Briefing Note and Make a Recommendation for a Budget Cut

Briefing Note

The recent economic climate has been a challenge in all sectors of life, including the health care sector. The purpose of this document is therefore to propose a 10% budget cut for health care in the province, based on the fact that severe economic circumstances have necessitated a lower allocation of government funding for this purpose. The question and focus for this briefing note is therefore: How can we achieve the necessary budget cut without compromising the quality of care taxpayers and insurance holders have come to expect in this country?

The current economic turndown has affected both individuals, businesses, and governments. Most individuals are in a situation where they need to manage their money very carefully in order to make ends meet in an economy where salaries remain the same while prices increase incrementally. The same is true for governing bodies such as ours.

The cost of health care, like everything else, has shown a consistently upward trend. By now, this expense constitutes about 40% of our provincial GDP. This creates a widespread challenge in terms of our ability to fund the health care needs of our citizens.

This is why it is vital, especially in today's economic climate, for us to arrive at an effective, efficient, and safe way of applying taxpayers' money to maintain the well-being and health of all our citizens.

Current Status

In terms of the current situation, our provincial health care is funded by means of a global budget. This means that we allocate a fixed amount of funding to providers, which they use to pay for insured health care services over a fixed period of time. The largest part of these expenditures are allocated to hospitals, accounting for about 28% of the total cost.

An interesting factor in his regard, and one that we need to take seriously, is that Canada is unusual in terms of its health care funding as compared to the rest of the world. Indeed, most countries fund their health care needs by other means than global budgets, using an ABF, or activity-based funding, basis for their health care budgets. This means that such counries allocate funding according to the specific type and amount of services provided to their users. This could be significant to us as we attempt to make decisions regarding budget allocations.

healthcare. However, it must also be taken into account that more services would require more funding. If our province were therefore to prove in great need regarding the number and types of services required, spending might rise rather than decrease. On the other hand, ABF systems include financial incentives that can be used to both decrease government spending and increase the efficiency, effectiveness, and safety of care.

In the financial situation currently facing us, we need to focus not only on the way we have made budget allocations in the past; we should also focus on what we can learn from other countries faced with the same economy. Indeed, the current economic situation is global, which makes this a perfect platform for learning and greater future efficiency.

Key Considrations

There are two key considerations we must focus on now. First, we are faced with severe economic conditions that have resulted in a significant budget reduction for health care in our province. Second, the global funding allocation used in Canada is unusual in terms of the rest of the world, most of whom have used the ABF method. Our question should be: What can we learn about funding allocation and efficiency from these countries?

Options:

In examining the different funding methods and allocations used by other countries, one major option is, as mentioned above, ABF. To make this method efficient in terms of our budget constraints, careful research will be necessary in terms of the specific health care needs in the province.

Some countries use budget shifting to contain the governmental costs of their health care needs. In other words, costs could be shifted to households or private insurers. The main disadvantage of this is that it could create barriers to health care.

Service coverage is another option that could significantly reduce public funding for health care. This would involve removing non-vital items such as dental care and GP checkups from the public benefit package. Service coverage also reduces costs by systematically defining benefits, whereby only interventions with established, proven benefits are funded.