The Jim Prentice government announced that it will restore the use of health-care taxes so that Albertans can directly contribute to the health-care system with a levy of up to $1,000 a person on anyone who earns more than $50,000 a year. On the surface, adding about $500-million over two years toward an $18-billion medical treatment system sounds reasonable. But dig a little deeper and the tax looks less a cure for the health system and more of what ails it already.
Before the budget, the government indicated it was considering visible health-care premiums that would contribute directly to health-care spending – a transparent mechanism. What Albertans are actually getting is a new tax purported to be for health that will merely be absorbed into general revenues. A health-specific tax tied to health spending would at least offer the hope of introducing government accountability by shedding light on perpetually rising health-care costs. What we get instead is nothing more than an open ended commitment to pay a tax should the government fail to "bend the health-care cost curve."
In work published through the School of Public Policy, we have shown the sizeable inflationary impacts on health spending when voters do not face a clear tax linked to the price of the spending. The "fiscal illusion" created by obscuring how health-care spending is financed is estimated to have added $6.75-billion to public health-care spending in Canada from 2001 to 2008.
Where government spending is more clearly tied to tax prices or out-of-pocket costs, such as in education, we have seen greater public demand for spending restraint, particularly for teacher incomes, and calls for accountability in education outcomes. In the context of the payroll-tax-financed Canada Pension Plan, concerns over the rate of increase in the contribution levels resulted in dramatic reforms in the late 1990s that included pre-funding some of the plan's future liabilities.
Since Mr. Prentice has not tied the new health-care levy to any specific expenditures, such as physician billings or patient use of the system, the levy should be interpreted as just another tax with no purpose other than to raise revenue for a government interested in perpetuating the Canadian tradition in health care of avoiding tough choices. This is unfortunate, since Alberta needs to make some tough choices if the publicly funded medical system is to be sustained and the province is to address its deficit.
Health-care spending in Alberta is approaching half of all government expenditure. Stephen Duckett was one of the earliest commentators to point out that when it comes to health care, compared with other provinces, Alberta spends a lot per person and achieves middle-of-the-pack health outcomes and access to necessary services. By definition, this defines Alberta's health-care system as inefficient.
But there's room for hope. The Prentice health-care levies could change the health system for the better if implemented as a measure of accountability for performance. Wouldn't it be great to see a government with the incentive to change from a passive bill payer to fulfilling its actual role of being an effective purchaser of health-care services?
A transparent health levy tied directly to expenditures could make this a real possibility.
Imagine a "Prentice Premium" that would limit taxpayer tolerance for inefficient and unnecessarily costly provision of medical treatment. Studies have shown enormous costs linked to inappropriate health services, unnecessary referrals and an unwillingness to resource the health system appropriately beyond the scope of hospitals and doctors.
Imagine a "Prentice Premium" that would activate voter demands for a patient-oriented medical treatment system that operates beyond the 9-to-5, five-day-a-week schedule when needs don't follow a regular work week. And, after 75 years of talking about it, voters may demand the government make the prevention of chronic disease a priority.
I applaud the new health premium only if it will introduce meaningful accountability into spending.
If this government cannot manage its responsibility to procure high-quality, patient-oriented and cost-effective health services in return for Albertans' high level of public spending, then voters might feel it is time to let a new government give it a try.
Herb Emery is an expert adviser with EvidenceNetwork.ca and the director for health policy, School of Public Policy, University of Calgary.