Beware of bankers who profess to be health experts

Beware of bankers who profess to be health care experts. Don Drummond and Derek Burleton of TD Economics released a report yesterday blaming health care for the present fiscal deficit and recommending a variety of ways of bringing down costs, including taking “rich” seniors off the Ontario Drug Benefit Plan.

Have they no shame? Do they just assume our collective memories are so short that we have forgotten the role of the international financial services sector in bringing down the world economy in 2008? Now they are rewriting history to suggest it was health care that sent our deficits soaring.

Returning to record bank profits – which will be taxed less thanks to Dwight Duncan’s recent budget – the TD Economics executives feel it is their place to tell us to tighten our belts and do without. In Duncan’s budget new tax cuts cost Ontario $4 billion for 2010/11. The increase in costs for public health care was $2.2 billion. That’s right — increased tax cuts cost more than increased health care spending.

Next year the government plans to reduce increases in health care spending to an arbitrary 3 per cent, but the corporate gravy train will continue with more tax cuts.

Under this scenario, you could freeze health care spending and it would eat up a larger percentage of the provincial budget by virtue of a shrinking capacity by government to raise the money it needs. So, where are the editorials talking about tax cuts being unsustainable?

The Chicken Littles of health care spending Armageddon really don’t like to look at health care spending as a percentage of the overall economy. This is how most international economists analyse health care spending. Health care spending cost 10 per cent of Canada’s gross domestic product (GDP) during the last recession in 1992. Last year health care spending amounted to 11.9 per cent. This is not because of any major growth in health care spending in 2009, but because the economy actually shrunk. The year before health care had cost 10.8 per cent of GDP – that’s less than a one per cent change over close to 20 years. These figures are for all health care, both public and private. About seven cents of every dollar spent on health care is public. In Ontario it’s a little bit less.

Hospitals always appear to be the target of bankers and policy makers. Hospitals have actually been shrinking as a percentage of the public health care pie. There was a time when hospitals accounted for more than 50 per cent of public health care spending. Now it’s below 28 per cent.

The fastest rising costs in health care are for drugs – something the government has just begun to tackle amid the firestorm from Shoppers Drug Mart and other commercial retailers. In Canada we now spend more on drugs than we do physicians.

The bankers acknowledge that much of our present-day expenses are related to the fact that Premier Harris and his counterparts across Canada slashed health care funding throughout the 1990s. And we know that when you do that, you don’t save money, you defer expenses until another day, often at greater cost.

Presumably when you play catch up a funny thing happens – you actually catch up. Nobody is saying health care will cost 8 per cent this year. Hospitals are getting 1.5 per cent in global funding. The OHA said at one point they needed 3 per cent. Yet the bankers say costs will rise at an annual pace of at least 6.5 per cent over the next 20 years. According to whom? Where are their figures coming from?

Dwight Duncan often repeats the mantra that health care will swallow up 70 cents of every program dollar within 12 years. Yet the most recent budget says health care is only 40 cents of the program dollar, but when adjusted for some accounting changes unrelated to health care, that figure jumps to 46 cents. In 2007 it was 47 cents on the program dollar. If you were making a little chart of this, the line would be trending slightly downward, not upward, even accepting the effects of accounting changes.

If we are trending slightly downward over the last three years, how do we suddenly get to 70 cents of every program dollar in a little more than a decade? To do so would mean an increase of 2 cents on the program dollar every year. Even in the most lavish years of spending we never saw that rate of increase. Not once.

The government has never explained how it arrived at that figure, but it was been echoed in bankers reports and in the mainstream media since March. Apparently if they keep on saying it, we’ll all believe that there’s a problem with health care spending and be more likely to accept the unacceptable.

Our single-payer system remains the most efficient model for delivering health care. Regardless of what the cost is, all alternatives are worse. Just look at the U.S.

There is much we can do to improve how we spend our health care dollars. It may be counterintuitive, but if a public plan can buy drugs for less, why would we want to move people out of that plan, as the bankers suggest? Shouldn’t we instead expand the plan? Wouldn’t it make sense for all of us to pay a bit more in taxes to save us substantial out-of -pocket expenses? In a January Vector Poll, 57 per cent of Canadians said they would actually pay more for better health care.

If the bankers recognize fee for service does not work well for doctors, why would they want to move hospitals towards that model?

Nobody calculates the cost of the constant upheaval in the system. It’s been more than a decade since the Health Restructuring Commission issued its report. The constant restructuring continues at great expense. The system never gels because it never gets the opportunity to do so. Now the bankers want more of the same.

Keeping track of the various entities the McGuinty government has set up to manage health care is a challenge. The Local Health Integration Networks have been a colossal flop. We already have an Ontario Health Quality Council – but the bankers want a Commission on Quality and Value for Health Care. The appetite for this level of bureaucracy is endless, especially after gutting the actual Ministry of Health. Recently the Central East LHIN complained they were getting no new staff but were receiving increased responsibilities from the province for capital projects. The same LHIN has no problem approving plans that continually remove front line care providers from their jobs while expecting hospitals to do more.

The system can be improved, but let’s make it about quality first. When we have quality, every health care expert agrees the costs will no longer be an issue. Instead of being stampeded by the banks into doing something rash, we need to take the time to figure this out and get it right.

2 responses to “Beware of bankers who profess to be health experts

  1. Why are our (excessive) union dues paying for this sort of childish finger-pointing? Banks & bankers are contributing members of our society — better than in most, from recent global experiences — while contributing via taxation, as do all working people & taxable institutions, to funding health care. They are thus as entitled as all citizens to participate in policy discussions, proposals & debates about public health systems. Ad-hominum ridiculing of them for being bankers is simply pathetic. Often an exchange of views from different perspectives can be positive and illuminating. Ontario is still nominally a democracy and they are entitled to participate. Your members expect unions to display a more mature, adult,reswponsible and communally inclusive level of discussion.

    • Jim — I think you are missing the point. The banks are trying to blame health care for the deficit, not for their own considerable role in the financial debacle. There is no question the government is lining up to take on health care. That’s our member jobs, that’s why we talk about it. Carol Goar suggested the TD paper was actually asked for by the Minister of Health. Why would the Minister prefer the advice of the bank over somebody like Robert G. Evans, who is an Order of Canada recipient and independent policy expert on the question of health care sustainability (See yesterday’s posting)? And don’t the banks have a conflict of interest given they are benefiting from the tax cuts that are eating up a greater share of public funding, funding that could be going to sustain health care?

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