Debt and Health Care

by David M. Kaplan – June 13, 2012 – from

The fiscal health of the province should not be cured by detrimental changes to the health of Ontarians. The rhetoric of rising health care costs and a population aging ‘crisis’ are a means by government, health service providers, and even the consumer to obscure reality.  The main crisis facing Ontario is a debt crisis. The politics of blame are used by both the government and the healthcare establishment to defend their self-interests. The Ontario government had hoped to grow itself out of deficit by relying on overly optimistic projections for revenue growth. Prior to the fall 2011 election, not one political party had a frank and honest dialogue with the people of Ontario.

Prior to 2003, and aside from a brief time in the late 1990s to 2002, an increasing proportion of Ontario’s Gross Domestic Product (GDP) was spent on servicing the debt. The servicing of this massive governmental debt, caused by the operating deficits of the mid-1970’s to mid-1980’s, caused a diversion of government revenue to pay for debt financing.*  The public debt was so massive that the government had been going further into deficit each year to pay the interest charges.

We should have learned from biblical Joseph even though our Premiers did not have dreams to decipher. We should have kept money back during the years of plenty (2002-2008) for these years of famine. Instead, we ate all the grain and bought even more grain on cheap credit. From 2003-2011, the Ontario government increased spending by almost double the rate of economic growth.  Debt service charges (the annual interest payment on the debt) have remained about $10 billion a year only because interest rates have dropped since 1999. Debt servicing is the province’s third-largest annual expense and one of its fastest growing expenditures. To put it into perspective, the Ontario government almost spends as much on servicing the debt each year as it does on our colleges and universities.

So what do we do now? Increasing the value of our health care spending dollars (of course without increasing risk and while maintaining quality and patient experience) will only get us so far. Unfortunately, ‘bending the cost curve’ in healthcare is not the answer to the grey tsunami that will increase health care utilization in the next decade.

We need to increase our productivity to increase government revenue. If we don’t change soon we won’t be able to sustain even our current system.  We need to increase the productivity of Ontarians so that companies are more successful and Ontarians are better paid. Paid citizens and financial sound corporations contribute to taxation revenue. We need to increase our per capitaGDPand lead the country in economic growth once again.

Without the existence of an astronomical debt, the graying of the population and the subsequent increase in resource utilization would not seem so much of a problem. If crises in health care continue to ‘emerge’, there are more likely consequences of a fiscal crisis and not the causes of one. Politicians need to solve the fiscal crisis. Health care providers and government need to address the broad determinants of health. Ontarians need to increase their productivity and take individual responsibility for their health. The true crisis that faces Ontario, the debt crisis, will lead to future, consequential crises in health care which we will not be able to finance out of the public purse.

*Northcott, H. “The Politics of Fiscal Austerity.” Health and Canadian Society 1(2): 347-366.

David M. Kaplan MD, CCFP, MSc (Health Policy) is an academic family physician practising in Toronto. He is an Assistant Professor in the Department of Family & Community Medicine and Joint Centre for Bioethics at the University of Toronto.  Click here to read David’s Blog.   Follow David on Twitter: @davidkaplanmd