Was the budget about protecting health?

by Robert Evans

Economics Prof. Robert Evans is a research associate with UBC's Centre for Health Services and Policy Research.

This budget is about health,"
Finance Minister Joy McPhail said firmly a few weeks ago. Perhaps so; it was certainly about health spending.

She also reiterated her government's claim, alone among the provinces, to have protected the funding of health care against cuts in federal transfer payments and general economic slowdown. And the numbers bear her out. But they also reveal a remarkable coincidence.

Allegations of "underfunding" and responses of "cost explosion" are as old as Medicare. Behind the rhetoric, expenditures in all provinces (per person, adjusted for inflation) moved steadily upward for a quarter-century. But 1992 saw a real turning point.

Driven by fiscal crisis, provincial governments finally became grimly serious about cost control. In the six years since, national data and projections compiled by the Canadian Institute for Health Information (CIHI) show that per person spending on health by provincial governments has been essentially flat -- not even increased for inflation. Except in B.C.

Health-care spending (per person) by the B.C. government rose by 11.7 per cent, or nearly 2 per cent per year, during this period of general restraint.

B.C. actually keeps the national average on the positive side of the ledger; per person spending by the other nine provinces fell by nearly 2 per cent.

If spending by the B.C. government had changed in parallel with the others, it would have been $1,714 per person last year instead of the reported $1,950.

The discrepancy of $236 is an interesting figure. There were (estimated to be) 4.013 million people in B.C. last year. Multiplying $236 per person by 4.013 million people yields $947 million. Compare this with the provincial deficit of $890 million budgeted for the coming year.

Just by the numbers, the cumulative effect of B.C.'s decision to keep health spending growing while other provinces froze it, now accounts for the entire difference between the forecast deficit, and a modest surplus, even including the substantial increases budgeted for this year.

Also interesting is the breakdown of B.C.'s spending.

The state of relations between the provincial government and B.C.'s doctors might suggest that they, at least, had been particularly badly treated. Not so; per capita expenditure on physicians' services in B.C. rose 18.2 per cent in the last six years, compared with a Canadian average of 2.5 per cent.

Excluding B.C., spending on physicians in the rest of Canada rose less than one percent (per person) in six years. The gap of over $100 per person that has emerged between spending in B.C. and in the rest of Canada (recall that the all-Canada average includes B.C.) is enough to account for over $400 million, roughly half of the currently projected deficit.

Hospital spending did contract in B.C., but very little, and the decline was exactly matched by a modest expansion in other institutions.

In other provinces the reduction in acute care was much larger, and was not offset by the small increases for other institutional care. On the other hand, while pharmaceutical spending has risen dramatically during this period of general restraint, it rose less rapidly in B.C. The attempts by Pharmacare to rationalize prescribing -- "lowest cost alternative" dispensing and "reference pricing"-- appear to have exercised at least relative restraint on costs.

But budgets are about choices, and the B.C. government clearly chose the spending policies of the last six years. They rejected the quite brutal cuts that have been associated with so much distress elsewhere in the country. Are British Columbians healthier or happier as a result?

Well, not the providers of care. Doctors, dissatisfied with their fees, damned the new budget as not nearly enough and threaten further job action. (One might ask what would be enough? The only answer seems to be "more.") Nurses and other hospital workers? Well, they went on strike last fall, for higher wages and more positions. If they are less unhappy than elsewhere, it isn't obvious.

Providers' consistent message to the public has been crisis and imminent system collapse; nothing about the B.C. health-care system being so much more generously funded than elsewhere; nothing, for example, about the fact that while hospitals have been downsized, access to hospital care has not been reduced.

Hospital beds have been closed (and staff positions cut) because patients simply spend less time in bed now, for a variety of mostly good reasons. Hospitals have become substantially more efficient.

On the backs of overworked nurses? Perhaps, but nurse staffing per acute bed in B.C has continued to rise over the past decade. Maybe not by enough.

It might have been smarter politics for B.C.'s government to follow the lead of Ralph Klein and Mike Harris. Impose harsh cuts on health, trigger a crisis, recognize it and put back part of the money. That way, you get political credit for being responsive, and for running a surplus. You'll be criticized for "underfunding" health care in any case - that seems to be an iron law of Canadian politics.

Pretty cynical? This government would probably say they have chosen the high road. They believe that the health of British Columbians is more important than the approval of the bond rating agencies, and worth the public floggings over the deficit.

Well and good, but are we healthier than we would otherwise have been? The fact is, we don't know.

Data on outcomes of care or on the general health of the population have never been a high priority, either for those who provide care or for those who pay for it (or, it must be said, for the rest of us).

But if "underfunding" is such a threat to health as providers claim, surely we should be seeing some evidence of a health gap opening up between B.C. and less favoured provinces. (Stories about B.C.'s older population or higher cost of living are irrelevant. The data above compare changes in spending since 1992.) After all, we are now spending a billion dollars a year more on health care than we would be if our provincial government had chosen to follow the spending patterns of the other provinces.

Our government has certainly protected health care providers, but have they protected our health? Well?