Guest Post: Where’s the evidence for a health care sustainability crisis in Canada?

Posted on November 16, 2016, 12:18 am
11 mins

PHOTOS: Well, that’s one way to “bend the cost curve” … premier Ralph Klein’s way. The old Calgary General Hospital begins to fall an instant after the dynamite was triggered on Oct. 4, 1998, the Klein PC Government’s approach to health care infrastructure. Within seconds, Calgary’s only downtown hospital had been reduced to rubble. Below: Barret Weber, author of this guest post, and four charts illustrating key points in the article.

By Barret Weber

There is no overwhelming evidence Canada’s health care system suffers from the dire sustainability crisis we hear so much about from mainstream media and right-wing think tanks.

Just the same, we hear plenty nowadays about the need to “bend the health care cost curve,” in Alberta and across Canada.

barretweberA recent book by Gregory Marchildon and Livio Di Matteo, Bending the Cost Curve in Health Care, identifies three main phases of health spending in recent Canadian history:

  • The first phase, running from 1976 to 1991, saw an annual inflation-adjusted growth rate of 2.6 per cent.
  • The second, starting in the early 1990s, was characterized by harsh fiscal belt-tightening across Canada.
  • The third, which came about when the second proved unsustainable, ran from 1997 to 2008 and saw major growth, averaging 3.5 per cent a year.

The authors believe we are now at the beginning of a fourth phase in which growth in health care expenses will be much gentler – in other words, we’re bending the cost curve.

Health expenditures have levelled off in Canada since 2009, when they reached 11.6 per cent of Gross Domestic Product, declining to 11.1 per cent in 2013.

The Canadian Institute for Health Information estimates national health expenditures were 10.9 per cent of GDP in 2015. By contrast, in the 1970s, Canada spent 5 to 7 per cent of its total economy on health care.

As for the fear health care spending would “crowd out” other areas of provincial expenditures, this seems not to have happened. “Despite the conventional wisdom,” wrote Drs. Marchildon and Di Matteo, “studies have not yet found a robust relationship between increase health spending and reduced provincial spending on other public goods and services.”

In other words, there’s no evidence Canada’s health care system suffers from the dire sustainability crisis we keep hearing about from the right and its mainstream media echo chamber.

chart1As for Alberta, it is in the middle of the pack when it comes to provincial governments health spending – 38 per cent in 2013-14.

Perhaps that is why few provinces today are seriously considering harsh cuts – save, perhaps, Newfoundland and Saskatchewan – like those seen throughout Canada in the 1990s.

Remember, it wasn’t just Ralph Klein’s Progressive Conservative government in Alberta that cut deeply in that decade. Roy Romanow’s NDP government in Saskatchewan also made “cuts to education and health, offloading to the municipalities and school boards, and higher sales taxes,” political economist John Warnock observed. There was no recognition a substantial cause of Saskatchewan’s large deficit was the previous Grant Devine government’s cuts to royalties and resource taxes.

These facts mean we now need to seriously reconsider the notion we face a grave sustainability crisis in health care.

Canada spent approximately $219 billion annually on health care in 2015. Ottawa directly contributed more than $34 billion in 2015-16, approximately 15 per cent of the total. Per capita costs for provincial health care vary across the country, depending on such differences as population growth and density, average age, and cost of living.

In 2013, Nunavut spent the most at $13,760 per person, N.W.T. was the second highest territorial spender ($12,219.11), and Yukon the lowest ($9,443).

chart2Newfoundland and Labrador was the highest per capita provincial spender in 2013 ($6,825.83). At $6,681.54 per person, Alberta spent the third highest that year. The lowest per capita spenders were Quebec ($5,519.38) and British Columbia ($5,651.52). In other words, Quebec spends about 20 per cent less per capita than Newfoundland. And, in the west, British Columbia spends 18 per cent less than Alberta.

While these differences are not insignificant, they make sense given geography and regional characteristics across a large country. They hardly paint a picture of an unsustainable health care system. They also show Alberta is not the highest per capita spender in Canada.

chart3Still, Alberta has been a relatively high per capita spender since the early to mid- 2000s, and particularly since 2008 when Alberta Health Services was created. As a percentage of total GDP, however, Alberta has never really been as big a spender as right-wing mythology would have it.

While Alberta is often compared unfavourably to British Columbia because that province spends approximately 15 per cent less per capita than Alberta, B.C. spends more on health care as a percentage of its overall GDP. BC also spends a higher proportion of its total provincial budget on health than does Alberta – 43 per cent versus 38 per cent.

In 2010, the B.C. government spent 11.79 per cent of total GDP on health. In 2013 it spent 11.28 per cent. Alberta’s spending peaked at 8.9 per cent of GDP in 2010 and then levelled off to 7.9 per cent in 2013.

chart4So maybe the sky isn’t falling in Alberta after all?

In the 2015 election, the Alberta NDP ran on ensuring “a stable and secure budget for health care services” and insisted it would not proceed with PC premier Jim Prentice’s planned cuts to the health system’s budget.

This made sense for a system that had paid the price for decades of systemic reorganization, micromanaging, and resulting staff morale problems. Creation of Alberta Heath Services in 2008 did not come cheap, either, which helps explain why Alberta’s per capita health spending has been above average since that time.

Alberta Health Minister Sarah Hoffman is on record calling for stabilizing the system while “bending the cost curve.” In a recent media interview, she advocated ending “experiments in privatization.”

The NDP also proved willing to bring some services that had been contracted to the private sector back into the public system – including medical lab services. Doing this was, “without question, a different philosophy than Albertans grew accustomed to with previous governments,” the Edmonton Journal editorialized. “It is also likely the right move.”

For its part, Alberta’s Opposition Wildrose Party calls repeatedly for cutting costs in health care, but continues to repeat its campaign pledge to “gradually decentralize the delivery of health care services to the local or facility level.” It advocates for a “patient-centred” health-care system and harshly criticizes wait times in the province. It has provided little information, though, about how it proposes to pay for yet another massive reorganization in health care delivery or explain how that might reduce wait times.

Perhaps this is to be expected. The Opposition party’s 2015 platform could have been written by Donald Trump himself, describing Alberta’s health system as “broken, bureaucratic, inefficient, and … wasteful.”

There’s plenty of work to be done to ensure Alberta’s health care system serves the public interest, but another systemic reorganization won’t get us there.

Democratically elected governments, not the profit-driven private sector, are best situated to carry out that public mandate. We need to find a way to be honest about how our health care system is performing without trashing it as bureaucratic, wasteful, and bloated.

We should also celebrate shared values that most Albertans and Canadians have – and our health care system is one of the few.

We need to remember what a health system is designed to do. As a recent report on basic income by the Canadian Centre for Policy Alternatives reminded us: “Income is the leading determinant of health. Poverty and income insecurity translate into expensive health care needs. A key solution to rising health care costs that preoccupy governments is not in the health care system; it is in income security.”

Albertans certainly shouldn’t light their collective hair on fire about health care spending. Yes, Alberta has a $10.9-billion deficit and has recently been an above-average per capita spender on health.

Yet people who worry about how much we’re spending on health care rarely seem to complain about how much we spend on roads, new trucks, private schools, or tax breaks for the wealthy.

Alberta’s budget difficulties should not be blamed on health care spending.

Barret Weber is a member of the Friends of Medicare and has a doctorate in sociology from the University of Alberta. This post also appears on Rabble.ca.

5 Comments to: Guest Post: Where’s the evidence for a health care sustainability crisis in Canada?

  1. political ranger

    November 17th, 2016

    Without taking a single thing away from what Barret Weber says about AHS it must be noted that the low levels of employee moral and the endless ‘systemic reorganisation’ are endemic in all of Alberta’s gov’t services.
    While we use wait-times as a measure of delivery and efficiency in the health care system and find that system wanting, the lack of basic managerial and technical competency results in extremely poor and expensive service for Albertans’ from the rest of gov’t.

    Reply
  2. jerrymacgp

    November 18th, 2016

    A few comments, if I may. First, while Alberta spends more per capita than most other provinces, our health outcomes are not commensurate with that upper tier of spend. I think most people would be OK with spending a bit more if we saw more bang for our bucks, but on that measure we are only middling. Secondly, the average voter doesn’t look at proportion of GDP, which is quite an abstract concept, but at percentage of their taxes going into health care, which is increasing. Thirdly, the fastest growing components of health costs are physician fees and drug costs. The government is gently taking on the docs to try and address the former; it isn’t clear what their strategy is for the latter.

    Fourthly, there has been a long history in this country, with Alberta being no exception, of politicians being overly focused on bricks & mortar and expensive shiny chrome machinery, while starving low-tech, capital-light preventative, restorative and rehabilitative services that could, if better resourced, reduce demand over time for costly acute care services. My take on that has been that we in the public, and the media, have contributed to that by in incentivizing our politicians (with our votes) to support things that can have brass plaques attached to them and ribbons that can be cut, instead of to support services that can truly improve the health of the population.

    Reply
    • David Climenhaga

      November 18th, 2016

      Very good points, Jerry, especially the one about the political value of bricks and mortar. I am afraid that most of the things done by politicians – they are only people, just like the rest of us – are done because we, the voters, encourage them. This is why most politicians “lie” – because they know we will punish them if they tell the truth.

      Reply
      • Barret

        November 18th, 2016

        Yes, thank-you Jerry. Outcomes surely have been a problem, which detract from public perceptions of the system. But I think it is useful to think about spending in terms of GDP because, though abstract, it gives us a sense for the overall size of Alberta’s economy and fiscal capacity (Albertans can afford to spend more on health so they do; population has grown significantly through this time; budget discipline at AHS has been a problem; and Alberta has artificially low general taxation levels overall which makes funding even basic programs difficult without significant bitumen bucks). The problem with per capita measures, as you know, is that they can be abstract as well – they don’t tell us much other than how much we spend per head. Alberta has a young population, which further makes the per capita figure hard to explain. But we do know that spending on hospitals, drugs and physician pay at least since 2008 has been very high. As we know, successive Alberta governments have been focused on shrinking the fiscal capacity of the government [http://www.parklandinstitute.ca/hard_math_harder_choices], which can also assist in the agenda to make health care spending appear to be out of control. The final point relates to why the cost curve has been bending; this is the result of big investments that should ultimately pay off once productivity gains have been realized in the system overall, as they have in Ontario and Alberta, which are already bending the curve: http://healthydebate.ca/opinions/defying-expectations-how-health-care-reformers-quietly-bent-canadas-cost-curve

        Reply
  3. JMB

    November 18th, 2016

    I would encourage us to compare not just the amount we spend on health; but rather what outcomes/returns we get for that investment. Comparing to other provinces in Canada is a limited view; if we compared more frequently to other countries who get arguably better results/outcomes for their investment, we may gain more insight into how to shift not only the cost curve, but more importantly, the ways in which we organize and deliver services in a way that supports Albertans to achieve their health goals.. which of course as one commentator noted, is often about things not traditionally included in our healthcare discussions e.g. poverty and basic income.

    Reply

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