Will Drummond recommend failed Quebec health care levy?

Former TD Bank VP Don Drummond is soon expected to issue his report on how we can makeover public services in Ontario. With health care taking up about 40 per cent of provincial program spending, it is certain that Drummond will have much to say on the sector. Having spent time on a Canadian Medical Association panel earlier this year and having publicly beaten the subject to death while at the TD Bank, it will not be hard to predict where he is going.

There is some question as to whether Drummond’s report will ever be made public, placed in a drawer and forgotten, or quietly used to provide guidance to the McGuinty government.

Amid the Occupy movements and resentment building over corporate influence on government, Dalton McGuinty may want to avoid the optics of having a former banker determining what Ontario’s priorities should be.

They place extraordinary confidence in Drummond even though his advice to Paul Martin didn’t exactly pan out. At the beginning of the last decade Drummond had been an advocate for corporate tax cuts, arguing they would benefit the economy. More recently he admitted they had no effect – aside from removing billions out of the public sector and leaving less to pay for services like health care.

In today’s Toronto Star Thomas Walkom suggests that Drummond will likely recommend a form of user-pay that comes out of your income tax – similar to what was attempted in Quebec. Under Quebec Premier Jean Charest’s failed scheme, you would pay $25 per visit every time you went to the hospital or to see a doctor. You wouldn’t pay up front, but instead these fees would be added to your income tax.

For someone who makes regular trips to the hospital for rehab, dialysis, or cancer treatments, the $25 fee could add up to be a substantial tax hike. For example, someone who had to go to the hospital once a week for 30 weeks would face a levy of $750.

Charest said he would offset the impact on low-income earners by providing tax credits, but where would the cut-off be?

In Ontario more than half of the population earns less than $30,000 per year. Under such a scheme, would a similar plan let all of these people off the hook? It’s unlikely.

We do know who would pay less – the wealthy. Every study has shown that one’s health status has a direct link to personal income. Those at the top are less likely to need the kind of access those at the bottom and middle will be asked to pay for.

For the super rich who prefer private health care, they wouldn’t pay a dime more.

In Quebec they calculated this scheme was a way around the prohibition on user fees for doctors and hospitals in the Canada Health Act.

What they didn’t calculate was the widespread opposition to the scheme by Quebecers, forcing Charest to eventually abandon the idea.

If the government truly needs to raise taxes, it should do so fairly.

Alex Himelfarb, former Clerk of the Privy Council, pointed out that Canada’s super wealthy are actually paying less in tax than their US counterparts.

Until the rich pay their share, government will likely find little willingness on the part of the middle class and poor to ante up for their trips to the doctor.

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Drummond’s former TD bank boss Ed Clark was recently named Business Leader of the Year by the University of Western Ontario’s Ivey School of Business. Speaking at UWO, Clark recognized Canada’s middle class is shrinking and the working class falling behind. To address the issue, Clark said government may need to address redistributive policies. Unfortunately, after pointing out that hard-working people were not reaping the rewards promised to them, the Toronto Star reports he said “unlocking the current crisis may well require the population to accept actions laced with moral hazard – rewarding less disciplined members of society.” So that’s it – those outside of the 1 per cent may be hard-working, but morally “undisciplined?” Clark received a 9 per cent increase in his personal compensation this spring, earning $11.3 million. Evidently he is very disciplined.

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