Boosting health transfers: behind the big bipartisan campaign consensus - Macleans.ca
 

Boosting health transfers: behind the big bipartisan campaign consensus

Health policy needs closer scrutiny


 

The most consequential promise of this election campaign—issued this week by both the Conservatives and the Liberals—is the pledge to keep raising federal transfer payments to the provinces for health care, apparently indefinitely, at six per cent a year.

That was the “escalator” rate established under Paul Martin’s 2004 deal with the premiers, which expires in 2014. Renegotiating the pact had loomed as a major challenge for the next federal government. Now, the big decision appears to have been made in advance, not at the fed-prov bargaining table, but on the hustings.

A casual observer might conclude that the need to continue boosting the Canada Health Transfer, which this year came to about $25 billion, by six per cent a year must be so glaringly obvious as to be beyond debate. There’s a bipartisan consensus, after all. But I’m not sure. Let’s look at the latest figures from the Canadian Institute for Health Information.

According to CIHI, spending on health care in Canada increased 1.4 per cent per person last year, the lowest in 13 years. But that includes all sorts of spending, including out-of-pocket costs borne by individuals or covered by private insurance.

So what about just the core costs covered directly by provincial governments, and supported by those federal transfers? Provincial spending on health climbed 3.9 per cent in 2010, after rising 5.2 per cent in 2009.  In case you hadn’t noticed, that’s less than six per cent, which means Ottawa’s transfers over the past two years covered an increasing share of provincial health spending. (However, provincial health costs were, in fact, rising at about 6 per cent a year through the previous 10 years.)

Casting ahead, though, anyone who has been paying attention to the health care discussion might reasonably argue (citing authorities like David Dodge)  that an aging population will inevitably make it impossible for provinces to keep containing spending—as they have for the past couple of years—in the coming decades.

It’s this demographic time bomb that the campaign pledges to maintain the health transfer’s expansion at six per cent a year are presumably meant to address.

I’ve contributed a bit to the conventional wisdom about old people driving up costs myself. But given last fall’s CIHI report on spending trends, I wonder if we fully understand the so-called demographic time bomb. CIHI”s data shows that despite an aging population, the portion of health spending devoted to seniors did not increase between 1998 and 2008.

It’s hard to say what’s happening here. Maybe just a delayed impact from retiring boomers. But CIHI vice-president Jean-Marie Berthelot observed: “An aging population may have an impact on health care spending, but so far the average expenditure on seniors has not risen faster than for younger Canadians.”

None of this is to suggest that health spending isn’t a serious concern. But it seems to me that the campaign-trail promises to maintain the rate of federal spending increases in transfers to the provinces is more about political positioning than clear policy thinking.

Neither Stephen Harper nor Michael Ignatieff wants to be cast as the guy who’s less committed to sustaining health services. The voting public doesn’t like languishing for hours in ER waiting rooms or months on specialists’ waiting lists. What they do like is their universal public health insurance, and rightly so.

Yet if ever-increasing federal spending on health is unavoidable, is just boosting the Canada Health Transfer year after year the way to go? That hardly seems self-evident.

Maybe dedicated spending on aboriginal health, a clear federal responsibility, needs more emphasis. Maybe a particular federal push, backed up with significant money, could create something like a national drug insurance plan. Maybe federal funds should be devoted to special initiatives, such as large-scale pilot projects in problem areas like juvenile mental health or gastrointestinal disease. Maybe federal support for home-care really must become the top priority.

If the six-per-cent solution derails discussion around all these other possible policy thrusts, and more, then that will be a very bad outcome of this bit of electioneering.

Another potential problem with the escalator is the potential for ever-increasing federal transfers to the provinces for health to become an excuse for saying other spending is impossible.

But the backdrop, remember, is a decreasing federal tax burden and a shrinking federal government. The latest budget forecasts total program spending falling from 16 per cent of gross domestic product in 2010 to 13 per cent in 2016.

So the government is getting less expensive and less expansive. That should ease anxiety over health costs. Yes, health spending as a share of the economy has been creeping higher, from about 9.2 per cent of gross domestic product in 1998 to 10.7 per cent in 2008.  And, yes, that’s a challenge to our mainly public system—but not on the face of it an overwhelming one.

We’ll need to spend more on health, no question, but we’ve got room to maneuver. Paying for health care only looks ruinous if we assume that we can’t possibly collect the taxes to pay for it. But why can’t we, especially in an era of generally smaller government?

Federal budgetary revenues stood at 14.4 per cent of GDP in 2010, down from 16.4 per cent five years earlier. I don’t recall  the tax burden feeling so crushing during the boom year of 2005.  If we had to pay tax at that level again to support the health system, without denying other programs, I don’t see why would that would be so bad.

All this is to argue that health policy needs close attention, not just the promise of continued federal transfer hikes. We need to be strategic about where to direct more money. We need not to panic over the scope of the challenge. We need to keep in mind the capacity of Canadian governments to respond.


 

Boosting health transfers: behind the big bipartisan campaign consensus

  1. Passion over reason.

  2. Stéphane Dion, right about every subject except himself.

    • Hardly. He is right about national unity, but that's about it. He has been shown to be wrong about almost everything else.

  3. No. Canadian unity doesn't rely on the constant attention of the sitting PM. The head of the government should instead attend to, for instance, the economy, any war we might be fighting, the education of the young and the pensions of the old—that sort of stuff.

    Good point, John. Someone should inform Iggy.

  4. Canadian unity is making sure you don't announce, we are crashing, on west jet, unless you have a french recording also. lol
    Or otherwise, a joke.

  5. That was most definitely, a capital read!
    Thanks.

  6. Yes and no. The conscription issue destroyed the Tories in Quebec for 65 years. The constitution wars of the late 80's and early 90's certainly unearthed some divisions within the country. In 1995 a majority of Quebeckers came within a hair of voting yes on a referendum on sovereignty. The averted crisis of December in Canada also had stark implications for national unity (both from having separatists effectively in government and the Conservative reaction).

    Canada has a real national unity crisis, however, it is a lot narrower than what Harper and Ignatieff claim it to be. It is true that Canada has energy consumers and energy producers. The carbon tax would have imposed a big cost on oil-rich provinces and industrial Ontario. However, Alberta separatism has never been more than a joke. Newfoundland, which is the only province other than Quebec where any significant number of the population identify with their province before their country, is economically dependent upon the rest of the country and too small for the burdens of nationhood anyway.

    Ignatieff's implication that dividing rich and poor constitutes a crisis of national unity is similarly off the mark. Canada is one of the most classless societies in the world in terms of income equality. You can see that in our political system, in fact. Upper middle class "bleeding hearts" and joe lunchbuckets vote NDP; wealthy suburbanites and poor rednecks love Harper – class has little to do with it (at least relative to other countries).

    Moreover, you can actually make a country more unified by increasing the salience of some divisions. The only division that threatens Canada is French-English. What if Canadian politics was both French-English and left-right though, with ideology as a big cleavage. Well, you would have right wing and left wing separatists that don't get along very well (Mario Dumont's 2007 election performance was a good example of that).

    National unity should be job #1 – Quebec secession is probably the most plausible "nightmare scenario" facing a Canadian PM. That means, however, we should focus on the cleavage that is real, and not imagined.

  7. Baby boomers range from 46 to 64 years old right now….we won't begin to see them as seniors in nursing homes….if at all…..for 20 years yet.

  8. Baby boomers range from 46 to 64 years old right now….we won't begin to see them as seniors in nursing homes….if at all…..for 20 years yet.

    • The healthy ones at any rate. Those broken by illness or life-style will however have increased health-care needs sooner.

      • Oh yeah…the unhealthy ones will die off long before the nursing home…but then again we have 100 olds going sky-diving….so it evens out.

  9. A small dash of reality in the febrile non-debate. More please, sir.

  10. A small dash of reality in the febrile non-debate. More please, sir.

  11. The healthy ones at any rate. Those broken by illness or life-style will however have increased health-care needs sooner.

  12. Oh yeah…the unhealthy ones will die off long before the nursing home…but then again we have 100 olds going sky-diving….so it evens out.

  13. Unconditional Health Care funding increases, not unlike unending Corporate Income Tax Cuts, can create dependency and stifle innovation/creativity in addressing changing demographics in an increasingly competitive world.

    "Necessity is the mother of invention"

  14. Unconditional Health Care funding increases, not unlike unending Corporate Income Tax Cuts, can create dependency and stifle innovation/creativity in addressing changing demographics in an increasingly competitive world.

    "Necessity is the mother of invention"

  15. “An aging population may have an impact on health care spending, but so far the average expenditure on seniors has not risen faster than for younger Canadians.”

    It may be that the proportion of spending on seniors isn't rising faster than the general population because the younger generations aren't looking after their health as well and so are demanding more care earlier than the preceding generations.

    As an example, think of the rapidly escalating prevalence of diabetes in our society, and the decreasing average age of onset.

  16. “An aging population may have an impact on health care spending, but so far the average expenditure on seniors has not risen faster than for younger Canadians.”

    It may be that the proportion of spending on seniors isn't rising faster than the general population because the younger generations aren't looking after their health as well and so are demanding more care earlier than the preceding generations.

    As an example, think of the rapidly escalating prevalence of diabetes in our society, and the decreasing average age of onset.

  17. Thirty billion dollars for fighter jets in a country once known for its peacekeeping efforts.

    Seventeen per cent of Canadians without a family doctor in a country that was once the envy of the international community for its medicare system.

    What's happening to our country?

  18. Thirty billion dollars for fighter jets in a country once known for its peacekeeping efforts.

    Seventeen per cent of Canadians without a family doctor in a country that was once the envy of the international community for its medicare system.

    What's happening to our country?

    • Sending Canadian service people into combat zones as coalition fighters or peacekeepers without proper equipment is nonsensical. We cannot expect to serve effectively on the world stage if we do not provide our military with modern equipment. Being a peaceful country doesn't mean that we should not provide our service people with modern tools to protect themselves nor stand aside when the UN, NATO and NORAD request Canadian assistance. Perhaps the worst strategy would be to send Canadians into peace missions without proper personnel and modern equipment (eg. the UNAMIR lead by Lieutenant-General Romeo Dallaire). Otherwise, we may as well send civilians.

      Our medicare (insurance) system is functional, but terribly inefficient. Any Canadian can walk into a hospital and receive service but this is not the same with family physicians because almost all are private practitioners. There are just over 24,000 family physicians in Canada. Most are located near urban centres. All are are compensated by the medicare (insurance) system, not employed. I would argue the majority of the 17% of Canadians who are without a family physician live some distance away from newly licensed medical practitioners. So improving access to family physicians isn't as simple as training more family physicians, as most will likely stay near their city of training. Governments will have to encourage new docs to move, practice and stay in low service areas. Not an easy thing to do for a young generation that enjoys the comforts and temptations of urban settings.

      Change is happening to our country for better and for worse. Canada is an impressive country, but it has never been optimal. Politicians will continue to make expensive promises for the advantage of election and people vote for political goodies rather than for responsibility and prudence. This will always be the failure of democracy.

      • 1. I have heard many time from military experts that these jets are not the right ones nor is it the right process. Just because someone disagrees with buying these jets it does not mean they want our troops going into battle under equiped.
        2. Canadians demand health care and if that means cutting other government spending then so be it.
        3. You are absolutely right that politicians will promise anything to get elected.

  19. Dictatorship with minority!

    Majority?! LOL! can you imagine the Harper regime with a majority government?! SCARY!.

  20. "The voting public doesn't like languishing for hours in ER waiting rooms or months on specialists' waiting lists."

    I strongly disagree. Anytime anyone even mentions any sort of reform the "voting public" go nuts screaming "No changes! Change means making it American! Don't change anything!" So I can only conclude that the "voting public" loves waiting in ER rooms and on specialists' lists so much that they are willing to defend it tooth and nail.

  21. "The voting public doesn't like languishing for hours in ER waiting rooms or months on specialists' waiting lists."

    I strongly disagree. Anytime anyone even mentions any sort of reform the "voting public" go nuts screaming "No changes! Change means making it American! Don't change anything!" So I can only conclude that the "voting public" loves waiting in ER rooms and on specialists' lists so much that they are willing to defend it tooth and nail.

    • If that is all you can conclude, then your powers of analysis and conclusion are pretty narrow.

      One of Geddes’ well made points is that there are potentially dozens of policy options we should be looking at and debating. The options before us are not limited to “status quo” and “carbon copy of American health care.”

      To conclude that is the case is to have missed the point, and rather badly.

      Oh, I know, I know, you were just trying to make a narrowly partisan political point, which is most of what goes on here. Fine. Good job not contributing anything.

  22. Sending Canadian service people into combat zones as coalition fighters or peacekeepers without proper equipment is nonsensical. We cannot expect to serve effectively on the world stage if we do not provide our military with modern equipment. Being a peaceful country doesn't mean that we should not provide our service people with modern tools to protect themselves nor stand aside when the UN, NATO and NORAD request Canadian assistance. Perhaps the worst strategy would be to send Canadians into peace missions without proper personnel and modern equipment (eg. the UNAMIR lead by Lieutenant-General Romeo Dallaire). Otherwise, we may as well send civilians.

    Our medicare (insurance) system is functional, but terribly inefficient. Any Canadian can walk into a hospital and receive service but this is not the same with family physicians because almost all are private practitioners. There are just over 24,000 family physicians in Canada. Most are located near urban centres. All are are compensated by the medicare (insurance) system, not employed. I would argue the majority of the 17% of Canadians who are without a family physician live some distance away from newly licensed medical practitioners. So improving access to family physicians isn't as simple as training more family physicians, as most will likely stay near their city of training. Governments will have to encourage new docs to move, practice and stay in low service areas. Not an easy thing to do for a young generation that enjoys the comforts and temptations of urban settings.

    Change is happening to our country for better and for worse. Canada is an impressive country, but it has never been optimal. Politicians will continue to make expensive promises for the advantage of election and people vote for political goodies rather than for responsibility and prudence. This will always be the failure of democracy.

  23. This is a good start, but it would be nice to see some vision for managing health care costs. ie: increased funding for programs that properly manage homelessnes and seniors housing and treat additions and mental health issues — so that our comparitively expensive emergency services and hospital services are used for what they're designed for.

    As an aside, it's kind of funny to hear Harper pledge more funding for health care. After all those years with the National Citizen's Coalition and calling Canada a welfare state and so on, it must just make him crazy to have to utter those words in order to get elected. I wonder if he'd ever follow through on such a promise. I'm guessing not.

  24. This is a good start, but it would be nice to see some vision for managing health care costs. ie: increased funding for programs that properly manage homelessnes and seniors housing and treat additions and mental health issues — so that our comparitively expensive emergency services and hospital services are used for what they're designed for.

    As an aside, it's kind of funny to hear Harper pledge more funding for health care. After all those years with the National Citizen's Coalition and calling Canada a welfare state and so on, it must just make him crazy to have to utter those words in order to get elected. I wonder if he'd ever follow through on such a promise. I'm guessing not.

  25. 1. I have heard many time from military experts that these jets are not the right ones nor is it the right process. Just because someone disagrees with buying these jets it does not mean they want our troops going into battle under equiped.
    2. Canadians demand health care and if that means cutting other government spending then so be it.
    3. You are absolutely right that politicians will promise anything to get elected.

  26. If that is all you can conclude, then your powers of analysis and conclusion are pretty narrow.

    One of Geddes’ well made points is that there are potentially dozens of policy options we should be looking at and debating. The options before us are not limited to “status quo” and “carbon copy of American health care.”

    To conclude that is the case is to have missed the point, and rather badly.

    Oh, I know, I know, you were just trying to make a narrowly partisan political point, which is most of what goes on here. Fine. Good job not contributing anything.