Health care is sustainable, more tax cuts aren’t


How sustainable is health care? Opponents of Medicare regularly question the public sector’s ability to pay the bills as health care creeps up as a share of provincial budgets. New data from the Canadian Institute for Health Information (CIHI) suggests health care costs may be more sustainable than we think.

Affordability is best determined by looking at health costs as a percentage of our overall economy, not by the size of government. The CIHI data suggests that health care costs have escalated roughly in step with the economy, whereas the size of government has been getting dramatically smaller.

Health care accounted for 10 per cent of our economy in 1992 – the last period of recession. In 2009, health care is expected to be 11.9 per cent largely due to a shrinking gross domestic product (GDP), not rising costs. In 2008 it was 10.8 per cent, less than a percentage point above the 1992 levels. This hardly indicates a lack of sustainability.

There is no question we are living longer and better as a result of the investments we have made. From 1996 to 2006 our average life expectancy was extended by three years – the biggest leap in mortality rates since they have been kept.

Federal funding to reduce wait times is having a positive impact, particularly for hip and knee replacements as well as cataracts. This is something Canadians all said we wanted and were willing to pay for.

According to CIHI, money has also been invested in tailored drug therapies, diagnostic technology, training health care professionals and to increase class size in medical and nursing schools. These last investments are necessary if we hope to replace the soon to retire legion of baby boomers serving as professionals within our health system.

While spending as a percentage of our economy has nudged forward over 20 years, it has not been entirely in lock step. In the 1990s governments dramatically slashed funding to health care, leaving present governments with a major infrastructure deficit. It is far more costly to play catch-up than it is to keep the system on an even keel. Finance Minister Dwight Duncan admitted this when speaking to the Ontario Hospital Association Conference last fall.

Hospitals always appear the target of restraint, but are hardly to blame for rising health costs. As a share of the overall health pie, hospitals have been shrinking. In 1975 hospitals accounted for 44.7 per cent of health expenditures. Today it’s 27.8 per cent.

In 2009 Canadians are expected to spend $5,452 per capita on health care – both public and private. That’s slightly less than France, Germany, Switzerland and Belgium. It’s much less than the United States, which spends almost double per capita and yet leaves 45 million Americans uninsured and many more underinsured. On almost every objective measure, Canadians do better with their health than Americans, from infant mortality to our overall longevity.

In the past year there has been an attempt to divide the progressive community by portraying health care as an insatiable monster crowding out education, housing, transportation and even poverty reduction.

The McGuinty government continues to shrink the pie and is happy to see us all fighting over the scraps. Total public sector spending used to account for about half the economy. Today it is closer to one third.

While the government cries poor, it is stampeding ahead with a series of tax cuts, including a $5 billion reduction to Ontario corporations.

We need to defend all our social services, including health care. When we start pitting our sectors against each other, we all lose.

In solidarity,

Warren (Smokey) Thomas, President

For the latest report on school funding in Ontario, click here. To see United Steelworkers economist Erin Weir explain why privatizing the LCBO is a bad idea, click here.

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