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Five challenges for bending the health-care cost curve in Canada

shutterstock_155315552.jpgCanadian economists received a pleasant surprise recently: expenditure growth on public health care in Canada finally appears to be slowing down. However, it is unclear if this slowdown is the result of explicit success in sustainably bending the cost curve or more short-term cost cutting in response to slower economic growth or future federal health transfers.

So is it a blip on the health-care horizon or the beginning of a trend?

February 11, 2015  By Livio Di Matteo and Greg Marchildon

With the continued aging of the Canadian population, the diffusion of
new health-care technologies, and increased pressure for other public
spending, we anticipate health-care costs will continue absorbing the
energies of governments in Canada for years to come.  And bending – or
breaking – the cost curve, will remain a perpetual challenge. Here’s

1. Bending the health-care cost curve is a long-term process
that is much more than a quick cost cutting exercise or yet another
“structural re-disorganization.” But the voting public is impatient for
change. Governments have a time horizon that operates within four-year
cycles and are expected to demonstrate substantive improvement in the
short run.

2. When it comes to cost control, there must be an
emphasis on prices as well as volume or numbers of health providers.
Cost control attempts to date have focused mainly on the number of
service and health providers with “prices” (the fees paid by government
to providers per service) remaining the undiscovered country. At the
same time, however, one person’s health spending is another person’s
income, and constraining fees will likely be vigorously opposed by those
affected (doctors and health providers), even if a clear public benefit
can be demonstrated.

3. While health system sustainability is
about revenues (how much tax money a province has at its disposal) as
much as it is about spending, most provincial governments have seemingly
determined that they are not prepared to increase tax revenues. The
basis for this decision seems to be rooted in a general public aversion
to higher taxes and a need for competitive tax systems. At the same
time, there is an inconsistency in public attitudes that desire more and
better public health services but with fewer or lower taxes.


While policy should be evidenced-informed rather than belief-based, the
complexity of health-system change makes it difficult to draw a straight
line from one evidence-based improvement to health-system change as a
whole. Indeed, improving the quality and quantity of evidence-based
decision-making is perhaps the greatest challenge in systematically
devising policies for bending the cost curve.

5. While
comparative evidence is essential for a better understanding of policy
problems, you cannot bend the health-care cost curve by cherry-picking
reforms from other jurisdictions with other political and social
contexts. Ultimately, solutions are devised within the context of
specific political, economic and policy environments. Grafting quick
fixes onto one health system based on experiences in another can quickly
generate new problems to replace those they were intended to fix.

major hurdle for health reform is that we need to decide exactly what
changes we want to make in our health system. While there remains room
to increase efficiencies and gain greater value for money, bending the
cost curve requires fundamental reforms to the way we manage and deliver
health services in Canada.  This is a reality many Canadians seem
reluctant to face.

Another challenge is getting federal,
provincial and territorial governments to agree on the basic values or
principles we want to preserve and enhance as we reshape policies,
structures and the regulatory environments of health care in Canada.

challenges are formidable but surmountable barriers to ensuring the
sustainability of publicly financed health care in Canada.

these challenges will fall mainly on the shoulders of our provincial
governments, and of course, the electorates they serve. However, the
federal government also has both the potential and the responsibility to
play an important role. One thing is certain: whoever wins the next
federal election in 2015 will have to meet these challenges head on.

Marchildon is an expert advisor with, Professor and
Canada Research Chair in Public Policy and Economic History (Tier 1) at
the  Johnson-Shoyama Graduate School of Public Policy at the University
of Regina.

Livio Di Matteo is an expert advisor with and Professor of Economics at Lakehead University. 
They are the editors of the newly released, Bending the Cost Curve in
Health Care (University of Toronto Press).

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