The Health Care “Crisis” Con

July 26, 2010
in Category: Articles, BC Politics, Economics, Health
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The Health Care “Crisis” Con

While journalists help the Liberals drum up hysteria, health spending has actually remained relatively stable for decades.

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It was one of those articles that makes me think, “Wow, I’ve been so stupid.”

I love reading those.

We’ve all heard alarms about health care gobbling 40% of BC’s provincial budget. Our Liberal government asserts that, at current growth rates, health care will be mainlining 100% of BC’s budget by 2040. You can’t help but start screaming with the expanding mob, “More cuts! De-fund Viagra! Privatize! Unplug the elderly!”

But The Tyee‘s Will McMartin analyzed thirty years of BC health budgets and completely dispelled such claims. It’s worth the read (I checked the numbers); however, McMartin’s central point was simple: Don’t forget the BC Liberals have repeatedly cut taxes and the budgets of most other ministries. ­The end result in a quick analogy: While the government spent $2 on health care and $8 on other ministries decades ago, today government spends a bit over $2 on health, but barely more than $3 on all other ministries. That’s the primary way health care has gone from taking 20% of the budget to taking 40%.

McMartin contrasts this by calculating health care spending as a percentage of gross domestic product (GDP), a more common standard for comparing public expenditures across governments and decades. GDP represents the overall economic activity and tax base from which a government can draw for funding public services. Government data show BC’s health spending has fluctuated steadily around 5-7% of GDP since the mid-80s (See here, especially page 106, table A 3.5, and the GDP numbers here). Essentially, relative to our overall economic strength, health spending now is in line with where it’s always been. So, while we can still improve our health care system, clearly, we needn’t be acting as if we’re having a financial near-death experience.

This eye-opener made me wonder, ‘How is it I’ve read innumerable hysterical articles about BC’s health care budget, and have never heard this simple counterpoint?’ (According to the Canadian Institute for Health Information, as a percentage of GDP, BC is actually at the lower end of spending nationally. See here and here for details.) Intrigued, I revisited how local media have handled the issue the past two years.

Most coverage was typified by Rob Shaw’s Victoria Times-Colonist news story: “Health care continues to devour money and accounts for 42 per cent of the entire $40-billion budget,” wrote Shaw. He quoted Premier Gordon Campbell: “[I]t’s really important for people to understand that the costs of our health-care system are staggering, frankly.”

No other point of view on health spending was quoted. While Shaw seemed guilty of simply lazy journalism, others seemed more manipulative—or manipulated.

T-C staffer Jack Knox wondered how much we’ll “shovel into the gaping maw” of health care’s “ever-growing, insatiable appetite”. Interestingly, he related health spending to GDP, but only in one specific context: “Health spending has been outstripping the economy for decades…” Knox wrote.

I soon spotted this imprecise but alarmist refrain reappearing ad nauseum like a Republican talking point on Fox TV. No articles cited BC’s low health spending relative to GDP; however, many roared menacingly about the high growth rate of BC’s health spending relative to GDP.

“[B]etween 2001 and 2005, public health expenditures have grown faster on average than total revenue…” wrote public administration professor emeritus Jim Cutt in an opinion article about the approaching “financial brick wall”.

T-C news columnist Les Leyne parroted the same idea being spun by BC’s previous Liberal health minister: “Abbott said health spending grows twice as fast as the GDP and has done so for 20 years…”

It does sound terrifying. And it’s terrifically misleading. That’s because the growth rate for health spending is relative to a much smaller dollar amount than the growth rate for GDP.

Why is that significant? Well, if I spend $5,000 on consumer goods this year, that’ll be 400% more than five years ago. In that same time, BC’s GDP increased by a measly 17%. So now ministers and journalists are crying, “Rob Wipond’s increases in frivolous spending have been outstripping the increases in productivity of BC’s entire industrial base thirty times over! Stop Rob Wipond before he consumes the whole province!”

Sound absurd? You bet. Rob Wipond’s consumption still represents just 0.0000025% of provincial GDP.

To abandon ludicrous comparisons, then, and examine the numbers: BC GDP was $79.35 billion in 1990 and $197.93 billion in 2008, an increase of 150%. Meanwhile, BC health spending was $4.4 billion in 1990 and $14 billion in 2008, an increase of 218%. And that slight (hardly “twice as fast”) difference in growth seems significant, until we calculate that it merely means health spending was 5.5% of GDP in 1990 and 7% in 2008—within its normal fluctuation range. Much of that recent rise isn’t due to health spending increases, anyway, but GDP drop-offs after Wall Street meltdowns.

Spinning the tale the other way, though, the BC Liberals make it sound like they’ve been dramatically increasing health care funding. And in the atmosphere of crisis, they can justify privatization—something they’ve shown a propensity towards with hospital and nursing home operations, facility ownership etc.

What’s staggering to me personally is how I fell for such bafflegab for several years. I console myself that, when I actually write about a topic or take a political stand, I do some research first. But now I’m disturbed about what other illusions I have yet to dispel.

Though I guess that makes us humble, and not quick to parrot what anyone tells us. And that’s a good thing, isn’t it?

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Originally published in Focus, August 2010.

4 comments on “The Health Care “Crisis” Con”

  1. Johnny says:

    Lies, damned lies and statistics: Will McMartin’s piece doesn’t take into account that BC’s GDP has grown substantially over the period charted so although health spending has stayed even as a percentage of GDP, in real dollars the spending has gone up. Now spending will need to rise to due to increased population and inflation but by how much? Will McMartin certainly doesn’t give us any clear answers.

  2. Rob Wipond says:

    Johnny: In fact, both my and Will’s articles take into account the growth in GDP; that number is, in fact, a central feature in both of our discussions.

  3. Johnny says:

    I should have been more clear: what I am criticising is the fact that health care spending rose as much as it did – it seems to have risen more than needed even when taking into account increased population and inflation. By linking health care costs to a percentage of the GDP Will gets away with not making the problem look all that bad but this is problematic. Let me give an illustration: All things being equal (no changes in inflation, population) if say the technology industry in BC starts booming we will see the GDP grow as well. Now if health spending stays the same percentage to GDP as it was before, the real dollars being spent on health care will be more. However this shouldn’t be happening because there is absolutely no reason for a boom in one industry to necessarily cause increased spending in another (health care in this case). The care industry should continue to need just the same amount of money as it needed prior to the tech boom (all things being equal). To use another example imagine if a small town was to discover gold or oil near by and it subsequently became rich. The towns GDP would shoot through the roof as it began to sell the newly found resource but all things being equal their would be no reason for the towns health clinic to need more staff or the local grocery store for that matter. I hope this illustrates the difficulty and complexity of this issue.

  4. Rob Wipond says:

    First, it’s important to contextualize the argument being made; it’s not occurring in a vacuum. Both of our articles are responses to how the gov’t has framed the issue and used the numbers. We’re saying, the gov’t is misleading us. And I think that point is made very clearly and accurately.

    You seem to be simply saying that, after all, in fact, health care costs are increasing to some degree. And I think that’s clear, and I doubt McMartin would disagree. There’s a whole separate discussion to be had about the problems in the health care system, how to improve it, and where money is being wasted. I’m just noting in this article, that important discussion is absolutely not being helped along at all when the gov’t is constantly trying to frame it within needless, misleading hysteria.

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