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Barua and Eisen: Provinces should ask for more health-care freedom — not more money

Commentary

The recent federal budget included record-breaking spending promises and historically large budget deficits. There is, however, one area where the Trudeau government was somewhat more restrained — health care.

Despite calls from the provinces for a permanent $28 billion annual increase in health transfers, Ottawa announced a onetime $4 billion top-up, acknowledging the pandemic’s effects yet refraining from indefinite spending increases in the future.

To be clear, health care is a provincial responsibility as per the constitution. However, this hasn’t stopped the federal government from becoming involved. It currently provides about $42 billion a year to the provinces (and territories) via the Canada Health Transfer (CHT), with an automatic increase each year. With the additional $4 billion, that comes to $46 billion for 2020-21.

The Trudeau government’s decision to provide a onetime top-up during the pandemic instead of new permanent funding to the provinces for health care is more in line with the appropriate division of power between Ottawa and the provinces. Importantly, calls for permanent increases also misdiagnose the real problem.

Why?

Consider this. Canada already ranked among the highest health-care spenders in the world before the pandemic. In 2018, Canada had the second-highest level of health-care spending (as a share of its economy) and seventh- highest per capita (on an age-adjusted basis) among 27 other countries with universal health care.

Unfortunately, it’s not clear Canadians get good value for this high spending. A recent analysis of economically developed countries with universal health care ranked Canada second-last for acute care beds and near the bottom for the number of physicians. It’s no wonder hospitals were already bursting at the seams in pre-COVID Canada. The pandemic has only exacerbated a long-standing shortage of medical resources.

Canada also reported lengthy wait times for care relative to peer countries before COVID. For example, in Canada in 2016, 30 percent of patients reported waiting two months or longer for an appointment with a specialist, far more than in Germany (3 percent), France (4 percent) the Netherlands (7 percent). Similarly, 18 percent of patients in Canada reported waiting four months or longer for elective surgery compared to 7 percent in Switzerland and none in Germany.

Obviously, over the last year health-care systems in many provinces have come under significant new pressure and health ministers have had to postpone or cancel elective treatments, adding thousands of patients to waiting lists. However, in the pre-COVID world, our health-care system struggled to address routine demand for patient care, despite ranking among the top spenders worldwide.

To be fair, CHT transfers are partially responsible for these long-standing issues but not, as the provinces claim, because they aren’t large enough. Rather, federal CHT funding comes with strings attached that prompt provinces to comply with the Canada Health Act (CHA). Provinces that violate CHA regulations can lose federal money.

The resulting inability of provinces to experiment with and design policy that could actually improve health care and reduce wait times (lest they run afoul of federal guidelines) is one reason why Canada’s system performs poorly compared to international counterparts.

By demanding permanent increases in future CHT payments, provincial ministers essentially advocate for increased dependence on Ottawa, which would have the unintended consequence of further curtailing their own ability to implement policy reforms that could improve their health-care systems.

Clearly, provincial health-care systems are underperforming compared to peer countries, particularly on wait times. However, more money from the federal government is not the answer. In the future, instead of asking for increased transfers — and all the strings attached — the provinces should ask for more freedom to learn from other countries and implement reforms to better serve patients.

Blair Gibbs: Voters give the benefit of the doubt on COVID-19 — up to a point

Commentary

It will be years before the personal pain and emotional experiences of this pandemic make way for a dispassionate assessment of what was done well and which countries had the best response.

Polling suggests the public will give governments the benefit of the doubt for once-in-a-century pandemics, making them non-political events. But only until it becomes clear your country is not keeping up.

The slow roll-out of vaccines contributing to today’s awful third wave of COVID-19 infections is now dominating Canada’s political debate. Prime Minister Justin Trudeau’s Liberal government could soon be experiencing the reverse scenario to the Conservatives in Britain, who endured widespread criticism at the outset, only to be lauded a year later for the best vaccine roll-out of any major country.

Two areas will reverberate down the years as Canadians try to make sense of their government’s record. Firstly, to what extent the country’s lack of domestic vaccine manufacturing capacity left it woefully ill-equipped for the pandemic and for quickly deploying the most effective tools to allow the economy to reopen sooner.

Secondly, whether the support schemes did their job and if the fiscal impact — and the cratering of the public finances — could have been a different story if government spending had not already been so high.

On the first question, if more onshoring is deemed necessary in a world where globalised supply chains seize up in a crisis, then it should not be allowed to become a partisan issue because these capabilities have to be developed over decades.

Unlike the human impact in lives lost, the raw fiscal cost of this pandemic is tangible.

The recent federal budget boosts life sciences spending by $2.2 billion over seven years, including allocating $59.2 million over three years for bio-manufacturing of vaccines, and calls domestic vaccine capacity “essential to our national security.” A striking statement that by implication means it took a global pandemic for the federal government to recognise a key element of its national security was not really optional. These are the industrial foundations that the U.K., France and even smaller nations like Australia have invested in for years, but this needs bipartisan commitment and something akin to a modern industrial strategy.

The second question is more difficult, because every country has taken a massive fiscal hit and the policies used to fund the furlough schemes and keep businesses afloat were adopted in haste and will be evaluated at leisure. Few dispute that schemes like CERB, or something like it, were needed. The stimulus spending made the lockdowns tolerable, and the lockdowns — to a degree that is still contested — contributed to slowing the virus’s spread and saving lives. But was it enough? And if it wasn’t, what else might Canada have done that it could have realistically afforded in 2020?

Unlike the human impact in lives lost, the raw fiscal cost of this pandemic is tangible and if the price to pay for tackling it was national debt at World War II levels, and increased taxes for perhaps a decade or more to come, it is important to know if the fiscal response worked. Did it save businesses from going under or just forestall it by a few months?

One way to gauge how this pandemic has affected businesses is to ask them. The consultancy I work for, Public First, surveyed companies in Canada to understand how they had been affected and what they thought about the government’s response. In a representative national survey of businesses conducted earlier this month, a majority (59 percent) of businesses report their revenues have declined compared to 2019, against just a fifth (19 percent) who say they have stayed the same. The impact seems to have been worse on smaller businesses, with a quarter of firms employing fewer than 10 people saying their income is down by more than half and almost a third of sole proprietors saying their income has declined by over 50 percent.

There is a lucky minority of businesses who say their revenue has grown since the same period in 2019, but these are more likely to be larger companies. In a hint to the long-term legacy of what the pandemic has done to customer behaviour, almost 1 in 6 businesses said “the COVID-19 pandemic caused my firm to lose customers and become unprofitable.” Again, this is a statement that more smaller companies agreed with.

Given these results, it is not surprising that businesses generally think the government has not done enough. When respondents were asked about the government’s handling of the pandemic a nuanced picture emerges.

A majority of businesses supported the early action to close the borders and there was general support for the idea that provinces were left to decide too much and the federal government should have played a bigger role. However, respondents split 46 to 18 in support of the statement “the Canadian government prioritised making emergency payments to individuals at the expense of direct support for businesses” (with 35 percent neither agreeing or disagreeing) which might suggest that there is underlying resentment among business owners.

The vaccine failure seems to have been noticed. By 64 percent to 12 percent Canadian businesses agreed that “the Canadian government was not fast enough in securing shipments of COVID-19 vaccines and has taken too long to approve vaccines for use.”

And in a question that could have delivered a much more impressive result last year, 43 percent agreed that “the Canadian government handled the pandemic far more successfully than other countries” (with 30 percent disagreeing).

In a possible sign of Canada’s deep-seated reasonableness, 60 percent of businesses surveyed agreed that “the Canadian government was not well prepared for the pandemic but did an OK job in the circumstances.” This is the benefit of the doubt that may end up saving the current government from major political blowback, although vaccine progress in next few months will decide whether that last question will deliver a radically different result by the fall.

As the federal budget unveils a raft of new support schemes for employees and businesses, this poll gives a sense of the pandemic’s impact on the “real” economy and it is clear that businesses have been hugely impacted already and many of them feel let down. It is also striking that despite the generous taxpayer support provided by provincial and federal governments since last spring, the lockdowns were more than many Canadian businesses could weather, and for plenty of companies they have already drowned. Each of these failed businesses is a human story of a lost dream, of life savings being wiped out and new opportunities lost, and it will have an electoral impact eventually.

There may be another federal election before it becomes clear how the pandemic has materially affected businesses, and how much the support schemes have cushioned ordinary voters. But we do know there are hundreds of thousands of people who will never recover economically from COVID-19, even if they avoided contracting the virus themselves.