be traced to 1982, when the federal government introduced a series of unilateral decisions which reduced its cash contributions to the provinces and territories for health and other social programs. Figure 1 highlights the changes made to the EPF formula used to fund health and post-secondary education between 1977 and 1995. These unilateral changes, resulted in the withholding of approximately $30 billion in federal cash that would have otherwise been transferred to provincial and territorial health insurance plans (and an additional $12.1 billion for post-secondary education - for a total of $42.1 billion). 8 This dollar amount is of no small consequence when it comes to ensuring that all Canadians have access to quality health care. [FIGURE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] Figure 1 [FIGURE END] Into the Mist... Prior to April 1, 1996 the federal government's commitment to insured health services, post-secondary education and social assistance programs could be readily determined since the federal government made separate notional cash contributions to the provinces and territories in each of these areas. 9 Announced in the 1995 federal budget, the creation of the Canada Health and Social Transfer (CHST), on April 1, 1996, saw EPF merge with the Canada Assistance Plan (CAP). In effect, health, post-secondary education, and social assistance were collapsed into one large cash transfer. At the time, the government claimed that the CHST was “a new approach to federal-provincial fiscal relations marked by greater flexibility and accountability for provincial governments, and more sustainable financing arrangements for the federal government.” 10 In reality, the increased “flexibility and accountability” was accompanied by a $7.0 billion reduction in the cash portion of the new transfer, and introduced a lower level of transparency with respect to where and what proportion the federal government notionally allocated its dollars for health, PSE and the social programs previously funded under CAP. In its 1998 budget, the federal government moved to partially restore CHST funding by establishing a new cash floor of $12.5 billion (see Table 2) - however, this is still $6.0 billion short of the pre-CHST cash floor. To date, the cumulative impact of previous CHST cash reductions in 1996 and 1997 amounts to a $15.5 billion withdrawal of cash from health and social transfers to 1998/99. By 2002/03, it is estimated that $39.5 billion will have been removed from the CHST. This is in addition to the $30 billion withheld from fiscal transfers that would otherwise have gone to the provinces and territories for health between 1982 and 1995. 11 [TABLE CONTENT DOES NOT DISPLAY PROPERLY. SEE PDF FOR PROPER DISPLAY] [TABLE END] Furthermore, in addition to the current cash floor, the cash entitlement will stagnate at $12.5 billion, as adequate provision has not been made to maintain the value of the cash portion of the transfer. 12 This means the spending power of the cash entitlement will continue to erode as the health care system is forced to meet the changing needs of Canadians based on population growth, aging, epidemiology, new technologies and inflation. With the introduction of the CHST, the disappearance of health, post-secondary education and social assistance into the shadowy mist makes it impossible to hold the federal government accountable with respect to its relative commitment to each of these important policy areas. Using the pre-CHST percentage distribution, the federal government’s current cash allocation to health care stands at roughly $5.0 billion, or 7% of total health care expenditures. This is not surprising considering that the “H” in CHST was added later, only after health organizations protested its absence. Based on the reduced federal cash contribution to health care, it would appear that the government has made a conscious decision to abdicate its responsibility and leadership role in funding health care. While claiming to uphold the integrity of our national health care system, the reality of reduced cash transfers has forced all provinces and territories to make do with significantly fewer federal dollars for health. Federal “offloading” at its best has allowed the federal government to meet (and exceed) its own financial projections; at its worst it has forced the provinces and territories to consider a series of unattractive options: re-allocate program spending from within current budgets; deficit-financed program spending; or reduced program spending. To be clear, from a national perspective, the CMA believes that the single most important reason for the deterioration of the health care system is the significant decline in federal financial support for health care. It is critical that the federal government immediately signal its commitment to Canadians that the health care system is a high priority, and to immediately reinvest in a program that will restore the confidence of Canadians' that the system will be there for them when they need it. Now is the time for the federal government to demonstrate leadership and address the number one concern of Canadians by turning the "vicious cycle" of deficit reduction into a "virtuous cycle" of reinvesting in the health care system. This is not business as usual, and the status quo is not sustainable. IV. A TIME TO RE-ESTABLISH FEDERAL LEADERSHIP IN HEALTH CARE Stabilize the System Canadians, who strongly support a publicly-funded health care system - a conviction shared by the CMA - need to see some leadership from their federal government about how it perceives the future of the health care system unfolding. The failure to re-invest in health care in the last federal budget leaves them confused by the contradiction of seeing the government withdraw funding while at the same time talking about introducing new programs such as home care and pharmacare. Before the federal government can even contemplate future program expansion, it must move quickly to stabilize our current health care system. Canadians have made it very clear where they believe the federal government's spending priorities lie. Seventy-one percent (Angus Reid, November, 1997) want federal cash transfer restored and 81% (Ottawa Sun/Roper, June 1998) of Canadians want the federal government to dedicate more resources to Medicare. The CMA believes strongly that there is an immediate need for a measured, deliberate and responsible approach to re-invest in our health care system. Canadians need to be reassured that the system will be there for them and their families when they need it. To restore access to quality health care for all Canadians, the CMA respectfully recommends: 1. That in order to ensure greater public accountability and visibility, the federal government introduce a health-specific portion of the cash transfers to the provinces and territories. 2. That in addition to the current level of federal cash transferred to the provinces and territories for health care, the federal government restore at a minimum $2.5 billion in cash on an annual basis to be earmarked for health care, effective April 1, 1999. 3. That beginning April 1, 2000, 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, aging, epidemiology, current knowledge and new technologies, and economic growth. The principles outlined in the above recommendations are fundamental and underscore the importance of establishing an accountable (i.e., linking sources with their intended uses) and visible transfer for federal cash that is targeted for reinvestment into health care. While there is ongoing discussion about the mechanism(s) to reinvest in health care, the minimum federal cash restoration of $2.5 billion on an annual basis into the health care system recognizes the high priority of placing health care on a more sustainable financial footing for the future. This figure is separate from the $5 billion notionally allocated to health care via the current CHST, and 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 dollars required to restore the CHST cash floor to $18.5 billion (1995/96 level). The recommendations also speak to the necessity of having in place a fully indexed escalator to ensure that the federal cash contribution will continue to grow to meet the future health care needs of Canadians, and with the economy. The escalator formula recognizes that health care needs are not always synchronized with economic growth. In fact, it could be argued that in times of economic hardship (i.e., unemployment, stress, anxiety), a greater burden is placed on the health care system. Taken together, the above recommendations are a targeted approach to reinvesting in health care, and serve to re-establish the federal government's leadership role when it comes to the current and future sustainability of our health care system. It also signals that the federal government is prepared to address, in a focused and strategic approach, Canadians' number one concern - access to quality health care. Finally, it is important to note that in principle the above recommendations are consistent with those of other groups such as the provincial and territorial ministers of finance, the Canadian public and other national health organizations, who are not asking for new resources but an immediate restoration of monies that have been taken out of the federal/provincial/territorial transfer envelope over the past three years. Looking to the Future At the same time that the federal government reinvests to stabilize the health care system, it must also consider the broader spectrum of health care services that must be in place to ensure that Canadians do not fall through the cracks. In addition to the re-investment required to stabilize our Medicare system, there is also an urgent need for investments into other components of the health system. In many ways, this suggests that new transitional funding is required to ensure that as the system evolves, it remains accessible, and can do so with minimal interruption of service to Canadians. Proposed by the CMA, the Health System Renewal Fund, is time limited, sector-specific, and strategically targeted to areas that are in transition. Funding is intended to meet defined need and give the federal government sufficient flexibility in how the funds will be allocated, with full recognition for the investment. The CMA respectfully recommends: 4. That the federal government establish a one-time Health System Renewal Fund in the amount of $3 billion to be disbursed over the three-year period beginning April 1, 1999, for the following areas of need: a. Acute care infrastructure support: assist health institutions to enhance the delivery of a continuum of quality patient care by improving their access to necessary services including new technologies, and modernizing health facilities and upgrading infrastructure. b. Community care infrastructure support: to enable communities to develop services to support the delivery of home and community-based care in the wake of the rapid downsizing of the institutional sector. c. Support Canadians at risk: to provide access to pharmacotherapy and medical devices to those in need, who are not adequately covered by public or private insurance (pending the development of a long-term solution). d. Health information technology: to allow the provinces and territories to put in place the transparent, clinically driven health information infrastructure necessary to support the adequate and appropriate management of access and delivery of health care. In implementing the health information infrastructure scrupulous attention must be paid to privacy and confidentiality issues. The Acute Care Infrastructure Support program is designed to ensure that targeted reinvestments are made in the institutional sector such that it has the necessary physical capacity and infrastructure to deliver quality health care. In a world where downsizing has become the accepted wisdom, health care facilities need to be modernized in terms of new technology and equipment to ensure the full continuum of patient care is available. The Community Care Infrastructure Support program speaks to the important need to develop adequate community-based systems before any reforms are introduced in the acute care sector. It also recognizes that community-based programs should not be implemented at the expense of the acute care sector, but rather, should be designed such that both sectors complement one another and add value to the health care system. The Support Canadians at Risk program focuses on those who with inadequate coverage and have compromised access to needed pharmacotherapy and medical devices. Currently, drug coverage is not universal nor is it comprehensive. In many cases, the working poor, those that are self-employed or employed by small businesses do not have drug coverage (nor are they eligible for government sponsored plans). In other cases, co-payments/deductibles of some public plans are so high that individuals must pay out-of-pocket (e.g., $850 deductible, semi-annually, in Saskatchewan, then 35% co-payment) for all necessary prescription drugs. As a result, this patchwork coverage may inhibit Canadians access to quality care and may place additional demands on the acute care sector. Similarly, Canadians may not have access to medical devices covered by the public and/or private plans. The Health Information Technology program speaks to the critical need to develop and implement a transparent and clinically driven information systems that will support better management, measurement and monitoring of the health care system. At the same time, scrupulous attention must be paid to privacy and confidentiality issues. To this end, the CMA has taken a proactive approach in addressing these issues by developing a health information privacy code. Taken together, our recommendations are a powerful and strategic package. They speak to the need to immediately stabilize the health care system - which is in crisis, and the need to look at the broader spectrum of health care services to ensure that Canadians in need do not fall through the cracks. V. REINFORCING GOOD ECONOMIC POLICY WITH GOOD HEALTH CARE POLICY IN CANADA While the system-wide issues related to the federal role in funding health care is clearly of importance to Canada's physicians, there are also other important issues that the CMA would like to bring to the attention of the Standing Committee on Finance. As mentioned earlier in the brief, good economic policy and good health care policy should go hand-in-hand. They should serve to reinforce, not neutralize, one another. They should not be viewed as one gaining at the expense of the other. Viewed in their proper context, they can be balanced such that policy decisions produce outcomes that are fair to all parties. Tobacco Taxation Policy Smoking is the leading preventable cause of premature mortality in Canada. The most recent estimates suggest that more than 45,000 Canadians die each year due to tobacco use. The estimated economic cost to society from tobacco use in Canada has been estimated between $11 billion to $15 billion 13. Tobacco use directly costs the Canadian health care system $3 billion to $3.5 billion 14 annually. These estimates do not take into account intangible costs such as pain and suffering. CMA is concerned that the 1994 reduction in the federal cigarette tax has had a significant effect in slowing the decline in cigarette smoking in the Canadian population, particularly in the youngest age groups - where the number of young smokers (15-19) is in the 22% to 30% range and 14% for those age 10-14 15. The CMA congratulates the federal government’s February 13, 1998 initiative which selectively increased federal excise taxes on cigarettes and tobacco sticks. This is a first step towards an integrated tobacco tax strategy, and speaks to the importance of strengthening the relationship between good tax policy and good health 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 areas with lower tobacco tax (i.e., Ontario, Quebec and Atlantic Canada). The goal of selective increases in tobacco tax is to increase the price to the tobacco consumer over time (65-70% of tobacco products are sold in Ontario and Quebec). The selective stepwise tax increases will approach but may not achieve parity amongst all provinces; however, the tobacco tax will attain a level such that inter-provincial/territorial smuggling would be unprofitable. The selective stepwise increases would need to be monitored so that the new tax level and US/Canadian exchange rates do not make international smuggling profitable. The selective stepwise increase in tobacco taxes can be combined with other tax strategies. The federal government should apply the export tax and remove the exemption available on shipments in accordance with each manufacturers historic levels. The objective of implementing the export tax would be to make cross-border smuggling unprofitable. The federal government should establish a dialogue with the US federal government regarding harmonizing US tobacco taxes with Canadian levels at the factory gate. Alternatively, US tobacco taxes could be raised to a level that when offset with the US/Canada exchange rate differential renders international smuggling unprofitable. The objective of harmonizing US/Canadian tobacco tax levels (at or near the Canadian levels) would be to increase the price of internationally smuggled tobacco products to the Canadian and American consumers. The CMA's comprehensive tobacco taxation strategy is designed to achieve the following objectives: (1) to reduce tobacco consumption; (2) to minimize interprovincial/territorial smuggling of tobacco products; (3) to minimize international smuggling of tobacco products from both the Canadian and American perspective; (4) to reduce and/or minimize Canadian/American consumption of internationally smuggled tobacco products. The CMA recommends: 5. 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, bringing US tobacco tax levels in line with or near Canadian levels, in order to minimize international smuggling. The Excise Act Review, A Proposal for a Revised Framework for the Taxation of Alcohol and Tobacco Products (1996), proposes that tobacco excise duties and taxes (Excise Act and Excise Tax Act) for domestically produced tobacco products be combined into a new excise duty and come under the jurisdiction of the Excise Act. The new excise duty is levied at the point of packaging where the products are produced. The Excise Act Review also proposes that the tobacco customs duty equivalent and the excise tax (Customs Tariff and Excise Tax Act) for imported tobacco products be combined into the new excise duty [equivalent tax to domestically produced tobacco products] and come under the jurisdiction of the Excise Act. The new excise duty will be levied at the time of importation. The CMA supports the proposal of the Excise Act Review. It is consistent with previous CMA recommendations calling for tobacco taxes at the point of production. Support for Tobacco Control Programs Taxation should be used in conjunction with other strategies for promoting healthy public policy, such as public education programs to reduce tobacco use. The Liberal party, recognising the importance of this type of strategy , promised: "...to double the funding for the tobacco control programs from $50 million to $100 million over five years, investing the additional funds in smoking prevention and cessation programs for young people, to be delivered by community organizations that promote the health and well-being of Canadian children and youth." 16 The CMA applauds the federal government's efforts in the area of tobacco use prevention and cessation - particularly its intent to commit $50 million to public education through the proposed Tobacco Control Initiative. However, a time limited investment is not enough. Substantial and sustainable funding is required for programs in prevention and cessation of tobacco use. 17 A possible source for this type of program investment could be tobacco tax revenues or the tobacco surtax. The CMA therefore recommends: 6. That the federal government commit stable funding for a comprehensive tobacco control strategy; this strategy should include programs aimed at prevention and cessation of tobacco use and protection of the public from tobacco's harmful effects. 7. That the federal government clarify its plans for the distribution of the Tobacco Control Initiative funds, and ensure that the funds are invested in evidence-based tobacco control projects and programs. 8. That the federal government support the use of tobacco tax revenues for the purpose of developing and implementing tobacco control programs. Fair and Equitable Tax Policy? - The Goods and Services Tax (GST) and Harmonized Sales Tax (HST) 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'etre of introducing the GST: to be an end-stage consumer-based tax, and having not 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. To be clear, 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 only seems 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. 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. By the end of this calendar year, physicians will have been unfairly taxed in excess of $480 million. Furthermore, with the introduction of the HST in Atlantic Canada, KPMG has estimated that it will costs physicians an additional $4.686 million per year. As it currently applies to medical services, the GST is bad tax policy and the HST will make a bad situation worse for physicians. Last year, the Standing Committee, in its report to the House of Commons stated: "According to the CMA, the GST is fundamentally unfair to physicians and is a deterrent in recruiting and retaining physicians in Canada. This issue merits consideration and further study". 18 The CMA believes that it has rigorously documented its case and further study is not required - the time has come for concerted action from the federal government to alleviate this tax impediment. 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 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. As it currently stands for medical services, the GST and HST is not a tax policy that reinforces good health care policy in Canada. The CMA view is not unique. The late Honourable Chief Justice Emmett Hall recognized the principles that underpin the fundamental issue of tax fairness by stating: "That the federal sales tax on medical supplies purchased by self-employed physicians in the course of their practices be eliminated". 19 Even though Mr. Hall's recommendation was made prior to the introduction of the GST and HST, the principles outlined above are unassailable and should be reflected in federal tax policy. Canadian physicians work hard to provide quality health care to their patients within what is a publicly funded health care system. Physicians are no different from Canadians in that they, too, are consumers (purchasers). Why then, they ask, has the medical profession been singled out for such unfair treatment under the GST regime? The CMA respectfully recommends: 9. That health care services funded by the provinces and territories be zero-rated. The above recommendation could be accomplished by amending the Excise Tax Act as follows: (1). Section 5 part II of Schedule V to the Excise Tax Act is replaced by the following: 5. "A supply (other than a zero-rated supply) made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes)." (2). Section 9 Part II of Schedule V to the Excise Tax Act is repealed. (3). Part II of Schedule VI to the Excise Tax Act is amended by adding the following after section 40: 41. A supply of any property or service but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government under a plan established under an Act of the legislature of the province to provide for health care services for all insured persons of the province. Our recommendation fulfils at least two over-arching policy objectives: (1) strengthening the relationship between good economic policy and good health policy in Canada; and (2) applying the fundamental principles that underpin our taxation system (fairness, efficiency, effectiveness), in all cases. 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 living standards upon retirement. Reviewing the demographic picture in Canada, we see that an increasing portion of society is not only aging, but is living longer. Assuming that current demographic trends will continue and peak in the first quarter of the next century, it is important to recognize the role that private RRSPs savings will play in ensuring that Canadians may continue to live dignified lives well past their retirement from the labour force. This becomes even more critical when one considers that Canadians are not setting aside sufficient resources for their retirement. Specifically, according to Statistics Canada, it is estimated that 53% of men and 82% of women starting their career at age 25 will require financial aid at retirement age - only 8% of men and 2% women will be financially secure. In its 1996 Budget Statement, the federal government announced that it froze the dollar limit of RRSPs 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 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 change in policy with respect to RRSP contribution limits run counter to the White Paper released in 1983 (The Tax Treatment of Retirement Savings), where the House of Commons Special Committee on Pension Reform recommended that the limits on contributions to tax-assisted retirement savings plans be amended so that the same comprehensive limit would apply regardless of the retirement savings vehicle or combination of vehicles used. In short, the principle of "pension parity" was endorsed. Furthermore, in three separate papers released by the federal government, the principle of pension parity would have been achieved between money-purchase (MP) plans and defined benefit (DB) plans had RRSP contribution limits risen to $15,500 in 1988. In effect, the federal government postponed the scheduling of the $15,500 limit for seven years - that is, achieving the goal of pension parity was delayed until 1995. The CMA has been frustrated that ten 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 (from 1988 to 2005). As a consequence, the current policy of freezing RRSP contribution limits and RPP limits without making adjustments to RRSP limits to achieve pension parity serves to maintain inequities between the two plans until 2004/2005. This is patently unfair for self-employed Canadians who rely on RRSPs as their sole vehicle for retirement planning. The CMA recommends: 10. That the dollar limit of RRSPs at $13,500 increase to $14,500 and $15,500 in 1999/00 and 2000/01, respectively. Subsequently, dollar limits increase at the growth in the yearly maximum pensionable earnings (YMPE). 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% 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 1998 pre-budget consultation , the Standing Committee on Finance made the following recommendation (p. 66): "...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." A recent study by Ernst & Young, demonstrated that Canadian investors would 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 and believes 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: 11. 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 1999. As part of the process to revitalize the economy, greater expectations are being placed on the private sector to create 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 role to play in fostering an environment that will stimulate 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 businesses and entrepreneurs. In this regard, the CMA would encourage the government to explore current regulatory impediments to bring together capital with small and medium-size businesses. The CMA, recommends the following: 12. That the federal government foster economic development by treating RRSP contributions as assets rather than liabilities and by exploring the regulatory changes necessary to ensure increased access to such funds by small and medium-size businesses. Non-Taxable Health Benefits In last year's federal budget, the CMA was encouraged by the federal government's announcement to extend the deductibility of health and dental premiums through private health services plans (PHSP) for the unincorporated self-employed. The CMA believes that this initiative is a step in the right direction when it comes to improving tax fairness. As well, the federal government is to be commended for its decision to maintain the non-taxable status of supplementary health benefits. This decision is an example of the federal government's serving to strengthen the relationship between good tax policy and good health care policy in Canada. If supplementary health benefits were to become taxable, it is likely that young healthy people would opt for cash compensation instead of paying taxes on benefits they do not receive. These Canadians would become uninsured for supplementary health services. It follows that employer-paid premiums may increase as a result of this exodus in order to offset the additional costs of maintaining benefit levels due to diminishing ability to achieve risk pooling. As well, in terms of fairness it would seem unfair to "penalize" 70% of Canadians by taxing supplementary health benefits to put them on an equal basis with the remaining 30%. It would be preferable to develop incentives to allow the remaining 30% of Canadians to achieve similar benefits attributable to the tax status of supplementary health benefits. The CMA therefore recommends: 13. That the current federal government policy with respect to non-taxable health benefits be maintained. Health Research in Canada At the same time that our health care system has been de-stabilized, so too has the role of health research in Canada. In response, the federal government announced in its 1998 budget that it would increase funding levels for the Medical Research Council of Canada (MRC) from $237.5 million (1997/98), to $267 million (1998/99), $270 million (1999/00) and $276 million (2000/01). While this is a step in the right direction, the $134 million over three years represents for the most part a restoration of previously cut funding - only $18 million would be considered new money. Furthermore, when compared against other countries, Canada does not fare well. Of the G-7 nations for which recent data were available, Canada ranks last in per capita spending for health research. France, Japan, the United States and the United Kingdom spend between 1.5 and 3.5 times more per capita than Canada. 20 In what is increasingly a knowledge-based world, the federal government must be reminded that a sustained and substantial commitment to health research in required. The CMA therefore recommends: 14. That the federal government establish a national target (either in per capita terms or as a proportion of total health spending), and an implementation plan for health research and development spending including the full spectrum of basic biomedical to applied health services research, with the objective of improving Canada's position relative to other G-7 countries. Brain Drain and Tuition Deregulation In June, 1998, the CMA met with the Standing Committee on Finance to discuss the issue of "brain drain" in Canada. At that time, the CMA expressed its serious concerns over the recent tuition deregulation policy in Ontario and its subsequent impact on the career choices of new medical graduates. Specifically, the CMA officially decries tuition deregulation in Canadian medical schools and believes that governments should increase funding to medical schools to alleviate the pressures driving tuition increases; that any tuition increase be regulated and reasonable; and that financial support systems be in place in advance of, or concomitantly with, any tuition increase. These measures will foster the education and training of a diverse population of health care givers, and will support culturally and socially sensitive health care for all Canadians. As new physicians graduate with substantial and growing debt loads, they will be attracted to more lucrative positions in order to repay their debts - particularly positions in the United States. As a consequence, tuition deregulation policies will have a direct and detrimental impact when it comes to retaining our best and brightest young physicians in Canada. The CMA is currently in the process of developing a position paper on this issue. VI. SUMMARY OF RECOMMENDATIONS With the future of access to quality health care for all Canadians at stake, the CMA strongly believes that the federal government must demonstrate that it is prepared to re-establish its leadership role and re-invest in the health care system that all Canadians cherish and closely identify with. The CMA therefore makes the following recommendations to the Standing Committee on Finance in its deliberations. Stabilize the System 1. That in order to ensure greater public accountability and visibility, the federal government introduce a health-specific portion of the cash transfers to the provinces and territories. 2. That in addition to the current level of federal cash transferred to the provinces and territories for health care, the federal government restore at a minimum $2.5 billion in cash on an annual basis to be earmarked for health care, effective April 1, 1999. 3. That beginning April 1, 2000, 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, aging, epidemiology, current knowledge and new technologies, and economic growth. Looking to the Future 4. That the federal government establish a one-time Health System Renewal Fund in the amount of $3 billion to be disbursed over the three-year period beginning April 1, 1999, for the following areas of need: a. Acute care infrastructure support: assist health institutions to enhance the delivery of a continuum of quality patient care by improving their access to necessary services including new technologies, and modernizing health facilities and upgrading infrastructure. b. Community care infrastructure support: to enable communities to develop services to support the delivery of home and community-based care in the wake of the rapid downsizing of the institutional sector. c. Support Canadians at risk: to provide access to pharmacotherapy and medical devices to those in need, who are not adequately covered by public or private insurance (pending the development of a long-term solution). d. Health information technology: to allow the provinces and territories to put in place the transparent, clinically driven health information infrastructure necessary to support the adequate and appropriate management of access and delivery of health care. In implementing the health information infrastructure scrupulous attention must be paid to privacy and confidentiality issues. Tobacco Taxation Policy 5. 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, bringing US tobacco tax levels in line with or near Canadian levels, in order to minimize international smuggling. Support for Tobacco Control Programs 6. That the federal government commit stable funding for a comprehensive tobacco control strategy; this strategy should include programs aimed at prevention and cessation of tobacco use and protection of the public from tobacco's harmful effects. 7. That the federal government clarify its plans for the distribution of the Tobacco Control Initiative funds, and ensure that the funds are invested in evidence-based tobacco control projects and programs. 8. That the federal government support the use of tobacco tax revenues for the purpose of developing and implementing tobacco control programs. Goods and Services Tax (GST) 9. That health care services funded by the provinces and territories be zero-rated. Registered Retirement Savings Plans (RRSPs) 10. That the dollar limit of RRSPs at $13,500 increase to $14,500 and $15,500 in 1999/00 and 2000/01, respectively. Subsequently, dollar limits increase at the growth in the yearly maximum pensionable earnings (YMPE). 11. 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 1999. 12. That the federal government foster economic development by treating RRSP contributions as assets rather than liabilities and by exploring the regulatory changes necessary to ensure increased access to such funds by small and medium-size businesses. Non-Taxable Health Benefits 13. That the current federal government policy with respect to non-taxable health benefits be maintained. Health Research in Canada 14. That the federal government establish a national target (either in per capita terms or as a proportion of total health spending), and an implementation plan for health research and development spending including the full spectrum of basic biomedical to applied health services research, with the objective of improving Canada's position relative to other G-7 countries. 1 Angus Reid, February, 1998. 2 Angus Reid, February, 1998. 3 Canadian Medical Association. January 1998 Physician Resource Questionnaire. 4 39th Annual Premiers’ Conference, Saskatoon Saskatchewan, August 5-7, 1998. Press Communique. 5 Rock A. Speech to the Canadian Medical Association’s 130th General Council Victoria, Aug 20, 1997. 6 The Budget Plan, 1998. Building Canada for the 21st Century, February 24, 1998. 7 The tax point transfer refers to the dollar value of ?tax points? that were negotiated with the federal government and the provinces. Specifically, where the federal government reduced personal and corporate income tax rates, the ?tax room? that was created was then occupied by the provinces. This is an important point because even though the federal government collects taxes on behalf of the provinces (with the exception of Quebec), it is argued that the value of the tax point transfer belongs to the provinces and is not considered as a true “federal contribution”. The last time this issue was negotiated was in 1965. 8 Thomson A. Federal Support for Health Care - A Background Paper. Health Action Lobby, Ottawa, 1991. 9 Thomson, A., Diminishing Expectations - Implications of the CHST, [report] Canadian Medical Association, Ottawa. May, 1996. 10 Federal Department of Finance. 11 Thomson A. Federal Support for Health Care - A Background Paper. Health Action Lobby, Ottawa, 1991. 12 Currently, the CHST cash entitlement has an escalator attached to it, however, it is scheduled to begin in 2000/01, 2001/02, 2002/03, at a rate of GDP- 2% (year 1), GDP-1.5% (year 2), and GDP-1% (year 3). 13 Health Canada, Economic Costs Due to Smoking (Information Sheet). Ottawa: Health Canada, November 1996. 14 Health Canada, Economic Costs Due to Smoking (Information Sheet). Ottawa: Health Canada, November 1996. 15 Health Canada, Youth Smoking Behaviour and Attitudes (Information Sheet). Ottawa: Health Canada, November 1996. 16 Liberal Party, Securing Our Future, Liberal Party of Canada, Ottawa, 1997. p. 77. 17 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. 18 Report of the Standing Committee on Finance. December, 1997. 19 Hall Emmett (Special Commissioner). Canada?s National-Provincial Program for the 1980s, p. 32. 20 Organization for Economic Cooperation and Development. OECD Health Data 97. Paris: OECD, 1997.

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