Health Financing, Universal Pharmacare & Getting Value for $$$ Spent in Healthcare

canadian-coins-kmr-photographyBlog post by Colin Hung

There are a lot of appealing things about Canada. Four distinct seasons, a wealth of natural resources, ruggedly beautiful landscapes and a welcoming people. But perhaps one of the most unique aspects of Canada (at least for our American friends), is our universal healthcare system that is funded with public money.

This week on #hcldr we’ll be discussing various aspects of financing a public health system and healthcare in general.

Now, before you get concerned that this next topic for #hcldr does not apply to the US, consider a moment these statistics:

  • In 2013, the Center for Medicare and Medicaid Services (CMS) estimated that federal, state and local governments paid for 43% of healthcare expenditures. This leaves 57% of healthcare costs for private citizens to bear.
  • In 2016, David U Himmelstein MD and Steffie Woolhandler MD published a study in the American Journal of Public Health where they calculated that the total of public funds going to healthcare in the US was closer to 64.3%. The authors expect that percentage to rise over the next 10 years.

So even though many consider the US healthcare system to be privately funded, it may in fact be closer to a publicly funded system than at first glance.

Financing a public health system is not easy. In Canada, the system is funded via a variety of taxes – on individuals as well as employers. Those tax monies are collected by the federal government which in turn doles it out to the provinces (aka states) who actually pay for healthcare. It’s an imperfect system, but it does provide every provincial citizen with “free” healthcare.

In an article published by the Canadian College of Health Leaders @CCHL_CCLS, D. Wayne Taylor (one of our esteemed #hcldr guest hosts this week), Executive Director of The Cameron Institute @CameronInst wrote:

Lack of money is not the issue [when it comes to public healthcare]; how that money is spent is the issues – what public healthcare is covering and not covering. The same dollar amount can be spent quite differently and more effectively. The 1950s first-dollar, single-payor decision [in Canada] shifted the burden from the individual to government, but a lot has changed since the 1950s. Today Medicare is not universal, comprehensive, reasonably accessible or portable.

In the article Taylor argues passionately that the current model of “universal healthcare” that only funds medical doctors and hospitals is failing citizens.

Medical evidence challenges the efficacy of only funding medical doctors and hospitals today as compared to 50 years ago. Dental health is crucial to nutrition, heart health, pancreatic health, and well babies. Vision care is imperative for education, mobility, and employment. Evidence-based chiropractic is most cost-effective for lower back ailments.

Taylor highlights one particularly vulnerable aspect of public healthcare – funding drugs and therapies.

Thousands of Canadians die prematurely due to the lack of access to new and better medicines, despite all that is spent on healthcare. Provincial plans pay for a senior’s $10 bottle of 600 mg ibuprofen for osteoarthritic symptoms but not the biologic to save a child afflicted with a rare genetic disease; most seniors today can afford a $10 prescription but few families can afford a $100,000þ biologic. The socio-economic costs to society of losing an otherwise potentially healthy and productive member, and the direct cost of palliative care, usually far outweigh the purchase price of the drug.

The cost of drugs is particularly hot topic these days. Just look at the recent drug-pricing practices of Mylan Inc (maker of the EpiPen) and Turing Pharmaceuticals under then-CEO Martin Shkreli. In fact, according to the Journal of the American Medical Association (JAMA) we may just at the start of a drug-price crisis.

Drug coverage was the focus of an article co-written by Steven G Morgan PhD @SteveUBC, a Professor at the University of British Columbia, School of Population and Public Health (another of our esteemed #hcldr guest hosts this week). In the article Morgan highlights how important universal public coverage of prescription drugs can be in controlling healthcare costs:

As a consequence of these various forms of inefficiency, Canadians spend considerably more per capita on pharmaceuticals than comparable countries with universal, publicly financed healthcare systems that include universal, public coverage of prescription drugs. Pharmaceutical expenditures per capita in Canada is now 25% greater than the next highest-spending comparator country (Germany), 42% higher than the median of comparable health systems.

As bad as it is in Canada, it’s much much worse in the US. In 2015, the Wall Street Journal published a table comparing drug prices in the US to that in Norway, the UK and Canada. Avastin, a cancer drug, for example costs $685 in the US. That same drug is $399 in Norway, $379 in the UK and $398 in Canada. Same drug. Different price.

Morgan goes on to point out that if drugs were rolled under a publicly funded system (like it is in Norway and the UK), it would keep prices in check since pharmaceutical companies would have to negotiate with governments to get their drugs into those large markets. Furthermore, pharmaceutical companies would have to prove the efficacy of their products in order to receive consideration in the first place.

I agree with Taylor and Morgan that it’s time for governments and healthcare leaders to take a serious look at the way healthcare is paid for. Especially when it comes to drugs. We have a window of opportunity now that drug prices are in the spotlight. Time to seize the initiative.

This week on #hcldr we will be discussing various aspects of public healthcare – with particular focus on healthcare costs. We will be joined by a number of guest hosts:

  • Wayne Taylor, PhD, F.CIM, Executive Director, The Cameron Institute – @CameronInst
  • Steve Morgan, PhD, Professor, University of British Columbia, School of Population and Public Health – @SteveUBC
  • Canadian College of Health Leaders, @CCHL_CCLS

Please join us on Tuesday November 15th at 8:30pm Eastern (for your local time click here) when we will discuss the following questions:

  • T1 Do you believe there a link between how healthcare is paid for (ie: public, employer, insurance, patient) & system performance?
  • T2 What does “medically necessary” care mean to you?
  • T3 What could be done to ensure that new treatments (drugs, therapies) are fairly priced?
  • T4 What ideas do you have for ensuring patients receive value for the $$$ spent in healthcare?

References

“Rethinking the financing of healthcare in Canada”, D Wayne Taylor, Canadian College of Health Leaders, 25 September 2016, http://hmf.sagepub.com/content/early/2016/09/25/0840470416658904.full.pdf+html, accessed 10 November 2016

“Universal prescription drug coverage in Canada: Long-promised yet undelivered”, Steven Morgan and Katherine Booth, Canadian College of Health Leaders, 25 September 2016, http://hmf.sagepub.com/content/early/2016/09/25/0840470416658907.full.pdf+html, accessed 10 November 2016

“The Current and Projected Taxpayer Shares of US Health Costs”, Himmelstein and Woolhandler, American Journal of Public Health, March 2016, http://ajph.aphapublications.org/doi/pdf/10.2105/AJPH.2015.302997, accessed 12 November 2016

“Tax-Funded Healthcare Expenditures in the US Examined”, Roger Rabb, LexisNexis, 10 March 2016, https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/recent-cases-news-trends-developments/archive/2016/03/10/tax-funded-healthcare-expenditures-in-the-u-s-examined.aspx, accessed 11 November 2016

“Government funds nearly two-thirds of US healthcare costs: American Journal of Public Health Study”, Mark Almberg, Physicians for a National Health Program, 21 January 2016, http://www.pnhp.org/news/2016/january/government-funds-nearly-two-thirds-of-us-health-care-costs-american-journal-of-pub, accessed 11 November 2016

“Public Health Financing”, US Dept of Health and Human Services, June 2013, https://www.cdc.gov/stltpublichealth/docs/finance/public_health_financing-6-17-13.pdf, accessed 11 November 2016

“How public health is funded in Canada and why that needs to change”, Monika Dutt, HealthyDebate, 25 February 2013, http://healthydebate.ca/opinions/how-public-health-is-funded-in-canada-and-why-that-needs-to-change, accessed 12 November 2016

“Mylan’s EpiPen Pricing Crossed Ethical Boundaries”, Daniel Kozarich, Fortune, 27 September 2016, http://fortune.com/2016/09/27/mylan-epipen-heather-bresch/, accessed 12 November 2016

“EpiPen Only Scratches The Surface of The Drug-Price Crisis, JAMA Study Says”, Arlene Weintraub, Forbes, 1 September 2016, http://www.forbes.com/sites/arleneweintraub/2016/09/01/epipen-only-scratches-the-surface-of-the-drug-price-crisis-jama-study-says/#199df4a52613, accessed 12 November 2016

“The High Cost of Prescription Drugs in the United States”, Kessleheim et al, Journal of the American Medical Association, 23 August 2016, http://jamanetwork.com/journals/jama/article-abstract/2545691#jsc160015r64, accessed 12 November 2016

“Why the US Pays More Than Other Countries for Drugs, Jeanne Whalen, The Wall Street Journal, 1 December 2015, http://www.wsj.com/articles/why-the-u-s-pays-more-than-other-countries-for-drugs-1448939481, accessed 12 November 2016

Image Credit

Canadian Coins – KMR Photography https://flic.kr/p/qM84Pe

 

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