Health care: staggering costs that keep going higher

Dan Leger danjleger@gmail.com
Published on April 15, 2013

In Nova Scotia, health care eats up $4.5 billion of the province’s $9.5 billion annual budget. That’s almost half of provincial government spending, 13.2 per cent of the province’s economy and 70,000 jobs.

In P.E.I., it has about the same impact: 13.2 per cent of gross domestic product and 42 per cent of the provincial budget. In New Brunswick, it’s $2.58 billion and 40 per cent of the budget. The David Alward government says it will freeze spending in the coming year.

Across the Maritimes, health care is gobbling up an ever-larger share of provincial spending and there’s no end in sight. And it’s not just here in the East. Health-care spending is growing everywhere in Canada and reached $200.5 billion in 2011, according to the Conference Board of Canada.

The figures are pretty staggering. Across Canada, 2.1 million people now work in health care, with a total payroll of $127 billion. It costs all levels of government some $58 billion to run more than 1,200 hospitals and another $28 billion to pay doctors.

The Conference Board report was actually arguing that health-care spending helps drive big sections of the economy. That’s because it returns money to governments through taxes on income and consumption by all those workers. So when governments cut health-care spending, they also cut their tax take.

And that might partly explain the dilemma in which governments find themselves across the Maritimes. For health care, every dollar cut, they save only 90 cents because of the roughly 10 cents lost in tax revenues. It’s hard to make the numbers match up.

That kind of pressure could also explain why P.E.I. Health Minister Doug Currie tried so hard to sound tough earlier this month in the legislature.

Defending some modest cuts in services, Currie said the Island government can’t carry on the way it has and it’s time for change.

Quoted in The Guardian, Currie said P.E.I.’s health-care budget has risen to $570 million from $360 million in just five years. That’s an increase of 58 per cent, if you’re keeping score.

“These are pressures and realities,” Currie said in a penetrating insight into the obvious. “It’s not sustainable, we have to make changes and we will make changes.”

He better get right at it. The Island’s population is aging and in 10 years, four in 10 Islanders will be over 65. That trend alone suggests more has to be done to ensure that the money spent is spent wisely.

That won’t be easy. Inflation in the health-care sector is always growing faster than in the rest of the economy. Federal transfers are growing at six per cent a year but not for long. After 2017, federal health-care transfers will be pegged to the rate of economic growth plus inflation.

So somehow between now and 2017, all the Maritime provinces will need to come up with plans to control spending or the affordability gap will widen even further. They all claim to be doing that now, with varying levels of credibility, but it’s a tough sell to the public.

Canadians expect and demand top-shelf health care no matter where they live. We want the best qualified doctors and nurses, the latest cutting-edge technologies and the best drugs available. And we want it provided free, 24 hours a day, preferably at a convenient nearby location.

Beyond that, is our health-care system structured to produce efficiencies or is it set up to spend ever more?

About 90 per cent of the spending goes to wages and salaries in a system monopolized by interest groups. Doctors, nurses and the big public service unions are virtual cartels, controlling the labour supply and campaigning against money-saving reforms.

The big drug companies lobby tirelessly for ever-higher prices, which they mostly get. This leaves ordinary citizens facing cuts, as the Ghiz government is promising, or higher taxes of the kind New Brunswickers face. And that proves yet again that in the land of free health care, nothing is cheap.

 

 Dan Leger is a Halifax-based writer and commentator.

Twitter: @Dantheeditor.