Self-fulfilling prophets of health-care doom

Posted on May 15, 2011 in Health Delivery System

Source: — Authors: – opinion/editorialopinion
Published On Sun May 15 2011.   Will Falk

During the election campaign, all federal party leaders agreed that spending more money on health care is good. They fell all over themselves proclaiming their party was most likely to continue increasing spending by 6 per cent a year. There was no real debate about how to improve or reform health care, just a political argument about who is best positioned to blow the budget by funding growth at two times inflation or more.

Canada’s leading conservative think-tanks are contributing to this self-fulfilling prophecy by identifying new sources of funding for increased spending. The right-wing Fraser Institute’s provocative report, “Canada’s Medicare Bubble,” concludes that we should suspend the Canada Health Act and allow private funding. The C.D. Howe Institute’s more nuanced “Chronic Healthcare Spending Diseases” speaks of the need to engage Canadians now on raising revenues (a.k.a. taxes) in three to five years. Politicians are tripping all over themselves to commit to increasing funding rather than tackling the tough issue of health-care reform.

This is one bubble that needs bursting!

The past decade has seen record growth in health spending. Good economic times, the 2004 federal-provincial health accord, investments to reduce wait times, and reinvestment after the last round of restructuring all increased expenditures. We spent 7.5 per cent more on average annually. And 7.5 per cent growth for the next 10 years would be the end of the world. Or at least the end of provincial governments as we know them.

This is a false straight-line projection of a future that will never happen. We used to worry that the world would run out of food in the 1970s or get giddy with anticipation that the Dow Jones index would reach 30,000. We used to call these “Malthusian projections” — false expectations that the past would look like the future, that human beings and technology couldn’t figure out different ways to do things.

What the authors of the two studies mentioned above don’t say is that the decade before last had a much lower rate of spending and from 1991-96 averaged just 0.9 per cent growth. We actually had real spending declines on a percentage-of-GDP basis for most of the 1990s.

Yes, we have had spending growth over the past 10 years, but what did we expect when we guaranteed the provinces 6 per cent more a year? Privatizing health financing would just add more fuel to the fire. The Fraser Institute does Canadians a disservice when it produces a political conclusion based on such nonsensical projections. C.D. Howe’s authors did a better job over a longer time frame. Their projections were age-adjusted with a variety of important variable factors around technology, relative price and GDP growth. However, their projection is at heart another neo-Malthusian straight line.

The political elites are engaged in a game of self-fulfilling prophecy. Straight-line cost projections and guaranteed federal revenue increases will ensure the cost increases they project.

Canadians need government to bend the cost curve, not fund it. We need to figure out how we can shift gears and deliver more value for the tax dollars spent. We have successfully done so before and we can do so again.

Look at the 1990s in Ontario. It started with the Rae years’ social contract and forced days off work (Rae Days). Restructuring picked up steam when Mike Harris appointed the Health Services Restructuring Commission. This blue ribbon group closed hospitals, pushed surgeries from in-patient into ambulatory facilities, forced mergers and cut costs dramatically. The commission, led by Duncan Sinclair, former dean of the Queen’s University medical school, had a group of talented individuals from outside government who did the right things.

The 1990s restructuring was not easy and labour dislocations were dramatic. Major efficiencies were found: hospital days plunged, laparoscopic surgery expanded, facilities merged, services moved from institutions to the community. Leaders at the time did not simply raise taxes or give up on our cherished public health system.

The human costs of restructuring were high. As in other industries that have undertaken major change, people lost jobs and had to learn new skills. For health-care workers, this was traumatic. Nurses and other hospital workers felt that trust with the health system had been broken. Many remember the time with bitterness.

Fortunately, our challenge this decade is different. Then it was about fixing hospital care; now, we must harvest productivity gains from new technologies and virtualization of care. From a human point of view, this time will be easier. We have very low nursing unemployment — a third of new nurses come from abroad. It is a difficult task but not so challenging we shouldn’t try.

Let’s stop talking about how we finance 6 per-cent-plus increases or privatize health care and instead tackle improving the system to preserve it for the next generation.

Will Falk is executive fellow in residence at the Mowat Centre for Policy Innovation.

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