Social Policy in Ontario

The penny has dropped, or at least is beginning to drop, for Canadian health care.

It’s been obvious for many years that the system could not continue without fundamental change either to its financing or its delivery, or both. But the public was so wedded to the status quo, so ignorant about the costs, so fearful of change, that no politician would dare say publicly what almost all of them did privately.

We are still a long way from what former Bank of Canada governor David Dodge told the recent Liberal conference in Montreal: Canada needs an “adult conversation” about the future of health care. A few politicians have actually come forward to say change is needed, but most remain in public denial, including federal Liberal Leader Michael Ignatieff.

Mr. Ignatieff sat in the front row, presumably listening to Mr. Dodge’s speech, but he apparently learned nothing. Or at least he was not allowed to indicate that he had learned anything, because the poor man was forced by his caucus this week to recant his first reaction to Quebec’s budget – that provinces should have room to experiment in health care – by denouncing the patient fees suggested in the document.

It doesn’t much matter what federal Liberals, or any of the federal parties, say or think. It is the provinces, not Ottawa, that deliver health care and provide most of the money for it. Frankly, what Mr. Ignatieff or other federal politicians think or say doesn’t count for much.

Canadians lived for many years under the influence of the 2002 Romanow commission on health care that told people what they wanted to hear. The report’s underlying premise was that if we poured lots of additional money into the system we could “buy change,” thereby making the system better for patients, preserving its iconic status as the leading example of Canadian “values” and dealing with any questions about financial sustainability.

Eight years later, and almost six years after Liberal prime minister Paul Martin agreed to give provinces an additional $41-billion for health care (indexed at 6 per cent yearly!), the fundamental assumptions of the Romanow report are proving to be suspect, as critics noted at the time.

The report bought time, rather than change, forestalling a much more fundamental examination of the system’s sustainability at existing tax levels. The report looked at health care in isolation from other demands on the public purse, hoping wrongly that providers would not scoop up the lion’s share of new money injected into the system and accepting the “expert” notion that administrative efficiencies could make the system sustainable. And, miraculously, the report suggested that these changes could all occur without governments having to raise taxes or cut spending elsewhere, assumptions as false then as they are now.

The recession brought home sharply just how omnivorous health-care spending is within provincial budgets. The recession caused provincial deficits to soar, revenues to plunge and debt levels to rise, but nothing could stop fixed costs such as health care from increasing in real terms. Governments are now looking at how to cut spending and/or raise revenues to balance their budgets and stop their debts from rising. The very first thing that smacks them in the face is their health-care budgets.

Health-care spending has been crowding out other programs for years, but this effect was partially masked by the infusion of federal cash. The cash infusion was more – indeed, way more – than Mr. Romanow had said in 2002 was necessary to stabilize the system and make up for smaller yearly increases during the deficit-fighting years of the mid-1990s.

The federal cash merely prevented the system from deteriorating. It certainly did not “buy change” such that yearly spending would stop rising above the inflation rate, government revenues or spending on other programs.

So provinces are being driven to raise more revenue or cut spending. Quebec has proposed a health-care tax and a controversial patient fee (with exemptions for low-income people) within the income-tax system. Ontario is trying to claw $500-million from its budget through payments from drug companies to pharmacists for selling their generic products. British Columbia is changing the model for hospital financing, tying facilities’ budgets to the number of patients they treat instead of block grants.

These changes, dramatic by Canadian standards, have predictably provoked furious reactions by defenders of the status quo. Much bigger changes lie ahead.

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