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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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Brief to the House of Commons Standing Committee on Finance 1995 Pre-Budget Consultation

https://policybase.cma.ca/en/permalink/policy1994
Last Reviewed
2019-03-03
Date
1994-11-18
Topics
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Last Reviewed
2019-03-03
Date
1994-11-18
Topics
Health systems, system funding and performance
Text
I. PURPOSE While Canada is undergoing significant social, political and economic change, the Canadian Medical Association (CMA) remains committed to the delivery of high quality health care and to safeguarding the national integrity of the health system. However, given the need for the federal government to gain control over our deficit and national debt, it seems clear that putting Canada's fiscal house in order remains a high priority. In this regard, CMA appreciates the invitation to submit its views on the 1995 pre-budget consultations that are underway. One overriding objective of the brief is to provide the Committee with a better understanding of the current pressures on physicians across Canada that have arisen as a direct result of past government decisions in this area. It is our firmly-held position that the health care system in general, and the medical profession in particular, have paid more than their fair share in terms of contributing to debt management. This brief focusses on five somewhat distinct areas of concern to Canadian physicians: (1) federal health transfers to the provinces; (2) taxable health benefits; (3) the goods and services tax (GST); (4) Registered Retirement Savings Plan (RRSP) contributions, and (5) the Lifetime Capital Gains Exemption (LCGE) for Small Businesses. In each case, the brief contains specific recommendations as to what the government should do, and more importantly what the government should not do, to balance its short-term deficit reduction targets against longer-term Canadian values. To summarize, good health policy and prudent economic policy go hand-in-hand provided the principles of fairness and good management practices are observed. If change is to come within an overall policy framework that is strategic, coordinated and fair and which preserves (or augments) the integrity of Canada's health care system, it behooves us to avoid short-term, stop-gap initiatives. As the government's 1994 Throne Speech put it "...the agenda of the government is based on an integrated approach to economic, social, environmental and foreign policy". Accordingly, in establishing an appropriate fiscal framework for health, change must take place within the context of a longer-term integrated view. II. BACKGROUND...."Medicare Is A Shared Value" Canada's system of universal health insurance is still one of the best in the world. Experts from around the world travel many thousands of miles to study and, in some cases, emulate our system. For most Canadians, medicare is a highly cherished, integral component of our social fabric. While Medicare's popularity has not diminished over the past 30 years, it is sometimes taken for granted in these difficult economic times. Recent public opinion surveys indicate that 84% of Canadians (with the highest response in Quebec) see medicare as a defining characteristic of being Canadian. Furthermore, 84% of Canadians are of the opinion that the system provides high quality care. 1 At the same time, however, 65% of Canadians are concerned about continued accessibility to a full range of publicly-financed benefits. According to the same poll, 83% of Canadians see current financing of the system as being "unsustainable" over the longer-term 2 and they are right. As much loved as the Canadian medicare system is, there is a large and growing consensus that we need to make changes. This brief is not about maintaining the status quo. Rather, it is about managing the changes required in the long-term best interests of all Canadians and of the physicians who are ultimately responsible for serving those interests, subject to the fiscal realities confronting government. III. CONSIDERATIONS CMA acknowledges that there is a pressing need, now more than ever, for the federal government to balance a number of competing social and economic policy challenges. In a time when deficit reduction measures are required, all segments of society are being asked to do more with the same or less. Health care is no exception, having done so for quite some time. At the same time, we must re-evaluate the variety of services provided or paid for by government. Deficit Management, but at what Costs? As of 1993/94, Canada's net public debt stood at $508.2 billion, or $17,484 for every Canadian. Combined with the debts of the provinces and territories, our national debt is in excess of $700 billion. Not to understate the case, currently one-third of each revenue dollar the government collects is allocated to debt service payments on the federal debt. 3 CMA believes enough is enough: we must not pass this burden on to future generations of Canadians. The federal government has managed to run operating surpluses for five of the past seven years. 4 While this is necessary it is no longer sufficient to meet our fiscal challenges. Maintaining the status quo would mean that debt service payments would further crowd out government expenditures at an accelerated rate. While the government's first priority should be to get us "out of hock", there is an equally- compelling need to respect the longstanding and fundamental principle of fairness/equity that help define Canadian society. One step toward meeting these twin objectives is to consider all possible methods of repatriating that portion of the national debt held by the international lending community. Some experts have argued that Canada, as a country, can no longer afford to have "massive leakages" in interest payments to individuals/countries abroad. 5 In so doing, we would also repatriate our ability as a sovereign nation to set and maintain social policy objectives. This involves guarding against the persistent "tyranny of the deficit" and the influence that international bond rating agencies can exert on the economy. Facts and Fallacies about Health Spending In reviewing expenditures in the public sector, some would suggest that health and health care spending are "out of control". This is a myth. While it is true that Canada spends 10.0% (1993) of Gross Domestic Product (GDP) on health care (second highest among OECD countries), the reality is that the public sector share of total health care expenditures has fallen from 76.4% in 1975 to approximately 71.9% in 1993 6 (falling to the lowest third of OECD countries). This process of reducing real public sector expenditures, in the absence of a well-coordinated and planned framework, has not always been in the best interests of health and health care. Specifically, federal offloading in terms of unilateral reductions in health cash transfers to the provinces have been followed by: * the elimination of entire programs, such as dental insurance programs for children and universal drug insurance programs; * hospital closures (e.g., 52 hospitals in Saskatchewan); * massive regionalization of health programs and the attendant disempowerment of community hospital boards; * the reduction of total bed capacity by as much as 20% in some provinces; * the reduction in medical school enrolment by 10% and a planned 10% reduction in post-MD residency slots; * global medical care expenditure caps in virtually every province in Canada; * individual physician income thresholds in at least five provinces; * a moratorium on interprovincial mobility of physicians; * legislative overrides of duly-negotiated contracts for health care providers; * widespread restrictions on the operation of high technology equipment; and * the de facto "expropriation" of physician business practices without compensation (e.g., Saskatchewan pathologists). These repercussions also serve to underline the fact that change is the only constant in the health care system. Many physicians across the country have expressed concerns that such changes or "threats" to our health care system are already beginning to have serious consequences for individual patients in terms of access to needed medical facilities. If the national integrity of medicare is to survive, federal fiscal policy changes must be assessed within a larger and longer-term framework; one that respects the need for innovation and professionalism in the health care system. Physicians as Responsible Professionals Some mistakenly argue that physician expenditures are responsible for the increasing costs to the health care system. The reality is that physician expenditures as a proportion of total health care expenditures in Canada have declined from 15.7% in 1975 to 15.1 in 1991. 7 Furthermore, physician expenditures constitute a declining share of GDP. Given the recent round of unilateral reductions in medical care spending in many jurisdictions, this percentage share will continue to drop significantly as more recent data become available. As health care resources have become increasingly constrained, physicians have taken on added responsibilities at the macro, meso and micro levels to better manage our health resources. * At the "macro" level, within the provinces and territories, the medical profession has been engaged in formalized consultation structures known as "Joint Management Committees" or "Administrative Councils" with government and other stakeholders to ensure value for money within a diminishing "real" globe of publicly-available resources for health care. * At the "meso" or institutional level, physicians are working hand-in-hand with health care administrators and other community stakeholders to "rationalize" services so as to provide the best value for money in all areas. In addition, to give a greater voice for choice and improve overall accountabilities in the system, physicians are providing formal input to governments that are looking to regionalize health system operations. * At the "micro" or clinical level, physicians have been taking the lead in developing and disseminating clinical practice guidelines (CPGs) to ensure that the care provided is both appropriate and cost-effective. More can and is being done, in collaboration with government, to ensure responsible use of the taxpayer's dollar while meeting the needs of individual patients. At all levels, physicians will continue to involve themselves as capable and responsible professionals. As the health policy agenda continues its rapid pace, physicians and the organizations that represent them should be viewed as "agents" for, rather than "objects" of, change. Good Health Policy Means Good Economic Policy Agencies such as the World Economic Forum, 8 tell us that our system of financing health care is one of Canada's greatest assets in competing in the new world economic order. We should heed this advice, as the Prime Minister recently observed. Compared to the United States, this economic advantage takes the form of 30 percent lower health spending (measured as a percent of GDP or in per capita expenditures) while providing for universal medical benefits and high quality care. In terms of our European trading partners, the fact that health insurance programs are financed primarily through consolidated revenues (rather than employment-based taxes), also confers a unit cost advantage to Canadian exporters. In this sense, good health policy and good economic policy should be mutually reinforcing. Aside from the complementary nature of the relationship between health and the economy, this fundamental concept also suggests that we need to take a longer-term, more integrated and more strategic approach to managing our collective debt and debt-servicing challenges. The federal government can no longer simply shift its financial obligations onto the backs of lower levels of government or individual Canadians without consultation or advance notice. We need to re-evaluate the full range of government- provided or -funded services. Again, however, if federal fiscal reductions are to take place, the principles of fairness and equity must begin to guide the development of sustainable economic and health policies. While there are no doubt trade-offs that can and must be made, if the price of getting our fiscal house in order is losing a national treasure - i.e., our health care system, it is a price too high to be paid. To summarize, we have set out a series of principles that should serve to guide the Committee in its decision-making, they are: * take the longer-term view; * adopt a system-wide, integrated approach for fiscal management; * strive for a strategic approach that mutually reinforces health and economic policies; and * strengthen the fundamental foundation of fairness and equity. These four principles form the building blocks of the remainder of CMA's submission. IV. ISSUES Canada is at a social, political and economic crossroad. The challenge to this Committee and to this Government is to balance short-term fiscal pressures against the longer-term need to re-position Canada to take advantage of economic opportunity while preserving that which is of fundamental importance to Canadian society as a whole. As the Committee looks to striking the right balance, there are five specific areas of concern that the CMA wishes to bring to your attention on behalf of the Canadian medical profession. The Temptation to Reduce Federal Health Transfers CMA commends this Government for exempting EPF health transfers from the extended freeze that was applied to other provincial transfer programs in its spring 1994 budget. We would have been surprised had this Government done anything else, given that medicare is the "Liberal legacy" of the 1960s and given the Liberal Party's consistent opposition to the previous government's "policy by stealth" (i.e., Bill C-69; Bill C-96). The fact is that medicare's contribution to getting our "fiscal house in order" is already large and continues to grow. In specific terms, the Committee will know that over the 1986/87 to 1995/96 fiscal period, it is estimated that $42.108 billion will have been removed via reductions in Established Program Financing for health and post-secondary education. For health alone, over $30 billion will have been removed from the system by fiscal year 1995/96. 9 Even with a resumption of GNP minus three percent growth formula in per capita EPF entitlements for health, beginning next spring, reduced cash contributions to medicare programs will continue to contribute to the attainment of the government's fiscal targets. Given the unprecedented health reforms taking place across the country, Canadians and the health care system can ill afford another federal fiscal shock. The system is already balkanizing, with poorer regions not being able to fiscally sustain some basic health care benefits. Any further acceleration in the rate of reduction in federal cash transfers will all but assure the demise of the national integrity of medicare programs. Moreover, any further reductions in federal health-related cash transfers will: (1) significantly hamper or stall the work of the newly-created National Health Forum; (2) further reduce the capacity for enforcement of national health principles under federal law; (3) exacerbate health-related problems of dealing with child poverty and problems of reducing health inequalities by socio-economic class; and (4) increase other areas of federal direct program expenditures in the context of renewed efforts to provincial program "uploading" (e.g., Canada Pension Plan Disability Program). A propos of health and economy going hand-in hand, it is useful to remind ourselves of the importance of maintaining the comparability of health benefits across Canada in terms of promoting regional development, shared opportunity and efficient resource allocation. Poor regions of this country are already finding it difficult to compete for scarce new business investment capital. The implications of competing from a more uneven playing field in terms of being able to offer only "bare bones" publicly-financed health benefits will further widen the gap between the "have" and "have not" provinces. It is for these reasons that the CMA joins with other national health organizations 10 in recommending the following: 1. THAT THE FEDERAL GOVERNMENT AVOID FURTHER CUTS TO THE EPF HEALTH TRANSFER AND LOCK IN THE CASH PORTION; 2. THAT THE FEDERAL GOVERNMENT NEGOTIATE A STABLE FIVE-YEAR FUNDING ARRANGEMENT WITH THE PROVINCES/TERRITORIES; 3. THAT THE FEDERAL GOVERNMENT MUST ENSURE THAT ACCOUNTABILITY OF THE HEALTH TRANSFER BE SEPARATE AND EXPLICIT. Taxable Health Benefits Canadians have already been dealt one blow with the increasing de-insurance of health care services (e.g., reduction of out-of-country benefits to an unfair and dangerous level, elimination or reduction in drug benefit programs). In the context of funding those services that remain public benefits, only the cruellest government would strike yet another blow to individual Canadians and to Canadian business by taxing the very benefits that taxes were raised to pay. If implemented, this proposal would be tantamount to nothing less than double taxation. Fairness and equity would suggest that the government should be doing more, not less at the legislative and regulatory levels to promote the availability of private health insurance benefits in areas increasingly vacated by government cutbacks. This is why CMA makes the following recommendation: 4. THAT THE CURRENT FEDERAL GOVERNMENT POLICY WITH RESPECT TO NON-TAXABLE HEALTH BENEFITS BE MAINTAINED; Goods and Services Tax (GST) When the GST was introduced in 1991, preoccupation with implementation issues resulted in a number of fundamental injustices at the micro level. One such injustice was dealt to the medical profession. Physicians, like other Canadians, expect to pay their fair share of taxes. We do not however, accept what essentially amounts to double taxation. Physicians in practice in Canada are in the unique, unenviable and unfair position of being forced to absorb all the GST on business inputs. Unlike all other professions, physicians are precluded from being able to pass on the tax to consumers (with provincial health insurance plans as payment in full) or from claiming input tax credits (ITCs) since insured medical services are deemed to be "tax exempt". Unlike other professions, physicians cannot claim input credits for the imputed taxes associated with providing needed medical care. In fact, all of the following health professionals are capable of recouping from patients the GST paid on inputs because their revenues are not restricted by government: dentists; optometrists; chiropractors; physiotherapists; chiropodists; osteopaths; audiologists; speech therapists; occupational therapists and psychologists. Physicians are still angrily awaiting remedial steps to correct this injustice. To be clear, CMA is not asking for preferential treatment for Canadian physicians. What we want is the same fair and equitable treatment from the federal government accorded to other self-employed professional groups. Like physicians, other professions are purchasing inputs and paying GST; but unlike physicians, they are able to recoup the GST. Given this oversight in the legislation and regulations, physicians have already been asked to pay (over and above the GST paid by other professional groups) a cumulative total of $250 million since its introduction of the tax in 1991. The magnitude of this tax paid is not in dispute (as a result of a study prepared by KPMG). While the direct effects of the GST are significant and measurable, the indirect effects are even more significant though less measurable. It is estimated that the 55,000 physicians in Canada employ up to 100,000 Canadians. Given the disproportionate effects of the GST on the medical profession as employers, the employment dampening could be at least as high as 1,000 full-time jobs lost. In addition, the tax-induced distorting effects in terms of efficient resource allocation in the health care system cannot be measured, but are thought to be significant. A goal of health reform in many parts of the country is to move care services out of institutions and into the community. Current federal GST policy, by taxing supplies in a clinical practice setting but not in a hospital setting, acts to discourage this shift in emphasis. No other issue in recent years has raised the ire of individual practitioners as much as the imposition of this most unfair and inequitable tax on business inputs. Understanding that the Minister of Finance is in the process of consulting with the provinces as to the nature of a replacement tax for the GST, we are confident that this oversight will be remedied. In the interests of fundamental fairness/equity and allocative efficiency, CMA respectfully recommends the following: 5. THAT THE COMMITTEE WORK TO ENSURE THAT CANADIAN PHYSICIANS, AS SMALL BUSINESSES, PAY NO MORE THAN OTHER PROFESSIONS UNDER ANY REPLACEMENT TAX FOR THE GST; 6. THAT ALL TAXES ON BUSINESS EXPENSES BE FAIRLY AND FULLY REMOVED UNDER ANY REPLACEMENT TAX FOR THE GST; 7. THAT IF ANY REMEDIAL STEPS ARE TAKEN TO ENSURE NO TAXES ARE LEVIED ON BUSINESS INPUTS, THESE BE APPLIED UNIFORMLY ACROSS ALL EXEMPT SERVICES. Registered Retirement Savings Plan (RRSP) Canadian physicians, while receiving a large proportion of their professional earnings from the public sector (94%), do not benefit as self-employed individuals from defined benefit plans or from publicly-financed pension benefits that accrue to employed professionals. They, like other self-employed individuals, must plan and fund their own retirement. Fairness/equity once again demands that there be symmetry between money-purchase (MP) and defined-benefit (DB) retirement plans. This is all the more important for physicians because of their compressed period of lifetime earnings in relation to other groups. This Committee will have heard various calls for either reducing the annual contribution limit or taxing assets within RRSPs. Such arguments are both specious and patently unfair. Both propositions potentially involve double taxation. Experts both within and outside government argue, quite correctly, that the current policy be maintained, and that equity between employees and the self-employed before the taxman be assured. It is for these reasons, that CMA has led an unprecedented alliance for the preservation of retirement savings, and recommends the following: 8. THAT THE FEDERAL GOVERNMENT CONSIDER THE TOTAL COST OF THE RETIREMENT SAVINGS SYSTEM BEFORE MAKING ANY CHANGES TO THE INCOME TAX ACT; 9. THAT THE EQUITY ESTABLISHED DURING PENSION REFORM NOT BE DISTURBED BY DISCRIMINATORY CHANGES AND THAT ANY FUNDAMENTAL CHANGES TO THE SYSTEM INVOLVE A PROCESS OF INFORMED AND THOUGHTFUL INQUIRY AND DEBATE; 10. 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-SIZED BUSINESSES. Lifetime Capital Gains Exemption (LCGE) for Small Businesses Most Canadian physicians are independent, self-employed practitioners. As such, they have the ability if they are incorporated to claim the LCGE when they sell their practices. Over time, several provinces have accorded physicians the right to incorporate (e.g., Prince Edward Island, New Brunswick, Alberta, British Columbia, and the Yukon Territory), in other jurisdictions, physician incorporation is under active review (e.g., Nova Scotia, Quebec, Ontario and the Northwest Territories). While physicians have benefited from incorporation on a limited basis, this issue takes on added importance when one considers the "national" move towards incorporation allowing a greater number of eligible physicians to claim the LCGE. Recent health reforms have also underscored the importance of maintaining the current policy. Previously, physicians were free to move their practices from one location to another to meet the changing health needs of Canadians. Over the past two years, provincial governments have moved to restrict inter-provincial mobility of physicians and indeed mobility within any given province or territory. These "barriers" not only restrict the number of new entrants into the system in addition to those who wish to move to other areas of the country, but also can be thought of as increasing the capitalized value of established practices. Indeed, with the advent of regional physician resource plans across Canada, the cost of establishing a new practice can be expected to continue to grow at an unprecedented rate. So while some physicians have yet to claim the LCGE, it is reasonable to think that they will some time in the future. As the health needs of Canadians change, and as people move, medical care services will have to respond accordingly. The elimination of the LCGE, by significantly increasing the purchase price of a new medical practice, unnecessarily and unfairly raises additional economic barriers to shifting practices in response to changing community health needs. CMA therefore recommends: 11. THAT THE FEDERAL GOVERNMENT MAINTAIN THE CURRENT POLICY FOR THE LIFETIME CAPITAL GAINS EXEMPTION FOR SMALL BUSINESSES. V. TRADE-OFFS To summarize: in broad terms the health care sector has already paid its fair (and to a larger extent unfair) share. Everyone who has appeared before this Committee will argue that cuts should not occur in their backyard. They can't all be right! The government of Canada must decide where its priorities lie over the longer-term. Deficit reduction targets can no longer be met by simply chipping away at the full range of federally-sponsored programs. The national integrity of national health insurance programs, given their importance to Canada's economic, social and political future must be on the short list of safeguarded social programs. If further reductions in federal health transfers are deemed appropriate, the Committee should be prepared to publicly acknowledge that the principles of universality or comprehensiveness (i.e., the choice between covering everyone versus everything) will have to be fundamentally re-examined. Given the degree of support for the universality principle, if the federal government is serious about further reducing its direct or indirect contributions to health, then it must reconsider the range of core benefits that will be made available to Canadians. In fact, we may now have reached the point where we need to get back to basics; reminding ourselves of the original medicare promise, which was to protect Canadians from the spectre of personal bankruptcy associated with large and unexpected health care bills. Not to pay the day-to-day ("grocery") bill of health care. The recently-announced National Health Forum, chaired by the Prime Minister, will provide an important opportunity to assess the breadth and depth of publicly-financed health care. The contribution of medicine to the health of Canadians and to the economy is just too important to be traded off. Physicians are still feeling the "aftershocks" of recent federal fiscal decisions. They have also had to absorb sharp unilateral reductions at the provincial level. The provinces of Nova Scotia, Prince Edward Island and Alberta - to name only three - have disproportionately singled out the medical profession on a net earnings basis in decreasing health funding. Taken together, these fiscal forces could trigger an unprecedented exodus of physicians from Canada. As governments move to restrict the ability of physicians to provide needed medical care, CMA is increasingly concerned about the growing number of physicians who are being actively recruited by the United States, and those who feel they have no alternative but to leave the country. At a macro level, we as a society, must recognize that we are in a North American labour market, and as such, each physician heading south represents both a short-term pain and long-term pain. VI. SUMMARY OF RECOMMENDATIONS The CMA offers the following recommendations to the Committee in its deliberations: 1. THAT THE FEDERAL GOVERNMENT AVOID FURTHER CUTS TO THE EPF HEALTH TRANSFER AND LOCK IN THE CASH PORTION; 2. THAT THE FEDERAL GOVERNMENT NEGOTIATE A STABLE FIVE-YEAR FUNDING ARRANGEMENT WITH THE PROVINCES/TERRITORIES; 3. THAT THE FEDERAL GOVERNMENT MUST ENSURE THAT ACCOUNTABILITY OF THE HEALTH TRANSFER BE SEPARATE AND EXPLICIT. 4. THAT THE CURRENT FEDERAL GOVERNMENT POLICY WITH RESPECT TO NON-TAXABLE HEALTH BENEFITS BE MAINTAINED; 5. THAT THE COMMITTEE WORK TO ENSURE THAT CANADIAN PHYSICIANS, AS SMALL BUSINESSES, PAY NO MORE THAN OTHER PROFESSIONS UNDER ANY REPLACEMENT TAX FOR THE GST; 6. THAT ALL TAXES ON BUSINESS EXPENSES BE FAIRLY AND FULLY REMOVED UNDER ANY REPLACEMENT TAX FOR THE GST; 7. THAT IF ANY REMEDIAL STEPS ARE TAKEN TO ENSURE NO TAXES ARE LEVIED ON BUSINESS INPUTS, THESE BE APPLIED UNIFORMLY ACROSS ALL EXEMPT SERVICES. 8. THAT THE FEDERAL GOVERNMENT CONSIDER THE TOTAL COST OF THE RETIREMENT SAVINGS SYSTEM BEFORE MAKING ANY CHANGES TO THE INCOME TAX ACT; 9. THAT THE EQUITY ESTABLISHED DURING PENSION REFORM NOT BE DISTURBED BY DISCRIMINATORY CHANGES AND THAT ANY FUNDAMENTAL CHANGES TO THE SYSTEM INVOLVE A PROCESS OF INFORMED AND THOUGHTFUL INQUIRY AND DEBATE; 10. 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-SIZED BUSINESSES. 11. THAT THE FEDERAL GOVERNMENT MAINTAIN THE CURRENT POLICY FOR THE LIFETIME CAPITAL GAINS EXEMPTION FOR SMALL BUSINESSES. _______________ 1 The Angus Reid Group, The Reid Report. Vol. 8, No. 7, July/August, 1993 and Vol. 8, No. 8, September, 1993. 2 Ibid. 3 Agenda: Jobs and Growth: Creating A Healthy Fiscal Climate (The Economic and Fiscal Climate), Department of Finance, October 1994. 4 Economic and Fiscal Reference Tables, Department of Finance, September 1994; Annual Financial Report of the Government of Canada, Fiscal Year, 1993/94. 5 Valaskakis K.: The Debt Monster, Montreal Gazette, November 5, 1994. 6 National Health Expenditures in Canada, 1975-1993. Health Canada. 7 Ibid. 8 World Economic Forum 1991: The World Competitiveness report 1990, Institut pour l'étude des méthodes de direction de l'entreprise, Lausanne, Switzerland. 9 Thomson A 1991: Federal Support for Health Care: A Background Paper. Health Action Lobby, Ottawa, June 1991. 10 See the 1995/96 Pre-Budget Submission to the Standing Committee on Finance by the Health Action Lobby (HEAL), November 15, 1994.
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Maintaining Ontario’s leadership on prohibiting the use of sick notes for short medical leaves

https://policybase.cma.ca/en/permalink/policy13934
Date
2018-11-15
Topics
Physician practice/ compensation/ forms
Health systems, system funding and performance
  1 document  
Policy Type
Parliamentary submission
Date
2018-11-15
Topics
Physician practice/ compensation/ forms
Health systems, system funding and performance
Text
The Canadian Medical Association (CMA) submits this brief to the Standing Committee on Finance and Economic Affairs for consideration as part of its study on Bill 47, Making Ontario Open for Business Act, 2018. The CMA unites physicians on national, pan-Canadian health and medical matters. As the national advocacy organization representing physicians and the medical profession, the CMA engages with provincial/territorial governments on pan-Canadian health and health care priorities. As outlined in this submission, the CMA supports the position of the Ontario Medical Association (OMA) in recommending that Schedule 1 of Bill 47 be amended to strike down the proposed new Section 50(6) of the Employment Standards Act, 2000. This section proposes to reinstate an employer’s ability to require an employee to provide a sick note for short leaves of absence because of personal illness, injury or medical emergency. Ontario is currently a national leader on sick notes In 2018, Ontario became the first jurisdiction in Canada to withdraw the ability of employers to require employees to provide sick notes for short medical leaves because of illnesses such as a cold or flu. This legislative change aligned with the CMA’s policy position1 and was strongly supported by the medical and health policy community. An emerging pan-Canadian concern about the use of sick notes As health systems across Canada continue to grapple with the need to be more efficient, the use of sick notes for short leaves as a human resources tool to manage employee absenteeism has drawn increasing criticism in recent years. In addition to Ontario’s leadership, here are a few recent cases that demonstrate the emerging concern about the use of sick notes for short leaves:
In 2016, proposed legislation to end the practice was tabled in the Manitoba legislature.2
The Newfoundland and Labrador Medical Association and Doctors Nova Scotia have been vocal opponents of sick notes for short leaves, characterizing them as a strain on the health care system.3,4
The University of Alberta and Queen’s University have both formally adopted “no sick note” policies for exams.5,6
The report of Ontario’s Changing Workplaces Review summarized stakeholder comments about sick notes, describing them as “costly, very often result from a telephone consultation and repeat what the physician is told by the patient, and which are of very little value to the employer.”7 Ontario’s action in 2018 to remove the ability of employers to require sick notes, in response to the real challenges posed by this practice, was meaningful and demonstrated leadership in the national context. The requirement to obtain sick notes negatively affects patients and the public By walking back this advancement, Ontario risks reintroducing a needless inefficiency and strain on the health system, health care providers, their patients and families. For patients, having to produce a sick note for an 4 employer following a short illness-related leave could represent an unfair economic impact. Individuals who do not receive paid sick days may face the added burden of covering the cost of obtaining a sick note as well as related transportation fees in addition to losing their daily wage. This scenario illustrates an unfair socioeconomic impact of the proposal to reinstate employers’ ability to require sick notes. In representing the voice of Canada’s doctors, the CMA would be remiss not to mention the need for individuals who are ill to stay home, rest and recover. In addition to adding a physical strain on patients who are ill, the requirement for employees who are ill to get a sick note, may also contribute to the spread of viruses and infection. Allowing employers to require sick notes may also contribute to the spread of illness as employees may choose to forego the personal financial impact, and difficulty to secure an appointment, and simply go to work sick. Reinstating sick notes contradicts the government’s commitment to end hallway medicine It is important to consider these potential negative consequences in the context of the government’s commitment to “end hallway medicine.” If the proposal to reintroduce the ability of employers to require sick notes for short medical leaves is adopted, the government will be introducing an impediment to meeting its core health care commitment. Reinstating sick notes would increase the administrative burden on physicians Finally, as the national organization representing the medical profession in Canada, the CMA is concerned about how this proposal, if implemented, may negatively affect physician health and wellness. The CMA recently released a new baseline survey, CMA National Physician Health Survey: A National Snapshot, that reveals physician health is a growing concern.8 While the survey found that 82% of physicians and residents reported high resilience, a concerning one in four respondents reported experiencing high levels of burnout. How are these findings relevant to the proposed new Section 50(6) of the Employment Standards Act, 2000? Paperwork and administrative burden are routinely found to rank as a key contributor to physician burnout.9 While a certain level of paperwork and administrative responsibility is to be expected, health system and policy decision-makers must avoid introducing an unnecessary burden in our health care system. Conclusion: Remove Section 50(6) from Schedule 1 of Bill 47 The CMA appreciates the opportunity to provide this submission for consideration by the committee in its study of Bill 47. The committee has an important opportunity to respond to the real challenges associated with sick notes for short medical leaves by ensuring that Section 50(6) in Schedule 1 is not implemented as part of Bill 47. 5 1 Canadian Medical Association (CMA). Third-Party Forms (Update 2017). Ottawa: The Association; 2017. Available: http://policybase.cma.ca/dbtw-wpd/Policypdf/PD17-02.pdf (accessed 2019 Nov 13). 2 Bill 202. The Employment Standards Code Amendment Act (Sick Notes). Winnipeg: Queen’s Printer for the Province of Manitoba; 2016. Available: https://web2.gov.mb.ca/bills/40-5/pdf/b202.pdf (accessed 2019 Nov 13). 3 CBC News. Sick notes required by employers a strain on system, says NLMA. 2018 May 30. Available: www.cbc.ca/news/canada/newfoundland-labrador/employer-required-sick-notes-unnecessary-says-nlma-1.4682899 4 CBC News. No more sick notes from workers, pleads Doctors Nova Scotia. 2014 Jan 10. Available: www.cbc.ca/news/canada/nova-scotia/no-more-sick-notes-from-workers-pleads-doctors-nova-scotia-1.2491526 (accessed 2019 Nov 13). 5 University of Alberta University Health Centre. Exam deferrals. Edmonton: University of Alberta; 2018. Available: www.ualberta.ca/services/health-centre/exam-deferrals (accessed 2019 Nov 13). 6 Queen’s University Student Wellness Services. Sick notes. Kingston: Queen’s University; 2018. Available: www.queensu.ca/studentwellness/health-services/services-offered/sick-notes (accessed 2019 Nov 13). 7 Ministry of Labour. The Changing Workplaces Review: An Agenda for Workplace Rights. Final Report. Toronto: Ministry of Labour; 2017 May. Available: https://files.ontario.ca/books/mol_changing_workplace_report_eng_2_0.pdf (accessed 2019 Nov 13). 8 Canadian Medical Association (CMA). One in four Canadian physicians report burnout [media release]. Ottawa: The Association; 2018 Oct 10. Available: www.cma.ca/En/Pages/One-in-four-Canadian-physicians-report-burnout-.aspx (accessed 2019 Nov 13). 9 Leslie C. The burden of paperwork. Med Post 2018 Apr.
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