Health Care - The Crisis is Funding? - Not Really

It occurs to me that the Government's focus on Health Care _FUNDING_ is completely missing some critical points.

First, the assertion is made that costs are escalating out of control, or certainly, at a rate that exceeds both inflation and the growth in governmental revenues.

Second is that a 'means test' is an appropriate way to determine who "can" pay, and who "cannot" pay. The assertion being that "low income" Canadians should not have to pay at all, but the rest of us should be sanctioned for going to the doctor, even on a preventative basis. I perceive a significant problem with this, for it ensures that a lot of people in the low-end of the earning spectrum are going to have to think twice about a trip to the doctor - by the time they pay the premiums (head tax), and then the proposed deductible, they are pretty much guaranteed to pay 100% of the costs that they are incurring. Basically, short of major illness, AHC becomes a pure cost sink with no identifiable benefit.

The last assumption being made is that the healthcare market should run free - just as it does for groceries. We can look around the world and identify obvious problems with an unfettered health care market - look at the United States, where they spend considerably more per capita for health care than we do in Canada; in Russia where a "partial" two-tier system provoked a serious decline in the public health system after the collapse of the Soviet Union, there are other examples to be sure.

What are the cost drivers that are involved? According to the 'Graydon Report':

a) Salaries for Health Care Workers
b) New Technology - such as MRI machines
c) Growing population

Not unlike the high-technology industries, Medicine is knowledge-driven. Therefore, you wind up paying people a lot of money - for the knowledge that is trapped in their heads. I don't think the salaries paid to nurses and doctors have been unreasonable these past few years - remember that the Klein government froze or reduced those salaries considerably in the 1990s.

New technology costs - this is a fascinating assertion. On one hand, we have a government talking about the costs in terms of day-to-day costs, then they turn around and add the cost of capital equipment into the fray, as if the cost of an MRI machine is written off the day it arrives. This is a serious accounting error. Capital costs, such as buildings and specialized equipment have a lifespan, and are accounted for using well-defined rules of depreciation. Let's clarify the picture a bit by separating operating costs (salaries and consumable materials) from capital costs (buildings and durable equipment). The government shows us that there is an accounting distinction by using a recent $700 million dollar cash infusion in the following manner - $500 million towards capital investment, $200 million to pay off operating deficits in the RHAs.

Let's make some intelligent analysis here - if the issue is increasing costs in the operations side of the picture, there are ways to deal with that; similarly, if the issue is primarily capital cost related, then let's take a look at how we should handle those expenses.

I recognize that we live in a world where public and private enterprise co-exist in many different fronts. We should be cautious about reducing Health Care related transactions to the same level as a common commercial transaction. Simply put, they are not the same thing. When I get a new roof put on my house, that's a very commercial transaction - money is exchanged for a combination of product and service. When I go to my doctor for a checkup, the transaction is far more subtle - the exchange of money (figurative or literal) takes place for the doctor's expertise and knowledge that exceeds my own. Hopefully he will detect anomalies that are early signs of a problem before I will, and thereby forestall more expensive treatment with preventative treatment. In essence, I am ultimately saving the system money by being somewhat proactive.

So - if the problem are escalating costs, and the complaint of the Government is that they can't afford to continue paying they way they have, how do we begin addressing it.

So far, a lot of 'increase the user cost' proposals have been floated. To say that such proposals are troubling is an understatement indeed. Blindly turning the system over to private, profit-driven interests is simply guaranteeing that the Public Health System will very quickly become the "Poor Health System", both because it will be under-funded, and only utilized by those who cannot afford anything else. The reason we are having this debate today is because _everyone_, rich and poor alike is in the same system, and therefore all are lobbying to improve it.

Let's start discussing the regulatory environment in which these services and products are sold as well - obviously, even the constrained market that's out there is creating problems - simply throwing money at things is pointless unless we take steps that are non-punitive to the user of the system - to bring the commercial interests under control.