It was no surprise that the provinces and the federal government did not reach an agreement on health care, with the cameras trained on every word from each of the leaders. When a camera is on a political leader, all you receive is political posturing for their constituents back home.

by David J. Marshall

It was a completely stupid idea to televise the first ministers’ conference in the first place. It is not even as though it was something Canadians wanted to watch; they would have preferred to see a hockey game. But that did not matter in the end. As soon as the cameras were turned off, the backroom dealing began and to no one’s surprise, a deal was struck just two days later. The 18 billion dollar deal was touted as a solution to the medical quagmire for the next decade, but will it really solve the problem of Canadian health care? Maybe Ralph Klein was right to leave after one day - claiming it was turning into the Gong Show!

It was clear from the beginning that economists were not involved with the proceedings. All the discussion was focused on the revenue side and not the cost side. No economist would simply ask for more money if a program like health care was running such an enormous deficit. The most fundamental principle of economics involves both demand and supply. If a business is running a deficit, the first thing managers look at is what is generating the deficit. In the case of health care, it is certainly not a fall in revenues. The average annual growth rate for health care revenues has been running over ten percent since the program began nearly 40 years ago. The problem is that costs have been escalating by nearly 20 percent. For a time in the 1970’s this fact could have been overlooked with Inflation running at more than 12%. However, over the last 22 years, inflation has been beaten down to less than three percent, but with no let up in the cost of health care.

Alberta’s solution is to turn to private clinics, while Ontario has been paring back on the services which are covered by health care. This is like treating a cancer by operating around it or claiming the infected area is no longer a part of the body. Clearly, health care is not like buying a pair of shoes. Even the wealthiest Canadians do not believe that health care should be parceled out to the highest bidder. No one seriously wants to return to the time of Dickens’ workhouses. The most diehard capitalist believes in public goods and clearly health care is one of them. So these government strategies of slashing off the arms to reduce the cost of health care are no solution. What is needed is a forensic audit of the costs of health care. I do not doubt this has been done by provincial ministries of health, but the fact is the results of these audits are not apparent. A national council should be formed with the mandate to investigate every dollar spent by every level of government.

I am well aware of the excuses popularly promulgated for the burgeoning health care costs: the aging population, advances in medical treatment and the deterioration of the environment. I say it is all boloney! The population is getting older, but that is because people are healthier than a generation ago. There is little evidence that the time they spend in hospitals or with medication is any longer.

Maybe we can not afford state of the art technology or maybe special deals can be negotiated with those companies on a national level - rather than allowing individual hospitals or provinces to make that decision. Medical experts claim that nearly half of all medical problems are self induced by what we eat. I often think of Bill Clinton’s recent triple by-pass operation. Did he really think that 30 years of sucking down those Big Macs and fries would not catch up to him? We have to start looking at health care from the ground up and I do not believe throwing more money at the problem will make it go away. The federal government may run a deficit next fiscal year for the first time in a decade - if the money is really new. As we all know the federal government is famous for disguising old money to look like new. But if it is new money, is this really the route we want to take? Personally, I think we have missed the boat.

David J. Marshall has been a financial economist for 20 years and is currently a professor of economics at Humber College. He can be reached at djmarshall@look.ca or (416) 532-2598