Making Health Care Work in Alberta, 2030

How Health Care Works in Alberta

Alberta’s health care system is largely operated by private firms providing for profit or not for profit services to the public. Such firms include General Practitioners, the WCB, dentists, pharmacists and many specialist medical services, such as medical testing services and consultant doctors. While some doctors are employed by the Alberta Health Services, most in fact work for companies – usually their own. Nurses work for both private firms and for public organizations, as do other health professionals, such as Psychologists, Occupational Therapists, Physiotherapists and Rehabilitation Therapists.

When we here people say “we don’t want private health care in Alberta”, what they mean is that they don’t want a system whereby some people can fast track access to services simply through payment. They ignore the fact that some services, for example some obstretics-gynecology practices, offer the opportunity to pay for complete care from the moment pregnancy is confirmed to an agreed period after the birth of a child and that such provision is perfectly legal. Also, most dental and ophthalmology services are paid for largely by the patient, unless they have made arrangements for supplementary health insurance over and above base provision. In fact, the provision of health services outside of hospital systems in Alberta is largely in private hands and even within hospitals, private providers are at work.

Many employers offer their employees additional health care benefits through health insurance plans which employees contribute to, such as those offered by Blue Cross, ManuLife, Alberta Motor Association and others. These supplement the base plan offered by Alberta Health Services. Self-employed workers purchase such insurance for themselves. The organizations offering these services are not Government agencies. For example, Alberta Blue Cross, one of the providers of such services, is a non profit organization independent of Government.

The basic model of health care in Alberta, which is governed by both Federal and Provincial legislation, is that the Province determines which treatments are approved for payment under the Canada Health Act and which professions are licensed to practice under regulation. Once these decisions have been made, publicly or privately provided service providers who meet standards provide services which the public purse pays for.

Some services – chiropractic and homeopathic, for example – are not covered by Alberta Health Services and are only modestly covered in supplementary health plans, if at all. The explanation is that these services, especially homeopathy, have not demonstrated health outcomes sufficient to justify public payment. Practitioners dispute this but, especially in the case of homeopathy, the evidence would appear to justify the exclusion of these services.

A large number of Albertans travel elsewhere to receive medical treatments. A Fraser Institute analysis of this suggests that some 5,354 individuals went to other jurisdictions (mainly the US) in 2009 to receive treatments – mainly so as to reduce wait times. Such treatments varied from internal medicine, general surgery, ophthalmology to plastic surgery. The Fraser Institute recognizes that this is an estimate, but also suggests that the actual number is likely to be higher.


Health Care Spending

In the next decade, health care spending in Canada will consume $2 trillion. Several Provinces in Canada will spend 50% or more of their Provincial tax, royalty and investment revenues on health care by 2020 – including Alberta. Health care currently accounts for 12% of Canada`s GDP.

Government health care spending in the next year in Alberta will be $15 billion, including $657 million for capital projects and an operating budget of $9 billion - $4,416 per citizen. Projected spending on the day to day health care system in Alberta health care 2010 – 2015 will total $50 billion, not including capital or pension servicing of retirees. The five year spending plan assumes a continuance of Government of Canada health transfers ($2 billion in 2008-9), the agreement for which expires in 2014.

In 2007, private health insurers and households (the private sector) across Canada spent $47.8 billion. Private-sector expenditure reached $51.8 billion in 2008 and $54.5 billion in 2009. Prescribed drugs and dental care (which has never been a `listed` service in Alberta) are the greatest components of total private health spending. Canada has a public: private health care model.

Albertans paid significantly more for ‘other medical services,’ which include nursing homes and ambulances, than many other Canadians. Fees vary by municipality: for example, Edmonton charged $344 for an ambulance in 2007. By contrast, the same ambulance would cost a BC family $80.

Hospitals have traditionally occupied a prominent place in health care provision. In the mid-1970s, hospitals accounted for approximately 45% of total health expenditure. During the past 30 years, the share of hospitals in total health expenditure has fallen. In 2009, hospitals made up the largest component of health care spending, accounting for 27.8% of total health expenditures. Since 1997, drugs have accounted for the second-largest share. In 2009, drugs accounted for 16.4% of total health expenditure, while physicians are expected to make up the third-largest share, with 14.0%.


Funding Health Care

Spending on day to day health care in Alberta is funded from: (a) the Government of Alberta general revenues at a cost of $9.7 billion; (b) the Government of Canada at a cost of $2 billion; (c) funds from Lottery revenues at a cost of $260m; (d) funds from health care premiums (Blue Cross etc) - $787m; (e) Alberta Cancer Legacy Fund - $19 million; and “other revenues” (third party recoveries, etc) - $54 million.

Per capita, Alberta spends less than many other Provinces on health care – Alberta ranks eighth (on average) over the last ten years amongst Canadian Provinces. Relatively speaking, there is room for further expenditure on health care in Alberta which could bring us into line with other Provinces.

The barrier to doing so is the perceived growing cost of health care relative to the revenue projections of the Government of Alberta. Alberta, however, has a very low tax base in comparison to many other jurisdictions and has stopped collecting Health Premiums from citizens. Alberta has no sales tax. It also has the second lowest oil and gas royalty regime in the world – only Yemen has a lower royalty rate for oil – in fact, Alberta collects more from gambling, cigarettes and alcohol taxes than it does from oil . If Alberta increased its tax revenues in line with other Canadian jurisdictions, it would be able to fund an expansion of health care services.

Health Outcomes

Life expectancy in Alberta is 78 years for males and 83 years for females. This puts Alberta in the top ten jurisdictions in the world – Japan has 86 years for females and 79 for males and tops the list of countries when they are ranked by life expectancy.

In a study of the population of Alberta, the proportion of the adult population with a healthy body mass was 49% (up from 47% in 2002). The proportion of children with a healthy body mass was 81%. Significant improvements have occurred in the rate of death through heart disease (down from 175 per 100,000 in 2002 to 127,1000 in 2009) , incidence of death from breast cancer (down from 24.2 per 100,000 in 2002 to 20 per 100,000 in 2009) and the number of new cases of lung cancer (down from 56 per 100,000 in 2002 to 50 per 100,000 in 2009).

Some health conditions, diabetes in particular, are not declining but are in fact increasing. The number of new diabetic patients grew in Alberta between 2002 and 2009 from 4.5 per 1,000 persons to 4.6 per 1000, though the incidence of diabetes in Aboriginal population does appear to be moderating at 8.6 per 1,000 (almost twice that of the non Aboriginal population), down from 9 per 1,000 in 2002.

Wait times for patients vary by the patients condition and location. When the condition is urgent, the goal is that the patient is seen within one week, for a serious condition it is up to two weeks and for non urgent conditions it is six to ten weeks. Patients in Calgary and more likely to be seen “on time” than patients in Edmonton.

Of particular concern are wait times for common surgical procedures, especially those affecting seniors. These include hip and knee replacements. It takes an average of 32 weeks to secure a hip replacement and 48 weeks to secure a knee replacement. The targets are 26-30 weeks for hips and 26-45 weeks for knees. Its no wonder so many people travel to the US for surgery. For emergency treatments in ER at Alberta hospitals the situation is poor. Median wait times are 16.6 hours in Calgary’s three hospitals as of February 2008; averages between 22.6 and 27.8 hours at Edmonton hospitals as of March 2009.

Reforming Health Care

There are six major changes which have been advocated for health care in Alberta.

The first is a switch of focus from treating sickness to preventing illness. Most major improvements in health outcomes have not come from medical breakthrough’s but from changes to public policies. Clean air, improved water quality, effective sanitation, building codes, seat belt legislation, smoking legislation, winter heating subsidies for seniors have all had a major impact on health outcomes. By focusing on public policies and education, significant gains in health and wellness can still be made.

For example, obesity in both adults and children is leading to a major epidemic in the onset of diabetes. Legislation concerning food content and labeling – banning trans fats, restricting access to fast foods, taxing soft drinks to significantly reduce consumption, controlling sugar content in ready meals and other prepared foods, regulating the marketing of food to children, ensuring healthy food in schools and engaging children in diet and food related learning are all seen as precursors to reducing the occurrence of obesity, diabetes and heart disease. Requiring daily exercise in schools and providing tax incentives for attending gymnasiums and fitness programs may also be helpful.

The second change many propose is to outsource more of the services which government currently pays for in full to third party providers – either for profit or not for profit organizations. The idea is simple. By paying for a service, but not employing staff or paying for the capital and technology costs, services are provided at agreed prices without the Government having to pay for the full costs of labour or capital. Alberta Health Services is committed to increase its outsourcing of services. The model for this is medical testing. Doctors ask patients to have a medical test – urine or blood tests, for example. The patient goes to a test centre for service and the test results are filed with the patients record. The testing service is private, but Alberta Health Services pays for the tests at a fixed price. The suggestion is that a great many services could be provided in this way, lowering the unit costs of such services to the Government.

As has been found elsewhere, at some point the price paid by the Government is insufficient to attract investment in the infrastructure needed to deliver such services. What then happens is that the Government builds the infrastructure and leases it to the private or non profit provider at an agreed rate so as to create capacities in the system.

Alberta is short at least 1,000 full-time physicians, and that will increase to 1,500 within five years. Alberta's two medical schools together graduate about 250 students per year. While that number will increase to 300 in a few years, with the natural egress of physicians from practice due to retirement, moves to other environs and voluntary changes to practice, that modest increase will not solve our shortage for a very long time. This suggests a third development required in the system: the recognition of the skills of health care professionals other than doctors. Pharmacists are more knowledgeable about the medicinal properties of drugs than are doctors – they should be able to provide prescription services against a medical diagnoses performed by a doctor. Renewal of prescriptions currently occupies and wastes a great deal of clinical time – we can enable the 3,800 practicing pharmacists to do more here. Nurse practitioners can diagnose and prescribe a great many conditions which patients attend both general practitioners and emergency room services for. These professionals should be given the same medical rights as doctors.

This alone will not “solve” the access to care concerns of many Albertans. Some 250,000 residents of Calgary, for example, are not registered with a general practitioner. There is therefore is a need to expand the medical schools in Alberta and to fast track the recognition of new immigrants with medical degrees so that they can practice.

A fourth development is to link behaviour to payments for health. For example, missed appointments in general practice and hospitals account for between 6-10% of all appointment times in the health care system. Those who make appointments and do not show should be required to pay a fee – they are costing our system a great deal of money. Patients have responsibilities as well as rights.

A fifth proposal is to increase the size of the user pay portion of the health service provision, through a combination of health care premiums for Provincial services, only recently abolished, and a requirement for everyone in Alberta to hold health insurance over and above the current tax-paid services. This would increase available funding, link medical aid seeking to cost and promote an understanding of health risks linked to behaviours. The fundamental idea here is to generate new revenues to support health care provision in the Province.

There are more radical ideas in relation to funding the system. The Frontier Centre, for example, is advocating the adoption of a Universal Medical Savings Account. Each citizen would be entitled to a fixed sum, based on medical assessments, which would be placed into a medical savings account. This account constitutes what is available to that person for medical services and they are then free to “buy” their services from any provider. If they want to “top up” their account with their own funds, they would be free to do so.

Whatever we do, the provision of health care will be progressively expensive and at some point, new tax revenues or new payments systems will have to be found.

The final change the health care system needs to consider is simple, yet full of moral hazards. At what point do we say yes or no to a treatment? Some expensive treatments may prolong life for a very short period of time – six months or less. Should that treatment be given? The medical profession is based on a constant quest to preserve life, sometimes at “all costs”. While this is admirable, at what point do living wills, “do not resuscitate” instructions and other considerations come into play. As medical technology advances, we may be able to find new ways of extending life for short periods. Do we always have to adopt such technologies? Public health care expenditure needs to focus on making a significant difference to the quality and extent of life for longer periods of time than a few weeks.

The public versus private health system debate that normally preoccupies public conversations about health care fails to understand both the fact that our health system is already a mixed economy and that private versus public is more than an issue of who pays. The six areas of change outlined here are the substantive issues we need to discuss if health care in Alberta is to be sustained over time.