On November 4th, the Vancouver Sun published an op-ed by MLI director of research Jason Clemens on health care reform. Clemens said, “The federal government has an opportunity to begin meaningful reform of Canada’s health care system by learning the lessons of welfare reform from the 1990s. Specifically, he said, “The federal government should announce that federal transfers for health care will be frozen, perhaps even cut, and certainly not increased in the future. In exchange for the reduced federal resources, the provinces would be afforded the maximum amount of flexibility and autonomy to design, deliver, finance and regulate health care within a universal, portable framework.”
The op-ed is copied below and is based on Clemens recent studies on health care reform.
A first step to health care reform: Allow flexibility
By Jason Clemens, Vancouver Sun, November 4, 2011
The problems in Canada’s health care system are well known, including poor access to physicians and medical technology, and long waiting lists. With negotiations over the renewal of the Canada Health Accord, which governs federal transfers to the provinces for health care beginning later this fall, the federal government has an opportunity to genuinely start the process of reform. Such changes should be based on the successful welfare reforms of the 1990s.
Canadians understand that we spend quite a bit on health care but don’t enjoy commensurate performance. In 2009, the latest year for which comparable data are available, Canada spent 11.4 per cent of its economy (GDP) on health care. This places us sixth (tied with Switzerland) in the 34 Organization for Economic Cooperation and Development countries.
Spending on health care by both the federal and provincial governments is increasingly crowding out other important, even vital spending.
For example, health care spending by each of the provinces as a share of total spending is either approaching or has already surpassed 40 per cent. Federal transfers on health care are growing at almost twice the pace of other program spending.
Unfortunately, we don’t benefit from comparable performance in the health care system. For example, Canada ranks 26th in the OECD on access to physicians, and 24th in hospital beds.
We rank 16th in access to MRIs and CT scanners out of 27 reporting countries. In a recent study of waiting times, Canada performed worst among the seven industrialized countries analyzed.
The increased spending, crowdingout, deficits and worrying performance of health care is quite similar to the welfare dependency crisis Canada faced in the 1990s. In 1994, some 3.1 million Canadians received welfare, representing almost 11 per cent of the population. Almost everyone recognized the problems embedded in the country’s approach to social assistance.
The 1995 federal budget was historic for a number of reasons, one of which was the fundamental reforms implemented to social policy.
The federal government cut social transfers to the provinces, removed most national standards, and freed the provinces to experiment and innovate with social assistance. In other words, the federal government markedly decentralized control and responsibility for welfare to the provincial governments.
There were some common reforms implemented by most provinces based on common observed problems. However, more interestingly were the numerous experiments and innovative approaches pursued to try to deal with welfare. British Columbia, for instance, was the first and only province to introduce limits to welfare use. Specifically, the province introduced a 24-month limit to welfare use in any five-year period for employable individuals.
Other provinces took different approaches. Alberta focused on changing the culture of the department overseeing welfare from one of processing payments to one focused on diverting potential welfare recipients to alternatives such as employment. Manitoba focused on transitional programs to help former recipients move from welfare to work. Ontario introduced the only broad-based workfare program in the country and further decentralized to the municipalities.
The standard reforms along with the innovative approaches had quick results. The number of Canadians on welfare declined from 3.1 million in 1994 to 2.1 million in 2000, representing 6.8 per cent of the population.
These are important lessons for government as we now struggle with similar problems in health care. The federal government should learn and apply these lessons now. Specifically, the federal government should announce that federal transfers for health care will be frozen, perhaps even cut, and certainly not increased in the future. In exchange for the reduced federal resources, the provinces would be afforded the maximum amount of flexibility and autonomy to design, deliver, finance and regulate health care within a universal, portable framework.
This last consideration is worth emphasizing. The federal government should require that whatever changes and reforms the provinces pursue be made within a system of universal access and continuing portability. Outside of those requirements, the federal government should permit and indeed facilitate innovation and experimentation.
Such a framework would start a process of genuine reform in health care. Provinces and health providers would soon learn lessons from one another in terms of reforms that work and some that don’t, just like the experience with welfare reform. Such a process would lead us to better control over rising health care costs as well as better results.
Jason Clemens is the director of research at the Macdonald-Laurier Institute and author of the recently released Reforming the Canada Health Transfer.
