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The Money Myth


The conventional wisdom is that medicare's current problems stem from federal cuts to transfer payments in the mid-1990s. That conventional wisdom is wrong.

Originally published in the Medical Post. Republished with the permission of the author.


David Gratzer

 Author Notes

Student at the Faculty of Medicine, University of Manitoba, where he served on the university's Board of Governors for four years. Author of a weekly column for the Halifax Herald and contributor to over a dozen newspapers and magazines including the National Post, the Calgary Herald, the Ottawa Citizen, and the Toronto Star. Author of Code Blue (1999), winner of the Donnor Prize for outstanding books on public policy.

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Code Blue: Reviving Canada's Health Care System
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 Essay - 5/8/2001

It's strange the lengths people will go these days to glean wisdom. Check out the business or management section of your local bookstore and you will find writers culling the words of Attila the Hun and Napoleon in the pursuit of sagely advice.

But for meaningful insight, look no further than your childhood. In Alice's Adventures In Wonderland, the Queen suggests that we "begin at the beginning." No glib management guru or long-dead warrior could better summarize the situation with medicare. For as Canadians look for ways to address the system's many deficiencies, they should remember to begin at the beginning. That means that rather than accepting other people's analysis of the system and its failures, we must take a fresh look.

With surprising speed, Canadians are coming to the realization that medicare crumbles. Once a minority opinion, Canadians now wonder about the quality and timeliness of the care they receive.

Those of us in the health-care system have our doubts, too. In his recent speech to the Canada Club, Ontario Medical Association President Albert Schumacher neatly (and personally) described the situation:

"When I began practising medicine nearly 20 years ago, the very idea of waiting for care in Ontario would have seemed far-fetched. How the world has changed-waiting lists have become the norm rather than the exception. They are now a fact of life."

Dr. Schumacher goes on to describe his own community: "(In) Windsor, for example, it now takes six months to obtain a hip replacement, five months to get a CAT scan and one of my patients waited more than a year for cardiac surgery. And some of our cancer patients still have to go to the United States for their treatment."

Of course, the Windsor description would fit for Toronto, Winnipeg, Vancouver or any other urban or rural centre across the country.

But if we are to do anything about this-if we are to "save" medicare, as so many politicians urge-we need to begin at the beginning and ask a basic question: what is the root of the problem?

The traditional answer to that question is that we went too far with cuts. If a majority of Canadians is convinced that medicare isn't working, it's equally true that a majority feels more money will solve these woes.

And those of us in the system are equally wedded to this view.

Consider, for example, the frustration of Dr. Michael Bass, head of obstetrics and gynecology at Winnipeg's Seven Oaks General Hospital, who decided enough was enough. In April, he left for the Dakota Clinic in Thief River Falls, Minn.

In a Winnipeg Free Press interview, Dr. Bass described the breaking point: he tried and failed to persuade the provincial government to pay more for a type of tape that can treat incontinence in women. The tape procedure, which costs $600 per patient, is viewed as too expensive. As a result, only 70 Manitobans a year can undergo the procedure. "That's 70 for all the women in Manitoba. I'll be able to do that there (in Thief River Falls alone)."

Why can't Manitoba afford more procedures? Dr. Bass, like many physicians and nurses, holds the federal government responsible. Because of deep cuts in the mid-1990s, he reasons, the federal government created a funding crisis, leading to long waiting lists and old equipment.

Dr. Bass voices an opinion often heard. Writing in the Globe and Mail, Dr. Gordon Guyatt of the Medical Reform Group recently claimed that: "We've only just returned to 1992 levels of per capita spending (on health care)."

If cuts are responsible for our predicament, the solution is clear: increase federal and provincial support.

There is, unfortunately, one problem. The traditional answer is wrong: health-care spending has never been higher.

Like so many myths, the "deep cuts" theory of health-care dysfunction contains a kernel of truth. The federal government did reduce provincial transfers in the mid-1990s. But total spending is not restricted to the federal contribution.

So, did total health-care spending spiral down as a result of federal cuts? Hardly.

The Canadian Institute of Health Information lays out the numbers. In 1990, total spending was $61 billion. In 2000, after the deep federal cuts of the mid-1990s, that figure was up to $95 billion. Health spending rose throughout the 1990s.

Of course, these figures aren't adjusted per capita or for inflation, and they include private spending. But if we exclude all things private and break things down to a per person level, then even the mid-1990s were not a period of steep decline. In fact, public spending effectively stayed the same in the middle of the last decade, and then expenditures rose greatly. In the last three years, public spending has shot up: 6.8% in 1998, 6.7% in 1999, and 7.7% in 2000 (for more on Canadian health expenditures, see the Canadian Institute for Health Information).

In some jurisdictions, spending spirals up. Consider that in Manitoba, Dr. Bass's soon-to-be-former home, public spending has risen by one-third in three years.

Since the conventional wisdom as to what's wrong with medicare doesn't hold water, we must begin at the beginning. For a meaningful discussion of health-care reform, we must accept that health expenditures have never been higher. It will take more, in other words, than just money to get us out of this fix.

This analysis, of course, contradicts the weighty advice of so many prominent health economists, policy analysts and politicians. But we have one thing going for us: the sober logic of Lewis Carroll.

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