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History Table of Contents
1992 Summer Conference
Summer Conference 1992
Competitiveness and Social Justice: How Can Canada Have Both?

Panel: Delivering Compassion Efficiently

MARTIN BARKIN, Health Care Practice Leader, Peat Marwick Stevenson Kellog
DON RICHMOND, Commissioner of Community Services, Municipality of Toronto
TOM BRZUSTOWSKI, Deputy Minister, Premier’s Council on Economic Renewal

Alan Pearson, president of Alan Pearson Associates Inc., moderated the panel, a powerful and experienced trio whose members were Dr. Martin Barkin, Health Care Practice Leader, Peat Marwick Stevenson Kellogg; Don Richmond, Commissioner of Community Services for

Metro Toronto; and Dr. Tom Brzustowski, Deputy Minister of the Premier’s Council on Economic Renewal.

Dr. Martin Barkin led off by noting the extraordinary reverence Canadians have for their health care system. Every speaker had alluded to it. A poll had found that the health care system was the central value of Canadian national feeling, the cardinal example of the social safety net. There was hardly a country in the world that would identify their national wishes with their health service. There was something truly perverse about our view. As a determinant of health that system was marginal.

We were somewhat schizophrenic about our health care. We approached it as two persons, one who paid for it and deplored its extravagances, and a sick one who used it and wanted everything it could deliver. Everyone wanted someone else to pay.

It was possible to give people the health care that they needed. It was not possible to give them all the care that they wanted. Defining what we needed, and what we wanted would probably be the great challenge of the next decade or so.

Unwritten principles were, first, that care for the few who were ill should be paid for by the many who were well. But in the 1990’s almost everyone used the health care system all the time. The formulation included an insurance principle. Nowhere else was there an insurance principle for what we now regarded as an essential public service. There was no such principle for police. If you were private the police came in ten minutes; if public in 20 minutes.

The second unwritten principle was that of equality before the health care system, as before the law. That was uniquely Canadian, distinguishing our system from every other health care system in the world. No one should be able to buy themselves better health care simply because they had more money. We had enshrined that principle in law. It was illegal under the Canada Health Act to take part in a privately insured health system. Ours was the only country that did not allow private insurance.

The first positive effect of public administration was that we had one of the lowest costing insurance systems in the world. So low was the cost that when accounting officers for the U.s. Congress looked into our system, they declared that if it were transferred holus-bolus to their own country it would save, in paper-work alone, close to $100 billion a year. This was one example where the public sector administered something more efficiently than the private sector could.

A second effect of public administration was it provided a much fairer distribution of cost. The very high costs were borne through the general taxation system. In other jurisdictions one tried to pass those costs off to employers, producing an unfair burden. When health care was publicly administered it could more easily balance health care against other expenditures, e.g. on affordable housing, high technology, the environment, shelters for battered women, etc. Where health care expenditure was sequestered into an insurance system, money was not available for other determinants of health.

Other principles were universality, portability, comprehensiveness and reasonable accessibility.

We now had a new health care principle which could be called the principle of affordability. If we lacked an affordable system, we did not have a system at all. On the affordability side we had the balance between the principles of our system and its delivery systems – fee for service, private practice, medicine, independent autonomous hospitals and other aspects of the delivery system. We as Canadians had to decide today whether we would retain the delivery systems, in which case we would have to retract from our principles; or whether we would hold to our principles, which meant changing the delivery systems.

The choice turned on that new principle of affordability. Caplan had taken the view that we had not reached the sensible limits of borrowing. Barkin was less sanguine about deficits, having seen what happened to other nations that ran up huge public debts. He argued that since the 1970’s the national debt had been increasing exponentially and hence the annual payments had been increasing at a similar exponential rate. The result was that we were now spending four times the annual amount on debt repayment as on all the transfers to provinces for health care. As this debt was transferred to the provinces we were about to do to our children what our parents had done to us by borrowing in the ‘70s.

While we had been watching Patriot missiles in the sky a couple of summers ago, the federal government had quietly passed a bill (C69) that altered the federal responsibility for transfer payments. Hence Ottawa no longer had the clout to insist on principles.

Ontario came out of a sharp repression in 1982 with the best G.D.P. in the world, better than Japan, Germany, Korea. But by 1987 the recession was returning. Ontario was unprepared.

Most countries spent about 8 per cent of G.D.P. on health care. U.S. spending had risen to over 12 per cent of G.D.P. But when we compared Canada with other countries in terms of per-capita spending in parity dollars, we were number one in the world. We spent twice as much per person as the U.K.

Was it because of our aging population? No. The bulk of our population was young. Meanwhile there was the phenomenon of "crowding": health care expenditure was growing fast, at the expense of education and regional and economic development, the most powerful determinants of the health and welfare of a society.

In response to that crowding, as well as the recession, health care spending plunged in 1992 from its annual ten per cent increase to a two per cent increase.

Those who thought a private-sector approach offered a solution should look at the biggest private-sector experiment in the world, that of the U.S. The idea was to have a private system and use government expenditure only for the vulnerable – medicaid for the poor, medicare for the elderly. Result: 37 million without health insurance, 30 million under-insured, a system costing highest per capita, highest per cent of G.D.P. Americans rated 19th in infant mortality; they rated 22nd in the world in average life-expectancy, from 20th to 30th in morbidity from any one of the leading fatal diseases.

In all of those categories Canada ranked in the top five, and in the most important one, overall health and well-being, number one! An unbelievable achievement for a multicultural and multiracial society.

Costs, however, were unfairly distributed.

There was time for an anecdote: Chrysler Corporation had gone on an advertising campaign in the United States with the slogan "Born in America." It had featured, as its star attraction, a Plymouth Voyageur minivan. Nothing in a Voyageur minivan was built in the United States! Everything in it was built in southwestern Ontario except its engine – which was built in Japan. The reason that that was so was because the costs of health care were unfairly distributed. The cost of health care fell heaviest on employers in the U.S., and accounted now for 15 or 20 per cent of the cost of product. That was about $800 per vehicle produced in the U.S. as opposed to $200 in Canada.

This brought us to a possible solution of the cost problem-rationing. The American solution was lifeboat rationing, The number of persons a lifeboat could save was limited. The addition of one more would sink the boat and drown everybody. So you let the extra person drown to save the rest. This was what was done in the state of Oregon. You evaluated what a surgical procedure was worth, and if too expensive – the middle-class making the decision for the poor – it would not be provided. This was the kind of rationing some people believed we should have!

In Canada, after Royal Commissions had been held across the country, some of our delivery systems would undergo fairly radical changes. We were going to see further commitment to the principles of Canadian health care as set out above, while some of the delivery systems would undergo fairly radical changes. We’re already seeing major shifts from institutions to communities. The problem is that we were closing the institutions faster than we were building the community support systems. We were seeing the health insurance programs of the various ministries of health stop being insurers and becoming managers of a health care system. We were seeing a definite shift of emphasis from the provider to the consumer. In Ontario the self-regulating health professions were to have consumers on their boards. There would be more and more consumers on hospital boards, for example. A shift from central to regional authority: Ontario talked about it, British Columbia talked about it, Quebec had already done it. We were seeing a shift from cost control to quality control, and an amazing shift from conflict with providers to cooperation. The O.M.A. campaign to discredit medicare was now over.

The last major change was a shift away from open-ended spending on health care that encroached on other essential services. Since democratic governments could not control themselves, laws had to be passed to put limits to spending. We were seeing cost-capping across Canada.

Our problems were not insoluble. We had the solution in our hands. All we had to do was to do it.

Don Richmond followed. He referred to Professor Galbraith’s insistence on a pragmatic approach to our problems.

Looking at the welfare side of our social services, he discussed the assumptions underlying our approach.

The first assumption was the leadership of the federal government. But you had to give credit to Tommy Douglas in Saskatchewan, and to Manitoba too.

The system had been created in a single span of five years in the 1960’s, beginning with pension plans and ending with health care. It was a time of buoyant government revenues. I can tell you it was a hell of a lot more fun to be a public servant in the ‘60s than it is today," he said. "I used to be paid to spend money. Now I’m paid to save it!"

The system could not have come into being without the collaboration of Ottawa and the provinces, and notably Quebec. Quebec had insisted on its obligations to its own people in social services. Hence there was a Quebec Pension Plan and a Canada Pension Plan, a deal which the two governments had worked out together. The role of the provinces in social services had always been a basic assumption. In the present foofaraw over the constitution, he wondered what was going to happen to such long-standing deals in the future, and particularly to the most important one, fundamental to our system, which was Unemployment Insurance.

The other part of the federal preeminence theory was that the feds had dominated the scene because they had had the money. At the start, the federal government had been taking 65 cents of every tax dollar raised by all governments in Canada, so that they did have the money. By 1990 it was taking 40 cents, a massive shift of spending power away from the federal government to the provinces. And as we had heard so often in the last two days, the feds had no room to maneuver anyway. So could the federal government use its undoubted spending power to shape policy in the future.

The Canadian safety net was being changed in a fundamental way. The federal government was being pushed out of it. They had backed away from day-care, not only because they had no money for it, but probably because Quebec had said, "No bloody way!"

If this trend continued, what would happen to national standards? Richmond doubted whether the loss of such standards would be such a disaster. You could look at one central aim of national policy, the reduction of regional disparities in income. In 1961 P.E.I. had been 40 per cent below the national average in personal income, Ontario 18 per cent above it. In 1989, Newfoundland had attained that dubious record of being the lowest in the country at 29 per cent below the national average. while Ontario had shrunk to 13 per cent above. The gap was being reduced, but after 30 years it was not such a great showing.

What about poverty? Again, we did not have good data before 1965, but there was not a bad spread. The national incidence of poverty was 11 per cent, the high in Manitoba at 13.4 and in Ontario it was 8.1. That spread was worse when you looked at particular cities.

But the most critical test of policy had been its impact on the distribution of income among the various quintiles. The change: virtually none. The bottom 20 per cent still gets four and half per cent.

One could argue that the social safety net had not achieved dramatic results. But without it, what would have happened? We had seen substantive improvement, but also serious unintended consequences. We had virtually solved the problem in this country of poverty among the elderly, an enormously effective job. But we also had seen what we call the feminization of poverty, the single parent family, a source of social, economic and every other kind of problem because they are in destitution. By a vast majority, that single family is headed by a woman.

Earlier in the conference, we had flippantly dismissed the guaranteed annual income as an idea whose time had come and gone. The only guaranteed income we had in this country was for the elderly – and it worked.

There also had been talk, among other things to come, of community delivery. This was a cornerstone of current governmental rhetoric. But what did it mean? Whose community? Geographic? Ethnically or culturally based? They were not the same thing. We had seen an obscenity, an absolute obscenity: the de-institutionalizing of people out of psychiatric hospitals in this province and this country, North America and the western world. The community would look after them – but no resources were put into the community to take care of those people. So now we said, "Oh, we have homelessness!" Richmond did not know what proportion of the homelessness in our cities was the direct result of emptying the psychiatric wards.

He feared that once again, to save a dollar here and there, the government would say, "We’ll give it to the community." The communities had been put upon by the province of Ontario.

It was assumed that commercial involvement in delivering social service was bad. Richmond did not agree. In day-care, for example, over the past ten years, Metro had had to close down more substandard non-profit facilities than commercial ones.

Finally there was the matter of accountability. We had heard of Bata shoe accounting systems in Czechoslovakia dating from the 1940’s. In the welfare system we had a system dating from the Tudor revolution 400 years ago. We had moved from quill pens to ballpoints. Some 85 separate forms had to be filled out. Accountability broke down when large sums were allocated to agencies. It was time to decide whether we wanted to account for every welfare penny, or to cater efficiently to people’s needs.

It seemed to Richmond that, as Galbraith had suggested, to deliver compassion efficiently you only had to ask one question-did it work? Not whether it sounded good, or had the right "ism" on it, but did it actually work. In designing new programs we would have to look at results, intended and unintended.

We had to start with a new philosophy. It came right back to competitiveness. We had to stop maintaining poverty, and to invest in people as human capital. Some journalist had predicted that by the year 2000 we’d have to have a post-graduate degree to get a job. Richmond scoffed at the notion. You did not need a degree to be able to pick up the garbage. There were going to be more old people who needed care. "Let’s say that!" Richmond declared.

A final point. Over the past two years, Metro’s welfare rolls had tripled. One was frustrated to hear loose talk about "welfare bums". Newcomers to the rolls had had jobs and lost them. They went on welfare because they had nowhere else to go.

And by the way, a "welfare bum" at 65 became an honoured "senior citizen".

Meanwhile what the jobless wanted above all was to get back to work. Many recent newcomers were young and poorly educated. We had to give them what they needed to compete in a very competitive world.

Tom Brzustowski, Deputy Minister of the Premier’s Council on Economic Development, took the last place, like a bishop in procession.

The Deputy Minister wanted to make only one point about delivering compassion. He spoke about the poor performance of our high schools, which produced 30 per cent dropouts. But even among the graduates there were many who lacked the skills to profit from on-the-job training or apprenticeship. They required remedial training. Spending on this put Canada near the top of such expenditures in O.E.C.D. nations. The outcomes were dismaying. Compared with those of other nations, the scores of our children started out near the top in elementary school, and ended near the bottom in high school.

Yet weighing more heavily on us was that statistic of the 30 per cent that did not complete high school. Dropouts might find a job in good times, it might even last some time, but it would be a job with no horizons. We tolerated this. We were an advanced western society that gave aid to third-world countries. And we tolerated this.

We had to be concerned with outcomes.

And now a couple of surprises. The first example was from East Harlem, a place where you’d probably want to lock your car doors. Yet in a public school district in East Harlem, the percentage of those remaining in school had shot up dramatically. The explanation, in one word, was choice.

In East Harlem students and their families could choose their schools. The schools competed. Two or three schools occupied a single building and they were in competition.

The other example, even more striking, was taken from Scientific American (February 1992). The article described a study of Vietnamese and Laotian boat kids and their performance in inner-city public schools. These were children who had to struggle to escape and survive. They were performing so well that something like three quarters of them were in the uppermost one third in California in maths and science, in which language skills played a part.

There they were in the gangland schools of Los Angeles. What had happened? In Canada we tended to look for institutional solutions, but there were none here. There was only one explanation of the boat kids’ success, and that was the commitment of their families to their education.

A small learning environment was created in the home. The dishes were cleared, the books were on the table, and the parents talked to their children about their homework. Children learned from one another. There was a fixed time for this family activity of homework.

Those two examples were worth thinking about. There might be bureaucratic solutions, teacher-education and the rest. In fact simple issues like choice and the culture of the school, and the commitment of the family, were part of a different solution.

That 30 per cent of dropouts from our high schools was frightening. We noted that the much more successful German system had streaming as we did, but while German students could move from one stream to another, ours had to stay in place. Only success in the academic stream gave status. Too many of our students were left with very little after their educational experience.

We could not talk of investing in human resources if we did not react to these very obvious problems in our midst.

During question time, a politician rose to suggest the creation of a Canadian Youth Corps. He received dusty answers. (A) It was a wonderful idea.(B) But the Company of Young Canadians had not been a success. Such ventures required a huge bureaucracy at great expense and yielded very small benefits.

A question was put to the panel on the ethical basis of the compassion they had spoken of. One answer was that this country still believed in the Judaic-Christian ethic, that we were our brother’s keeper. "The bottom line is, that in this country – and I hope for a long time to come – we do care. It has nothing to do, really, with competitiveness," Don Richmond said. "It has to do with respect for the dignity of human beings." This was roundly applauded.