Moving Beyond the Status Quo:
Alberta's "Working" Prescription for Health Care Reform
The Problem With the Status Quo
Many health care experts agree that over the long term, the current, publicly-funded and publicly-administered system is not sustainable. Health care costs in Canada have been steadily increasing over several decades and are now 70 percent higher than they were 25 years ago (CIHI, 2001). In 2000, the cost of health care was estimated to have risen nearly 7 percent over the previous year to over $95 billion, and per capita spending increased by $175 to over $3,000 (CIHI, 2001). One factor that may have contributed to this trend is a growing (and aging) population. Canada spent the highest proportion of health expenditures on seniors (48.9%) in 1993 compared to 11 other OECD countries (Dryden, 1999). Alberta, in particular, has experienced one of the highest rates of aging across the country; the projected annual population increase for seniors is expected to be more than twice that of any other age group (Saunders et al., 1999).
Other factors contributing to higher costs include increased prices for established services and treatments and the use of more intensive (and expensive) treatments for the same types of conditions (CIHI, 2000). An economic analysis of health care expenditures in Ontario showed that the aging population and the sharp rise in the cost of health care delivery after age 55 could combine to increase real (inflation-adjusted) provincial government expenditures from $19.2 billion in 2000 to $39.0 billion in 2020. The same study also showed that advances in technology and its impact on diagnoses and treatment are likely to increase at historically high rates (CBOC, 2000b).
One conclusion seems clear: even if the current system were publicly affordable, maintaining it is likely to mean either incurring deficit budgets or that other highly valued programs such as education and infrastructure development necessarily will be reduced. Contemplating trade-offs such as these—the choice between "investing," chiefly in the young, or "paying dividends" to the elderly—may explain why the Alberta government recently attempted to chose both: "like health care, education continues to be a top priority of this government" (GOA, 4.10.01). In fact, however, making difficult choices and trade-offs is what political leadership is all about, and in this case a strong provincial economy may have only postponed what may be an inevitable decision to move toward privatization.
A second reason why increased expenditures in health care may not be feasible stems from the conclusion to which we were drawn in an earlier analysis (Kanji and Cooper, 2001): citizens place no natural or self-imposed upper limit on public funding for social programs, particularly when it comes to health care. Accordingly, no matter how much money the government spends on health care, it never seems to be enough. It is unlikely, therefore, that we shall ever see the day when citizens demand that politicians quit spending so much on health care. For many people, it seems, the illusion of "free" health care has proven irresistible.
Consider, for example, that in fiscal year 1999-2000, health care spending in Alberta increased by 15.1 percent over the previous year—an increase of nearly $2 million a day. Currently, the Alberta government spends nearly a third (32.4%) of its annual program spending on health care, which is 6 percent more than it did in fiscal year 1992-93, before restructuring (GOA, 6.29.00). Moreover, the current provincial treasurer, Pat Nelson, recently announced that the health sector would receive an additional $737 million in new funding (Calgary Herald, March 24, 2001, p. A1). In spite of these spending increases, however, there has been no significant decrease in the proportion of Albertans who felt the government should spend more money on health care (86% in 1999, 85% in 2000). Even though most Albertans are satisfied with their government's level of spending on social programs (67% in 2000), as far as program spending priorities go, health care still remains at the top (followed by primary education—78%, secondary education—76%, post-secondary education—72%, and social services and welfare—36%) (Kanji and Cooper, 2001).
These same sentiments are echoed by the results obtained from the government's own It's Your Money survey, which was conducted to find out how Albertans think the money saved from provincial debt payments and royalties from natural resource revenues should be spent. Eighty-one percent of respondents to the government's survey said more public expenditures on health facilities and equipment is important, and 67 percent supported more funding for education facilities and equipment (GOA, 01.30.01).
The issue, however, is more complex. Given that increasing public expenditures seem to be the major problem with the existing system, but since at the same time it has become politically difficult to limit public expenditures, the option of limiting existing expenditures by making room for individual choice looks like an obvious alternative. That is, allowing individuals to spend some of their own (pre-tax) dollars on their personal health care rather than live under the illusion that someone else ("the government") is spending money on them, when, in fact, "the government" is funded by taxpayers, would have the effect of curbing what appears to be an insatiable appetite.
A third reason the current system cannot be maintained is that, despite an emphasis on increased public funding, more money is not the best solution to existing problems with health care. For example, so far as the clearly measurable aspects of health care delivery (such as waiting times) are concerned, more money does not make much of a difference (Zelder, 2000b). Moreover, high levels of spending on health care do not correlate strongly with a robust and healthy population. For example, Japan is the healthiest country in the world (measured in terms of life expectancy and infant mortality rates), but spends three percentage points less of its GDP on health care than does Canada. On the other hand, the United States, which trails other industrialized countries on several health status indicators, has the highest per capita spending on health care (CIHI, 2000). Furthermore, during the recent period of cutbacks to health care in Alberta, self-reported health status remained stable (The Advisory Group, 1995; Northcott and Northcott, 2000), as did infant mortality and life expectancy (CRHA, 1999). Other studies have also shown that health and health care spending are (within wide limits) independent of one another (Brownell, Roos, and Burchill, 1999; Sheps et al., 2000; Lewis et al., forthcoming, 2001; DeCoster et al., 2000).
Health care experts and economists are not the only ones who believe that throwing money at the problem is not a remedy—many ordinary Canadians agree. A Canadian Medical Association survey, for example, showed that less than half (42%) of respondents believed that money injected into the health care system would bring noticeable improvements in the quality of care, and more than half felt the budget would have little impact on health care (CMA, 1999). Furthermore, consultations with various stakeholders, health care providers, and public representatives during Health Summit '99 reveal that in principle, most Albertans agree that the health care system should be both affordable and sustainable. So why, then, does the status quo seem so difficult to change?
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