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article imageEconomist: Health care will consume Ontario's budget by 2030

By Andrew Reeves     Nov 18, 2011 in Politics
Toronto - Don Drummond, former chief economist at TD Bank, released a report through the C.D. Howe Institute on the state of Canada's health care system. He warns that Ontario's rising health care costs will consume the provincial budget by 2030 if left unchecked.
Therapy or Surgery? A Prescription for Canada’s Health System [PDF] examines the state of health care provision in Canada, and offers a staunch defence of the public model. And while the report does indicate that many facets of the current system should remain universal (prescription medication for the elderly, hospital care, etc.) as opposed to moving towards a two-tiered, public-private model, the most crucial findings are those about soaring costs in Canada's most populous province.
The report found that health care spending in Ontario has been rising 7.6 per cent annually at a time when Drummond is strongly recommending Ontario rein in all spending to no more than 1 per cent per year in order to slash its deficit by 2018. And the reality is that revenues are not projected to increase at a rate sufficient to pay for rising health-related costs, the report claims.
And according to the Globe and Mail, Drummond argued in a report released last year that if "left unchecked, health-care costs are set to reach between 70 to 80 per cent of total program spending by 2030, up from just over 40 per cent today."
“There’s no way you could ever run a civic society in which 80 per cent of your budget goes to one thing,” Drummond told the Ottawa Citizen. “I mean, you do need education (which consumes roughly 25 per cent of the budget.) And people probably want a few police officers and a few parks," he added with a laugh.
And the same principle applies to Canada as whole. While Canadian spending on health care is not likely to approach 80 per cent of the budget any time soon, over-spending on health care is a truly Canadian concern: 2010 saw over $192B spent on health care costs alone, a total which accounts for just under 12 per cent of the country's GDP. And as the population continues to age, that figure is likely to increase.
Drummond was commissioned to write this report for the C.D. Howe Institute before being asked by Ontario Premier Dalton McGuinty to conduct a broader review of Ontario's health care spending. And interestingly enough, the separate reports Drummond will release speaks to an opportunity that the federal-provincial split in health care funding affords. If one province should find a system that might benefit the entire country, our decentralized system would allow for one region to gamble on a new idea without it effecting the entire country. Consider that our current health care model came from an idea that was tested and incubated in Saskatchewan before being applied to the rest of the country.
"We must exploit a benefit of our decentralized system and have various provinces try new schemes that may eventually warrant broader application," Drummond writes in the report. "On the other hand, we need to encourage cooperation between provinces when there are additional fiscal and political benefits."
Drummond also indicated that the system would benefit from seeing fewer people in hospitals, which are “expensive, expose people to contagious diseases and yield poor patient satisfaction” and more people treated in primary care facilities. He also argued for better utilization of TeleHealth Ontario to keep people out of hospitals who don't need to be there, and that more resources be placed into preventative measures.
"The ideal health system would put more emphasis on preventing poor health," the report claims. What better way to treat people than to help prevent them from getting sick in the first place?
Drummond concluded the report by asking if "Canada’s or Ontario’s health care system is sustainable" before changing the nature of the question to "why would one want to sustain the status quo?"
"For the amount of money spent, the system should surely be delivering better results. It needs to shift from an acute-care model to a chronic-care model. It needs to broaden in purview from health care to health more generally, which brings in prevention and socio-economic factors. It needs to be centered on the patient, with all parts of the system co-ordinated around patient care."
"Things will only get worse as health care eats up every other public service like an insatiable Pac Man," he adds. "I do not believe the public will allow governments to levy ever-increasing taxes to avoid that scenario. So the system must be reformed. It must not only grow less rapidly in cost, but must deliver greater value-for-money."
More about Ontario, Health care, Austerity, budget restrictions, don drummond
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