Why aren’t we spending $200 billion on public health care in Ontario?
In the early 1990s the straight-line cost projections suggested that by 2012 that’s where our health care spending would be.
Instead we are spending $47 billion – less than 25 per cent of what the “experts” told us would happen.
Yet we see endless reports telling us that if don’t take drastic action that health care spending will soon represent 80 cents of every dollar spent by Queen’s Park. These present-day Chicken Littles include Don Drummond, appointed head of a Commission to look at reorganizing public services in this province.
Recently the University of Toronto’s Mowat Institute released its own report on Health Care Sustainability. Contradictory, “Fiscal Sustainability & The Transformation of Canada’s Health System: A Shifting Gears Report” uses the same kind of warnings, but then points out that such straight-line “projections of indefinite yearly increases in health spending are misleading.”
The report goes on to state that we have already “created a platform for cost savings.”
The document includes an OECD (Organization for Economic Cooperation and Development) chart that tracks growth in per capita health expenditures internationally from 1993 to 2008. Of 32 OECD countries, Canada does very well – health care costs are actually rising much slower than almost all of our OECD comparators. Only five of 32 countries have a marginally slower rate of growth than Canada.
“Healthcare has a history of cyclical investments and retrenchment, with long periods of high growth followed by system restructuring and rationalization,” the report states.
That’s not a straight line.
In fact, spending relative to the size of the Ontario economy has been relatively flat for much of the last decade, only rising in 2008 as a result of a shrinking economy. While Don Drummond charts a steep continuous line upward following 2008, health care spending as both a share of GDP and as a percentage of program spending actually shrunk. Drummond predicted consistent 6.5 per cent increases. Last year Ontario increased health care spending by about 5 per cent. If Drummond couldn’t predict one year into the future, how are we to take serious his assertion of a coming health care spending Armageddon 20 years down the line?
The Mowat report states: “while it is true that if prior trends continue the system would be unsustainable, there is a fundamental error of interpretation at work here. The health care system is dynamic. Rather than concluding that the system is unsustainable, analysts should acknowledge that a fundamental technological shift was required to increased investments over the past decade – but that other practices and processes in the health care system have not yet adjusted.”
The report also acknowledges that 6 per cent increases were sustainable during the 2000s. The McGuinty government used growth in the economy to spend money on developing an infrastructure “to measure and report on quality of care and access to care.” Not only was it sustainable, but the government managed to eliminate an inherited deficit from the Tories and balance the budget for three consecutive years while this was taking place.
It is difficult to sell policy-makers on the idea that change is urgently needed when the crisis doesn’t materialize as predicted, nor when it appears the solutions are already in progress.
The Mowat report does have an agenda – some of it positive, other parts questionable.
The authors provide the now familiar and misleading chart that shows health care steadily rising as a share of GDP from 1999 to the Drummond Armageddon date of 2031. Had they backed that up by just a few years, the chart would have shown a considerable drop in spending from 1992 before rising again the late 1990s.
It doesn’t mean we should relax and accept the status quo – the report does a reasonable job of showing us several areas where cost-savings could accompany increased quality.
The authors – Will Falk, Matthew Mendelsohn and Josh Hjartarson – make a strong argument that we should be benefiting from the implementation of new technology. In August of this year the Ministry was able to renegotiate its deal with the province’s doctors, recognizing that some procedures were being overcompensated thanks to improvements in technology. That deal resulted in savings of $223 million. Could it have been more?
Similarly, changes the McGuinty government brought to generic drug pricing and professional allowances resulted in additional savings of about $500 million annually. The report refers to an estimate of $1.28 billion in annual savings had the same policies applied to the rest of Canada.
While investments in e-Health have been huge, implementation is being gradually rolled out. That should not only make the system more efficient, but the costs of developing the system should eventually be retired.
There is much more to suggest that the Chicken Littles are once again ridiculously wrong.
More on the Mowat report in the coming days.
If you would like to download a copy, please click here for the Mowat report on Health Care Sustainability.