Liberal think tank salutes Harris era health care cuts

The McGuinty government established the Mowat Centre in 2010 with $5 million in seed money, but they may want to ask for their money back after Will Falk’s op/ed last weekend in the Toronto Star. Falk, an “executive researcher in residence” at the Mowat, suggests Mike Harris got it right when he restrained funding for health care, leading to hospital closures, reductions in beds, compensation restraint and cuts to medical school spaces. He even appears to commend Bob Rae for starting it off with his Rae Days (ignoring the fact that it ended up costing hospitals more to pay for overtime to cover the missing ‘Rae Days’ personnel).

Quick to cast off the perception that such ideas may paint him as a neo-Con, Falk points out that straight-line Malthusian projections of gloom and doom seldom work out that way. He indicates that studies by the Fraser Institute and the C.D.Howe ignore the level of growth in health care spending the previous decade averaged 0.9 per cent and represented real declines when compared to the size of the economy.

He might have added that Don Drummond, the McGuinty government poster boy for change, also uses such deceiving straight-line projections.

Falk argues that rising health care costs are a self-fulfilling prophecy – that if you provide increases of six per cent per year, health care will spend six per cent per year. He says Canadians need government to bend the cost curve, not fund it.

To be fair, Falk is not advocating more of the same – the obvious end game of such activity would be a demolished health system. You can’t cut beds forever – especially when hospitals are already functioning at capacity. Nor can you expect professionals to continue working without a raise. He instead makes the vague suggestion that technology and IT will save us. Give him points for audacity, but it doesn’t seem to be grounded in evidence.

If you stop funding health care, there is no question that we could be over the tipping point long before technology comes riding in on a shining white horse to save us all.

Falk may think we’re beyond the need for such cuts, but starving the health care system could start us down the same draconian path again.

Even Don Drummond acknowledges that the slash and burn approach by the Harris Tories took some time to recover from – and may account for some of the spending in the ensuing years. When it comes to deferring health care costs, it’s a safe bet that those costs will be much higher at a later date.

Falk, like the Chicken Littles he criticizes, doesn’t make the distinction between public spending and total spending.

The charts accompanying his article appear to lack the most recent health spending data which shows spending already in decline relative to the size of our economy. By ignoring 2010 it looks like health spending took a sharp turn upwards as a percentage of our economy. In fact, it was a shrinking economy, not an upswing in health care costs that bent the curve upwards.

His expenditure chart has no adjustment for inflation. Any expenditure will look like a straight-line upward without adjustment. The notion that better management of health care could take us back to the days of national spending of $400 per capita is silly.

By extending his graphs over 35 years it also makes it difficult to notice that as a percentage of our overall economy, spending has been relatively static in this last decade of supposedly runaway spending.

Then again, if we simply recognized that, this whole new industry of scaring the wits out of Canadians would lose much of its mojo.

2 responses to “Liberal think tank salutes Harris era health care cuts

  1. Hope that you will make note of the August 3 Star piece as a follow-up.
    I don’t think that there is a disagreement here.
    If adding money is necessary then let’s do it; but before we add the money let’s make sure that we spend well. We all want to preserve Medicare.
    http://www.thestar.com/opinion/editorialopinion/article/1034281–overcharged-for-health-care

  2. There is no question that the last deal with the docs failed to deal with these discrepancies, where specialists can be earning five times or more what a generalist earns. Instead of taking into consideration the changes in technology, they appear to have simply made a modest wage adjustment to those at the bottom of the earnings pyramid.

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