Aim health reform at seniors, doctors: Report


To bring escalating health care spending under control, the Ontario government should scale back its prescription drug coverage for high-income seniors and move doctors away from the fee-for-service compensation model, a new TD Economics special report recommends.

Don Drummond, chief economist for the TD Bank and an author of the report, said he expects the recommendations to draw a strong political response but urgent action is needed to prevent health care from swallowing up 80% of government program dollars by 2030.

"There’s no doubt that there will be political difficulties in virtually any one of these recommendations but (avoiding the issues) doesn’t resolve the problem,” Drummond said, noting that failing to take action could force more damaging cuts to health care down the road.

Ontario Health Minister Deb Matthews approached TD for a report on health care spending, so the recommendations are likely to be given serious consideration.

“I think timing is on its side; there’s nothing like a crisis to focus the mind,” Drummond said Wednesday.

The report says the growing and aging population and other pressures on the system mean the cost of health care will continue to rise by almost 7% a year, far in excess of government revenue increases, if reforms are not implemented.

It notes that 51% of government spending on drugs goes to seniors who have higher incomes.

Scaling back those benefits, with the highest earners getting no drug coverage, would ensure there is enough funding for low-income seniors.

“This could come through an increase in the co-payment and/or deductible for higher-income seniors on a sliding scale,” the report said.

TD economists also tackled the thorny issue of doctor compensation.

The majority of Ontario doctors are paid on a fee-for-service compensation although the provincial government has been trying to move more physicians into a group setting where they would be paid a salary, possibly in combination with per-patient funding.

“Paying for each service provided by the physician leaves little incentive to appropriately weigh the costs of procedures against their potential benefits,” the report says.

The Ontario Hospital Association also has called for a review of doctor compensation, but that report was not well received by the Ontario Medical Association which represents physicians.

The TD report makes other cost-saving recommendations — promote healthier lifestyles, expand information technology use, establish a Commission on Quality and Value for Health Care, move from global to care-based hospital budgets and reallocate functions among health-care providers.

The government also could consider setting up pre-funding for drug coverage, in which all people of a similar age contribute to a budget to pay for prescriptions, or add a new health care benefit tax to the income-tax structure.

One proposal would see an individual issued a receipt when they use health care and it would be treated as a taxable benefit.

Drummond said a new tax should be considered only if other measures fail because it would do little to promote needed reform and efficiency within the health care system.


1. Promote healthy lifestyles

2. Expand information technology use in the system

3. Establish Commission on Quality and Value for Health Care

4. Alter the way doctors are compensated

5. Change approach of funding hospitals from a global budget system to one based on actual patient services provided

6. Reallocate functions among health-care providers

7. Scale back Ontario’s Drug Benefit for higher-income seniors

8. Increase bulk purchases of drugs to lower costs

9. Establish pre-funding for drug coverage

10. Incorporate a health-care benefit tax into the income-tax structure

SOURCE: TD Economics report:Charting a path to sustainable health care in Ontario

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