Health Care Funding Policies for Reducing Fragmentation and Improving Health Outcomes

The federal government’s role in Canadian health-care funding policy has historically been a matter of writing cheques to the provinces and territories, leaving the nuts and bolts of funding policy for the provinces and territories to work out. Unfortunately, provinces and territories are stuck in policies from the past that have led to underperformance of their health care systems even as their health budgets continue to grow. There are opportunities for the federal government to remove some of provinces’ and territories’ barriers to adopting new policies for funding health care. Episode-based payments could help break down barriers between and within sectors and providers. Episode-based payments create financial incentives by aligning care providers across settings, with physicians potentially engaging in financial risk-sharing partnerships. The American example, led by U.S. Medicare insurance, suggests that the use of episode-based payments can work for certain conditions even in siloed and fragmented settings. Similarly, capitation-based funding models create incentives for organizations to work together across sectors. Reducing fragmentation includes primary care-centred organizations that span physical and mental health, and requires improvements to the intersection between primary and secondary care. These new-to-Canada models allocate a pre-set budget to provider organizations for health care based on each resident’s health. The goal of these primary care-focused models is to align funding with resident’s long-term health outcomes. The federal government can use what leverage it has to remove provinces’ and territories’ barriers to funding policy reforms. The federal government can fund research into best practices, fund the development of new streams of data that better measure value from health care funding, and support ways to link social care data with health care data. On a per capita basis, combined provincial, territorial and federal spending on health care places Canada among the highest of wealthiest countries in the world. Progress on the quadruple aim is elusive and ill-measured. Frustratingly, money does not appear to be the primary reason for underperformance in health care; the problem is likely due to how it is spent. Ontario is experimenting, albeit narrowly and slowly, with some new initiatives in episode-based funding, without causing ruptures in Canadian society. Provincial and territorial funding policies involve costly trade-offs. COVID-induced pressures on health care may tip the balance of these trade-offs towards funding policies previously considered too dynamic. Even with the widespread aversion to use market forces that prevails in Canadian health care, the use of funding policies to shape new and different incentives or activities might work in Canada, too.