Fraser Institute says increased health spending doesn't decrease waiting times
Contact:
Martin Zelder, Director of Health Policy Research
The Fraser Institute, (604) 714-4548, martinz@fraserinstitute.caRelease Date: 16 August 2000
VANCOUVER, BC>>>Provinces which have higher per capita government health spending do not experience shorter waiting times, and, in fact, perform fewer major surgeries and total procedures. These are the findings of a new study, Spend More, Wait Less? The Myth of Underfunded Medicare in Canada, released today by The Fraser Institute.
"Current discussions of how to improve Canadian health care often revolve around money, with conventional wisdom presuming that a crucial ingredient for repairing the system is increased government spending. This hypothesis, unfortunately, is wrong," says Martin Zelder, author of the study, and the Institute's director of health policy research.
The most alarming evidence of the poor performance of the health care system is contained in the examination of procedures rates. Not only did higher spending fail to increase per capita rates of total services, total consultations and visits, and minor surgeries, but it also reduced the per capita rates of total procedures and major surgery. In the crucial area of cardiovascular surgical services, increased spending actually was associated with lower rates of total services, total procedures, and major surgery.
"These findings can only mean that higher spending is not reaching those patients in the most dire circumstances - those who require treatment by specialists. It implies, along with the other results of the study, that increases in health spending are either consumed by wage and price increases or are for some reason being devoted to non-surgical uses," says Zelder.
The Results
The major findings of the study are:
- Untargeted increases in overall government health spending are ineffectual: provinces with higher per capita government health spending experience no reduction in waiting time (except for Quebec).
- Additions to spending in specific categories are also almost always unproductive: among the various types of health spending, only increased spending on drugs was found to reduce waiting times.
- Current spending is mostly misallocated: holding overall spending constant, shifting spending away from all other areas and into drugs would reduce waiting times.
"The favourable consequences of increased drugs spending are perhaps not surprising given the rapid advances in pharmacological treatment of disease in recent years," notes Zelder.
Additions to spending do not reduce waiting times for important areas of treatment: in fact, increased per capita spending increases waiting times for medical oncology, radiation oncology, and cardiovascular surgery, while having no effect on orthopaedic surgery waiting times.
Increased spending also fails to increase the number of treatments provided by the medical system: higher per capita spending has no impact on the broadest measure of health specialists' activity (total services), as well as no effect on total consultations and visits with specialists.
Increased spending even leads to fewer surgeries and interventions: provinces with higher spending have lower rates of total procedures and major surgeries, as well as lower rates of cardiovascular surgeries and radiology procedures.
Productive areas of spending are largely neglected: drugs spending (which reduces overall waiting time) only receives 1 cent of each additional dollar of spending, while capital spending (which increases the rate of total procedures) only receives 2 cents of each new spending dollar; the bulk of new spending goes to hospitals (29 percent), "other" (25 percent), and other institutions (23 percent).
"The implication of these statistical findings, taken as a whole, is a grim one: the current system is grossly dysfunctional, in that increased spending, for the most part, neither reduces waiting time nor increases the number of procedures done. Furthermore, the one area in which spending does seem to help, drugs, is largely neglected by the government," says Zelder.
The Need for Reform
The evidence presented in this study clearly refutes the claim that increased funding will solve the problems of Canada's health care system. What this new evidence demonstrates is that the maladies which plague Canadian health care are not primarily those of money, but of incentives.
Incentives in the current system are defective for bureaucrats: more money is spent even though it does not provide corresponding (or any) value, and no mechanisms exist to reward bureaucrats for doing better. But incentives are also defective for health care providers, hospital administrators, doctors, and nurses, among others.
In addition, health care consumers, by paying up front for health care but not at the time of use, are not required to ration the consumption of care according to its value to them. Instead, the government rations access to care, imposing substantial waiting times in the process.
Among the desirable policy changes recommended are moves towards permitting care provision by for-profit hospitals, allowing doctors and nurses to earn salaries commensurate with their abilities, and encouraging sensible use of the system by consumers via modest user fees or medical savings accounts.
"In the absence of meaningful reform, however, this study reveals that the expectations of Canadian patients and taxpayers should be low. Consequently, it is difficult to imagine that the current system is one worthy of pride, or preservation," concludes Zelder.
Methodology
This study examines the period 1993-1998, linking together a time-series of Fraser Institute waiting time data with Canadian Institute for Health Information health spending and procedures measures for each province. The conclusions in the study were reached by statistical analysis of the impact of real per capita spending on waiting times and procedures rates.
In some portions of the analysis, the spending figures were broken down into seven categories: Hospitals, other institutions, MDs, other professionals, drugs, capital, and "other" (including public health, non-commercial research and development, insurance administration, and home care).
The Fraser Institute's tenth annual survey of waiting times across Canada, "Waiting Your Turn: Hospital Waiting Lists in Canada," will be released in September.
Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.
For further information contact:
Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca
info@fraserinstitute.ca
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