Wednesday, April 20, 2016

A Primer on Medicine, Money, and Misery, Part I

Or, why is my doctor putting up posters for something other than flu shots, sunscreen, and smokers' hotlines?

Some of you reading my blog are doctors, but some of you aren't. Likewise, some of you live in Ontario, but some of you don't. That being said, I think everyone stands to benefit from a better understanding of the current doctors' dispute in Ontario. Why?

If you're a doctor, you might not know why you've been bombarded with Tweets or Facebook rants for months, or (more likely) would like some idea of when the government might finally reverse course on cutbacks. If you aren't a doctor, you might wonder why doctors are scheduling protests at Queen's Park on sunny days they would normally spend on call, golfing, or gardening.

If you live in Ontario, you deserve a basic understanding of where and how your tax dollars are spent in health care, how we got to where we are, and perhaps why you have or haven't had trouble accessing care. Even if you don't live in Ontario, much of what's gone on in Ontario holds true elsewhere in Canada and even foreign jurisdictions.

If you really don't care, well, I can at least try to be entertaining.

(If you're truly a wonk or perhaps a masochist, I refer you to read through this fantastic research paper by Grant and Hurley (2013) from the School of Public Policy at the University of Calgary, from which most of this information is drawn. It's a thorough overview of history, legit research and analysis, and not at all think tank claptrap.)

Once upon a time...

Before governments enacted single-payer health care, doctors were paid from large insurance plans that were essentially of their own design. The plans were far from universal, though, covering only about half the population. The province's respective medical association (OMA, BCMA, etc.) developed a "recommended" fee schedule for billing the plan when a patient was seen. Doctors were known to discount from the fee schedule, depending on a patient's ability to pay the insurance premiums. Anyone else either paid cash, or was seen and treated pro bono. There are horror stories out there from the pre-Medicare days, stories that would probably not be out of place in a Michael Moore movie.

The Medicare-Era Windfall

Despite vehement opposition from the medical profession, epitomized by the lengthy Saskatchewan doctors' strike, one by one Canadian provinces enacted single-payer health insurance plans. It wasn't all about morality or even politics, mind you...Prime Minister John Diefenbaker's pledge for the feds to pick up half of the tab of single-payer insurance almost certainly helped nudge the provinces along. Under Diefenbaker's successor, Lester Pearson, the federal government passed the Medical Care Act in 1966, enshrining single-payer health care across Canada within the same 50-50 cost-sharing arrangement.

Doctors would now be paid for their services according to a fee schedule negotiated between the provincial medical association and the government. It's the fee schedule negotiation that's at the heart of the current dispute in Ontario, but we've still got a ways to go before we get there.

Ironically, doctors did even better in the early days of Medicare than they did under their own insurance plans. Their net incomes more than doubled in real terms. Moreover, a typical doctor's income went from a little over double to 3.5 times the income for the average Canadian worker.

Blame it on OPEC

The gains stopped abruptly in the 1970s for several reasons. To begin with, the "negotiated" fee agreement was essentially adapted from the medical associations' old self-designed insurance plans, and the fees hadn't been updated in years. Combined with the rapid inflation that followed the 1973 oil shock, doctors saw the real values of their fees plummet by 20-odd percent. The drop was somewhat offset by more usage of the system, but the average doctor's real net income fell by more than 10%. Finally, wage controls enacted in 1975 effectively slammed the door shut on doctors going back to their rapid income gains of the 1960s.

At the time, doctors had two ways around the fall in their government-sourced earnings: extra-billing their well-off patients, or opting-out of the government insurance plan altogether. Significant numbers of doctors opted out in Ontario and Alberta in the 1970s, but not elsewhere in Canada.

Through all of this, the federal government continued to pay 50 cents of every dollar spent on doctors and hospitals, as per the law passed by the Diefenbaker Conservatives in 1957. The inflation of the 1970s and concomitant recession, however, put intense pressure on federal finances. Federal deficits soared, and the government needed to exert a measure of control over its fiscal commitment to health care.

Next time: the Canada Health Act and Ontario doctors' strike

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