Published in The Hamilton Spectator on January 17, 2015
By: Åke Blomqvist and Colin Busby
Åke Blomqvist is an Adjunct Research Professor at Carleton University and Health Policy Scholar at the C.D. Howe Institute, where Colin Busby is a Senior Policy Analyst.
Voucher-based cost-sharing system would tailor care to seniors’ needs
The blocked hospital bed crisis in Hamilton — and elsewhere in Canada — has peaked this flu season, but it has been brewing for many years. It shows what happens when a fiscally constrained government is confronted with an aging population that places growing demands on hospitals and other institutions and people who supply care. One necessary part of the solution requires changing the way in which care is financed, so that care becomes centred on patient preferences.
The crisis in the Hamilton area has come about because there are not enough nursing home beds for elderly hospital patients following treatment, so they wait for a space to open up in an acute-care hospital bed. In 2013, roughly one in five hospital beds in the Hamilton Niagara Haldimand Brant Local Health Integration Network was occupied by such patients. The result: higher costs, overcrowded hospital emergency units and, most seriously, delays in providing urgently needed hospital care.
Crises of this kind are bound to crop up all over Canada in the coming years. The reason is population aging. Most patients in hospital beds awaiting care elsewhere are over 75 years old, and the share of Canada’s population that is older than 75 will rise dramatically as baby boomers age. Individuals 75 and over make up 7 per cent of the population today. That number will double by 2040.
One obvious way to address the problem would be for provincial governments to increase the number of subsidized nursing home beds. This, however, is unlikely to happen in today’s fiscally constrained environment. Although nursing home beds are less expensive to operate than acute-care hospital beds, they are not cheap.
For many patients, care at home or in places like retirement homes, “semi-independent living apartments” or “wellness centres” would be preferable alternatives, and could be supplied at a cost that is much lower than if the patients remain in acute-care hospital beds. But these alternatives are not yet widely used because funding models are not designed to subsidize them to any significant degree.
An important part of the answer, we think, consists in making it more attractive for patients to choose, and for providers to supply, these alternative types of care.
One example of doing so would be through a voucher system modelled on the way long-term care is supported in France. In this model, the cost of non-acute care is shared between the government and the patient. The government’s contribution comes in the form of a fixed amount of money (a “voucher”) that depends on both the patient’s care needs and his or her income and wealth, and which can be used toward paying for care from any approved provider at a patient’s location of choice.
Patients are responsible for paying the difference between the amount the provider charges and the value of the voucher. The result is a system in which everyone is guaranteed access to the care they need, regardless of ability to pay, and different providers (nursing homes, retirement homes, home care suppliers, etc.) try to attract patients by designing models of care that patients desire in terms of cost and quality.
To implement this system with a limited budget, patients needing nursing home care would typically pay more for care, whether it be in an acute-care hospital bed (where they currently pay nothing), or in a subsidized nursing home (where they currently pay only relatively limited room-and-board charges). However, they would pay less for care received at home, in a retirement home or other unsubsidized facility, where most individuals currently have to pay the full cost.
Introducing a voucher-based cost-sharing system would obviously be controversial. Many Canadians believe there should be government programs that pay for all health care costs. But with an aging population and fewer working-age taxpayers, full public coverage for all health costs is likely unsustainable or would place a relatively large tax burden on future generations. The sooner we realize this and begin to talk about viable alternatives, the better.
