Saturday, January 16, 2016

One Asshole's (Informed) Opinion: How deep does the rabbit hole go?

Brought to you by The Glenlivet 12

In my last post of this series, I made a pretty cocky assertion about the health care system, namely that there isn't one. I should have elaborated, but I need you to keep coming back. Fair warning, though: this is a bit of a "big picture" post, and it can be more than a little confusing. No offense taken if you want to come back another day.



A typical North American health care "system" is not an identifiable entity in its own right the way a school district, military division, or municipality is. A health care "system" is actually a complicated web of interconnected and interdependent parts, parts that are each complex systems in their own right. Typically, we speak of either the Finance side or the Service Delivery side with health care, but that's barely a starting point.

Consider a single Canadian province. Its health care will consist of several distinct entities (I'd say it was organized into these parts, but that would imply thought was put into the setup, rather than just how the chips fell as time went by):

  • the "universal" insurance plan covering doctors' services, labs and other diagnostics, and hospitals
  • a drug-benefit insurance plan covering seniors, people on social assistance, and people with certain high-cost diseases (cancers, viral hepatitis, HIV)
  • hospitals, which are autonomously governed and have largely unionized workforces
  • home-care service providers, operating in a competitive market
  • pharmaceutical manufacturers, both "research based" and generic
  • doctors practicing independently or in groups, based in hospitals or in the community, but all paid through the provincial insurance plan
  • a variety of publicly-funded health services that lie outside the insured services "basket", such as community health centres (CHCs) for underserved populations, public health, etc. These are staffed by salaried health professionals, not necessarily unionized

If we think about the essential economic relationships from the government/payer perspective, the basic structure of health care becomes a little less confusing...at least from the finance side of things: 

  • the province is a monopsony (one customer) buyer of drugs from two different oligopolies--the USA/UK based brand-name drug companies, and the domestic generic drug makers
  • the province is a monopsony buyer of lab services from a domestic oligopoly, as part of the benefits of the universal insurance plan
  • the province is a monopsony buyer of home care services from a (mostly) competitive market of providers
  • the province is a monopsony buyer of medical services from doctors, through a negotiated fee agreement with the provincial medical association, as part of the universal insurance plan
  • the province sends money to hospitals, CHCs, and public health as it would fund any other public service, albeit with added complexity (that can be set aside for now)
  • the doctors theoretically operate in a competitive market, paid through the universal insurance the way a dentist might be from a workplace plan, but this is misleading (more on that in a future post) 

Believe it or not, this is a deliberately simplistic way of looking at just the finance side things, and over time things have only become more complicated. For example, Ontario has an entire bureaucracy for cancer care, that allocates funds for treatment independent of the provincial drug and medical/hospital service insurance plans. Ontario also has multiple funding models for doctors, depending on where and how they practice. You might also have noticed that the word "patient" has yet to appear anywhere before this sentence. Once the patient enters the picture, you're adding Service Delivery into the analysis, and the relationships start to feed back on one another. 

The point is that before prescribing any solution to what ails the health care system (More privatization! More money! More nurses!), you have to identify which system it is you're talking about, and which side of the Finance/Service dichotomy you're starting from.

Confused yet?


You should be, and that's a good thing. Because now you have ammunition for your next dinner table argument. Anytime someone tries to sell you on a "fix" for health care, start by asking which of the five distinct finance arrangements their "fix" will start to address. (If you're American, I imagine you could double that number and still be correct). When your question is returned with a blank stare, you win.

Next time: A simple question: why universal insurance? I promise these will start to make sense

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