Ontario government coming to terms with reality of health care funding

The government of Ontario (Canada’s biggest province predicts health costs to consume 70% of their budget in just over a decade.

Ontario government coming to terms with reality of health care funding.

Ontario government coming to terms with reality of health care funding

Appeared in the Toronto Sun
Date Published: March 13, 2010
The light bulb has gone on and the Ontario government has finally realized that the current method of financing health care in this province is not sustainable.

In the recent throne speech, Premier Dalton McGuinty warned that if serious reforms are not implemented soon, health spending will consume 70 cents of every provincial dollar spent in 12 years. Not only would this increase government rationing of health care services, it would also crowd out other critical public services.

This looming crisis shouldn’t come as a surprise to the Ontario government. The most recent research shows that on average, over the past 10 years, health care spending in Ontario has grown by 7.3 per cent annually, while the province’s total available revenues have grown by just 5.6 per cent. Based on the most recent 10 year trend, provincial spending on health care is on pace to consume half of all available provincial revenue by 2014.

Things are even worse if you look at more recent trends. Between 2008 and 2009, Ontario’s health care spending grew by 4.5 per cent while the total available revenues decreased by five per cent. If this one-year trend continues, Ontario will be spending 50 per cent of its total available revenues on health care by the end of this year.

The obvious reality is that we can no longer continue to pay for health care through public means alone. If we want to avoid continuing to pay more and getting less, the province needs to allow the introduction of private sector sources for financing our health care services.

There is a misallocation of medical resources in Canada because the supply of health care services does not reflect demand. Instead, resources are arbitrarily allocated to fit within government budgets. It’s absurd to suggest that governments can keep raising taxes to pay for health care and continue to make patients suffer through long wait times by denying timely medical services because they do not have the financial means to pay for them.

In the throne speech, Premier McGuinty said: “Patients will have greater choice about where they can access the best quality treatment.” However, he failed to explain how this would be accomplished.

Although discussions regarding ‘patient-based’ funding or ‘activity-based’ funding for Ontario hospitals is a move in the right direction, as competition will improve the quality of services provided, it is not enough. Allowing people to purchase private health insurance in a competitive insurance market and allowing for-profit and non-profit health service providers to compete with public providers for the delivery of publicly funded services is the best way to significantly improve the availability and sustainability of Ontario’s health care.

The government could also make people more responsible for their own health care by making patients pay for a portion of their health care services. This would force individuals to take a more economically rational approach in using the health care system. In fact, a recent public opinion poll by the Canadian Medical Association suggests that most Canadians are willing to consider just that.

On March 8th, the CMA released the results of an Ipsos Reid poll on the economics of Canadian health care. Results show that 59 per cent of respondents across Canada agreed that the current method of financing health care is not sustainable. Of those respondents, 46 per cent agreed that “patients should be responsible for paying a portion of the cost health care they receive;” 32 per cent agreed that “governments should raise taxes to cover the cost of health care;” and 22 per cent agreed that governments “should cut spending on other public services such as education and transportation” in order to continue paying for the health care services. It is clear that most Canadians agree that health care funding is in serious trouble, and importantly, they are willing to pay privately to ensure their medical needs are provided.

Ontario’s Liberal government has an opportunity to introduce meaningful reforms that could significantly improve the quality of medical services in the province, while preserving other public services that are also vital for many Ontarians.

It’s time for ideological resistance to be pushed aside and rational economic reforms realized.

Author(s): Mark Rovere
Research Topic(s): Health
Government Spending

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