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Canada spends roughly $75 billion dollars on publicly-funded health care (and another $30 billion or so on private health care). Mr. Romanow’s solution to our problems is a cash infusion of up to $6.5 billion per year. But the federal-provincial deputy ministers of health, in their last report, made a convincing case that health care costs are rising within the system at 5-6% a year, just under the current cost pressures, and that a number of new pressures are likely to accelerate that trend. So, you do the math. Add an annual tax-financed contribution of $6.5 billion to a health care budget of $75 billion rising at 5% per year, and within two years the ordinary and totally foreseeable costs of the existing system will have eaten up every penny of that new funding.
Indeed, the health care system in Canada staggers from crisis to crisis in which new funding is promised by the federal government. But the federal government put something like $20 billion into Medicare just before the last federal election several years ago, and, as Mr. Romanow himself remarked in his press conference last week, everybody wants to know what we got for that money. The queues have lengthened, not shortened, the shortage of diagnostic equipment has gotten worse, people are less able to find a family physician than they were five years ago. In fact, we have had a lot of experience in Canada with new injections of cash into the system, supposedly to "buy change". Normally what happens is that the powerful organised interests within the system (doctors, nurses, support staff, etc.), organise to capture a share of that money. Costs rise, but productivity does not, and services are no better or more timely. The Canadian Medicare system is a black hole into which we can pour seemingly infinite amounts of money.
A final note on this point. The Canadian Medicare system was created in the 1960s as a new layer on top of an existing, relatively well-funded health care system. Since then, we have paid most of the day-to-day operating costs, but we’ve been coasting on the capital within the system, and not renewing it.
The average hospital in Ontario, our wealthiest province, is 47 years old. David MacKinnon, the head of the Ontario Hospitals Association and I calculate that the total working capital deficit of Canada’s hospitals today is roughly $4 billion. On top of that, the capital expenditures for the Canadian hospital system will be about $2 billion a year for the next five years.
So simply eliminating the working capital deficit in our hospitals (because working capital represents capacity for change) and paying for the ordinary capital costs in the hospital sector alone over the next five years, would wipe out all the extra funding Mr. Romanow is proposing for the system as a whole. And don’t forget that he’s not merely proposing throwing cash at the existing system – he’s also talking about larding it with new responsibilities whose costs are virtually guaranteed to be higher than what has been forecast. Even if you think that money’s the solution, what Mr. Romanow is proposing is barely enough to take the incipient crisis in Canadian health care off the boiling point for 2-3 years at best.
