Wednesday, November 22, 2000
Halifax Chronicle Herald

Health care debate, heal thyself

By Brian Lee Crowley

SOMETHING in the health care system has got to give. But the politicians still won’t admit it.

We have never spent more on health care than we are today, and the spending is rising quite handsomely. Since medicare’s inception, there has only been one year, 1994, in which total public-sector health care spending declined on a year-over-year basis.

Angst over health care “cuts” is really a reaction to a slowdown in the rate of increase in medicare spending that took place as governments struggled to bring their fiscal situations under control and eliminate their deficits.

Yet that moment of fiscal discipline seems to have been fleeting. From 1992 to ’95, health care spending by the provinces rose by .4 per cent annually, but since 1996, the growth rate is 10 times that. According to the provincial ministers of health, the most optimistic scenario for the future has the rate of health care spending steadying at roughly five per cent per year. That means that in 25 years, health spending will be roughly two and a half times higher than in 1999-2000. The population will rise by less than a fifth.

We all know that an aging population, together with pricey advancing technology, is driving these inexorable rises in spending. But the real cost drivers haven’t even really bit yet. The Internet is giving people access to more information than ever before about their own health and about possible treatments. People are no longer dependent on local health care professionals for their information, and will increasingly demand the best service, the best drugs, the latest surgical techniques and the most recent diagnostic equipment, not merely what the system is prepared to provide.

As American health care entrepreneurs become increasingly aware of the opportunity that Canadian health care queues represent, they will make more and faster and cheaper health care available in border communities. Canadians’ willingness to pay a heavy taxation burden for a system that will increasingly be seen as unresponsive and archaic will decline rapidly.

Yet the voracious health care system I’ve described will require significant increases in taxation merely to maintain benefits at their current level, let alone to finance new drug insurance and home care programs. Alternatively, taxes will remain stable or rise more modestly, but at the cost of a significant decline in benefits in the future. The latter seems the more likely alternative, given Canada’s uncompetitive tax regime relative to the United States.

Some people claim, of course, that medicare is a competitive advantage for Canadian businesses versus their U.S. competitors. But the same Canadian companies that sing the praises of Canada’s health care system, because medical costs do not fall on the employer, are the ones who are complaining of the brain drain to the south. Those world-class corporate executives and highly skilled workers fleeing south are driven in part by the growing personal income taxation gap. It also helps to explain why we lose 19 doctors to the States for every one who comes north. And the tax gap will widen under either of the tax-cutting plans offered by the two candidates in the Americans’ interminable election campaign.

In fact, the way that we finance health care is pretty much a wash in its total effects on the economy if we compare Canada and the U.S. What is not a wash is the overall tax burden. Our taxes, debt and interest charges are all much higher than in the U.S. These are huge competitive disadvantages for Canada, and cast considerable doubt on our ability to generate the kind of superior economic performance that alone would allow us to sustain higher levels of public spending on health care. Our ability to raise taxes is constrained by our need to remain competitive in our major export market.

So, if health care spending continues to rise at its current rates, and governments continue to balance their budgets, governments must cannibalize other public spending. We will have to cut spending on schools and roads and environmental protection. In fact, that trend has already started.

I don’t know about you, but this is not a picture that meets my definition of sustainable. Neither increasing taxes nor cannibalizing other vital public spending is healthy or desirable.

Our federal election campaign was supposed to be about health care, the issue at the forefront of the public mind. Yet to listen to the leaders, you’d be forgiven if you thought the only issue facing the health care system was whether or not Joe Clark got his hernia operation in a private hospital, or whether it is Ralph Klein or Allan Rock who has done the most to encourage private health care provision in the country. The true sickness in the health care system is that its custodians cannot even bring themselves to talk to us about the real issues, and we then accept that as genuine debate about our most important social program.

Brian Lee Crowley is president of the Atlantic Institute for Market Studies, a public policy think tank in Halifax. E-mail: BrianLeeCrowley@aims.ca