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Health care deal solves no problems

By Steven Martinovich

The Professor(September 20, 2004) It wasn't surprising that the day after Canada's provinces and the federal government reached agreement last week on increased funding for health care that all the major players expressed their pleasure. The provinces will receive an extra $18 billion over six years, including $3.5 billion in additional transfers and $4.5 billion over six years to reduce waiting times. Billions more will be spent under an "escalator" clause that will hike transfers six per cent annually, to keep up with spiraling health costs.

The federal government will pump in total an extra $41 billion into the system over the next ten years, more than it wanted to spend but less than half of what the provinces had once demanded. It's the type of deal where everyone can go away claiming to be the winner. Unfortunately it's also the type of deal that failed to resolve the issues that created the problems we're saddled with today.

The system has two problems that are related to each other: inexorably rising costs and a lack of competition. The two work in concert to create the constant need for more money and neither was addressed during the three day conference.

Contrary to what politicians and health care activists have been telling the public, spending on health care has never fallen or remained static. As data from the Canadian Institute for Health Information shows, spending -- both public and private -- has increased every year for decades. The CIHI forecast that health care spending reached $121.4 billion in 2003, up from $113.4 billion the year before and $106 billion in 2001, an increase of 7 per cent and 7.1 per cent respectively.

Capital assets, personnel and treatment cost more each year. As an example, drugs rank second after hospitals in terms of its share of total health spending. "The share of total spending accounted for by drugs grew from a low of 8.4 per cent in the late 1970s to 15.7 per cent in 2001. In 2003, drugs are expected to remain ranked second with a share of 16.2 per cent," reported the CIHI in November.

The situation, of course, will only get worse in a few years time. Before this decade is over, the first wave of baby boomers will begin to retire and begin to stress the health care system. Under the current system, many experts believe that we will either have to cut the list of core services offered or radically raise tax rates for the system to merely survive.

Aggravating all of this is the second issue that the health care conference ignored, namely competition. As with most bureaucratic institutions, the health care system is under little pressure to find efficiencies, acquire equipment, introduce new treatments or keep costs in check. Thanks to political and labour sector hostility and misguided public affection for a deeply flawed system, Canada has not experimented in any meaningful way to introduce private sector delivery of essential health care services.

Canada is one of a few nations in the world that relies solely on a taxpayer funded universal health care system. Several other nations -- including France, which doesn't have waiting times for health care service -- permit a parallel private system to operate in tandem with their public universal system. Other countries have experimented with medical savings accounts and government administered blended public-private systems which have successfully contained costs and offered the level of affordable quality health care the recipient was willing to pay for.

The window of opportunity to fix the structural defects in the health care system is closing. We have neither the time nor the money to read the same stories in our newspapers year after year about funding shortages and new deals that promise to once again solve the problem. Unfortunately our elected representatives chose to ignore real reform in favour of delaying the decay of the system, much as they've done so many times in the past. The real price won't be paid in extra billions that will vanish like water in sand or future political controversies over a collapsed system, they'll be paid by Canadians with suffering.

More money not the solution to health care woes

By Steven Martinovich

(September 6, 2004) Some stories write themselves and that is never truer then when it comes to reporting on health care funding. Provincial finance ministers met in Toronto earlier this month and not surprisingly they emerged from their huddle calling on the federal government to invest more in health care. In addition to boosting the federal contribution to health care spending to 25 per cent, up from its current 16 per cent, they demanded a federally funded national pharmacare program, an annual spending obligation federal finance minister Ralph Goodale believes will cost $12.5 billion annually.

"The point here is the national government is looking at significant ... multi-billion dollar surpluses over the next decade and some of that money has to be invested in health care," Ontario Finance Minister Greg stated. "[T]he message coming out of here today is that the federal government has the capacity to fund the kinds of reforms that we are proposing."

For all the demands of new spending the finance ministers didn't buttress their argument by explaining how more money would fix the structural problems in the health care system. Every year spending on health care rises faster than the rate of inflation and yet the problems only seem to grow worse. Among OECD nations Canada, along with Iceland, spends the most on an age-adjusted basis on health care but continues to produce some of the worse results.

Those include substandard access to physicians and technology and longer waiting times. These outcomes, of course, affect Canadians and result in increased health problems, stress, financial troubles and sometimes deaths that would have otherwise been preventable. These problems aren't simply the result of underfunding by government, but rather with the way health care is delivered.

There are only two governments in the western hemisphere which rely solely on a taxpayer funded universal health care system, Canada and Cuba, and despite what you've heard neither system works particularly well. Unlike other modern nations that also provide universal access, they include France and Sweden, Canada does not allow any significant privatized presence in the health care delivery industry. While those and other nations permit user fees, private insurance and hospitals, Canada has chosen to place all of its eggs in one basket.

The result, of course, is a lack of competition. The government run system is under no real pressure to find efficiencies, acquire equipment, introduce new treatments and keep costs in check. The system does a poor job of allocating resources where they are needed the most and ultimately this means there is no impetus to better performance.

There are a number of different proposals that could fix the system, all of them decried by one group or another as a betrayal of Canadian values. We could gradually move to medical savings accounts, used by Singapore in one of the world's most efficient and beneficial health care systems. We could also move to a system like the American federal government's Federal Employees Health Benefit Plan, a system with a benefits package that provides its members' choice, holds down costs and offers quality care. Under that system, where the government pays for 75 per cent of costs, beneficiaries get to choose from competing plans that range from generous fee-for-service plans to low cost HMOs. Private insurance covers the rest.

A poll released during the recent federal election found a majority of Canadians were open to some level of privatized health care, suggesting that the people who rely on the system know better its problems. Regardless of what route we may consider, assuming of course we one day have politicians brave enough to actually voice alternatives to the current system, it's clear that more money only slows the decay. The first wave of baby boomers will begin retiring in a few short years, and soon place unimaginable pressure on the health care system, and we have neither the time nor the money to read the same stories in our newspapers year after year.

Thanks for reading,

Steven Martinovich


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