Of Interest to Readers in Atlantic Canada:  Canada’s Medicare Bubble: Is Government Health Spending Sustainable without User-based Funding?


In this research paper Fraser Institute President Brett Skinner and coauthor Mark Rovere demonstrate that Canada’s Medicare costs are on a growth trajectory that cannot be maintained without fundamental changes to the system.   The authors argue that the solution isn’t simply increasing federal contributions: in recent years the federal government has transferred billions of dollars more than would be necessary to offset overall price increases or population growth.  They conclude that: “Transfers encourage the provinces to avoid making necessary reforms.”

Readers in Atlantic Canada may be alarmed to learn that, when all federal transfers are excluded from the calculation, government health care spending currently consumes 87.7 percent of all “own source” revenue in Nova Scotia; 74.2 percent in New Brunswick; 65.5% in Prince Edward Island, and 60.3% in Newfoundland & Labrador.

Quebec has already reached the significant threshold of spending 50 percent of provincial revenue from all available sources on healthcare. Only two provinces—Nova Scotia and Newfoundland and Labrador—are not currently testing that critical level.  That is not a reflection of spending restraint, but stems from a short-term increase in natural resource revenues that is unlikely to persist in future years.

Skinner and Rovere argue that tax hikes cannot simply chase ever-higher spending.   Fundamental reforms are called for.  The Canada Health Act should be suspended to allow provinces to require copayments and permit a role for private insurers.  They recommend a role both for-profit and non-profit health providers in competing for the delivery of publicly insured health services.  Such procedures, they note, are common across OECD countries in similar circumstances.

To read the complete report, follow the link to the Fraser Institute sitehttp://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/canadas-medicare-bubble.pdf