Canadian Healthcare System Overview

Introduction to Health Economics

• Health economics examines resource allocation within and to the health economy.
• It includes health care production and distribution across populations.
• The health sector significantly contributes to the overall economy.
• Improving health is a policy priority, leading to challenges in optimal policy.
• Economic factors play a role in many health issues.

Gross Domestic Product (GDP)

• GDP is the value of an economy's final goods and services.

Inflation

• Inflation is a rise in the prices of goods and services over time.
• This reduces the purchasing power of money.
• Inflation occurs when demand surpasses supply, increases production costs, or a general increase in money circulation in an economy.

Healthcare Expenditures

• Healthcare expenditure totals costs, including hospitals, medications, and insurance.
• This can be private (individual) or public (government).
• Healthcare spending is a significant part of GDP, which highlights its economic importance.
• For example, indicators for Canada demonstrate the proportion of national output allocated to healthcare systems and services, reflecting policy priorities and resource allocation.

Health Care as Share of GDP (2019)

• The graph compares healthcare spending as a proportion of GDP across OECD countries.
• Canada spends approximately 11% of its GDP on healthcare.
• This is higher than the OECD average but below the U.S. spending ratio (over 16%).
• Rising consumption of services, more advanced treatments, and rising health care costs influence spending in Canada.

Factors Contributing to Increased Health Care Spending:

• Increased utilization of health services (e.g., more tests, higher drug purchases).
• Higher-quality health services, which are more expensive.
• Faster price growth in health care, exceeding general inflation.

Key Features of Economic Analysis

• Scarcity of societal resources, requiring efficient allocation.
• Rational decision making: Individuals and groups aim to maximize benefits.
• Marginal analysis: Evaluation based on additional benefits and costs.
• Economic models: Simplified representations to understand behaviours and outcomes.

Scarcity of Resources

• Economic analysis assumes individuals must give up one resource to gain more of another.

Opportunity Cost

• Opportunity cost is the value of the next best alternative that one must sacrifice to choose a certain course of action.
• This includes tangible or intangible factors such as time.

Rational Decision Making

• Rationality is defined as making the best choices given available resources to achieve one’s desired goals.

Marginal Analysis

• Economic analysis often focuses on reasoning at the margin (next unit/decision).
• Decision-makers evaluate incremental costs and benefits.
• The marginal benefit must exceed the marginal cost for a decision to be considered.

Use of Models

• Economic models represent and analyze concepts.
• Models can use descriptive words, graphs, or mathematical equations.
• Models are simplified representations of real-world situations, meant to illustrate behaviours and outcomes.

Incentives

• Economic analysis emphasizes the role of incentives in driving behaviours (e.g., in buyers, sellers, consumers, firms, patients, physicians, hospitals, etc.)
• Incentives influence behaviour and decision-making in economic contexts.

Health vs Health Care

• Health encompasses physical and mental well-being, and is evaluated through the health status of individuals.
• Health care encompasses products and services necessary for maintaining health.

Health Care Delivery

• Key providers include physicians, hospitals, and pharmacies.
• Understanding providers, their services, quality of services, and the context (e.g., urban vs rural, demographic, socio-economic) is important.

Health Care Financing

• Health care financing is the process of raising and allocating revenue for health care services via various sources.
• Public finance (government taxes) and private financing play crucial roles in funding the system and determine who has access.
• The process affects how healthcare is used, how the burden of cost is distributed and influences new treatments' introductions.

Canadian Health Care System

• Health care is predominantly publicly financed and delivered by government.
• Universal coverage ensures equitable access to essential, medically necessary services.
• The Canada Health Act outlines criteria for provincial health insurance plans for receiving federal funding.
• Criteria include comprehensiveness, universality, portability, and accessibility.

Health Status in Canada

• Over time, life expectancy has increased while infant mortality rates have decreased significantly.
• Healthcare outcomes often differ by sex, income, and various other factors.
• Charts show data relating to life expectancy, mortality rates, and health outcomes, both across Canada and in comparison to other OECD nations.

Overall Health Improvements in Canada

• Life expectancy has significantly increased since 1960.
• Infant mortality is substantially decreased compared to rates in earlier years.

Physician (Doctor) Supply in Canada

• Canada has a physician (per 1,000 people) ratio similar to other OECD countries.

Hospital Beds (per 1000 people) in Canada

• Canada's hospital bed availability is lower than that of many other OECD nations.

Wait Times for Elective/Non-Emergency Surgery in Canada (2007)

• The data suggests that there are longer wait times for surgery in Canada as compared to other OECD countries.

Funding by Category in Canada (2019)

• Statistics related to hospital/physician spending and other sectors like pharmaceuticals are highlighted.

Circular Flow in Health Care

• Diagram that maps resource flows between governments, insurers, providers, and patients.
• This visual aids in understanding the dynamic interactions between all the actors.

Example: Do Prices Matter in Healthcare

• Prices influence consumer demand for healthcare, similar to other goods.
• Lower costs for healthcare increase the utilization of services. Higher costs for healthcare decrease the utilization of services.

Test your knowledge on the Canadian healthcare system, focusing on key statistics and determinants of health. This quiz covers aspects such as life expectancy, infant mortality, and healthcare funding sources in Canada. Understand the implications of public financing on healthcare access and performance.