Medicare Threatened by Funding Cuts | The Canadian Encyclopedia


Medicare Threatened by Funding Cuts

This article was originally published in Maclean’s magazine on December 2, 1996. Partner content is not updated.

Like hundreds of other hospitals across the country, The Pas Health Complex - a 60-bed facility attached to a 62-bed nursing home - has had its budget slashed and its staff reduced. It is operating on 20 per cent less money, or $1.4 million, than it did three years ago.

Medicare Threatened by Funding Cuts

Like hundreds of other hospitals across the country, The Pas Health Complex - a 60-bed facility attached to a 62-bed nursing home - has had its budget slashed and its staff reduced. It is operating on 20 per cent less money, or $1.4 million, than it did three years ago. About 50 staff - mostly nurses - have been laid off. And the hospital suffers from a chronic shortage of physicians: only five serve about 20,000 people in and around the northern Manitoba town, including residents of the nearby Opaskwayak Cree reserve. "I've got almost no doctors," says health complex vice-chairman Gordon Bulmer, "but I've got a surplus of nurses because I keep firing them." It would be bad enough, Bulmer adds, if more cuts were not on the way. But they are - and may translate into cutting such services as chemotherapy, or obstetrics, or dialysis. The way things are going, he says, the health complex will soon consist of a trailer with three exits. "One door, if you're not too bad, will take you to Flin Flon's hospital 100 miles away, and Door No. 2, if you're worse off, will take you to Winnipeg," Bulmer adds. "But Door No. 3 will be the busiest - it'll take you to the funeral home."

It may be small solace to the people of The Pas, but the town on the banks of the Saskatchewan River shares something with communities across Canada: anxiety about the health-care system. Thirty years after Prime Minister Lester B. PEARSON's government passed legislation that, by 1972, would create national, publicly funded medicare, health care is undergoing radical surgery. Hospitals are closing, or merging, or restructuring. Doctors are anxious about their independence, and their incomes, as provincial governments curtail spending. In the background lurks the spectre of a two-tier health system - the antithesis of the universal coverage Saskatchewan's medicare pioneer, Tommy DOUGLAS, envisaged in the postwar years. With governments spending less, the private sector is picking up the slack, increasing the share of the health tab paid by nongovernment interests. As health-care professionals and consumers grapple with change, the question is whether Canada's health-care system is going through the pangs of a rebirth into a new, better form - or through its death throes.

In some respects, at least, reforms are long overdue. Almost everyone in the field agrees that the current system is really a non-system - bloated, inefficient and unstructured. Canadians pay more than ever for health care - 9.5 per cent of gross domestic product, compared with 8.5 per cent in 1985. And increasingly, there is a sense that they are not getting their money's worth: according to a Maclean's/Medical Post/Angus Reid poll, a declining number of people award top grades to Canadian health care. The solution, boldly stated by politicians both federal and provincial, is that the system needs tough medicine. As Prime Minister Jean Chrétien said of medicare at the Liberal party convention in October: "We needed to squeeze it in order to keep it."

Reform is happening, although its scope and pace vary from region to region. The reformers promise a more efficient and more responsive health-care system. But for now, there exists a wide gap between the theory and the reality, between what the leaner system of the future is supposed to do and what is actually happening to hospitals, health-care workers and patients. In many areas, mere cost-cutting is outpacing real reform. And the consequences, some observers say, could be dire. "When you start taking money out of the system, what you see is cracks forming, and patients falling through the cracks," says Tom Closson, president and chief executive officer of Sunnybrook Health Science Centre in Toronto. "You're going to see patients becoming the victims."

In June, 1994, Harry and Beatrice Cunningham, a retired couple from the central Ontario town of Bobcaygeon, visited their daughter, Joanne Campbell, in Vancouver. They planned to stay for 10 days, but while there, Harry Cunningham fell ill from emphysema. Hospitalized for two weeks, he was released to the care of his daughter - a medical office assistant with three children, whose resources were already stretched by looking after her mother, who suffered from Alzheimer's disease. "It was a bit of a scary time," says Campbell, 41. "My father needed to be put in better care." But her parents did not qualify for subsidized nursing-home care because of British Columbia's three-month residency requirement. And in any event, the waiting period to get into a subsidized facility was more than a year.

Frustrated, Campbell contacted the Ontario ministry of health, which said it would pay for her father's return to Ontario by air ambulance and find him a subsidized bed. But Campbell was reluctant to split her parents up - "They were a real team," she says. Instead, they entered a private nursing facility in Vancouver at a cost of $4,000 a month, none of which Ontario would pay under its health insurance plan. In mid-1995, the Cunninghams were granted B.C. residency status - too late for Harry, who had died in March of that year. Last August, Campbell's mother was admitted to a subsidized care home in Kelowna, 270 km from Vancouver. By then, Campbell's parents had paid almost $70,000 for private care. "It was a real nightmare," says Campbell. "I don't know what would have happened if they hadn't been able to pay those costs themselves."

National medicare is not supposed to work that way. Portability is one of the hallmarks of the Canadian health-care system. But increasingly, distinctions between provinces over covered services, residency rules and payment methods have made accessing care in other provinces complicated, to say the least. Some provinces, especially Quebec, are notorious for not paying in full the medical bills of Quebecers treated outside the province. The five pillars of medicare - public administration, comprehensiveness, universality, accessibility and portability - seem to be crumbling. It is an erosion that many critics lay firmly at the feet of the federal government.

Federal Health Minister David Dingwall, who says he is a staunch defender of health care, insisted at the Liberal convention in October that the system's problems "have nothing to do with money." But he may have overstated his case. In fact, the murky, complicated world of federal-provincial transfers has much to do with the changes in medicare.

Some history: in 1977, the federal government transferred 13.5 tax points to the provinces, increasing their taxing power. From then on, federal transfers for social services consisted of a basic cash element - money directly paid to the provinces - plus the revenue generated by tax points. Originally, the cash element was tied to growth in GNP, but since the mid-1980s, the cash portion of federal funding has steadily declined. At the same time, however, the federal government has updated the value of the tax points it transferred to the provinces back in 1977, in line with population growth and other factors. But Ottawa did not inflate the remaining cash payments in similar fashion. As a result, only on paper did the federal share of provincial health expenses decline to 32 per cent in 1995 from 41 per cent in 1977. In real terms, federal payments are even smaller, falling to 16 per cent of provincial expenditures from 25 per cent over the same period.

Under the Canada Health and Social Transfer, a new funding scheme that lumps together payments for health, education and welfare, the federal government has pledged to hold the line at a total of $25.1 billion - the level projected for 1997-1998 - until the year 2000. And it has promised that the cash portion of the health and social transfer payments will not fall below $11 billion. But that is still $7.2 billion less than in 1995-1996. "There has been a massive withdrawal of funding and people don't seem to realize that," says physician Derryck Smith, president of the British Columbia Medical Association. "And the federal government has gotten away with it." As the cash portion of federal funding continues to dwindle, so, too, does Ottawa's ability to ensure provinces maintain national standards. In one of its preliminary reports, the 24-member National Forum on Health - which has Chrétien as its chairman and Dingwall as its vice-chairman - sounded the alarm about the trend towards less federal funding. If it continues, the forum wrote, "Canadians can expect to see the national character of the system deteriorate."

Declining federal funds have forced individual provinces to scramble to make do with less. The result has been a patchwork of reforms across the country, although there are some consistent patterns. One is to regionalize health administration. The idea is to reduce duplication of services and to integrate the various silos of administration - hospital boards, public health boards and some social services. In general, the focus of the regional authorities has been on hospitals: reducing lengths of stay, often by closing beds, and shifting funds into primary and home care.

But in some areas, the creation of regional authorities has led to squabbling and disappointment. Typically, their members are appointed, not elected - raising questions about their accountability, and whether their creation is merely a buck-passing manoeuvre for cost-cutting provincial governments. In Manitoba, Mayor Gary Hopper of The Pas was so concerned about the local hospital that he and Cree Chief Francis Flett last month made the seven-hour drive to Winnipeg to voice their concerns to Conservative Health Minister Jim McCrae. "He just referred us to the regional health authority," says Hopper. But Hopper has little confidence that the health authority - which, when it is up and running in April, 1997, will be based in Flin Flon - will have much concern for the problems in The Pas. "Whether it's coincidence or not, there's an awful lot of Conservatives on those boards," he says. The Pas, Hopper notes, voted New Democrat in the last provincial election.

Bonnie Cessford's mother, Hazel Campbell, was admitted to hospital in Edmonton on Dec. 20, 1995, complaining of diarrhea. She died the following May at the age of 71. In August, Cessford wrote Premier Ralph Klein about her mother's treatment. According to Cessford, her mother was twice discharged and readmitted - the second time, she came back with a perforated bowel. Early in her hospital stay, she fell three times trying to reach the bathroom unassisted - there was no one to help her. During one of those trips, her intravenous became dislodged and contaminated with diarrhea, but a nurse put the IV back without cleaning it, Cessford maintains. She says that there were several incidents when her mother had to lie in diarrhea for several hours. "There's nothing more we can do for my mother," Cessford says. "But I have children, I have a grandson. I don't want this to happen to anybody else." Recently, she met with officials from the regional health authority who, she says, "tried the best they could to address" her complaints. "They're working on it," she adds. Although "without extra money, I don't know how they're going to be able to do much."

In the 1990s, hospitals have become battlegrounds. In Nova Scotia, the number of acute-care beds has been cut by about one-third since 1992-1993, to 3,481. In Ontario, the government-appointed Health Services Restructuring Commission has targeted roughly 20 per cent of the province's 24,000 beds for closure; an estimated 15,000 nurses will lose their jobs over the next three years. The thrust is straightforward: there are too many beds in too many hospitals, and money could be spent more efficiently helping people look after themselves.

At least in part, the push is related to a new way of thinking about health care and how it should be delivered. "The in-patient that used to be the dominant business in health care is really rapidly becoming the minority business," says Michael Decter, managing director of Canada for APM Management Consultants Inc., a U.S.-based company that specializes in re-engineering hospitals to increase their efficiency (its annual billings top $100 million). A former deputy minister of health in Bob Rae's Ontario government from 1991 to 1993, Decter maintains that new technologies and drugs have reduced the need for hospital stays. And the public likes it. "People are saying, 'Wait a minute, if I get a choice between lying in bed for a week to have my cataracts taken out with a scalpel, or getting them done in half an hour with a laser - it's an easy choice.' "

Shorter hospital stays may work well for relatively healthy people recovering from minor surgery, but for others - particularly the elderly - the effects can be devastating. Ethel Meade, health issues convener for the 400-member Older Women's Network in Toronto, says that she knows of elderly people who have been released from hospital only 48 hours after suffering a stroke. "The idea of sending people home after a stroke like that is appalling," adds Meade. "If you're old, you're just a nuisance to the system."

Still, many hospitals are attempting to better integrate the way they look after patients. The biggest shift is what systems planners call "horizontal integration" - sharing of services by spreading them out over different hospitals. But it is not always the seamless process its name implies. For one thing, it can be severely disruptive to staff. A provincially commissioned survey of 3,450 workers at the Queen Elizabeth II Health Sciences Centre in Halifax - created by the 1995 merger of four smaller facilities, cutting 500 jobs and $50 million in collective debt - found that most workers doubted the merger would improve patient care or save money. And they had little sense of loyalty, the survey reported, to the new health centre.

Harold Swanson, a former radiologist who worked for 36 years at Calgary's Bow Valley Centre, says that dividing up programs between hospitals presents health risks. (The Bow Valley is scheduled to close next April; many of its services - including neurosurgery and most of its trauma centre - have already moved to Calgary Foothills Hospital.) "When you get into one hospital and you're in there for a chest problem and you have suddenly a problem with your heart or your head, they may not have those specialists there to look after you," says Swanson, who ran against Klein for the Tory leadership in October in the riding of Calgary/Elbow. "And you know it's dangerous to transport patients 10 miles across town. They may not make it."

For others, horizontal integration simply does not go far enough. "What hospitals are trying to do now is live the same way," says Jane Cornelius, president of the 50,000-member Ontario Nurses' Association. "They've been told they can't cut programs, so they're diluting front-line staff. The community is the real loser." Instead, the nurses propose an alternative that would vertically integrate primary, home and acute care. The association's plan calls for the creation of so-called integrated delivery systems, which would receive funding directly from the province and allocate resources depending on the needs of the community. Patients would carry their funding dollars with them wherever they go. If one integrated delivery system provided better service than another and attracted more patients, it would earn more money - encouraging competition among health-care providers.

The National Forum on Health and a handful of health-care experts - including the Policy Group on Health Reform, a coalition of health-care professionals from across the country - favor similar vertically integrated health systems. But several factors stand in the way. For one, the schemes depend upon the principle of capitation, which would replace traditional fee-for-service payment to doctors with a salary - hardly a popular concept among physicians. Perhaps more important, many doubt that the political will exists to radically alter the system. Still, Sunnybrook CEO Closson, who along with Decter sits on the Policy Group for Health Reform, remains hopeful - in a way. "It has to happen, because we've got growing and aging populations while we try to take money out," he says. "Over the next few years, you're going to see a bunch of pieces on the front of the newspaper about people dying because nobody was taking responsibility. When that happens, I think it's going to cause governments to intervene in a more active way."

Is that the future of health care? A string of unnecessary disasters before real reform? Against such a depressing prognosis, there are signs that the political trend towards cutting health care - at any cost - may be reversing. In Alberta, Klein was set this week to announce plans to reinvest an estimated $335 million back into health care over the next two years. With an election expected next spring, Klein has dismissed suggestions that the reinvestment is an admission that health-care cuts have been too deep. "You can put all the money in the world into health care," he said, "and there will still be problems." That may be true. But in the world of health care, as in politics, money talks.

Amid the controversy over funding and reform, hospitals and institutions, it is easy to lose sight of what medicare can mean to individuals. Not so long ago, Richard Hollingsworth's voice would choke with emotion as he described his situation. Hollingsworth is 43, and he is infected with HIV, contracted while he was an intravenous drug user on the streets of Vancouver. He is now sober. And since the fall, his HIV infection has been treated with a class of drugs called protease inhibitors - which, he says, have improved his health dramatically. The drugs are expensive - about $645 a month - but are covered under British Columbia's health plan.

But Richard Hollingsworth wanted to live in his home town, Edmonton, where his fiancée lives and where he has a promise of employment as an AIDS educator. The problem: Alberta did not cover protease inhibitors on its provincial drug plan. And he could not afford them on his $505-a-month disability pension. So, every month, Hollingsworth - still officially a B.C. resident - commuted to Vancouver to get his drugs. For a man whose health was already compromised by HIV, it was an untenable situation. "I have all my support systems here in Edmonton," he said. "I don't want to be a burden to anyone, I want to work as much as possible. Why not allow me to stay here?"

It is a question Hollingsworth has tirelessly asked the Alberta government. He has staged a public-awareness walk from Lethbridge to Edmonton; he has met with Health Minister Halvar Jonson, who made no commitments; he has picketed the provincial legislature. Then, on Nov. 14, he confronted Premier Klein - politely - at an Edmonton school, a meeting captured by news photographers. "The next morning," recalls Hollingsworth, "I got a fax from his office saying that they were approving the drugs." Klein has said the decision to fund protease inhibitors - at a cost of $3 million a year - after meeting Hollingsworth was a mere coincidence.

To Hollingsworth, of course, the motives don't matter. Able to stay in Edmonton, he hopes to get married soon. And now, as he considers the prospect of Christmas with his family, Hollingsworth again gets choked up. "Of all men," he says, "I am the most blessed. I am."

Maclean's December 2, 1996