Martin Zeider Fraser Institute Columnist WHILE surgical patients languish in hallways and closets, Finance Minister Paul Martin has announced a five-year $11.5 bil- lion infusion to the healthcare system. Reduced surgical waiting times are the promised conse- quence. Will this expectation be realized? It appears doubt- ful. It seems natural to expect that more money will reduce waiting time — until one examines the data. From 1990 through 1997, the Fraser Institute has collected data from each province on surgical waiting times for 12 different special- ties (for example, neuro- surgery, orthopedic surgery). For 1997, the median waits range from one week for urgent cardiovascular surgery in Alberta, Saskatchewan, and Quebec, to 52 weeks for elective car- diovascular surgery in Newfoundland. The median wait averaged across all different types of surgeries in Canada as a whole was 6.8 weeks in 1997, with Ontario having the low- est overall median value (5.4) and Saskatchewan having the _highest (12.4). Comparable numbers exist for the cartier years of the survey. For the same time period (1990-1997), data on health spending per capita (inflation- adjusted) by province are also available. The question is: when provinces increased health spending, did their “Government enterprises inherently lack the profit motive’s impetus to reduce costs and satisfy customers.” waiting times decrease? Analysis of the data tinds no connection, For example, in 1997, health spending in Saskatchewan increased by $102 million and waiting time also increased (by 3.9 wecks), while in British Columbia spending rose by $401 million and waiting time decreased (by .9 weeks). These two examples are rep- resentative of the overall absence of any wait-reducing effect of spending. fa other words, increases in health spending don’t reduce wait- ing times. Because more money didn’t help in the past, why should we expect it to now? Why not? Two explanations exist for this surprising result. Both stem from defects in the cur- rent system. First, government enter- prises inherently flack the profit motive’s impetus to reduce costs and satisfy cus- tomers, In a seminal book, Dennis Mueller of the University of Vienna surveyed 50 studies comparing government and private provision of goods and services, and found that in only ewo cases did govern- ment firms perform better. So, pervasive government inefficiency is one explanation for our finding that health spending increases don’t reduce waiting times. This explanation implies that inereased spending filters through to health system bureaucrats and employees without affecting patient out- comes. A second explanation, while Jess insidious, also illus- trates the malfunctioning of the system. Suppose that the spending supplement is actu- ally used to provide more medical consultations and procedures. Consider an indi- vidual with specific but appar- ently non-lite-threatening symptoms (for example, lower back pain). Before additional money is pur into the system, the indi- vidual, suppose, forgocs mak- ing an appointment to see her GP because she reckons that the wait is too long. After additional money is infused, she figures that her expected waiting time will be reduced. Unfortunately, other previously discouraged con- sumers think similarly, and also make appointments. Consequently, even though more patients are being seen and treated, more patients are also attempting to be seen and treated. This combination of circumstances could be exactly what we observe in our data analysis: increased spending has no effect on waiting. More peo- ple are being treated in this case, bur still more could be treated if the system were repaired. Less waiting can be achieved with less spending and without deterioration in health outcomes. This remarkable conclusion is the product of the leading eco- nomic analysis of health insurance and usage, the RAND Corporation Health Insurance Experiment. The RAND researchers wanted to determine how additional insurance coverage influenced use of medical care, reasoning that for many individuals not in critical dis- Cail Brian Watts for an appointment * SELF EMPLOYMENT INCOME ¢ EMPLOYMENT INCOME © RETIREMENT © INVESTMENT INCOME © Caritat. GAINS © Disasitity CREptTs We also offer Financial Planning Services WHITTAKER & ASSOCIATES CHARTERED ACCOUNTANTS #103 - 3151 Woodbine Drive (Edgemont Village) GERRY BREWER BUILDING f north vancouver March 21, 1999. city o LEASE TO RCMP TAKE NOTICE THAT, pursuant to Section 186 of the Munidpal Act, the City of North Vancouver and the District of North Vancouver, intend to lease a portion of the Gerry Brewer Building, located at 147 East 14th Street in the City of North Vancouver, to the RCMP for the provision of office space for Federal and Provincial Officers appointed to the North Shore. The lease will be effective from March 15,1997 to March 14,2007 with options to renew for three five-year terms. The lease rate will be based on the ratio of Federal/Provincial Officers to Municipal complement which will average $28,250 per annum depending on the number of officers in occupancy. City of North Vancouver heart off gous community, 988-7832 Bruce Hawkshaw, City Clerk Dennis Back, Municipal Clerk * RENTAL INCOME ¢ CHILD Care © MOVING ExrENsES mM Bittet you can reach us 141 West 14th Sureet, North Vancouver BC V7M IH9 | Www vv.cinv.org: Phone: 985-7761 Fax: 985-9417 Sunday, March 21, 1999 —- North Shore News — | More health money won't cure wait lists tress, being required to pay a higher out-of: pocket price would induce less usage. It did. In particular, they discov- ered that increasing the share paid out-of pocket by con- sumers from 0% to 25% reduced expenditures by 19%, The reduction occurred entirely in outpatient services, presumably more discre- tionary and less urgent than inpatient treatment, Consequendy, this reduction in usage did not compromise individual health, except in three minor and specific cases. Were an increase to a 25% copayment rate tied in Canada, the implication is that coral health spending would be reduced by $15 bil- lion without any significant impairment in Canadians” health. The lesson here for Canada is obvious. Interpret “accessibility” in the Canada Health Act to mean 25 per- cent copayments (with income replacement for low- income people) for all cov- cred care, rather than the current interpretation of O% copaynient. Until then, to our detriment, we wait — no matter how much money is spent. — Martin Zelder is Director of Health: Policy Research at The Fraser Tustitite, a Vancouver-based public policy organisation. Timothy Renshaw is on vacation. His Ripping Yarns colume will return on March 28. Au services jually warranty approved & I Oil, Lube & Filter I i 21 pt. Safety check, 15 rninutes - FAST! Includes up to 5 litres of 1Ow30 Quakerstate 1362 Marine Drive 980-9115 Mor-Sat 8:00am-6:0Cprn, Sun. 9.00am-5:00pm Expires Mar, 24/99 fo ce ew cee me ee Ee ee ee ee ee Cor eT sPela) ANY OIL CHANGE . PACKAGE Formerly Shelt Rapid Lube Lonsdale & 13th , Vancouver 985-1050 PX, < z_S - 4 , OFF m aS 4iL. CHANGE Expires April a 7 Days a Week The Great Canadian ait CHANGE Sines ee tTm™. MOBILE REFRIGERATION & AiR CONDITIONING SERVICE Retro Fitting, Discharging, Recharging R134A Servicing North Shore’s Body Shops, Mechanical Shops and Dealers. All jobs done on the spot. Custom Rods, Upholstery’ & Bedspreads (Ask aboue our Seniors Discount) For Free Estimate call 922-4975 or 987-2966 Labour $12.50 per panel unlined, $13.50 lined. 33 Low Low Pnriczs