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Lowest health care funding increase ever?

Funding increase hits new low: The Ontario government plans health sector spending growth of 1.2% this year compared with the interim spending estimate for 2014/15.   This deepens the trend to cut health care funding increases.

Actual 2013–14
Interim 2014–15
Plan 2015–16
Health and Long-Term Care
% Increase

The average increase over the last four years is 2.2%.  Over the previous six years, funding increases averaged 5.9%, well more than double the more recent average.  This year's plan of 1.2% is a new low. 

In 2011, the then Auditor General noted that various factors (inflation, aging, population growth, and increased utilization) created health care cost pressures:  “The government’s 2005 projection was that, over the long term, these factors would drive up health-care costs by 5.9% annually, while more recent estimates indicate that these factors will result in annual increases in the 6%–7% range.”  

Declining share of the economy: As a percentage of the economy (Gross Domestic Product) Ontario government health care spending has declined consistently since 2009-10, when it is was at 7.23% of GDP.  Last year it was at 6.96%, and this year it is planned to be at 6.76%.  As a percentage of total government expense, health care spending will fall from 38.8% last year to 38.5% this year. 

The current Budget plan is to increase health care spending to $51.7 billion in 2016/17 (a 1.8% increase) and $52.7 billion in 2017/18 (a 1.9% increase). With nominal GDP expected to go up at more than twice that rate (4.2% for both years), health care spending would continue to decline as a percentage of the economy. 

Less than Drummond:  If these increases are implemented, the increases for 2015/16 through 2017/18 would average 1.63% -- about a third less than even the 2.5% annual increase for health care recommended by the 2012 Drummond Report.  This year's proposed increase is half of the rate proposed by Drummond.   

At the time Drummond characterized his cuts as "a wrenching reduction from the path that spending is now on."   Drummond claimed that no jurisdiction had limited health care funding to his planned 2.5% increase in the last thirty years. 

The health care sub-sectors: Below the level of government ministries, the Budget gets quite vague. Bearing that in mind, however, the figures that are supplied for the health care sub-sectors are of some interest, at least as a broad estimate. 

Provincial hospital funding: The stated policy of the provincial government is to move funding out of hospitals and into other health care sub-sectors.  We are now in the fourth year of a freeze on funding for base hospital services. There has been some other funding for growing parts of the province:  this year, for example, total hospital funding is supposed to go up 1.4%. 

Planned hospital expense increases have slowed almost to a stop.  Over the last four years, planned increases have averaged 1.275%.  Over the previous six years, planned increases averaged 4.8%, almost 4 times the more recent average.

Planned hospital funding has also declined as a percentage of total health care funding under the Liberals, declining from 46.4% of health care funding in 2010-11 to 43.7% in 2015-16.   

Planned hospital funding increases over the last four years have not increased at the rate of inflation, never mind cost pressures arising from population growth (about 1% per year) aging (about 1% per year) and utilization demands.  The discrepancy will have to be made up by extraordinary productivity increases or, more likely, by cuts to utilization and quality.

Long-term care: The 2015 Budget documents actually suggests there will be fewer long-term care beds than estimated in the last two Budgets, bringing the number down by 400 beds to 77,600.  According to Budget estimates, we have had a 2.8% increase in the number of LTC beds since 2006 Budget  -- despite much larger growth in the relevant population (i.e. those 85+).   Getting into an LTC bed is getting harder -- and those that do get in will need more care. Whether they get it is another question.

The Budget figures suggest otherwise -- 1.9% increase per bed, with funding reaching $51,000 per bed. That just about keeps up with inflation.   When you consider the reduced number of LTC beds, the total planned increase for LTC is only 1.4%  -- about the same increase as planned for the hospital sector.

Total LTC funding is supposed to reach just under $4 billion.  

Home and Community Care: Part of this sector at least is supposed to do somewhat better, with the Budget claiming that homemaking and support services will go up to 26 million hours from the 24 million hours estimated in the 2014 Budget. That is a significant increase -- roughly 8%.   

Funding, however, will only go up at about half that rate, increasing from $750 million in the 2014 Budget to $780 million in the 2015 Budget estimate.  How the government plans to increase service by double the increase in funding is a good question - - a  very good question.   On these figures, the cost per hour of service is $30 overall.  The cost of this year's added 2 million hours of service, however, is $15 per hour (2 million added hours for an extra $30 million).  That's quite a price drop. Especially as the government has promise to raise PSW wages significantly.  

Nursing and professional services did not do so well -- despite the new claims today from the Ministry of Health and LTC.  Nursing and professional home care services are supposed to remain at 7 million visits, the same as estimated in the 2014 Budget.  

Notably, this is down 1 million visits from the estimate in the 2010 Budget, the 2011 Budget, and the 2013 Budget -- all of which estimated 8 million nursing and professional home visits.  

This puts in perspective, perhaps, today's headline claim from the Ministry of Health and LTC that they will increase nursing care by 80,000 hours -- through an extra $5 million in funding. That's about a 1% increase -- so it might just keep up with population growth but it is not going to offset growing demand arising from an aging population, never mind offset cuts in hospital and long term care.  Moreover, they are still going to be well short of the service level they claimed a few years ago.

Funding for  nursing and professional visits is supposed to increase this year to $550 million from the $530 million estimated in last year's Budget.  On these estimates, the cost per visit is now, very roughly, in the range of $78.50


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