Ontario’s “pay more, get less” health care system
unsustainable growth in health spending
Troy Media – by Mark Rovere
The Ontario government, faced with a $16-billion deficit, has announced it will stop funding a handful of medical services currently covered by the public health insurer.
This should come as no surprise, as it has become the norm in Ontario as well as other Canadian provinces because cost-containment strategies such as rationing access to medical services are intrinsic characteristics of single-payer health insurance.
Few options available
When governments are faced with budget constraints – i.e. a huge provincial deficit – along with unsustainable growth in health spending, it doesn’t have many options. Consequently, since Ontarians are prohibited from purchasing private insurance for medically necessary services, the breadth of insured medical services is at the mercy of Ontario’s politicians.
It’s time to move away from this fragmented, highly politicized, and centrally planned financing scheme and allow Ontarians to take control of their own health care by removing the prohibition on private health insurance.
This ‘paying more getting less’ approach to financing health care has become the status quo. Under our single-payer insurance scheme, the only way governments can pay for ballooning health care costs is by raising taxes and/or cutting services – period. One doesn’t have to look too far in the past decade to see how this has unfolded in Ontario.
For instance, in 2004, the Ontario government stopped funding biannual eye exams for everyone except children and seniors. It also discontinued funding chiropractic and physical therapy services.
At the same time, the province brought in a new health tax under the guise of a ‘premium’ – which in fact has done nothing to slow the growth of government health expenditures. While the health tax added approximately $2.5 billion to Ontario’s revenue base and temporarily increased the growth rate of provincial revenues to 13.6 per cent in 2005 from 6.8 per cent in 2004; the annual growth rate in total available revenue returned to normal levels of 4.7 per cent by 2006. Because the Ontario Health Premium was not successful at controlling costs, it likely won’t be too long before the OHP will be increased or new taxes introduced.
Does the province really expect Ontarians to happily continue paying more for health insurance while getting less coverage in return? Regrettably, if the status quo is maintained, it will only get worse.
Not only is the province attempting to tackle a massive deficit, but government health care spending continues to take up a larger share of Ontario’s total available revenues – which includes federal transfers. In 2000/2001, government health spending accounted for 41.5 per cent of Ontario’s total available revenues; compared with 49.5 per cent at the end of 2010. It’s simple: as health care currently accounts for half of every dollar spent by the province, taxes increases and/or cuts in insured medical services are inevitable in order for the province to avoid an even larger deficit.
Importantly, why is government left to decide which services are beneficial to patients and which ones should be cut? These decisions should be left to health care professionals and patients. When central planning is responsible for determining the scope of insured services, the entire process becomes politicized and the patient is no longer the primary concern. Competing interests, budget constraints, and political posturing take over the process – which is exactly why governments should NOT be in the business of providing health insurance.
In contrast, in a competitive market, not only are insurers forced to compete on price, but they also have an incentive to compete on the breadth of services that they offer. Thus, if a particular insurer stops financing a specific medical procedure or service, an individual has the ability to shop around for another insurance scheme that meets their personal medical needs. The ‘one-size fits all’ approach does not work for health insurance – which is precisely why the provinces need to relinquish their health insurance monopolies.
Simply prolonging the inevitable
Ironically, once medical services are delisted from the provincial formulary and therefore no longer considered ‘medically necessary,’ in most cases, they are eligible for private health insurance coverage. Instead of prolonging the inevitable, all medical services should be insurable in the private market.
This doesn’t mean we are abandoning our universal-health care system. Instead we would merely provide families with the option to purchase a health insurance plan that meets their personal medical needs, something that already takes place in the rest of the developed world. Those who opt for private insurance will reduce demand for publicly funded health care and public cost pressures will decline.
Mark Rovere is Associate Director of Health Policy Studies at the Fraser Institute and can be reached at mark.rovere@fraserinstitute.org
Category: Health
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