If you’re American and eying the Canadian healthcare system with envy, be careful what you wish for
By Paul Richard Harris, Axis of Logic
Axis of Logic
Saturday, Jul 1, 2017
|As 'Obama care' is being undone by the current administration in Washington, I hear pundits decrying the pitiable state of healthcare in the US - or the ability of the average person to pay for it. Before paying attention to those pundits, have a look at what we see most often - a desire to have a healthcare system like Canada. So what would Americans be getting into if they tried to follow Canada?
Let’s start with the premise that the various governments within Canada actually believe they are elected to represent the interests of Canadians. Let’s also assume that they conduct their business in the best way they know how.
Now that we have established these fanciful ground rules, how do we explain the consistent lying about healthcare that comes from the lips of virtually every elected official in this country? It is a thing of incredible wonder that these politicians treat us as though we are completely stupid, although our continued trust in their words and our failure to rise up and turf them all out of office is a good indication they might have a point.
We have all been bemoaning the sorry state into which our once-admired national healthcare system has sunk. I worked for the Ontario government’s branch of medicare (called OHIP, or Ontario Health Insurance Plan) at the time the national healthcare program was just getting off the drawing board. It was bright and new and shiny and was vehemently opposed by private insurers and a large part of the medical community. But it prevailed, and soon we all began to realize the benefits of a healthcare system that was responsive, affordable and, most important, available.
Oh how things have changed. Until recently, I lived in a rural area where the closest doctor or emergency medical care was at least twenty-five minutes away, and then only if I was willing to risk speeding on loose gravel roads. I’m not sure that can reasonably be addressed by a publicly-funded system because of the sparse population where I lived, so I have no complaints on that score. But let’s examine the care that is twenty-five minutes away: It’s in London, home of the University of Western Ontario’s School of Medicine and a wide array of hospitals and specialty medical services.
More than 40,000 residents of London can’t find a family doctor. I have worked on the periphery of medicine for almost forty years and I have never seen the system so broken down. I have many friends in the medical field who eye relocation to places like Saudi Arabia — not for the money, but for the sheer pleasure of going to work where there is enough staff and enough equipment. There is a very sophisticated epilepsy unit in London which services patients from across Canada, and some from abroad. To save costs, it closes down for several months each year as though seizure disorders don’t occur in the off-season. When I was examined in an emergency room last year, the nurses apologized that they had run out of tongue depressors. I could give a litany of examples but, unfortunately, all Canadians know similar tales or have had similar experiences.
The reasons for the rise in healthcare costs are many and varied and are not the subject of this article. But, briefly: rising labour costs (doctors, nurses, technicians, etc.), rising pharmaceutical costs, rising equipment costs, inefficient hospital management, repairs that we ignored for too long that can no longer be deferred, too many big hats with not enough cattle. And probably the most dangerous cost of all: a growing use of public funds for private, for-profit service delivery. I’ll get to that last point later.
To get back to my premise: government is lying to us about the healthcare crisis. We are told constantly by our political and business leaders that the healthcare system is not sustainable, due at least in part to an aging population. Well, the population is aging but that does not mean the system is not sustainable. Can’t you just hear some government official thinking out loud that the system would be so much more affordable if all those pesky old people would just die?
There is no question that healthcare costs are on the rise. Well, so is the cost of peanut butter; but covering the rising costs is merely a matter of adjusting priorities and putting the right money in the right place at the right time. And it requires no sacrifice. It requires no reduction in services or increases in wait times. It requires only the guts to tell our politicians to get their hearts, heads and hands out of corporate wallets.
The Organization for Economic Cooperation and Development (OECD) reports that we are not really in bad shape at all. It is absolutely true that healthcare costs are on the rise; they are everywhere. What is absolutely untrue is the claim that we don’t have the ability to meet those costs.
We currently spend about 9.6% of our Gross Domestic Product (GDP) on healthcare and that is close to the high levels we were spending in the early ‘90s. There are at least six nations under the OECD purview who have it worse. And in the most recent five-year period reported, 29 out of 30 countries saw their healthcare costs eat up an increased chunk of their GDP. But 15 of those countries fared worse than Canada.
And, just to be clear: that’s TOTAL spending on healthcare, public and private combined. If you look only at publicly funded healthcare, our costs have dropped significantly over the past decade.
So that’s the first big lie: it is dishonest to complain about being unable to meet the rising costs when you aren’t even trying to meet them. If public spending on healthcare is only about 7% of GDP, where’s the crisis? Spending that money certainly doesn’t threaten to bankrupt us. And to drive home this point a little more forcefully, Canadians have told their governments in no uncertain terms that we are willing to spend more on healthcare. So again, where’s the crisis?
It is true that increases in provincial healthcare costs have accelerated over the past half-decade or so but the rate of growth is actually slower than during the 1980-1990 period. Why is it a crisis now when it wasn’t then?
Governments at all levels tell us that the cost of healthcare is unsustainable. They point out that average provincial health care costs, as a share of all provincial spending, increased from 29 to 33% in the period 1990-2003, even more since then. That is misleading, at least in part. What they are leaving out of the equation, is that a portion of the increase is attributable to downloading other services to municipalities which leaves a higher proportion of provincial budgets to go to healthcare. In other words, while growing healthcare costs are real, governments are spending less on other things so the ratio going to healthcare appears to grow faster than the costs are actually rising.
If there is one area that governments have steadfastly refused to reduce spending, it is on tax cuts. Tax cuts represent foregone revenue, the kind of revenue governments use to fund programming. The federal Department of Finance estimates that provincial treasuries have foregone about $119 billion in revenue, solely due to personal and corporate tax cuts. An additional $130 billion has been foregone by the federal government.
So governments at all levels have foregone about $250 billion in revenue. During the same period, total government spending on healthcare has increased $108 billion. If government had collected even half the foregone taxes, there would be more than enough to pay for the increases in healthcare costs.
Think about what this means: we all got some benefit from small reductions to our taxes. Nothing substantial, but every little bit helps, right? Well, not in this case. You can readily see that tax cuts are a far greater fiscal threat than more healthcare spending would be. And let’s be honest about this: you and I didn’t get much of a tax break, your foreign-owned employer did.
Solving our ‘healthcare funding crisis’ would only require the reversal of a portion of those tax breaks. Even increasing taxes by 1% would yield about $6 billion annually. And who is going to feel the pain of a 1% tax increase?
The primary problem we are facing is not deceitful provincial governments, although each of them does mislead us in greater or lesser degree. It is the dishonest and weak-willed federal government. Healthcare is, for no sensible reason that I can see, a shared federal-provincial responsibility and it is quite clear that the federal government is not carrying its load. The provinces want autonomy to run their own programs and that is probably acceptable, so long as they all meet a minimum set of national standards that gives all Canadians equal benefits and equal access: No one in Prince Edward Island should have a lesser quality of care than someone in Saskatchewan or Alberta.
But the federal government should get into the business of building this nation, as it did following the Second World War. Then, our national government put its vast resources to work and helped build an infrastructure that included hospitals, roads, and so on. We’re in just about the same boat right now: except we don’t need new stuff, we need stuff repaired.
Historically, our national government has been the financial broker for the building of public assets and it’s about time they returned to that role. It would also be a good idea if they got into the job of training doctors, nurses and technicians. We already have a shortage in these fields and it is going to get a lot worse as large numbers of employees in the system are approaching retirement age. Poaching from other countries is not the answer.
But probably the biggest and most consistent lie we hear about healthcare funding is that private interests can do it better and cheaper. No beating around the bush: that is simply rubbish.
Involving the private sector into the provision of healthcare is a long-term commitment. If it doesn’t work, we are stuck with it for many years. We would also open up the requirement under NAFTA to allow American and Mexican firms to enter our healthcare market. And we all know that the first sniff of a drop in earnings per share means patients or the public taxpayer has to pick up the tab. [Although US president Trump has signalled an intention to renegotiate NAFTA, it's hard to imagine that it will be for anyone's benefit other than corporations.]
Taxpayers don’t save money by having the private sector enter our healthcare system because the risk still rests entirely with us. A privately built hospital, for example, will surely have received huge tax breaks and public funding and if it should go belly-up, guess who will be holding the bag. Hospitals we build ourselves with our money don’t go bankrupt, and we don’t have to figure a profit margin into them. Nor do they operate at the whim of some offshore group of investors who have no interest in the sustainability of healthcare in Canada.
Even international bond rating agencies recognize that the plans to involve private for-profit enterprises in the healthcare system is just disguised government borrowing. Government hasn’t fooled the bond raters with this chicanery but they continue to try to mislead us. The fact remains that there is no cheaper financing option than public borrowing; private businesses have higher risk than government so the cost of borrowing is higher. And in a public system, it is the public who pays those extra costs.
Studies conducted by some of our own provinces and in Australia and Britain show that Auditors General in several jurisdictions question the value of public-private initiatives. Where business is involved, so is the profit motive and in order to ensure that profit, the costs have to be higher. If higher costs cannot be tolerated, then saving money will only be achieved by lowering delivery costs — that is, services.
It should be clear to us all that governments have performed this song and dance for several years while they have tried to find some way to let their corporate friends get their hooks into our healthcare system. They have tried to show us all that our system just doesn’t work so they can sell it off. It is high time we demand that they desist; that they begin to utilize their enormous purchasing power to reduce costs; that they reinvest in healthcare infrastructure; that they set and enforce national standards; that they raise the appropriate revenue through very minor tax increases to achieve full funding of our health care system.
We’ve all told them, over and again, that this is our first priority. It is high time we told them to cut the crap and get about the business of providing us what we want — it’s what we hired them to do.
So for you Americans out there, don't look here for a better mousetrap. Try Scandinavia or France.
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