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Apocalypse Not Now

We have been hearing a lot this year that Medicare is unsustainable. The usual claim is that health care used to be 35% of provincial program spending but now is 40%+ and will be 80% by 2030 according to the TD Bank’s economics department. There are so many problems with these projections the mind spins. And, while the mind spins one becomes intensely nauseated at the use of this misanalysis – which is usually used to support a dismantling (quickly or incrementally) of the principles of public finance and non profit delivery.

But there are serious problems with all of these apocalyptic scenarios. For example, the Ontario budget paper page 55 warns that health care consumes 46% of program expenditures now and will be 70% by 2022. However, a footnote on the same page notes that health care will be 45% of program expenditures for 2010/2011!

How can health’s budget share go down next year but then grow like topsy over the next 12 years?

And, the TD report on Ontario health care is just as bad on the economics. Their graph on page 14 of their report shows health care’s share of program spending flat for the last several years and then they spin it upward out of control into the future.

Here’s my graph of health spending as a share of the Ontario government’s program expenditures. By the way, I am using Statistics Canada data and defining program costs as overall spending minus debt payments. The government also excludes so-called “one time only” budget expenditures like auto industry bailouts. But, the trouble is that recently 5-10% of the budget has been devoted to a particular year’s one-time only spending. It seems cleaner to me to define program spending as only excluding debt payments but the shape of the line is the same.

Line chart: Ontario government health expenditures as % of program expenditures. Detailed description below.
Using the above methodology, Ontario government health expenditures as a percentage of program expenditures climbs fairly steadily from 35% in 1991 to 42% in 2009. Data from Statistics Canada.

You can read my April 4th Toronto Star op ed on Canadian health care sustainability here and an op ed on the Ontario situation which unfortunately I couldn’t get anyone to publish in the wake of the TD’s report on the upcoming Medicare cost catastrophe.

The TD report wasn’t nearly all bad. They did highlight the need to change the way doctors are paid and increase their accountability. Tom Closson, CEO of the Ontario Hospital Association and others in the health administrator community have been banging this drum for a a while and its campaign culminated in the Excellent Care for All Act, which was passed this spring by the Ontario Legislature.

I’ll try to be more current in my blogging. Let me know if you find the new material useful. It’s always good to hear from readers.

Published inHealth Care ExpendituresOntario Health Care

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