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Absurd logic amid health-fund hikes

Absurd logic amid health-fund hikes

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VANCOUVER -- The 2004 federal-provincial health accord recently completed its 10-year run and expired on schedule. Though heralded at the time of its signing as a landmark agreement that would solve many of the wait-time issues plaguing Canada's health-care system, in retrospect it achieved very little and was very expensive to boot.

And yet, some misguided news commentators, ex-premiers and celebrities lamented its demise. These voices were reinforced by a series of nationwide protests, organized by groups such as the Canadian Health Coalition, to scare Canadians into thinking the accord's expiry will lead to a collapse of medicare.

Of course, it means nothing of the sort.

The Canada Health Act remains fully intact, setting the terms and conditions for transfer payments from the federal government to the provinces for health care, .i.e. public administration, comprehensiveness, universality, portability and accessibility. The 2004 accord simply specified the Canada Health Transfer would grow at six per cent annually for 10 years until 2014.

Ottawa has promised an extension of the six per cent increase until 2016/17. After that, the rate of increase will be set by a three-year moving average of nominal economic growth, with a three per cent annual increase guaranteed.

Some, such as the Canadian Health Coalition (CHT), are trying to convince the public the possibility of smaller increases -- note: increases, but simply not as large -- in years when the economy is not doing well actually constitutes a decrease or cut in spending to the tune of $36 billion.

To help illustrate this absurd logic, all one has to do is look at the CHT projections from the very same report the coalition cites. It estimates a federal health transfer of $30 billion in 2013/14, and projects a $47 billion transfer in 2023/24. Clearly, no "cut" in spending there.

Further, the total federal health transfers to the provinces over this 10-year period add up to almost $400 billion -- while annual "increases" after 2013 alone add up to about $17 billion.

So, how then do they come up with the $36-billion cut? Why, by employing a hypothetical projection over 10 years that assumes larger annual increases than those promised by the federal government, and then calling the difference a "spending cut."

There remains, however, the important question of whether the end of the accord might mean longer wait times for patients in the future.

The answer to this question is less clear. The previous accord also created national wait-time benchmarks, attempted to tackle wait times and established the Health Council of Canada to monitor progress (or lack thereof).

The established benchmarks are long (for example about six months for hip replacement) and they only applied to five "priority" procedures -- and even then were generally not met. The Health Council of Canada itself noted "overall, the accords didn't lead to the major changes that were expected."

Big surprise, given that the decade-old health accord never sought to change Canada's queue-style approach to health care into something more European. The result of such non-action, as the Fraser Institute's annual report on wait times found, was Canadians faced an 18-week wait from referral by a general practitioner to treatment in 2013 -- about the same length of time they faced in 2004.

Unfortunately, given the government monopoly on health-care insurance, the lack of appropriate incentives and an unwillingness to consider policies to reduce wait times that seem to have been successful in European countries with universal health care, it is entirely possible Canadians may continue to experience some of the longest wait times in the developed world.

This will not be the result of the end of the 2004 health accord. In fact, the experiences of the last decade have demonstrated that simply throwing more taxpayer money at the problem will not make it go away.


Bacchus Barua is a senior economist at the Fraser Institute.



Republished from the Winnipeg Free Press print edition April 17, 2014 0

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