Health, spending and elections


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MUCH as the Winnipeg Jets mystify and frustrate team management and Manitoba hockey fans with their blend of inconsistent play, the Manitoba health system remains a conundrum.

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MUCH as the Winnipeg Jets mystify and frustrate team management and Manitoba hockey fans with their blend of inconsistent play, the Manitoba health system remains a conundrum.

Health is by far the largest provincial expenditure and size alone makes it one of the most complex systems in the province, public or private. As I indicated in an earlier article (This is what austerity looks like, Jan. 27, 2021), Progressive Conservative governments under Brian Pallister sharply reduced health spending growth to reduce the deficit, but about 42 cents of every dollar of program spending still went to health by the end of Pallister’s term in 2021, leaving other prominent areas like education (17 cents) and social services (14 cents) far behind.

The current government, with Heather Stefanson now at the helm, has loosened the purse strings significantly as the economy recovers from the worst of the pandemic. Although tax revenue and other income have improved, federal transfers have been particularly buoyant. They increased by more than $600 million or almost 11 per cent in the 2022 budget and are projected to increase by more than $1 billion, or almost 17 per cent, in the 2023 budget. And while the 2022 budget only increased health care spending by a modest 1.6 per cent, well below the rate of inflation, the 2023 budget offers a seven per cent increase accompanied by several substantial spending announcements leading up to the fall election.

There is a cautionary revenue tale here for the Manitoba government based on recent experience. The volatility of revenues outside Manitoba, especially those derived from natural resources, are reflected in unpredictable future federal equalization payments. When transfer payments peaked in 2012 at just over $4 billion during Greg Selinger’s first full term, they subsequently declined and did not recover to that figure for another seven years in the midst of Pallister’s first term. The recent dramatic run-up from $3.9 billion in 2017-18 to $7.3 billion projected in the current budget, a whopping 87 per cent increase, should be viewed cautiously in terms of its sustainability, although at least some of the new funds arise from new federal health-care funding that is promised to last for the next decade.

It is also the case that the province is still spending beyond its means in the sense that projected expenditures exceed revenues by $363 million in the 2023 budget. While there is increased spending in many areas, the proverbial elephant in the room is always health spending, which rises by $469 million. Just as health spending was the driver in the austerity plan to rein in the deficit, it now is an important driver of deficits and rising debt on the expenditure side.

As we settle into a summer and fall of electioneering toward the October writ, there is little doubt that health care will be a main focus. Kim Campbell’s famous quote that elections are not the time for discussion of serious policy issues, while regularly derided, also has some truth. Election campaigning will provide a surface view of the health system, a system viewed as either improving or in disarray depending on the speaker, but the consensus on both sides will be that more needs to be done and therefore more money is needed to do it.

The latest figures from the Canadian Institutes for Health Information (CIHI) for 2020 indicate that, adjusting for age and sex differences across provinces, Manitoba health spending per capital ranks fourth among all provinces, behind only Alberta, Saskatchewan and Newfoundland. That is, even during the pandemic after a period of austerity, Manitoba spending, per capita, five per cent above the Canadian average, was well placed to produce good outcomes.

Hence the conundrum since, as we know, Manitoba lags behind the Canadian average in a variety of important measures, including regular access for a health care provider, diagnostic imaging, hip and knee replacements and other surgeries.

Only the Maritime provinces had higher overall health-care wait times than Manitoba. There is debate over plans to rely on external sources to ease backlogs.

The political parties will each continue to project their health care plan as the one best able to achieve improved results as we approach election day. We are unlikely to get many details, but the media and the voters should be wary of plans that introduce new funding without anything more than the most general plans and goals.

More specific plans for recruitment and retention of front-line health care workers and streamlining of the bureaucracy and its processes would provide better direction than simply funding announcements.

The devil is in the details, not the money, especially when the money must be borrowed.

Wayne Simpson is a professor of economics at the University of Manitoba and a research fellow at the School of Public Policy, University of Calgary.

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