How New Brunswick is making medicare sustainable
TheGlobeandMail.com – Globe Debate
May. 23 2014. Jeffrey Simpson
New Brunswick led Canada in adopting a hybrid pension system. Then it led by introducing a public plan to provide drugs to low-income residents. And now, it’s done what many thought impossible: delivered a health-care budget that froze overall spending without a reduction in services.
Not bad for a small province, usually overlooked nationally.
What New Brunswickers think of these issues, and many others such as shale gas exploration, will become known Sept. 22 when the Progressive Conservative government of Premier David Alward seeks re-election. The government has trailed the Liberals for a long time in polls, and still does, although a March poll by Corporate Research Associates showed the gap narrowing.
Being in power in New Brunswick is not easy, what with chronic revenue weakness and unemployment higher than the national average. Under these trying circumstances, there’s something admirable about a government trying to do hard things. We’ll find out in due course what the people think.
What about health care? How did the government do it? According to Health Minister Hugh Flemming, “culture change” began by telling the truth.
“We controlled a spending model that was out of control. We said we could not continue raising health care spending at 5 to 8 per cent a year. That was unsustainable,” he said.
Indeed, from 2007-08 to 2010-11, growth in health-care spending averaged 5.9 per cent a year. In the past three years, average growth has been 0.5 per cent.
Yes, necessity is the mother of invention. New Brunswick has a stubborn fiscal deficit. Tight controls on spending have been the order of the day, and health care was no exception.
Mr. Flemming put a cap on medicare billings after doctors took the government to court and lost, trying to kill the cap. Here’s the fixed amount, the minister told the doctors. If billings are above a fixed amount in a given month, fee-for-service rates will be adjusted downward for the next month. It turns out, he said, “we never had to use it.”
New Brunswick’s 1,600 doctors just ratified a deal giving them 2-per-cent increases for two years.
Across the system, efficiency gains became a mantra. A health administration that had 12 vice-presidents wound up with four. Laundry services were consolidated. Accountability for spending was beefed up. Budget controls were introduced. About $100-million came out of the hospital system, $160-million from the Department of Health. None of the province’s 22 hospitals closed.
The health budget came in $44-million below estimates, so that money could be invested in new technology, primary health care, diabetes and mental health. But the bottom line was no overall increase for 2013-2014.
The health budget will go up in 2014-2015, in part because of government contributions to the new pension scheme (that over time will require more contributions from employees) and the start of the low-income drug plan. This plan, novel in Canada, flowed from three or four years of debate that began with a white paper recommending coverage for residents without any drug coverage.
The plan’s aim is to ensure that low-income residents get access to drugs, regardless of income, the economic case being that low-income people disproportionately drive health-care spending. By giving them access to medications, it’s hoped they will put less pressure on the more expensive parts of the system.
It’s also a policy based on social fairness, from a Progressive Conservative government more like its old federal namesakes than the current Conservatives.
Other provinces have lowered their health budgets, although none as sharply as New Brunswick. British Columbia forecasts 2.3 per cent for this year, a shade under Ontario’s target. Alberta aims for 3 per cent.
Zero increases for B.C. and Ontario would be tough, since their populations are growing, whereas New Brunswick’s is not. Mind you, New Brunswickers are aging fast, and older people put far more cost stress on a health-care system than younger citizens.
There is a lot more that New Brunswick (and other provinces) can and should do to put health care on a more sustainable basis, but the province has made a good start. Efficiency gains will take a province only so far; there have to be structural changes too.
New Brunswick could help itself by joining the other Atlantic provinces in developing one regional drug formulary with one purchaser. That co-operation could become a model for the whole country.
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