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Headshot of Jeffrey Simpson. (Brigitte Bouvier/Brigitte Bouvier/For The Globe and Mail)
Headshot of Jeffrey Simpson. (Brigitte Bouvier/Brigitte Bouvier/For The Globe and Mail)

JEFFREY SIMPSON

From accelerator to brake on health spending Add to ...

That screeching sound you hear in provincial capitals comes from governments slamming on the brakes for health-care spending.

Smoke is coming off the asphalt. This week, New Brunswick froze its health-care budget. Newfoundland did the same thing in its budget. After inflation – because health-care inflation is invariably greater than the inflation of the consumer price index – it means health-care spending will be going down.

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Ontario’s health-care budget is rising by about 2 per cent, after jumping 7 per cent a year from 2004 to 2010. Alberta’s budget calls for an increase of 3 per cent, after a decade of annual increases of about 9.5 per cent, far more than inflation and population growth.

Only Quebec is the outlier: a 5-per-cent increase, while general revenues go up only 1.9 per cent, meaning cuts in many departments.

The post-Romanow era of huge dollops of additional cash poured into health care (for only marginal improvements in the system) is over. Governments have moved their foot from the accelerator to the brake.

How long the public will allow the foot to remain in that place remains to be seen. At the first signs of additional stress caused by fewer resources, you can bet the mortgage that opposition parties will start screaming, interest groups within the system will complain, the aggrieved will race to the media, and the end of medicare will be proclaimed by the self-appointed custodians of its eternal verities.

All the provinces, save Saskatchewan, are wrestling with deficits. The two heavily dependent on oil revenues – Alberta and Newfoundland – have skidded into deficits, having wrongly anticipated much higher oil prices. Royalties account for 30 per cent to 35 per cent of these provinces’ budgets. When these didn’t meet expectations, Alberta and Newfoundland both rather shockingly slipped into the red.

In addition, both had built up expensive public services, riding the oil boom of a few years ago. They run one-two in per capita spending on health care. So when revenues slumped and budgets entered the red zone, something had to be done with the item that takes nearly 45 per cent of their operating budget: health care.

In New Brunswick, health care had cruised along at increases of 7 per cent a year until 2012, when it dropped to 3 per cent. That 7 per cent was about the national average increase, except that New Brunswick’s population was not growing, nor was its economy.

Now things are worse. Revenues have slumped courtesy of a weak internal economy and slow growth in export markets. The Conservative government had promised to balance the books in 2014-1015. Now it would appear a balanced budget might not arrive until 2016-2017.

With freezing the health-care budget came increases in corporate and personal income taxes, along with a continuing downsizing of departmental budgets and personnel.

As for health care, New Brunswick Finance Minister Blaine Higgs said this: “The right to universal health care is one of the defining characteristics of being Canada. The average citizen believes that health care in our country is free. But that … is a myth. … Our medicare card is a credit card for which we never get a bill. The bill gets sent to the people of New Brunswick and I’m sorry to say that we’re spending way beyond our credit limits.”

The same cutting exercise is happening in Newfoundland, where, as has happened so often in suddenly oil-rich places, the government spent lavishly when times were good and now is having to cut back. The Conservative government of Newfoundland, a province with the second-highest per capita debt load in Canada, has pushed back by two years a balanced budget.

This shuddering halt to huge annual health-care increases comes about a decade after the Romanow commission recommended big infusions of additional cash to “buy change.” The result will be quite salutary (at least for a while) because, instead of governments and health-care providers believing more money will solve systemic challenges, it’s now known that such a beguilingly false option won’t be available.

Creative thinking about real change in health care is under way across the country. We learned in the post-Romanow years what not to do. More real change will happen in today’s lean times than in the fat ones.

 

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