The truth about health spending in Alberta

Much has been said over the past few years about health care costs. Here in Alberta, both the government and the Mazankowski commission have argued that costs are increasing by 10 percent a year and that health spending will soon consume half the provincial budget. Based on these figures, the government says that Medicare is "unsustainable."

But the truth is that the sky is not falling. The figures presented by the government are misleading because they don't account for factors such as inflation and population growth. When these adjustments are made, it becomes clear that for most of the past ten years spending has been flat or declining. In fact, despite our province's obvious wealth, we have been spending less on health care (sometimes significantly less) than the national average.

The records show that health spending in Alberta hit bottom in the mid-90s at the height of the so-called Klein Revolution and basically stayed there until 1999. Spending over the past two years has grown, but this is largely the result of efforts by Alberta's regional health authorities to catch-up for years of under-funding. After years of deep cuts, the RHAs are finally investing in long-over due capital projects. They are also hiring nurses and other health workers to bolster staff levels, which had fallen below the national average.

The bottom line is that health spending has increased only gradually - so it is a gross exaggeration to say costs are "spiraling out of control." The real spending trends simply do not justify the radical actions being proposed by the government.

If the Alberta government is really having trouble balancing its books (and given our province's recent history of huge surpluses, that's a big "if") it has more to do with bad decisions on revenue collection than any increases in spending.

For example, the provincial flat tax - which gives a huge tax break to people earning more than $150,000 a year and a tiny decrease for average working families - has resulted in a $1.5 billion annual loss to the provincial treasury. This comes on top of the billions of revenue lost as a result of corporate tax cuts and the relatively low rate of royalty fees charged to petroleum companies extracting Alberta's oil and gas resources.

These cuts to revenue are the real reason the government is seeking to slash health spending. Unfortunately, the Albertans have never been asked which they prefer: deep cuts to health care or a reversal of bad tax decisions. The Klein government seems to have made up its mind on this question - and they've decided to turn the health system on its head.

Medicare Facts:

• Even after increasing spending over the past two years to make up for years of deep budget cuts, Alberta still spends only about 5 percent of its provincial GDP on health care, the lowest proportion of any province in the country. This figure has remained stable for the past 20 years - proving again that costs are not spiraling out of control. It also shows that while health spending has increased, so has our ability to pay.

• Real per capita government spending on health care in Alberta increased by a modest 6.3 percent between 1990-91 and 2000-01, with all of the increase coming in the last two years. Despite this jump, Alberta still spends about 4 percent less per person on health than the national average (compared to 16 percent less than the national average in 1995-96, when the Klein cuts were at their deepest).

• Claims that health spending will soon consume half of the provincial budget are not borne out by the evidence. About 35 percent of the Alberta budget currently goes to health care, up from about 25 percent in 80s. But this jump has more to do with declining spending in other program areas than actual spending increases in health care.

• Even using the government's own figures, the cost of our health care system translates into only about $6.50 a day for each Albertan - a figure that most people in the province would probably feel comfortable with given the importance of health care.

Bad tax decisions, not health spending, to blame for financial crunch The government is facing a financial crunch - but not because health care costs are out of control. In fact health costs have risen only slightly over the past 15 years. The real problem in Alberta is that the government gave away too much money in corporate tax cuts and the recently introduced flat tax. These measures cut more than a billion dollars from the government's annual revenue. Should we have to sacrifice our health care system to finance tax breaks for high-income earners and wealthy corporations? Danger Ahead: Proposed Medicare reforms will be bad for business If the Alberta government goes ahead with plans to de-list services and introduce annual "Medicare Accounts", businesses in the province will saddled with millions of dollars in extra costs. That's because once the Medicare umbrella has been shrunken, many employers will have no choice but to buy private, supplementary insurance for their employees. These changes will add up to a huge erosion of the so-called "Alberta Advantage."

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