Number Three: Canadian Medicare is sustainable

On the contrary, Medicare is not sustainable on its present course. A modest slowdown in the rate spending increases has been bought chiefly through reductions in services, closure of facilities, fewer health professionals, increased waiting times and through forgoing innovative, but expensive, new technologies.

Medicare as we know it can only be "sustainable" if Canadians are willing to accept less service or more taxes. Polls, as I’ve already mentioned, indicate that neither is acceptable. And given increasing consumer expectations for expensive health technologies, drugs and procedures, and the expected health demands from an aging population, Medicare’s problems are only going to grow. In fact, a paper[3] by Bill Robson, vice president of the C.D. Howe Institute, a very prestigious think tank in Toronto, has argued that the unfunded liability of Medicare (promises to pay for services that normal increases in the take from the existing tax load will not cover) is in the $500 billion — $1.2 trillion range. Canada’s entire national debt, by comparison, is currently about $530 billion.

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Yet Roy Romanow has already publicly rejected these arguments and has recommended not only retaining but even expanding the centrally planned, government monopoly model of health care in Canada.

Virtually every other major inquiry into health care, including the Kirby Report (by a committee of the Senate of Canada), the Mazankowski Report (by the Alberta Premier’s Advisory Council on Health, of which I was a member) and the Fyke Report for the Government of Saskatchewan (where Mr. Romanow was premier), identifies sustainability of the health care system as the challenge we face. Mr. Romanow’s own former Minister of Finance in Saskatchewan, underlined this when she testified before his commission.

But Mr. Romanow denies there’s a problem. We’re spending the same share of GDP today on public health care as 30 years ago. If a little more than 7 percent of GDP was sustainable in 1972, why is that same percentage unsustainable today?

It’s the wrong question. It’s not how much we’re spending, but how we’re paying for it and what we’re getting in return. For years we borrowed and spent on health care (and other services), so we got more than we were willing to pay for. Today, as the only G7 country consistently in budgetary surplus, we pay the full cost of today’s services, plus the interest on money we borrowed for health care and other things in the past. So while the spending has remained constant as a share of GDP, the tax burden has grown and quality has declined.

The irresistible force of demand for "free" services is running headlong into the immovable object of unavoidably limited health budgets. To date, the pressure has been relieved by crumbling health infrastructure, loss of access to the latest medical innovations, declining numbers of medical professionals and lengthening queues. By and large, people have access to ordinary, relatively low-cost services like GP office visits, but find it increasingly difficult to get vital services such as sophisticated diagnostics, or many types of surgery and cancer care, where the waits can be measured in months if not years.

This is the exact reverse of what the rational person would want. We should use the public sector to pool everyone’s risk of expensive interventions, ensuring that they are available when needed, but leaving ordinary interventions, whose cost can easily be borne by the average person, to individuals, supplemented by private insurance and by subsidies for those on low-incomes. Hardly anyone can afford cancer care, bypass surgery, gene therapy or a serious chronic illness on their own. These are the things that, without insurance, destroy people’s finances.

Yet as much as 30 percent of the services consumed under Medicare are unnecessary, not medically beneficial or even harmful. No one would be financially ruined by having to pay for an ordinary doctor’s office visit if we ensured that people on low-incomes were subsidized and that there was a reasonable maximum anyone would be called on to pay. No one would be harmed by an incentive not to go to the emergency room when a visit to the family clinic would do just as well. The biggest health care study in the world, the RAND experiment, found that people who had to pay something towards the cost of their care consumed less of it, but that their health was, with very slight qualifications,[4] every bit as good as those who got totally free care.

The extra infusion of taxes Mr. Romanow recommends will merely put off the day when we realize that we must concentrate scarce public health care dollars where they’ll do the most good, and that we must give users of the system incentives to be prudent about how they spend them. We spend vast sums on procedures of little or no value, while we place patients whose condition endangers their life, in lengthening queues.