Canada's ability to finance its health care system is in desperate need of reform. Demographic changes and other trends, like more expensive technologies, will force a change to our health care system.

Capitalization (investing money now to pay for rising health care costs in the future) must occur if we are to provide comparable quality health care in the future. If we don't, the current pay-as-you-go approach to health care will result in further rationing, a massive tax increase, or further health care demand shifted to the U.S.

If capitalization is a long-term project how do we pay for immediate needs if not through higher taxes

Prioritize Spending
If more funding is needed for health care, some of it should come from cuts in more wasteful or less important government programs. But health care already consumes 40% of the provincial budget. Realistically, the financial sustainability of our health care system must be achieved through greater efficiency in health care itself or by finding funds elsewhere.

Private Funding
74% of health care spending in Saskatchewan is public spending, compared to the Canadian average of 70%. This suggests there is some minor room to expand the role of individuals and private insurers in funding health care in Saskatchewan.

Canadians seem willing to undertake a greater role in funding their own health care needs. In an August 2000 poll, 58% of Canadians supported restricting Medicare to "a set of core services." A poll in February of 1999, 61% of Canadians agreed that they "should be allowed to buy any surgery or lawful medical service they want."

Efficient Spending
Ultimately, the financial sustainability of our health care system must be achieved through greater efficiency and better allocation of resources, not simply the application of more public or private funds.

The Americans, for example, spend much more than we do (both privately and publicly) for a health care system that is in many ways inferior to ours. A recent study by Canadian health economist Martin Zelder showed that increased health care spending did not improve health care outcomes (i.e. reduced waiting times) except in drug spending and capital spending. Clearly we need to get better bang for our health care buck. So how do we allocate existing health care dollars more efficiently

Finding Savings
The capital costs of construction, high-tech equipment, etc., might be minimized by contracting-out to privately-run facilities. If doctors are competing for the public health care system's business and providing their own infrastructure, savings could be substantial. Better home care programs could also minimize the need to construct and staff new facilities.

Using market tools to control costs
Zelder's study suggests that the health care system as it operates in Canada does not channel funds to where they are needed most. The public health care system has no efficient control on costs, and no "non-bureaucratic" means of allocating resources. Since Medicare is a "free service" to the health care consumer, and physicians are paid on a "fee for service" basis, there are powerful incentives to overuse or misuse the system. The introduction of "efficiency incentives" is needed.

These are just a few ideas worth considering that could help improve the long-term sustainability of health care in Canada.

Next week: innovative remedies