$64-billion insufficient to stop bleeding
Provinces hitting 'the medicare wall'


Brad Evenson
National Post

Preliminary figures show the provinces and territories will spend $64.2-billion this year, $15-billion more than in 1997, when federal budget cuts hit them hardest.

"There's a strong recovery under way, for sure, after five or six unremarkable years," said Dr. John Horne, a Winnipeg health economist and advisor to the Canadian Institute for Health Information, which released the figures.

Per capita, health spending had declined by an average of 2.1% a year from 1992 to 1997. But in the past three years, spending grew by 7.8%, 6.0% and an estimated 6.3% this year -- and shows little sign of slowing.

The spending comes with deep sacrifices. A decade ago, health ate 25% to 30% of provincial budgets. Last year, Saskatchewan, Manitoba, Ontario and Nova Scotia spent roughly 40% of their budgets on health care. Provinces have had to cut spending on highways, schools and welfare and halt the introduction of programs in order to fund medicare.

"We cut $100-million out of transportation this year, for starters, and we downsized the civil service by 750 positions," said a senior New Brunswick government official. "We call it the medicare wall, and it profoundly affects every decision you make in government."

Provincial bureaucrats say the public should not expect increased federal transfer payments to make a big difference. At a first ministers meeting last month, Jean Chrétien committed the federal government to increasing the Canada Health and Social Transfer by $23.4-billion over the next four years.

"That money has already been spent," one bureaucrat said.

Moreover, experts say the negative effects of previous cuts will take years to heal.

"This new spending doesn't necessarily make up for all the lost ground," Dr. Horne said.

"We know we have too few nurses coast to coast. We have too few physicians, particularly specialty physicians. We have too few pharmacists, too few lab technologists, too few ultrasound techs and respiratory techs. There's an emerging shortage of health care workers."

According to the Canadian Institute for Health Information, a not-for-profit organization created by Canada's health ministers, most of the new spending has been used on capital projects and to purchase new drugs, while the proportion spent on doctors, nurses and hospitals has stayed the same or declined.

For example, in 1975, the provinces spent about 56% of their health care dollars on hospitals and about 1.2% on drugs. Since then, the amount allocated to hospitals has dropped by 11 percentage points to 45%. By contrast, the proportion spent on pharmaceuticals rose to 6.9% of total health expenditures, the largest gain.

In the past two years alone, spending on drugs has risen by 11% and 14.4%.

By contrast, physicians' services are projected to account for 19.8% of spending next year, a decline from 21.6% in 1997-98.

Manitoba has led the provinces during the past two years, with overall health spending there rising by 10.6% in 1999-2000 and a projected 11.4% this year. Prince Edward Island has kept its year-to-year increases lowest at 3.8% in 1999-2000 and a forecasted 2.1% this year.

And officials don't expect the skyrocketing costs to level off anytime soon.

"Now that [provincial] budgets are balanced and there's more money to be put back in, not only have any cuts been restored ... in our case we've gone far, far beyond that to the point where we're almost doubling our spending from the time of cuts," said David Bray, a spokesman for the Alberta Ministry of Health.

"We're probably looking at more than $6-billion next year and it's still going up.

"There are some studies that indicate that if spending keeps going like it is there'll be nothing left for education and welfare and other things 10 years down the road."

Mr. Bray noted Alberta's budget surpluses give it leeway to invest more money in the health system, but "it may be time soon for people to decide just what's possible."

HEALTH SPENDING: AN INCREASING PRIORITY:

Total provincial and territorial government health expenditures as a percentage of total provincial government program expenditures, in current dollars

Nfld.:

1979/80: 23.6%

1999/00 forecast: 37.2%

P.E.I.:

1979/80: 22.9%

1999/00 forecast: 31.3%

N.S.:

1979/80: 26.5%

1999/00 forecast: 39.6%

N.B.:

1979/80: 25.8%

1999/00 forecast: 26.9%

Que.:

1979/80: 28.4%

1999/00 forecast: 33.2%

Ont.:

1979/80: 31.0%

1999/00 forecast: 40.6%

Man.:

1979/80: 31.7%

1999/00 forecast: 39.2%

Sask.:

1979/80: 25.6%

1999/00 forecast: 40.2%

Alta.:

1979/80: 20.0%

1999/00 forecast: 34.3%

B.C.:

1979/80: 29.5%

1999/00 forecast: 36.5%

Y.T.:

1979/80: 10.0%

1999/00 forecast: 15.4%

N.W.T.:

1979/80: 9.5%

1999/00 forecast: 14.5%

Nun.:

1999/00 forecast: 23.6%

CANADA AVERAGE:

1979/80: 27.8%

1999/00 forecast: 36.5%

Source: Canadian Institute For Health Information, National Post