In Health Care Cost Cutting Will Not Be Enough

Published in the Telegraph-Journal 30th October 2012

Healthcare spending in Canada, which annually consumes in excess of $200 billion, has emerged as this country’s biggest source of anxiety over public spending.

Canadians generally are committed to continuing our current system of government-funded healthcare that is free to all Canadians. The cost of healthcare has risen but the simple solution of adding more money without first making fundamental changes has not been successful. The $41-billion increase in federal transfer payments to the provinces initiated in 2004 by then-Prime Minister Paul Martin was intended to end healthcare funding problems for a generation. Instead, it has become one in a series of healthcare public policy miscalculations.

In December 2011, Finance Minister Jim Flaherty outlined Ottawa’s newest healthcare funding plan. Federal transfers for healthcare would continue at six per cent until 2016-17. After that, the federal government plan will have transfers move to a system that ties increases to the growth in real GDP plus inflation. Mr. Flaherty called the plan, which was not open to negotiation, an effort to move toward responsible spending.

“Our public health care system is a source of pride to all Canadians,” Mr. Flaherty said. “We all want to see a strong, sustainable system that is there when we need it for today and for our children and our grandchildren tomorrow.”

In New Brunswick, where the cost of healthcare is $2.8 billion a year or approximately 40 per cent of the total provincial budget, Health Minister Ted Flemming is promising to put a full-court press on healthcare spending.

“We are going to create a target to bring our healthcare spending in line with at least the national average, if not better than,” said Mr. Flemming.

Premier David Alward recently referred to measures government is undertaking to achieve reductions in healthcare costs. The New Brunswick government plans to eliminate the duplication of services in addition to reviewing administrative, supervisory and management functions for savings. He added that alternative service delivery – potentially leading to the integration of FacilicorpNB operations with the Department of Government Services – could also achieve cost reductions.

“Are there areas for shared services where the system can work more efficiently and ultimately more effectively?” Mr. Alward asked. “We have seen some of the success that has taken place with the renewal within general government”.

The initial priorities identified through the government healthcare reform process are focused on achieving management efficiencies within the healthcare system. The New Brunswick government also plans to implement health innovations and best practices, although it has not yet selected an innovation strategy.

New Brunswick “has started to put a curb on (healthcare) spending, but we cannot get there alone,” Mr. Alward said. For this reason, government has indicated that system-wide changes will be fueled through collaboration with established boards, agencies, organizations and health-service providers.

But will cost cutting measures be enough?

There is no doubt that healthcare costs need to be comprehensively understood and more effectively managed. For example, a sustainable public health system information infrastructure is urgently needed. Despite the recent eHealth Ontario debacle, the deployment of an effective e-health, mobile health and tele-health infrastructure may become essential to provide services while managing cost in remote areas.

But simply reducing costs will not fix healthcare. The real issues lay below the surface, which include the challenges associated with end-of-life decisions, the increasing demands for seniors care, the pressures of emerging technologies and dramatic demographic changes. These issues will provide the foundation of sources of contention among Canadians. And in the background, the principles of our healthcare model will come under close scrutiny as Canadians review the limits of their entitlement and even entertain a two-tier service provision model. In New Brunswick, two official languages add complexity.

Healthcare reform will not stem from reviewing and implementing those initiatives that have proven successful in other jurisdictions. Healthcare reform in Canada will not be a simple matter of cost management. Instead, the philosophy, concept and practice of healthcare goes to the heart of what it is to be Canadian.

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Filed under Fiscal Policy, Healthcare, New Brunswick, Social contract

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