You would think 10 years notice would be enough time to start making changes. When it comes to health care spending by Canadian governments, that's simply not the case.
In mid-December federal Finance Minister Jim Flaherty put the provinces on notice that five years from now, the feds were going to start cutting back on the increases to health care spending. It's pegged at six per cent per year, and has been that way since Prime Minister Paul Martin set that rate in 2004 for the following 10 years. That's exponential growth, especially when you consider government revenues have not come anywhere close to six per cent annual increases over that time. Flaherty is even willing to continue that unsustainable rate for a few more years, before cutting it back.
I've been writing about the insane, insatiable fiscal maw that health care has become since 2004, after I spoke to then-NDP cabinet minister (and later minister of health) Len Taylor about the ever-increasing percentage of government spending going to health care. Back then, it was around 37 per cent. And, as he predicted, it has continued to grow, to the point where now it's in the low 40s per cent. If the provinces want to continue on the current path they are on, it will hit 50 per cent in short order.
Flaherty is the first person with the power to do something about it to actually show some spine. Instead of taking pot shots about the big bad feds, he should be applauded. While his measures are much more generous than I would give, he may end up saving us from ourselves.
My formula? Six per cent next year, five per cent the following year, then four per cent, three per cent, then the rate of GDP growth from the preceding year. GDP growth is a close indicator of rising or falling government revenues, and by lagging by one year, there are no surprises or shortfalls.
Imagine if your mortgage payment, your largest household expense, grew by six per cent every year for 13 years, yet your pay went up by about two per cent, some years maybe less. How long would it be before you could no longer make your car payments, your power bill and your phone bill? Soon you'd be down to eating Ichiban noodles every second day, and nothing on alternating days.
This is very much the scenario for governments today. The provinces have allowed it to continue because the feds have continued to boost their transfers each year.
Something has to be done. We still need roads, forestry workers, cops, agriculture support, and everything else that government provides. It can't be just health care.
Provincial finance ministers all know this. Surely they have told this to their underlings, or have had their underlings spell it out in block letters for them. Their outrage at Flaherty's laying down the law is simply political farce.
Denial of the obvious course of action is simply going to make the pain that much worse when the axe eventually falls. This is not a case of 1990s-style cutbacks, and then a gradual re-instatement. There needs to be an upper limit on health care spending that cannot and will not be violated.
By taking his time in implementing his plan, Flaherty is being too nice. Setting the final showdown beyond the next federal election is a bit of a cop-out, methinks. His deadline needs to be shorter, and the downturn quicker. The provinces, ultimate spenders of this money, need to get moving on the innovation front. They should invest in spine boards for their ministers of health, if not actual spines, before health care drives us all broke.
Brian Zinchuk is editor of Pipeline News. He can be reached at [email protected].
