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Who are the zombie masters, and what do they want? Evans, Robert G., 1942-; Barer, M. L.; Stoddart, Gregory Lloyd, 1948-; Bhatia, Vandna 1993-09

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Who Are the Zombie Masters,and What Do they Want?Robert G. EvansMorris L. BarerGreg L. StoddartVandna BhatiaHPRU 93:130 DECEMBER,1993HEALTH POLICY RESEARCH UNITCENTRE FOR HEALTH SERVICES AND POUCY RESEARCH429 • 2194 HEALTH SCiENCES MALLUNIVERSITY OFBRITISH COLUMBIAVANCOUVER, B.C. CANADAV6T1Z3The Centre for Health Services and Policy Research was established by the Board ofGovernors of the University of British Columbia in December 1990. It was officiallyopened in july 1991. The Centre's primary objective is to co-ordinate, facilitate, andundertake multidisciplinary research in the areas of health policy, health services research,population health, and health human resources. It brings together researchers in a varietyof disciplines who are committed to a multidisciplinary approach to research, and topromoting wide dissemination and discussion of research results, in these areas. TheCentre aims to contribute to the improvement of population health by being responsive tothe research needs of those responsible for health policy. To this end, it provides aresearch resource for graduate students; develops and facilitates access to health and healthcare databases; sponsors seminars, workshops, conferences and policy consultations; anddistributes Discussion papers, Research Reports and publication reprints resulting from theresearch programs of Centre faculty.The Centre's Health Policy Research Unit Discussion Paper series provides a vehicle forthe circulation of preliminary (pre-publication) work of Centre Faculty and associates. It isintended to promote discussion and to elicit comments and suggestions that might beincorporated within the work prior to publication. While the Centre prints and distributesthese papers for this purpose, the views in the papers are those of the authorts),A complete list of available Health Policy Research Unit Discussion Papers and Reprints,along with an address to which requests for copies should be sent, appears at the back ofeach paper.UBC CENTRE FOR HEALTH SERVICES AND POLICY RESEARCHDISCUSSION PAPER HPRU 93:13DWho Are the Zombie Masters, and What Do They Want?Robert G. EvansDepartment of Economics, andCentre for Health Services and Policy ResearchUniversity of British ColumbiaMorris L. BarerCentre for Health Services and Policy Research, andDepartment of Health Care and EpidemiologyUniversity of British ColumbiaGreg L. StoddartCentre for Health Economics and Policy Analysis, andDepartment of Clinical Epidemiology and BiostatisticsMcMaster UniversityVandna BhatiaDurham Region District Health CouncilSeptember 1993This work was funded by the Ontario Premier's Council on Health, Well-Being and SocialJustice. Responsibility for the views expressed herein, and any errors or omissions, rests solelywith the authors. R.G. Evans is supported by a National Health Scientist Award from Health andWelfare Canada, and is a Fellow of the Canadian Institute for Advanced Research. G.L. Stoddartand M.L. Barer are a Fellow and an Associate, respectively, of the Institute. Vandna Bhatia wasa staff member at the Council during the completion of background work for this project Theauthors wish to thank the many individuals both inside and outside the health care system whohave taken the time to share their views on user charges.PrefaceThis is one in a series of articles by the authors about the ongoing debate over usercharges in the Canadian health care system.In thispaperwe examine the "zombie-masters", those people and organizations whohaveconsistently revived and promoted the idea that user charges will help meet a number ofimportant social policy objectives, despite the fact thatsuch charges have been repeatedly rejectedby policy-makers and the general public (and the claims of their supporters refuted by analysesof the effects of such charges). We attempt to analyze their behaviour and motivations; in sodoing, we identify a number of distinct groups and find that they seem motivated largely by theexpectation that they, or the people they represent, will benefit in some way from the (re-)introduction of user charges.Otherpapers in this series discuss frequently heard arguments for usercharges, and focuson specific, and sometimes more technical, dimensions of the user charge debate. A briefdescription of each paper follows (titles are tentative)."Why Not User Charges? The Real Issues", describes and analyzes the most frequentlyheard arguments for user charges and what evidence there is for claims and counter-claims thatare often made. We explore the arguments carefully, asking what they really mean, what valuesthey are based on, and what fundamental issues are at the heart of the user charge controversy."The Remarkable Tenacity of User Charges" concisely documents the history of the usercharge debate in Canada. It reviews the participation, positions and rationales of Canadianinterest groups in debates over patient participation in health care financing."User Charges, Snares and Delusions: Another Look at the Literature" reviews andextends an earlier in-depth analysis of the effects of user charges which three of the authorspublished in 1979. The paper assesses whether experience and published literature in the yearssince then alter any of the (largely negative) conclusions of the earlier study concerning theability of direct charges to patients to achieve important public policy objectives, includingcontrolling health care costs."Charging Peter to Pay Paul: Accounting for the Financial Effects of User Charges"outlines a formal andcomprehensive analytic framework in which income transfers - the principaleffects of user charges - can be traced between groups in the population (e.g. the healthy, thesick, the rich and the poor), between payers and health careproviders, and among providers. Thepaper uses the framework to analyze the income transfers associated with different types of usercharges."It's Not the Money, It's the Principle" examines why usercharges exist for some healthcare services and not for others. The paper analyzes the characteristics of services which (do orshould) underlie decisions to charge in part or in whole for specific types of services.In addition, a bibliography entitled "User Charges in Health Care" provides an extensiveset of references to articles of relevance to the usercharge debate in Canada, drawn from diverse2sources including academic research and policy analysis literature, the popular press, governmentdocuments and reports, and the publications and reports of non-governmental organizationsincluding the professional associations representing a variety of health care providers.Who Are the Zombie Masters, and What Do They Want?"To Every Complex Problem There is a Simple Answer:Neat, Plausible, and Wrong"H.L. Mencken"Nothing that is regular, is stupid." (American policy analyst T.R. Marmor). Argumentsfor user charges in health care havebeen withus for a very long time. The same arguments havebeen advanced and rejected for at least thirty years in Canada; they were all thrashed out at thetime of the Hall Commission [1], and on a number of occasions since [2].Yet they recur. Like zombies in the night. these ideas may be intellectually dead but arenever buried. They may lie dormant for a time -- in the late sixties, for example. or the lateeighties -- but when stresses build up either in the health care system or in the wider publiceconomy. they rise up and stalk the land. So far. the fundamental principles of the Canadianhealth insurance system have been strong enough to hold back these challenges each time theyhave arisen, but this is no assurance of future outcomes.But why do these same ideas constantly recur. to be met with the same refutations, timeand again? The answers may actually be quite straightforward. First, they offer a simple andintuitively appealing 'solution' to a complex and urgent policy problem. User chages, amtheir putative effects. are easy to understand. They are consistent both with the "pop" economicsto which virtually every one of us is continuously exposed by the media. and with the simple­minded "supply-and-demand" models that are offered in elementary economics courses as general"explanations" of economic behaviour. Most of those who are involved in the process ofdeveloping and 'selling' policy changes have had some formal training in economics. Very fewhave any experience with or understanding of health care systems. which are among the mostcomplex forms of human organization.And second. while ineffective for many of the purposes claimed. user charges do in factprovide significant benefits to some members of society, although at the expense of others. Thepatterns differ depending upon the form of the charge [3]; but all redistribute incomes from usersof care either to health care providers or to upper-income taxpayers. Those who stand to gainthe most from the introduction of such charges have an obvious interest in promoting them, andin trying to convince others of their merits.Each of these answers is plausible, and has elements of truth. although neither alonerepresents the whole story. Simple ideaswhich are generally agreed to be wrong. or which serveno organized interests, may survive at the fringes of society but receive no serious policyattention. On the other hand, an interest group which cannot translate its objectives into policyproposals which are understood by a wider audience, will also gain little support.2To stay on the agenda, it helps if simple and intuitively appealing solutions to socialproblems also favour concentrated and influential interests. Such "solutions" may on balance beharmful, but if the interests that they threaten are diffuse, so that there is no organized "voice onthe other side," the policy may be hard to suppress. The larger and better organized are thesupporting interests, the more frequently and forcefully the idea will be repeated.In some cases, agricultural marketing boards, for example, or Bill C-22extending patentprotection for prescription drugs, the concentrated interests are sufficiently powerful, and theiropponents so diffuse, that they win a clear-cut victory, despite general understanding that theprincipal result is to transfer large amounts of wealth from the many to the few. But when theopposition is also strong, the policy idea neither disappears not sees the light of day. It becomesa zombie,In this paper we focus our attention on "zombie-masters", those people and organizationswho over the years have consistently revived and promoted the idea that user charges willachieve any number of good things. We interpret their behaviour as motivated by the expectationthat they, or the people they represent, would benefit; this expectation seems well-founded. Thisis not to imply that all those who might support user fees are so motivated. There areundoubtedly many Canadians who have become increasingly concerned about the problem ofpublic deficits, and who are becoming uneasy about the 'sustainability' of the Medicare system.But this paper is not about them. Elsewhere we attempt to disentangle the many "popular"arguments about the effects of user fees [4].Thus we find advocacy of user charges maintained over many years by the same interestgroups [2]. But the translation of this advocacy into policy has so far largely failed, becausethere has been insufficient resonance of these ideas in the rest of the Canadian community. Thusto understand the longevity of user charge proposals requires an understanding both of thesources of support, and of the nature of the policy environment. The interests are always present,and always hopeful that this time they will get their way.Who Benefits from User Charges?The potential beneficiaries from the introduction of user charges in the Canadian systemappear to fall roughly into five groups:1) Those who hope to contribute less to funding health care;2) Those who hope to have improved access to health care;3) Those who presently provide care but hope to be better paid;4) Those who hope to become paid by the health care system;and5) Those who advocate on behalfof any of those in the above four groups.The fifth group is comprised of individuals or organizations that identify, coalesce, andpromote the interests of those in the first four. They may be specific to an industry -- medicalassociations, or associations of insurers, for example - or may represent a "class" interestof thegenerally healthy and wealthy, such as chambers of commerce or the Canadian Federation of3Independent Business. But they also include "ideological entrepreneurs", like the Fraser Instituteor the National Citizens' Coalition, which provide an umbrella for a wide range of diversepersons and interests who expect to benefit from a reduced role for government -- in or out ofhealth care.Unlike members of the first four groups, the advocates in group 5 would not benefitdirectly from the introduction of user charges. But theyreceive financial and other supportfromthose who would, contingent upon their credibility and effectiveness. They play the role of"transmitters", drawing their power from the groups they seek to represent, sending out anunvarying signal over time, and trying to find the wavelength which will generate enoughresonance among the rest of the community to support a change in policy.All benefits to any of these five groups, however, can be shown to result from either theshifting of costs onto other -- and equally identifiable -- individuals or groups, and/or thegeneration of additional direct or overhead costs in the health care system! User charges serveprimarily to move money from one set of pockets to another [3). They also influence thedistribution of access to health care, and possibly of health benefits, but their overall effects onpopulation health are likely to be negative. And to the extent that they meet the aspirations ofmembers of groups (3) and (4) above, they will raise the overall costs of health care.Paying Less and Getting More: Groups (l) and (2)In all collectively funded health care systems, that is, all systems in the real world(outside the imaginations of neo-classical economists [6)) most people pay for more than theyget, while a few get much more than they pay for. Given the realities of illness incidence, thisis how it has to be, and there is no significant political support for change. Only the lunaticfringe imagine a health care system wholly funded from individual out-of-pocket payments. Thereal policy issue is not whether the healthy and wealthy will subsidize the poor and sick -- theymust and they will -- but the extent and pattern of financial redistribution, and its influence onaccess to care?If we begin with a system like that of Canada, where effectively all spending for hospitaland medical care is financed through general taxation, then the introduction of usercharges shiftspart of the cost burden from those who pay taxes to those who use care. Since tax payments are1. If the simple-minded economists' story wereuser charges reduce the overall costs of health care,groups (3), (4) and (5) would not be advocating them.not [5); and they are.true, thatmembers ofBut it is2 Even so, the financing of health care may still beregressive. In the United States, for example, "[l)ow incomefamilies spend over eight times as much out-of-pocket as do upper­income families (8.5% vs. 1% respectively)" [7). Yet even there,health(ier) and wealth (ier) subsidize poor(er) and sick(er) throughboth public and private insurance programs.4closely related to income, and use of care is closely related to sickness, it follows that in generaland on average the healthy and wealthy gain, the poor and sick lose. Those whose business itis to represent the economic interests of the former, advocate user charges.There may be other effects. Access to care may change, total costs may rise or fall, asmay the relative incomes of different types of providers. But whatever else happens, costs havebeen shifted. Money has been taken out of one set of pockets, and put into another. And in theeconomist's useful but treacherous framework, "holding everything else constant", the gainers andlosers are as described. Those who refer to user fees as "taxes on the sick" are quite correctlypointing out that the degree of subsidy through the tax system is reduced, and the slack is pickedup by the users of care.But what of the healthy and poor, or the wealthy and sick? And what about the rest, whoare neither perfectly healthy nor very sick, and neither wealthy nor destitute. In reality we areall distributed along continua in both dimensions. But we can with a little less violence to realityanalyse the intersections of three arbitrary divisions on each continuum -- high, middle and low,(as displayed in Figure 1) -- without knowing exactly where each division may be [3].The interests of those in the top left and bottom right comers are easily identified, asabove. But the opposite comers bring out additional interests. The wealthy and sick may alsogain from user charges, in two ways. First, ifBlgh1= ,--LoII1Figure 1The Distributional Mects Q,fUser FeesI Financial Status I--- -Large TaxReduction, Smallor No UserFees,Small or No UserFees Small or No Tax ReductionLarge TaxReduction; Smanor NoTax Reduction;HighUserFees; High User Fees;Improved Access to Care? Reduced Access to CareVI6one is sufficiently wealthy, and the tax system sufficiently progressive, then the savings frompaying less for the illnesses of others may well outweigh the costs of paying for one's own.Secondly, however, user charges may actually improve access to care for the ill andwealthy, and conceivably even enhance their health. In any case they may believe so. In ahealth care system which is entirely tax-financed, there will generally be restrictions on accessto certain types of care. Access will depend upon professionally determined criteria, rather thanself-determined willingness to pay. But partial user charges could change all this, bydiscouraging those with lower incomes and permitting the deeper pockets to move to the headof the queue.When they get there, of course, most of the cost of their care is still publicly supported.Hence the enthusiasm for partial, rather than full, user charges. After all, such charges providepreferred access to a public resource. A wealthy Canadian always has the option of headingsouth to buy whatever s/he wants, at full (U.S.) cost But how much more convenient and lesscostly it would be to have others subsidize his/her care closer to home!The last comer, the poor and healthy, may also gain from user charges, at least in theshort term. Everybody pays some taxes; not everybody uses health care. But they are alsoexposed to increased risk -- illness is unpredictable .. and (almost) everyone grows old.For the rest, whether one gains or loses from user charges depends upon one's relativeposition in each continuum. At any level of health, the more wealthy are themore likely to gain;at any given level of wealth, the more healthy are more likely to gain [3]. Thus one wouldexpect to find •• and one does find .. thatwhen people are surveyed about their attitudes towardsuser fees, the proportion of positive responses goes up with income [2].While people's principles are correlated with their economic interests, they arenotwhollydetermined thereby. As emphasized above, the Canadian health care system •• and every otherin the modem world •• depends upon a substantial degree of subsidy from the many to the few.And most Canadians, in the middle of the matrix in Figure I, accept and approve of that. Butif the boundaries in this matrix are seen as shifting, then opinions may shift with them.Declining incomes and tax bases, rising tax rates, growing public deficits, and aperception of relentlessly rising health care costs, may all contribute to a growing unhappinesswith theextent of the present subsidies. Thegapbetween (perceived) personal costandpersonalbenefit may be growing. "Tax the sick? Why not? Tax anybody, so long as it isn't me." If inaddition theescalating rhetoric of cut-backs from the providers of care leads more people to fearthat care will not be available when they need it, more in the middle ground may come toidentify with and behave like those in the lower left comer. They want to pay less for others'care, so as to be sure of being able to get their own, when they need itThe task for advocates of user charges is to encourage more people to see things from thisperspective, and not to dwell on the possibility that in a declining economy they too mightbecome unemployed and sick. .7More and Better Fed 'Places at the Health Care Feast': Groups (3) and (4)The channels through which providers and would-be providers stand to benefit from usercharges are somewhat more easily portrayed. Some years ago, Uwe Reinhardt introduced thegraphic metaphor of "places at the health care feast" to represent the numbers and sizes of theincomes which people draw from the health care system [8]. Since by definition, every dollarof health care expenditure is equal to a dollar of someone's income, it follows that any increase(decrease) in health care expenditures, regardless of the source from which it is funded, mustbereflected in a corresponding increase (decrease) in the income (from health care) of some(potentially identifiable) persons. This may take the form of additional persons drawing incomefrom health care -- new places at the feast -- or increases in present incomes -- larger helpings.Thelatteris the simplest relationship to observe. Extra-billing by physicians, forexample,was a quite specific way of increasing the prices of care, and correspondingly the incomes (orat least the hourly rates) of those providing it [3]. But there are more indirect relationships aswell. User fees for hospitals or otherfacilities, if they are used to expand capacity and activitylevels, will increase the billing opportunities of fee-for-service physicians as well as create morejobs and incomes for support personnel.'But providers are far from uniform in whether they support user fees, and in what form.Physicians tend to be supportive, for example, while nurses and otherhospital staffare generallyopposed. Apart from differences in ideology and personal income level, there may be otherexplanations. In hospitals, there is no necessary connection between a user fee, and the incomeof any employee. The funds raised may be used to pay higher incomes to existing workers, butneed not be. On the other hand, the extra-billing physician sees the money go directly into hisown bank account -- at least as gross revenue.Yet another possibility may be the quite different mix of clientele served by physiciansand by hospital workers. A large and increasing share of hospital bed capacity is taken up withvery elderly patients with ill-defined conditions, who are commonly both low income and verylong stay [9]. The prospects for substantial self-pay revenues from this group are small. Thepatient load of the average physician, in or out of hospital, tends to be on average younger,healthier, and wealthier.3. Fee-for-service physicians in a publicly funded system arein the peculiar position of depending to a considerable degree uponpublic capital and complementary labour in their ·private"practices. In the jargon of the economist. these are public inputsin a private production function. The extent of this ·publicsubs i dy s to private practice is obviouly very different in thedifferent specialties. being very low for General Practice. andvery high for surgical sub-specialties. Since the physician doesnot pay for these inputs. but does get paid for their output, shehas an obvious economic incentive to promote their expansion.Given this incentive. continuous claims of hospital ·underfunding·should come as no surprise.8Physicians' associations have long championed their members' interest in raising moremoney for health care from private sources. They offer both economic and non-economicreasons, although in fact the latter("professional autonomy" or "theintegrity of the doctor-patientrelationship") tend to reduce, on examination, to the hope of higher fees and incomes [2].Taylor, Stevenson and Williams [10, p.138], for example, found in the early 1980s that 57% ofOntario physicians who were paid fees for service would have supported a ban on extra billingif "insured benefit schedules were increased to the point where they were roughly equivalent tothose recommended by provincial medical associations..." (see also [11]).' But hospital workershave always opposed user fees, and hospital associations have been ambivalent [2].Otherhealth professionals, such as chiropractors and optometrists, have from time to timeadvocated usercharges on physicians' services with thehope of re-directing more workandmorerevenues to themselves [3]. Dentists have always and successfully supported "private" insurancefor their own services (although with a hidden subsidy from the income tax system), whichpermits them to extra-bill above the insured rates.Pharmacists have also recommended user fees for prescription drugs, paradoxicallyarguing that these were needed to encourage the~ "to not obtain drugs that are not absolutelyessential" [12V On the otherhand, pharmacists in British Columbia remain quite unhappy abouta user fee which requires elderly patients to pay, not a flat fee per prescription, but a largepercentage of the dispensing fee (though none of the ingredient cost). This fee is set by theindividual pharmacist, so the user fee is intended to encourage price comparison by consumers,and competition among pharmacists. The unhappiness of the lattersuggests that such a carefullytargeted user charge might, in fact, improve dispensing efficiency, lowering costsand, therefore,pharmacists' incomes.In general, then, userfees have been advocated by those provider groups whose membersexpected either increased fees or increased billing opportunities as a result, and have beenrejected by those who saw no such opportunities. Hospital administrators (and therefore theirformal associations) appear to have been doubtful about the net revenue effects of any charge low .enough to be politically acceptable in Canada.But recognized health care providers are not the only ones who may draw incomes fromhealth care. For hospital middle management, or private health care entrepreneurs (suppliers of,e.g. accounting, legal or financial services), the interests in increased levels of overall health carefunding are similar to those of the providers -- more jobs, and/or higher incomes. Qualityassurance, continuous quality improvement, and other related new initiatives whose 'official'objectives are to improve the overall quality of care, are supported by many who would benefit'. As Tommy Douglas is reported to have said: 'When someonesays. "It's not the money, it's the principle', you can be sureit's the money.'5. One wonders what the physician who prescribed theinessential drugs was believed to be doing.9from increased levels of such activity, even though this may not in fact be their primarymotivation."Private insurance underwriters and marketers also stand to benefit from anyreintroductionof user fees in a form and of a scale as to create a market for private insurance. In both theUnited States and France, the only two countries in which significant user charges are imposedin the public system (allegedly as ways of controlling costs), there is an active market in privatecoverage against these charges.' The result is thus not cost control, but cost expansion throughthe creation of additional private incomes in the financial services sector,"Is Anybody Listening'?The messages sent out by the groups above have not yet generated sufficient resonancein the wider community to bring about a significant change in policy - user charges are stillmarginal in the Canadian health carefunding system. But who is this wider community'? In factwe can identify at least three communities -- the political, the bureaucratic, and the general public(citizens, voters, taxpayers, actual or potential patients).The minimal role played by user charges in the Canadian health care system is not anaccident. It is the result of explicit policy choices made by elected officials; and those choices6 This poses an interesting dilerrnna, for example, forstudents of health services administration programs in the UnitedStates who, on the one hand, may understand perfectly clearly theproblems with private financing, but on the other recognize equallyclearly that such private financing may represent their most likelyprofessional futures.7 But it can happen here. As noted elsewhere [2], theOntario Hospital Association suggested in the late 1970s that thenon-profit insurance carriers should be permitted to offer coverageagainst the user fees that were necessary to increase the fundingessential to the survival of the system [13].B There is a direct opposition between the interests of theunderwriting industry, and that of the wider society, which isneatly expressed in their contrasting rhetorics. From the widersocial perspective, the proportion of premium income which is notpaid out for health care represents the "overhead" burden of thefinancing system. An efficient payment system minimizes thisoverhead. To the industry, the proportion of income paid out asclaims is the "loss ratio·, which a for-profit insurance companymust attempt to minimize if it is to remain healthy. It is worthnoting that the insurance industry is not sitting idly by waitingfor the re-emergence of user fees. For only $540/year a plandesigned by a Canadian and offered by aU. S. company offersCanadians ·wait list· insurance, which entitles them to access toU.S.-based care if they are on a wait list in Canada for more than45 days for a condition that did not exist at the time they too~out the insurance [14]. The marketers of this plan have a clearinterest in supporting those who claim that waiting lists in Canadaare a serious problem, and getting worse!10have been largely maintained in the face of the periodic resurgence of widespread calls for theirintroduction. The odd politician has over the years expressed a personal ideological predilectionfor such charges, but a balancing of the political costs and benefits has, at least until now,dictated staying the course.The obvious benefits of user charges for politicians are financial, although not personalas for groups (1) and (2) above. User charges provide an alternative to explicit tax revenues.Raising taxes is never popular; nor is accepting escalating deficits. So if costs can be shiftedfrom the public treasury to private individuals, particularly if this can be described in a positiveway -- people are "taking responsibility for" or "participating in" their own care, or user fees areweeding out "abuse" of the health care system -- politicians can reduce pressure on the publictreasury without jeopardizing their political careers.The political costs, however, are that most ordinary voters do not yet see things this way.To be seen as "against Medicare" continues to be tantamount to political suicide (although thismay be changing as politicians successfully convince the public that the deficit is public enemy#1). These political costs have clearly been perceived as outweighing the benefits -- since wedo not have user charges.The recent renewal of interest reflects the substantial increase in financial pressure facedby all governments, combined with the potential political costs of taking serious steps to limithealth care costs and "reform" health care. Several provincial governments have begun to movedown the latter road -- and are incurring those political costs. The alternative of letting thehealth care industry go where it will, and of shifting the economic burden back to the users,begins to some to appear as the lesser evil.Moreover, as the federal government appears intent on continuing to phase out its cashtransfers and, in so doing, shifts its own deficits onto the provinces, the financial advantages ofuser charges are increased. Under the terms of the Canada Health Act, a provincial treasurycannot benefit from user charges because any money raised in this way, regardless of therecipient; creates an off-setting reduction in the federal cash transfer. But once these cashtransfers are reduced to zero (as they will be, in some provinces, within the next decade if currentfederal legislation remains in place), there will no longer be any obvious penalty (at least withincurrent federal regulations) for such provincial cost-shifting. Indeed, the federal government'sown actions bave been interpreted by some as a covert invitation to the provinces to do as theyplease with the "sacred trust" of Medicare. In any case, if no other federal penalty emerges thepolitical costs and benefits will have shifted again, in the direction of favouring provincial usercharges.This scenario suggests, not so much that politicians are becoming more convinced by thearguments made by those identified above, but that the balance of the other pressures imposedupon them makes any new revenue source attractive. The existence of a ready-made supportiveconstituency, wealthy and influential, with a convenient set of cover stories, adds to theattraction. The fact that the overall health care system would as a result become more costly,less equitable, and probably less effective, is not irrelevant, but is only part of the balancing act.11Don Mazankowski vs. Benoit Bouchard?In this balancing act politicians are to a considerable extent dependent upon theirprofessional advisors. These bureaucrats are, however, far from uniform in their understandingof the dynamics of the health care system, and the potential negative effects of user charges.Some have considerable experience with, and understanding of, the objectives and strategies ofthe different participants in that system. But others, particularly those in the core treasury andfinance ministries, seem to view this field through a standard set of analytical lenses, all groundwith the same tools.People in the flnancial ministries tend to be recruited from economics or commerceprograms, where their training is largely based on all-purpose economic theories developed to"explain" the workings of private market systems. Knowing little about the areas dealt with bythe line departments, they appear to fall back on familiar "supply-and-demand" models which,as descriptions of how health care systems 'work', are "neat, plausible, and wrong"," The morecomplex and often contradictory reality is not in fact beyond their grasp; indeed these are mostlybright and highly motivated individuals, and theylearnfast But they also seem to tum overfastThe system within which they work rewards the honing of generalist fiscal management skills,not the accumulation of specialized institutional knowledge.The deteriorating fiscal climate forces a re-balancing by politicians -- this time of sourcesof policy advice. In an expansionary environment, those in power look to line ministries todevelop and fine-tune policy. But the power of the financial ministries increases as the "bottomline" sags [15]. Line Ministries may be reluctant to make many of the hard choices necessaryin tight fiscal environments. Since the financial ministries bear the (deficit) consequences of thisreluctance, we observe financial ministries' policy reach extended during periods in whichexpenditure control is the paramount policy concern.The professional advisors, however, hold very few votes. Ultimaiely, the reason that wedo not have user charges in Canada would appear to be that most politicians believe that mostpeople do not want them -- and the ones who believe otherwise are not in power. Most peoplesee themselves as using care only when they need it, and see user fees as getting in the way oftheiraccess to necessary care. Moreover, collectively they take pride in the Canadian health caresystem as one which goes out of its way to ensure access for all, irrespective of financialstatus." They are concerned about "abuse" -- by others -- and a growing number appear tobelieve that user charges might alleviate this problem [2]. But at the same time most continue9 If such "off-the-shelf" modelsdescriptions of health care systems, we wouldhealth care systems, with all their complexity.be provided through the private market-placecommodities.provided helpfulnot have separateHealth care wouldlike most other10. "There is no social program that we have that more definesCanadianism or that is more important to the people of ourcountry." [Then Premier David Peterson of Ontario, opening theInternational Conference on Quality Assurance and Effectiveness inHealth Care, Toronto, November 8-10, 1989.]12to believe strongly that everyone should get the care they need "on equal terms and conditions"regardless of ability to pay.Thusthemembers of the public arealso engaged in a continuous balancing act, balancingtheir commitment to a collective enterprise against their concerns as individuals. Pride in ourhumane egalitarianism competes with some resentment at the thought of "abuse" by others, andeven more important, the fear that maybe the system will not be there when! need it. Theselatter concerns are more likely to come to the fore in tight economic times, fueled by the claimsof "underfunding" from those who hope, through private funding, to increase theirown scope ofactivity, markets, and incomes.Final ThoughtsWhile the messages have undergone some changes over time (see [2]), the messengershave not -- they have been around for a long time, and they will be around for a long time.There is a good reason for this. Human nature is such that most people and organizations tendto promote their owninterests. There is nothing inherently "bad" or "wrong" with this (althoughsome people can get carried away some of the time). The trouble is caused by the "zombiemasters" dressing up their interests as being in the "public interest".The beneficiaries from substituting user pay for tax finance can be readily summarized.The wealthy will pay less of the costs of the system and get more of the care; the poor will paymore and get less. The higher your income, the more likely you are to gain; the sicker you are,the more likely you are to lose. In the United States, where user charges are a prominent featureof health care financing, families in the lowest income group (in the 1987 National Medical CareExpenditure Survey) spent 8.5% of their incomes on out-of-pocket charges, 7.9% on healthinsurance premiums, and 4.1 % on (health-related) taxes. Those in the highest income groupspent 1%, 2% and 7.2%, respectively [7].Others will benefit as well. Some providers of care (and eventually private insurers) willearn more, as total costs rise; but governments will pay less (than they otherwise would); thusMichael Rachlis' warning of an "Unholy Alliance" between provincial governments, medicalassociations, and private insurers, backed by those with higher incomes who have most to gainfrom tax reductions.Whatis new in the current brew is the greatly increased concern overgovernment deficits.The collapse in general economic growth rates after 1980 has placed great strains on allgovernment budgets, while increasing public resistance to new taxes. "Tax and spend" is nolonger acceptable policy, but people still strongly support the health care system. This doublebind pushes governments in the direction of alliance with the more "traditional" zombie-masters.As governments become more successful in convincing the general public of theseriousness of the deficit problem, they may simultaneously be eroding opposition to user fees.These can be presented by their beneficiaries as a necessary component ofa deficit reductionstrategy. In reality, the strategy is one of deficit transfer, not of deficit reduction, raising more13money for health care by "taxing the sick" while avoiding the more fundamental reforms inhealth care which really l!!l' necessary (but politically far more bruising) for the long-termsurvival of Canadian Medicare. The losers. though many. are diffuse. confused and without anyobvious channels of influence in a world where their elected officials are constantly having todecide how to respond to advances from "zombie masters" making fiscally attractive offers.There is no entrenched. concentrated interest on the other side. nor (as yet) any obvious meansof channeling and focusing the broad opposition so as to counter the alliance. Yet failure to doso moves us closer to an American-style system.14References1. Canada, Royal Commission on Health Services (1964), Report, Volume 1 (HallCommission), Ottawa: Queen's Printer2. Barer, M.L., V. Bhatia, G.L. Stoddart and RG. Evans (1993, forthcoming), "TheRemarkable Tenacity of User Charges", paper prepared for the Ontario Premier's Councilon Health, Well-being and Social Justice, September.3. Evans, R.G., M.L. Barer and G.L. Stoddart (1993, forthcoming), "Charging Peter to PayPaul: Accounting for the Financial Effects of User Charges", paper prepared for theOntario Premier's Council on Health, Well-being and Social Justice, September.4. Stoddart, G.L., M.L. Barer, RG. Evans and V. Bhatia (1993), "Why Not User Charges?The Real Issues", paper prepared for the Ontario Premier's Council on Health, Well-beingand Social Justice, September.5. Stoddart, G.L., M.L. Barer and RG. Evans (1993, forthcoming), "User Charges, Snaresand Delusions: Another Look at the Literature", paper prepared for the Ontario Premier'sCouncil on Health, Well-being and Social Justice, October.6. Parker, R (1993), "Can Economists Save Economics?", The American Prospect13(Spring):148-160.7. Rasell, E., J. Bernstein, and K. Tang (1993) "The Impact of Health Care on FamilyBudgets" Economic Policy Institute (April) cited in Healthcare Trends Report 7:7 (July)p.5.8. Reinhardt, U.E. (1982) "Table Manners at the Health Care Feast" in D. Yaggy and W.Anlyan, eds. Financing Health Care: Competition vs. Regulation, pp. 13-34, Cambridge,Mass.: Ballinger.9. Evans, RG., M.L. Barer, C. Hertzman, et al. (1989), "The Long Goodbye: The GreatTransformation of the British Columbia Hospital System", Health Services Research24(4):435-459.10. Taylor, M., Stevenson, H.M. and Williams, A.P. (1984). Medical Perspectives onCanadian Medicare. Attitudes of Canadian Physicians. Toronto: Institute for BehavioralResearch, York University.11. Bagley, G. (1988). Money was the main reason for Ontario strike. The Medical Post,May 31, p. 5.12. Ontario Pharmacists' Association (1977), Brief to Joint Advisory Committee of theGovernment of Ontario and the Ontario Medical Association on Methods to Control15Health Costs. October.13. Ontario Hospital Association (1978), Presentation to the Select Committee on Health CareFinancing and Costs. Don Mills, Ontario, p, i.14. Dineen, J. (1993), "U.S. insurer hopes to profit from Canada's health 'delays'", TorontoStar April 4, p. A4.15. York, G. (1992). "Michael Wilson's quiet revolution: The Toronto Globe and Mail,July 24, p. AI, A7.


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