Skip to main content

Health care spending continues decline

Contrary to the hysteria from conservatives, health care spending continues to decline as a percentage of the provincial budget.   Last year, health care accounted for 38.5% of total expenditures, this year the government plans to bring it down to 38.3%.  This continues the trend downwards since 2003/4 when health care accounted for 40% of total expenditures.

Austerity Redux
The provincial Budget reports that program spending is going up an impressive sounding 2.99% and health care spending is going up 2.3%.  Although that sounds like a larger than expected increase in these days of austerity, these figures are, unfortunately, misleading. The reason is that last year funding fell well short of the Budget plan and the government is now playing catch-up.

The 2013 Budget indicates that the government spent considerably less than it budgeted in the 2012 Budget.  For example, the Ontario government spent $595 million less on health in 2012-13 than it budgeted, a 1.2% reduction.

Overall, total spending was $2.4 billion less than budgeted -- that is a decrease of  just less than 1.9%.  Indeed, comparing Budgets, total interim expenditure in 2012-13 was actually $600 million less than total interim expenditure in 2011-12. This reduction is entirely accounted for by a reduction in program spending of $900 million (falling from $114.5 billion in the interim report for 2011-12 to $113.6 billion in the interim report for 2012-13).

Bottom line – the 2.99% increase in program spending promised for this year is catch-up.  With that increase we do equal the program spending planned for this year in last year's Budget, but, given considerably lower than expected interest on debt, the total expenditure plan is actually $600 million less than planned in the 2012 Budget for 2013-14.

The 2013 Budget sets total spending only 1.1% higher for 2013-14 than the 2012 Budget planned for 2012-13.  Similarly, health care spending planned in the 2013 Budget for 2013-14 is only 1% higher than planned in the 2012 Budget for 2012-13.

As noted repeatedly on this blog, the government consistently (and wildly) overestimates its deficits.  But it's not just spending that it gets wrong, it's revenue too.  This year, revenue was almost $2 billion more in 2012-13 than forecast in the 2012 Budget.  (They also overestimated the interest on debt by $200 million.)

The government plans more of the same tiny funding increases in the future. 

 Summary of Medium-Term Expense Outlook
$ Billions
Health Sector
Education Sector
Post-secondary & Training
Children's & Social Services
Justice Sector
Other Programs
Total Programs
% Increase

Interest on Debt
Total Expense
 Source: Budget Table 2.19

Program spending is supposed to increase another 1.1% in 2014-15 and then really head to the cellar with a 0.4% increase in 2015-16, a miserly 0.0% in 2016-17, and a miserable 0.7% decrease in 2017-18.  This is supposed to balance the budget by 2018, but will be a dead weight for the economy  -- something even the Budget documents quietly recognize.  It will also provide sharply shrinking public services, as population, aging, and inflation will more than eat up such tiny nominal increases. 

Notably, the Budget reports that Ontario already has the lowest public sector program spending per capita:

Health Care
The government sticks to its usual script on health care in the Budget:
  •  They will continue to move surgeries and procedures currently conducted in hospitals to specialized “not-for-profit” clinics. The government specifically sites colonoscopies, dialysis, and vision care (citing, in particular, expanded glaucoma and retina surgery at the Kensington Eye Institute).
  • The Ontario Drug Benefit (ODB) program will become less and less universal by requiring higher-income senior ODB recipients to pay a larger share of their prescription drug costs starting in August 2014. To some ears, this sounds nice -- but if the affluent don't get any benefit from the program they may not support it (and remember the golden rule -- in this society, them with the gold make the rules).
  • Hospital base funding (i.e. funding for existing services) will continue to be frozen, but other pockets of money will be available, with a total funding increase of 1.7%. The Budget adds that a 1% increase in hospital funding equals $217 million, so this should equal $369 million in new hospital funding.
  • Funding for “home and community care services” (however that is defined) will increase by 5% -- up from a promise of a 4% increase last year (although whether that was delivered, who knows?).  For what it’s worth, the Budget suggests 5% increases will continue for 3 years. The government says it will be investing to reduce home care wait times for nursing services and improve personal support services for clients with complex care needs.
  • Long-term care homes will get a “two per cent annual increase in funding for direct resident care to address the increasingly complex care needs of patients.” Despite the rhetoric, there is no sign that the government will require LTC facilities to use this money to improve staffing levels through a legislated staffing standard.
  • The government continues their promise of 23 “Health Links” to encourage greater collaboration to enable high-needs patients, such as seniors and people with complex conditions, receive more responsive care in the right place.
More on how the government sees collective bargaining and public sector pensions in the Budget tomorrow.

Popular posts from this blog

Deficit? Public spending ain't the cause. Revenue, however...

With the election over, pressure to cut public programs has become quite intense. In almost all of the corporate owned media someone is barking on about it.

Another option -- increasing revenue from corporations and the wealthy is not mentioned.  However, data clearly indicates that Ontario does not have an overspending problem compared to the other provinces.

Instead, it indicates Ontario has very low revenue. 
Ontario has the lowest public spending of all the provinces on a per capita basis (see the chart from the 2014 Ontario Budget below).  So there is little reason to suspect that we have an over-spending problem.  If anything, this suggests we have an under-spending problem.

The Ontario government has also now reported in the 2014 Budget that Ontario has the lowest revenue per capita of any province.  This is particularly notable as other provinces are quite a bit poorer than Ontario and therefore have a much more limited ability to pay for public spending.  (Also notable in this…

Six more problems with Public Private Partnerships (P3s)

The Auditor General (AG) has again identified issues in her annual reportwhich reflect problems with Ontario health care capacity and privatization.   First, here are six key problems with the maintenance of the 16 privatized P3 ("public private partnership") hospitals in Ontario:
There are long-term ongoing disputes with privatized P3 contractors over the P3 agreements, including about what is covered by the P3  (or “AFP” as the government likes to call them) contract.The hospitals are required to pay higher than reasonable rates tothe P3 contractor for  maintenance work the contractor has deemed to be outside of the P3 contract. Hospitals are almost forced to use P3 contractors to do maintenance work the contractors deem outside of the P3 contract or face the prospect of transferring the risk associated with maintaining the related hospital assets from the private-sector company back to the hospitalP3 companies with poor perf…

Health care funding falls, again

Real provincial government health care funding per-person has fallen again this year in Ontario, the third year in a row.  Since 2009 real funding per-person has fallen 2.6% -- $63 per person. 

Across Canada real per person funding is in its fourth consecutive year of increase. Since 2009, real provincial funding across Canada is up $89 -- 3.6%.
In fact the funding gap between Ontario and Canada as a whole has gown consistently for years (as set out below in current dollars).

Ontario funds health care less than any other province -- indeed, the province that funds health care the second least (B.C.) provides $185 more per person per year, 4.7% more.  
Provincial health care spending in the rest of Canada (excluding Ontario) is now  $574 higher per person annually than in Ontario. 

 Ontario has not always provided lower than average health care funding increases-- but that has been the general pattern since 2005.
Private expenditures on health care have exceeded Ontario government increases …