Will health care derail the 2017 target for balancing the books? Not likely.

Picture of coins to illustrate folly of the Conference Board of Canada's health care projections.

The Conference Board suggests that a 4.5 per cent annual increase in health spending will derail plans for a balanced budget in 2017. The thing is, that’s more than double the rate of increase the Wynne government is presently spending on health. (Canstock Photo)

The Conference Board of Canada likes to tell the world that it is independent and unbiased, but a quick look at its board of directors will reveal that it is mostly dominated by leaders from Canada’s corporate sector.

That includes representatives from banking, energy, insurance, and telecommunications, to name but a few of the private sectors chiefs that dominate the board. There are also, for good measure, a handful of board members from the public sector, including two university presidents and one hospital CEO, Michelle DiEmanuele from Trillium Health Partners.

DiEmanuele should be very familiar with what Ontario is spending on health care given Trillium has been subject to the same freeze on base funding that other public hospitals have experienced.

Overall Ontario budgeted for a 2.2 increase in nominal funding for the health care sector in 2014-15. Factor in the present inflation rate of 2.5 per cent (August CPI – Stats Canada), that means health care experienced an overall drop in real inflation-adjusted funding of -0.3 per cent. Add to that the impact of population growth and aging, the real cost pressures are probably closer to 4.5 per cent.

This funding gap of more than 2 per cent is why we are seeing cuts to hospital services, layoffs of needed health professionals and waits for home care and long term care. That’s the true status quo.

The Conference Board recently issued a report warning that Ontario was going to pull up a little short of its 2017 target to balance the books if it didn’t cut more services or raise taxes. Oddly, they blame a 4.5 per cent rise in health care costs as being among the reasons Ontario will miss that target if it doesn’t make changes.

We’re sure the Conference Board knows the difference between a cost pressure and actual funding. If Ontario is funding at 2.2 per cent, it isn’t costing government 4.5 per cent.

Further, they use the oldest trick in the book – they contrast the 4.5 per cent rise in nominal health care pressures with the 2.2 per cent real economic growth projections to highlight how unsustainable health care has become.

If inflation is running at 2.5 per cent, that means nominal economic growth is running at about 4.7 per cent. Government revenues, largely because of bracket creep, usually exceed that figure, which means revenues should be climbing by about 4.8 per cent.

If the Conference Board of Canada complains that health care costs are unsustainable because government revenues were increasing by 4.8 per cent and health care pressures were rising by 4.5 per cent, we should all be scratching our heads.

The Conference Board is really complaining that a 2.2 per cent public funding increase (status quo) is not sustainable with government revenue increasing by about 4.8 per cent. This is nonsense.

If you look past the corporate spin, what the Conference Board data really suggests is we could more than double the public funding increases to health care — to 4.5 per cent — and only run a deficit of $2.5 billion in 2017-18. “We don’t expect it will have a major negative effect,” they told the Toronto Star.

Yet that is not the message that the business press is carrying today. Once again health care is instead being portrayed as the culprit behind Ontario’s economic woes.

Is the Conference Board biased? You decide.

There is nothing sacred about 2017 as the date for fiscal balance. The global financial industry crashed the economy in 2008 and it is taking a long time to climb out again.

Given how artificial that target date is, should we really cut more, punting the frail and elderly out of hospitals without home support, or should we be more sensible and recognize health care, like other public services, is something we all need, use and should pay for?

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