National Post (National Edition)
Health care not on life support
Canada spends as much per GDP as France and U.K.
Dominic LeBlanc is living proof of the vigour of Canada's health system. The minister for intergovernmental affairs underwent a successful stem cell transplant a year ago to treat non-Hodgkins lymphoma.
“If I'm here one year later it's because of that remarkable feat of medicine,” he said at a press conference last Friday.
Ironically, he was there to refute the idea presented by four conservative premiers that the health system is broken, thanks to Ottawa's neglect.
The premiers — Ontario's Doug Ford, Quebec's Francois Legault, Manitoba's Brian Pallister and Alberta’s Jason Kenney — came to town to make a pre-throne speech appeal for what Legault called a “fair and equitable partnership."
The premiers claim there is fundamental imbalance in the way health services are funded; that Ottawa will provide just 22 per cent, or $42 billion, of the $188 billion the provinces and territories will spend on healthcare this year.
The provinces are seeking an additional $28 billion — “to be maintained over time with an appropriate increase to the annual escalator” — to take the federal contribution to 35 per cent.
“We're calling for fiscal fairness in the federation,” said Kenney, adding the funding share was originally envisaged as a 50:50 split between feds and provinces. “During COVID, it's been said we're `all in this together'. But fundamentally, our ability at provincial level to pay for the quality of care that people expect is increasingly limited,” he said.
Ford said that as demand increases, the support from the federal government is falling. “No province can sustain it — the system is broken when it comes to health care,” he said, pointing to the recent hike in COVID cases that have seen long lineups for tests in the province.
“It’s very concerning. Our doctors and nurses have been frontline heroes. But we need the support to hire more nurses,” he said.
LeBlanc hit back, pointing out that as part of the federal government’s $19 billion “restart” package, $11 billion is for healthcare measures.
“For every dollar spent on COVID, 87 cents has come from the federal government, which has been and will continue to be there,” he said.
Provincial premiers coming to Ottawa, demanding more money for healthcare is as eternal as death and taxes.
But, with healthcare top of mind, should there be an enhanced federal contribution?
LeBlanc suggested that Justin Trudeau is open to the idea. “The prime minister has said on multiple occasions he is happy to talk about the Canada Health Transfer and is finalizing a time this fall to have that very meeting,” he said.
However, Trudeau should resist the urge to make any expensive promises.
For one thing, most people would disagree with the suggestion the system is broken. As LeBlanc said, it remains a source of national pride.
Canada spent 10.7 per cent of its GDP on healthcare in 2018, or $6,448 per person. That’s far higher than the OECD average of 8.8 per cent, and more than peers like France and the U.K. (though less than the U.S.).
Nor is the funding context as clear-cut as the premiers would have Canadians believe.
A report by the Parliamentary Budget Office earlier this month looked at the contribution of federal health transfers to provincial programs that the transfers were designed to support — hospitals, physicians, home care services and so on — rather than total provincial health care spending.
By this definition, the 2018/19 Canada Health Transfer of $38.6 billion accounted for 32 per cent of the $119.3 billion in provincial and territorial spending. Those transfers increased by 4.3 per cent in the decade after 2008/09.
The provinces can justly complain that the Trudeau government ended more than a decade of six-per-cent annual increases in 2016/17, after which the Liberals offered a “take it or leave it” deal with minimum increases of three per cent every year (albeit, sweetened by an $11-billion over 10 years home and community care package).
Former finance minister Bill Morneau squeezed each provincial premier one by one, until they accepted a deal that saved Ottawa $65 billion.
It might be said the provinces were the architects of their own demise by proving they could live within those means, after restraining their own spending increases to 2.9 per cent between 2012/13 and 2016/17.
That was then and premiers can say with some justification the greying of the Canadian population is a harbinger of things to come.
The aging population will undoubtedly slow growth, putting downward pressure on government revenues and upward pressure on programs like healthcare.
But the impact on health expenditure is surprisingly small. As the Canadian Institute for Health Information expenditure trends report pointed out, seniors are a diverse group — the 65-69 age group use healthcare at comparable levels to the general population ($6,656 per capita), while the 80-plus age group has expenditure three times that amount.
“Overall, population aging is a modest driver of increasing healthcare costs, estimated at 0.8 per cent. The share of public health sector dollars spent on Canadian seniors has not changed significantly over the past decade — 44.4 per cent in 2007 to 44.2 per cent in 2017. During the same time, the senior population grew from 13.4 per cent to 16.8 per cent,” the report noted.
CIHI suggested that aging alone will add $2 billion a year to health spending.
That’s material but it does not imply a funding emergency that needs to be addressed in the middle of a crisis that is already straining the public purse.
Provinces have done a good job at keeping some healthcare costs under control — drug costs have been contained, mainly because savings from generics have offset growth.
Hospital costs have also been controlled by reduced admissions and same-day surgery.
But physician costs, which account for nearly one in six healthcare dollars, grew at 4.4 per cent last year. For the 12th year in a row, the number of doctors grew faster than the population. That is wonderful, except they have to be paid for. The gross clinical payout for a family physician in 2017/18 was $281,000 and for a surgical specialist $481,000. Ontario’s physician services budget alone is $12 billion and doctors in the province were last year awarded a four-year deal by an arbitrator, without the hard cap on earnings the government was seeking.
The bottom line is that a federal government with a $400-billion deficit has no fiscal room to enrich the Canada Health Transfer. There are very real pressures on provincial healthcare budgets caused by an aging population.
But Ottawa should make clear that premiers will have to live within their means, at least until the country has weathered the COVID crisis.
AGING IS A MODEST DRIVER OF INCREASING ... COSTS.