Achieving Excellence in Canada s Health Care System: Opportunities for Federal Leadership and Collaborative Action

Achieving Excellence in Canada s Health Care System: Opportunities for Federal Leadership and Collaborative Action Brief Submitted to the House of Commons Standing Committee on Finance August 2013

EXECUTIVE SUMMARY The Canadian Healthcare Association (CHA) wishes to thank members of the House of Commons Standing Committee on Finance for the opportunity to contribute to deliberations on the next federal budget. Founded in 1931, CHA is a federation. Its members are the provincial and territorial health organizations that serve the people of Canada across the continuum of care. CHA leads informed and continuous health system improvement and works for an innovative, accountable and sustainable health system for the people of Canada. Through its members, CHA represents the broad continuum of the health system, from health promotion through acute care to continuing care. Learn more about our solutions to health system challenges at www.cha.ca. Health, as an industry and a state of being, is a vital contributor to the Canadian economy. As a public service, health has an overwhelmingly positive impact on Canada s economic competitiveness. Our publicly-funded health system is respected internationally for ensuring a healthy workforce, and affording businesses based in Canada a definite competitive advantage. Investments in the health sector equate to investments in our economy. Strong, sustained leadership and collaborative action are needed to address challenges and achieve excellence in our health care system. CHA has three recommendations for federal leadership and collaborative action: Recommendation 1: Collaborate with stakeholders on reforms of Canada s prescription drug system Canada has the second highest per capita drug costs in the world and there is wide variability in access to pharmaceuticals among Canadians. CHA calls on the federal government to work with provinces, territories, and all stakeholders, to develop a pan-canadian pharmaceutical plan that reduces disparities in coverage across the continuum of care and jurisdictional disparities. Collaboration is necessary to ensure: (1) that all Canadians have equitable access to medically necessary prescription drugs, regardless of income and location; and, (2) that the system is financially sustainable. Recommendation 2: Create a National Commission on Seniors and Health Care Seniors are the fastest growing population in Canada. By 2036, 25% of the population will be over age 65. After age 65, per capita health spending doubles every decade, reaching $8,425 at age 75 and $16,821 at age 85. A comprehensive strategy that recognizes seniors value to society, maintains their dignity and provides quality care options is required. CHA calls on the federal government to fund a National Commission on Seniors and Health, with the goal of developing a strategy to address the many issues related to Canada s aging population. Recommendation 3: Leave needed dollars in the health system CHA wants to ensure that all hospital functions, including research, are eligible for a 100% GST rebate (HST in some jurisdictions). CHA recommends that the federal government amend the Excise Tax Act to increase the GST/HST rebate to 100% on all eligible purchases, including research inputs, made by publicly-funded, not-for-profit institutions such as hospitals, long-term care facilities, and home and community care services. 2

COMMENTARY Recommendation 1: Collaborate with stakeholders on reforms of Canada s prescription drug system Canada has the second highest per capita drug costs in the world (after the United States) and the fastest rising drug costs among OECD countries. There is wide variability in access to pharmaceuticals among Canadians, with many Canadians falling through the cracks. Ten percent of Canadian seniors, for instance, reportedly admit to skipping prescription drugs due to the financial burden. CHA believes that no Canadian should suffer undue financial hardship in accessing needed drug therapies and recognizes the federal government s role and responsibility as a partner in a funding model for coverage with the provinces and territories. Collaboration among all parties involved in Canada s pharmaceutical system including the federal government is needed for Canada to address its piecemeal, inequitable and expensive system. CHA recommends that the federal government work with provinces, territories and all stakeholders, to develop a pan-canadian pharmaceutical plan that reduces disparities in coverage across the continuum of care and reduces jurisdictional disparities. Collaboration is necessary to ensure: that all Canadians have equitable access to medically necessary prescription drugs, regardless of income and location; and, that Canada s prescription drug system is financially sustainable over the long term. Federal funding of the recommendation The federal government is a key collaborator in reducing overall pharmaceutical costs for Canadians. Working together with provinces, territories, and all stakeholders, the federal government could explore options to reduce the cost of pharmaceuticals, including: increase bargaining power through bulk purchasing arrangements on behalf of large populations in negotiations with manufacturers; modernize the mandate of the Patented Medicines Prices Review Board to lower drug costs; explore measures to ensure appropriate and cost-effective medicine use; and, find ways to reduce administrative costs; etc. CHA believes that $1 billion or more in pharmaceutical costs could be reduced over five years or more. Intended beneficiaries Reforms to Canada s prescription drug system could: 3

(i) lead to significant savings for Canadians, including Canadian governments. Prescription drugs are the second largest component of Canadian health system costs, representing about 16% of overall health expenditures. Canada is the only developed country with a universal health care system that does not provide universal coverage of prescription drugs. Countries with universal coverage spend much less than Canada on pharmaceuticals, partly because systems that purchase medicines on behalf of entire populations have greater bargaining power in price negotiations with drug manufacturers. Measures to reduce administrative costs, increase bargaining power in negotiations with drug manufacturers, and address funding silos, would result in significant savings for Canadians. (ii) reduce inequities among Canadians. Most Canadians pay out-of-pocket for health and prescription drug expenses and these costs vary from one province to another. Some Canadians face significant financial burdens. Reforms could reduce inequities. (iii) lead to better health for Canadians: The appropriate use of pharmaceuticals can reduce the incidence of disease, as well as health-related complications. Studies have repeatedly shown that even small charges can prevent patients from filling prescriptions that might otherwise improve their health. Reforms resulting in reduced and/or eliminated of out-of-pocket costs would contribute to better health outcomes for Canadians. General Impacts Prescription drug reform initiatives could: (i) ease pressures on the Canadian health care system. Many medicines can reduce the risk of future illnesses. When patients don t fill prescriptions because of financial barriers, this can result in the use of more expensive forms of health care down the road, such as hospitalization. Imagine, for instance, the senior who, for financial reasons, is unable to fill or refill a prescription for anti-hypertensive medication, or medication to lower cholesterol. This could contribute or cause serious conditions such as a heart attack, and extensive and expensive hospitalization. (ii) benefit Canadian businesses/employers. Rising drug costs are an increasing challenge to the ability of employers to provide drug coverage benefits to employees. Prescription drug reform could result in dramatic savings and could lead to significantly lower costs for employers and workers who have extended health benefits. Recommendation 2: Create a National Commission on Seniors and Health Care Perhaps one of the most pressing areas for leadership and collaboration is with respect to seniors health. Seniors are the fastest growing demographic group in Canada. In 1981, 9.6% of Canadians were aged 65 and older. In 2012, this percentage grew to 14% and by 2036, 25% of the population will be over 65. Since 2009, CHA has highlighted the needs of Canada s aging population in several of its policy briefs. In 2011, these briefs became the basis of a recommendation to develop a national strategy for continuing care that integrates home, long-term, respite and palliative care. The importance of pro-actively planning for the growing senior population is well-recognized across the country. At least eight provinces and territories have developed strategies, action plans or policy frameworks related to seniors, aging, long-term care and/or continuing care. 4

Several other pan-canadian stakeholder organizations and federal committees also recognize the significance of the issues related to Canada s aging population and have recommended the development of a national strategy for continuing care (or components of continuing care such as home care), seniors and/or healthy aging. Through the work of several departments and advisory groups such as the National Seniors Council, the federal government has also established that plays a role in developing policies that impact on seniors health and/or delivering services directly to seniors. Canadians clearly want to see leadership and action in this area. According to an August 2013 IPSOS Reid National Report on Health Care, 93% of respondents said that Canada needs a pan-canadian strategy to address seniors health care issues. Furthermore, 89% believed that all levels of government should work closely together, with a majority (78%) saying that the federal government has an important role to play in a seniors strategy. CHA believes that a comprehensive strategy that recognizes the value of seniors to Canadian society, maintains their dignity and provides quality care options is needed in Canada. CHA recommends that the federal government fund a National Commission on Seniors and Health. Working with the provinces, territories and other stakeholders, a major goal of a National Commission would be to develop a strategy to address the many issues related to Canada s aging population. CHA expects that the work of a National Commission on Seniors and Health would take place over a period of ten years at a cost of approximately $150 million. Intended beneficiaries The work of a National Commission and the resulting national strategy will have broad-reaching impact. Benefits will be experienced by seniors and their families (including Aboriginal and lowincome seniors); regulated and unregulated health care providers, family and friend caregivers, community support workers and volunteers who work with seniors; local, provincial, territorial and federal governments who fund and/or deliver services provided to seniors; and, private and not-for-profit organizations that fund and/or deliver services provided to seniors. General Impacts In the short term, the work of a National Commission will lead to an opportunity for the voices of seniors, emerging seniors, and their families to be heard; an increased and comprehensive understanding of the priorities and needs of a senior and aging population; opportunities for dialogue and collaboration among and across stakeholders, jurisdictions and sectors; and, the generation of ideas and strategies for addressing the needs of a senior and aging population. Over the long term, the recommendations of a National Commission may lead to a change in attitudes toward the value and role of seniors; the prioritization of and proactive planning for the needs of the largest segment of the population; more options for where and how seniors live; how seniors access the services and supports that are needed to age successfully; a health system that is attuned to the needs of the aging population; multiple sectors working together to provide the aging population with the most appropriate services and supports; and, a focus on emotional, financial and other forms of support for caregivers. 5

Recommendation 3: Leave needed dollars in the health system CHA wants to ensure that all hospital functions, including research, are eligible for a 100% GST/HST rebate. With federal tax policy that provides a 100% GST/HST (rebate of the GST portion of the HST in some regions) rebate to all publicly-funded, not-for-profit institutions, the full strength of the public funding that is intended for use in the health system would remain in the health system. CHA has been consistently calling for health research inputs to be eligible for a 100% GST/HST rebate as this research is dedicated to the well-being of Canadians and aligns to the federal government s focus on innovation and job creation. CHA recommends that the federal government amend the Excise Tax Act to increase the GST/HST rebate to 100% on all eligible purchases, including research inputs made by publicly-funded, not-for-profit institutions such as hospitals, long-term care facilities, and home and community care services. Federal funding of the recommendation Section 259 of the Excise Tax Act specifies how the GST/HST rebate is applied. Health research, which is essential to the well-being of Canadians, is eligible for only a 50% rebate, not the 83% rebate extended to hospitals under the MUSH (Municipalities, Universities, Schools and Hospitals) formula. i By amending the Excise Tax Act, the federal government will ensure all eligible purchases, including research inputs made by all publicly-funded, not-forprofit institutions such as hospitals, long-term care facilities, and home and community care services, are eligible for a 100% GST/HST rebate. Assuming a 5% GST, approximately $300 million would remain in the health system. ii Since the inception of the GST/HST, CHA has been working to mitigate the impact of these taxes. The present rebate system is equivalent to the federal government taking with one financial hand and giving with another; one hand provides funding to the provinces and territories through the Canada Health Transfer and the other removes funds from health through the GST/HST. Simplified administration of the rebate could also see efficiencies that would be passed along to the health system. Amending the Excise Tax Act to allow a 100% GST rebate would highlight the federal government s investment in the health of Canadians. Further, a 100% GST/HST rebate would keep federal dollars where they belong in the country s hospitals, health institutions, facilities, and agencies that provide Canadians with timely and quality health services across the continuum of care. Intended beneficiaries Publicly-funded, not-for-profit hospitals and health care institutions, long-term care facilities, home and community care services across the continuum of care, including those that have a role in health research and innovation, will benefit from up to $300 million annually that will remain available for world-class research and the delivery of quality health services to Canadians. 6

General impacts Health research is dedicated to improving the health of Canadians, and Canadians will benefit from research and innovations to solve health challenges of the future. An amended Excise Tax Act would allow academic healthcare organizations to play a significant role in discovering innovations that can have commercial application and economic impact in terms of creating jobs, capital formation, and generating wealth for the country. Align tax policy to government priorities In an August 19, 2013, address to the Annual Meeting of the Canadian Medical Association, the Honourable Rona Ambrose, Minister of Health, highlighted the importance of innovation to the sustainability of the health system. A 100% GST/HST rebate on eligible health system purchases including research inputs would align tax policy with federal government research and innovation priorities and would sustain the continued well-being of Canadians by leaving needed dollars in the health system. 7

Recommendation 1 Bibliography Adams, Owen, personal communication, June 2013. Canadian Association for Retired Persons. (2012). The case for a national drug strategy. Available from http://www.carp.ca/2012/09/20/the-case-for-a-national-drug-strategy/ Canadian Association of Retired Persons. (2013). Canada needs pharmacare. Available from http://www.carp.ca/2013/06/28/canada-needs-pharmacare/ Canadian Healthcare Association. (2006). Policy positions regarding issues addressed by the National Pharmaceuticals Strategy. Canadian Health Coalition and Carleton University School of Public Policy and Administration. (2013). Rethinking drug coverage: Time for universal pharmacare? [Proceedings of conference, May 24-25, 2013]. Available from http://www.pharmacare2013.ca Canadian Life and Health Insurance Association Inc. (2013). CHLIA report on prescription drug policy: Ensuring the accessibility, affordability, and sustainability of prescription drugs in Canada. Available from http://clhia.uberflip.com/i/140816 C.D. Howe Institute. (2013). Rethinking pharmacare in Canada. Conference Board of Canada. (2013). Reducing the health care and societal costs of disease: The role of pharmaceuticals. EKOS. (2013). Canadian views on prescription drug coverage. [Press release on May 22, 2013]. Gagnon, Marc-André, and Hébert, Guillaume. (2010). The economic case for universal pharmacare: Costs and benefits of publicly funded drug coverage for all Canadians. Canadian Centre for Policy Alternatives and Institut de recherche et d informations socio-économiques. Available from http://www.policyalternatives.ca/publications/reports/economic-case-universalpharmacare Gagnon, Marc-André. (2012). Provinces must stand together on drug purchases. July 31, 2012, The Globe and Mail. Gagnon, Marc-André. (2013). The case for national pharmacare. National Post. June 10, 2013. Morgan, Steven G., Daw, Jamie R. (2012). Canadian pharmacare: Looking back, looking forward. Healthcare Policy 8(1) August 2012: 14-23. Morgan, Steve. (2013). A prescription for better health care. ipolitics. June 13, 2013. Picard, André. (2010). Universal pharmacare touted as way to save billions. The Globe and Mail. September 13, 2010. 8

Recommendation 2 Canadian Association of Retired Persons. (2008). Submission to the Standing Committee on Finance and Economic Affairs Pre-budget Consultations. December 4, 2008. Available at http://www.carp.ca/o/pdf/ontario%20pre%20budget%20consultation%20dec08.pdf Canadian Association of Retired Persons. (2011). Submission to the House of Commons Standing Committee on Health: Issues and recommendations on chronic diseases related to aging. October 24, 2011. Available at http://www.carp.ca/wp-content/uploads/2011/11/submission-to-hoc-health-committee- Chronic-Diseases-Related-to-Aging-Oct-2011.pdf Canadian Healthcare Association. (2009). New directions for facility-based long term care. Ottawa: ON: Author. Available at http://www.cha.ca/research-and-policy/ Canadian Healthcare Association. (2009). Home care in Canada: From the margins to the mainstream. Ottawa, ON: Author. Available at http://www.cha.ca/research-and-policy Canadian Healthcare Association. (2011). Continuing care: A Pan-Canadian approach. Ottawa, ON: Author. Available at http://www.cha.ca/research-and-policy/ Canadian Institute for Health Information. (2011). Health care in Canada, 2011. A focus on seniors and aging. Available at https://secure.cihi.ca/free_products/hcic_2011_seniors_report_en.pdf Canadian Medical Association. (2012). A more robust economy through a healthier population. [Canadian Medical Association: 2012-2013 pre-budget submission.] November 1, 2012. Available at http://www.cma.ca/multimedia/cma/content_images/inside_cma/submissions/2012/prebudget-brief2012-2013_en.pdf Canadian Medical Association. (2013). The need for health infrastructure in Canada. [Submission to Hon. Denis Lebel, PC, MP, Minister of Transport, Infrastructure and Communities.] March 18, 2013. Available at http://www.cma.ca/multimedia/cma/content_images/inside_cma/submissions/2013/health- Infrastructure_en.pdf Canadian Nurses Association. (2012). Submission to the Standing Committee on Finance. Available at http://www.parl.gc.ca/content/hoc/committee/411/fina/webdoc/wd5709773/411_fina_pbc 2012_Briefs%5CCanadianNursesAssociationE.pdf Health Council of Canada. (2012). Progress report 2012. Health care renewal in Canada. Available at http://www.healthcouncilcanada.ca/rpt_det.php?id=377 National Seniors Council. Website. Available at http://www.seniorscouncil.gc.ca/eng/faq/index.shtml. 9

Standing Senate Committee on Social Affairs, Science and Technology. (2012). Time for transformative change: A review of the 2004 health accord. Ottawa, ON: Senate of Canada. Available at http://www.parl.gc.ca/content/sen/committee/411/soci/rep/rep07mar12-e.pdf Statistics Canada. (2006). A portrait of seniors in Canada. Pp.12. Available at http://www.statcan.gc.ca/pub/89-519-x/89-519-x2006001-eng.pdf Recommendation 3 Association of Canadian Academic Healthcare Organizations, Canadian Healthcare Association & Catholic Health Association of Canada. (2007). Keep the GST rebate fair for Canada s hospitals, health institutions, facilities and agencies. [Backgrounder]. Association of Canadian Academic Healthcare Organizations. (2007). Keep the GST rebate fair for Canada s hospitals, health institutions, facilities and agencies. [Backgrounder]. Association of Canadian Academic Healthcare Organizations. (2011). Our first wealth is health Strategic Investments that create jobs and sustain a healthy population and economy. [Submission to the House of Commons Standing Committee on Finance]. Canadian Healthcare Association. (2007). A framework for the prosperity, health and well-being of Canadians. [Submission to the House of Commons Standing Committee on Finance]. Canadian Healthcare Association. (2007). Health sector GST unfair, only solution is 100% rebate, says CHA. [Press release]. Canadian Healthcare Association. (2012). A healthy productive workforce: Opportunities for Federal Government leadership. [Submission to the House of Commons Standing Committee on Finance]. Government of Canada. (2013). Working together for real outcomes. [Remarks to the Canadian Medical Association by the Honourable Rona Ambrose, Minister of Health]. Retrieved August 21, 2013, from http://www.hc-sc.gc.ca/ahc-asc/minist/speeches-discours/_2013/2013_08_19- eng.php 10

Endnotes: i Presently, the GST rebate ranges from 50% for health research inputs, publicly-funded long-term care facilities, and home and community care services, 83% for hospitals, to 100% municipally funded facilities. Ideally, the health system should have a 100% GST/HST rebate. ii This figure is based on public information available from the Department of Finance in 2007. With increased costs over time, it is possible that the amount could be higher. 11