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Josh Dehaas: Forget the ‘American-style’ boogeyman, Canadian health care should be more like Norway’s

Commentary

February’s announcement that the Trudeau government had made a deal with the NDP to push the ball forward on pharmacare doesn’t appear to have resonated in the polls. That’s not surprising. Canadians are saying loud and clear that pharmacare isn’t even their top priority for health care.

That’s evident from new research conducted by Leger on behalf of my organization, the Canadian Constitution Foundation, SecondStreet.org, and the Montreal Economic Institute. 

Leger asked 2,017 adult Canadians to pick the top three health-care problems that most “need fixing.” National pharmacare came in second last of nine options. Just 14 percent had pharmacare in their top three while nearly two-thirds (65 percent) chose the lack of family doctors, more than half (52 percent) chose ER wait times, and nearly half (44 percent) selected wait times for surgeries and other common treatments. 

Canadians may support pharmacare in principle, but it’s hardly among their most pressing health-care concerns like faster access to doctors, emergency rooms, and surgeons. 

And yet, there may be a way to do it all. Canada may be able to deliver not only the must-haves like universal primary care but also the nice-to-haves like drug coverage for those currently falling through the cracks. It would just take some courage from politicians. 

There is an obvious way to find the money: it would simply require amending the Canada Health Act to make explicit that provinces would no longer be penalized if they allowed a small number of willing patients to buy quicker care so that provinces can loosen their rules.

This would then free up scarce resources such that provinces could expand public drug coverage beyond their current programs. One might think of it as a policy swap whereby public coverage would be somewhat curtailed for hospital and physician services and somewhat expanded for drugs.

Before you label me a monster for supporting the dreaded “two-tier American-style health care,” please consider the facts. Canada stands alone among wealthy nations in outlawing privately funded, medically necessary surgical and hospital care, and it also ranks among the worst for outcomes despite spending more than most, 10th out of 11, according to the Commonwealth Fund. As anyone who’s seen the subway ads advertising clinics in Buffalo knows, we already have two tiers: those who can afford to leave the country for prompt care and those who can’t. 

The question we should ask is not whether we can stomach two-tier care but whether most of us would be better off if we allowed a small percentage of people who are unable or unwilling to languish on lengthy waitlists to spend their own money here in Canada to get seen faster.

Perhaps that’s not ideal from an equity perspective, but here’s why it would be better than the status quo. Norway ranks number one and it spends about the same as Canada while running circles around us on access, outcomes, and equity. In Norway, about 10 percent of people have private insurance that allows them quicker access to things like elective surgeries and specialists. This makes the other 90 percent better off: fewer patients to serve means the public system can do more with the same.

Wheelchairs await non-ambulatory patients at the University of Calgary Medical Clinic in Calgary, Alta., Thursday, Nov. 17, 2022. Jeff McIntosh/The Canadian Press.

The usual suspects who defend Canada’s state monopoly like to claim that allowing even modest levels of private payment would drain health-care workers out of the public system. What they never mention is that allowing private dollars to be spent in Canada (dollars that are often already being spent abroad) would allow us to train and hire more doctors and nurses. We have 2.8 doctors per 1,000 people according to the OECD. Norway has 5.2 per 1,000.

The best part? Because some wealthy people are paying their own way or are covered by their employers, the Norwegian government can afford to cover drugs for all with modest copays. That’s right, Canada may be able to finally have the social safety net to which we have always aspired if we amend the Canada Health Act and allow some patients to pay their own way. Provinces could then change their currently restrictive rules to allow more private money to pay for care, taking a huge burden off the public system, and in turn expand public drug coverage for those in need.

The good news is that most Canadians are ahead of the politicians in realizing that major changes are needed and that shovelling more borrowed money into an overburdened public system isn’t working. When asked, 64 percent agreed “major change is needed” while only five percent agreed that “the system needs no change, just more public funding.”

If politicians are willing to pull the Band-Aid, they’d find plenty of support. We’d end up with a public system that does a better job offering not only acute-care essentials but can also afford to fund frills like pharmacare. 

Derek Holt: It’s no secret that this will be another big-spending budget

Commentary

Thank heavens it’s almost over! Canada has a cottage industry of folks employed in the business of developing, forecasting, assessing, and evaluating government budgets. It’s quite unlike many other parts of the world particularly given how seasonal the trade is with activity usually lighting up when the first major province releases a budget—often British Columbia in February—and culminates in budgets from the federal government and the biggest provinces. The season is almost at an end, for now.

Canada’s federal government releases its annual budget on Tuesday. Much of what it will contain has already been spilled. Long gone is the era when budgets would be all new on budget day, followed by business leaders attending evening and morning-after presentations and meetings by economists as well as accounting and consulting firms. For years now, governments have used budgets as rolling P/R stunts. Imagine a company that releases its financials in bits and pieces over weeks in advance as routine habit.

It’s no secret that it will be a big spending budget that will probably hit relatively upper-income earners and corporations with higher taxes while never targeting a balanced budget. Key in terms of whether the latter matters or not is whether the assumption of a beautiful economy for years to come through the decade’s end comes to fruition given the rise of structural deficits that could be substantially magnified by a wider primary deficit in a weaker scenario. Ottawa is sending it out faster than it comes in on the assumption that the skies stay sunny forever; this assumption through the 1970s and 1980s ultimately led to a crisis.

Canadian governments are not lightweights when it comes to debt. Many cite net debt-to-GDP ratios that are healthier, but do so on the implied assumption that the financial assets in sinking funds, sovereign wealth funds, pensions, etc. are accessible. 

But for now, the manageable deficits are one thing. The impact on the economy from heavy spending is another. The federal government’s program spending has skyrocketed by about one-third compared to the fiscal year just before the pandemic and is slated to be 60 percent bigger than pre-pandemic levels by FY 2028–29. If not for such spending by the Feds and provinces, the Bank of Canada would not have had to hike its policy rate by as much as it has and might have already been in a position to begin easing.

Expect a strong focus on housing. The government created a problem with severe housing shortages through the serial application of demand-side stimulus and wildly excessive immigration and is now trying to fix that with sundry incentives to build more housing. Its target of 3.9 million additional homes to be built by 2031 is laughable. Canada would have to sustainably ramp up annual housing starts to much more than double what has ever been achieved in any prior year and despite labour shortages.

The housing plan they have announced has some constructive elements, such as training for the skilled trades, but its targets are a pure and simple photo-op. The targets also assume there will be demand for the type of housing they are trying to encourage—cheap units on public lands, factory-built homes, and homes like the ones built in mass fashion for returning soldiers after the Second World War that have since driven a booming business in tear downs and rebuilds.

Alongside such fanciful supply-side ambitions are curious efforts to further stimulate demand despite already widespread housing shortages. I wrote about the plans to ease mortgage financing here.

As for taxes? That depends upon how you define the middle class and how you adjust this definition for different types of families, different regions, and varying individual circumstances. We’re told the middle class will be left unscathed but are unclear about how the Feds will define this. At risk is hiking taxes on the folks who drive much of the growth, and further vilification of successful industries and, by the government’s definition, anyone outside of the middle class doesn’t work hard…

We will be assessing the implications of the Budget for the Bank of Canada in light of its recent communications (recap here) and the fact it has yet to incorporate anything on the budget in its forecasts. How ratings agencies respond may be a risk.

Finally, it would be extraordinarily naïve to assume that whatever is announced on Tuesday will be the end of the government’s plans. Canada faces an election by no later than October 2025. Governments that are doing as badly in the polls as the Trudeau-Singh-Freeland administration is performing don’t typically turn fiscally prudent. Bear that in mind in terms of the prospect for further fiscal easing that complicates the outlook for the BoC and that entails drawing implications for debt management and issuance plans beyond what is laid out this week.

This excerpt was originally published at Scotiabank.com.