Author
Brett J Skinner, Ph.D.
Background
Growth in public health spending is contributing to a fiscal sustainability crisis for provincial governments. Yet, the Canada Health Act (1984) prohibits supplementary funding mechanisms like user charges and extra-billing.
Objective
The purpose of this study is to hypothetically estimate the potential for user charges, copays and extra billing to offset government health expenditures in Canada.
Data and Methods
The most recent publicly available, fully matured, fiscal year data current to 2014-2015 were obtained from the Canadian Institute for Health Information (CIHI) for utilization and payments for fee-based physician services.
Results
If, in the fiscal year 2004-2005 provincial/territorial governments had pegged all future increases in physician fee-for-service payments to changes in the CPI and allowed extra billings to cover fee inflation, by 2014-2015 governments could be saving up to $4 billion a year versus actual costs. Based on the most current utilization, a user fee of $20 per service could have offset up to $5.3 billion in government health spending in 2014-15, and a 25% copayment per service could have offset $4.1 billion. The magnitude of the cost savings from these policies varies by province.
Conclusions
The estimates provided are based on hypothetical scenarios and are projections of the maximum potential for savings. Some patients are high-frequency/high-intensity users of medical care. Governments would need to put limits on the direct costs that any individual patient (or family, household) could be exposed to when designing user charges, including for example capping total out-of-pocket costs on an annual basis or as a percentage of income. Such policies would reduce the magnitude of the estimates provided here. Nevertheless, modest user charges for public medical services are a fiscally attractive, socially manageable and economically feasible supplementary funding mechanism for Canada’s healthcare system.
