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Health care funding 1/3 of cost pressures

Health Care Funding Crisis.  The government has announced that global hospital funding will be frozen this year.  This is down from even the very modest 1.5% increases in the last two years.  Other forms of hospital funding are also down sharply – with the government promising to increase total hospital operating funding only 2% this year (2012-13).  This is well less than half the total budgeted expense increase in each of the previous two years.   

The Budget states that the government will hold “growth in hospitals' overall base operating funding to zero per cent in 2012-13”.  Presumably, this means “global funding” (payments for existing services and jobs) will be frozen.  However, “total hospital operating funding will grow by 2.0 per cent in 2012-13”.  This, the government says is for “ongoing support for key services such as wait-times initiatives and priority treatments, including for chronic kidney disease and transplants.” Exactly what this means remains vague.

Total health care funding is budgeted to increase somewhat more rapidly than hospital funding.  Total health care funding is planned to increase 2.33% this year and average 2.1% over this year and the next two.  Notably, this is considerably less than was even proposed by the very recent Don Drummond Commission into public service reform – the Drummond Commission proposed an average increase of 2.5% until 2017-18.   

Worse than Harris:  In even its first term the Mike Harris government increased health care funding 4.1% per year on average (and at the time inflation was less than its current levels).  
In its second term, the Harris government health care funding increases were higher still.

Liberals renege on pre-election funding promises:  Liberal government actual funding is significantly less than the 3.6% increase the Liberal government indicated before the election.  During the election campaign, the Liberals very quietly reduced this funding promise to just over 3%.

Auditor General Warnings:  Shortly before the election, the Auditor General reviewed the pre-election funding promises of the Liberal government, including the 3.6% health care funding promise.  He found that hospitals would have to find $1 billion in savings over two years (as well as imposing a two year wage freeze).  The Auditor General thought this was "optimistic" and concluded "if hospitals do not find $1 billion in savings and do not succeed in freezing compensation, they will likely run deficits or may have little alternative but to cut services." 

He also appeared to be unimpressed by the progress on finding such savings noting, the Ministry is "still working" on its cost saving strategies and "was unable to provide detailed 
plans or quantify the savings that it hoped would result". 

The problem is even worse now:  the Auditor General’s estimates were based on the government’s pre-election proposal of increasing hospital funding by 3.3% annually.  That increase is 1.3% higher than what the government now proposes to provide hospitals – adding about another $740 million in extra savings the hospitals would have to make over two years.  With the $1 billion in savings the Auditor General has identified, that totals $1.74 billion -- just for hospitals.

Notably, the Auditor General, using government and private sector reports, estimates that 
actual health care costs are going up about 6% or 6.5% annually in Ontario (given inflation,
an aging population, increased utilization, and a growing population).  That is about triple what the government proposes to provide.


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