Report: Canadian health care spending unsustainable

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Michael Bastasch DCNF Managing Editor
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Single-payer health care, once lauded by President Barack Obama for its ability to keep health care expenditures down by rationing care, has become prohibitively expensive and inefficient in Canada, according to a new study.

A 2011 report by the Fraser Institute concluded that Canada’s health care system is spending at an unsustainable rate. Six of ten Canadian provinces are on track to spend half of their revenues on health care, according to the institute.

“We conclude that Canada’s health system produces rates of growth in health spending that are not sustainable solely through redistributive public financing,” the report concluded.

In 2011, health care spending consumed 50 percent of revenues in Canada’s two largest provinces, Ontario and Quebec.

By 2017, four more provinces — Saskatchewan, Alberta, British Columbia and New Brunswick — will spend half of their revenues on health care, according to the institute.

Total federal, provincial and territorial government health spending has grown by 8.1 percent annually, while the national GDP in Canada rose by only 6.7 percent during the same period.

In response to the rapidly rising costs, provincial governments have raised taxes and rationed care, increasing patient wait times. Provincial drug plans have also more often refused to pay for most of the drugs that are certified as “safe and effective” by Health Canada.

“Unsustainable rates of growth in health care spending crowd out the resources available for other purposes including education, public safety, and economic growth-enhancing tax relief,” Fraser Institute Senior Fellow Nadeem Esmail told The Daily Caller News Foundation in an email.

The Canadian federal government has also spent an increasing amount of money trying to subsidize health care. From 1997 to 1998 and 2006 to 2007, the federal government transferred $115.7 billion to provinces for health care — 36 billion more than was needed to keep up with population growth and inflation during the same period, according to the institute.

“Federal funding is not a solution: the federal government has already transferred billions more in health funding to the provinces than the amounts needed to keep up with general price inflation or population growth. Transfers encourage the provinces to avoid making necessary reforms,” the study said.

Despite increased federal funding and rationing of care by the provinces, health care expenditures keep rising.

“Importantly, none of the government’s rationing efforts have made the growth of government spending on health care sustainable over the long run,” the study added. “Despite being slowed by the continued rationing of publicly insured medical goods and services, government spending on health care has still grown faster on average than revenue in eight provinces over the last ten years.”

“Unless something is done about unsustainable rates of growth in health care spending, Canadians will face some combination of higher taxes (leading to lower rates of economic growth), increased rationing of health care goods and services, or reduced public services other than health care,” Esmail warned in his email.

President Obama has expressed support in the past for the Canadian health care system, though he said he wouldn’t want a Canadian system in the United States.

“I’ve said that the Canadian model works for Canada,” he said. “It would not work for the United States, in part simply because we’ve evolved differently,” he said. “So, we’ve got to develop a uniquely American approach to this problem.”

But Obama has expressed his support for single-payer in the past, saying there’s no reason why the U.S. should pay such a high price for health and not provide basic care for everyone.

Proponents of the Affordable Care Act cite the fact that the U.S. spends more than any other country in the OECD on health care. In 2010, the U.S. spent nearly 16 percent of GDP on health care, compared to the OECD average of 9.5 percent.

On Tuesday the Congressional Budget Office expects to release two reports on the ACA. One of the reports will focus on the budgetary impacts of the ACA, which will likely influence the public debate surrounding the economic merits of the law.

The ACA’s critics say the law represents an unprecedented overreach by government and will lead to centralized health care decision-making.

“Canada’s system comes at the cost of pain and suffering for patients who find themselves stuck on waiting lists with nowhere to go,” Esmail said. “Canada’s system is in a bad way because of too much government involvement. Americans would be well advised to look elsewhere, and away from excessive government control and intervention, for their solutions.”

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