The Fraser Institute: Canadian Health Care System Shows Little Improvement Despite Extra $36 Billion in Federal Transfers Since 1997

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 13, 2007) - The federal government has provided provinces with an extra $36 billion in transfers for health care since 1997, yet Canada's health care system is in worse shape now than it was 10 years ago, according to a new report from independent research organization The Fraser Institute.

"Repeatedly we hear calls for the federal government to increase funding to the provinces for health care. Yet here is empirical evidence showing we have tried that and it's not working. Clearly, it's time for Canada to start looking at other options to improve health care," said Nadeem Esmail, The Fraser Institute's Director of Health System Performance and co-author of Federal Health Cash Transfers to the Provinces: Expensive and Ineffective.

"Since 1997, Ottawa has increased transfers to the provinces for health care by nearly 13 per cent per year - well in excess of what was required to account for population growth and inflation. With a new budget on the horizon, the federal government seems prepared to further increase transfers despite having no evidence that we're getting value for our money," added Jason Clemens, The Fraser Institute's Director of Fiscal Studies and co-author of the report.

Federal Health Transfers to the Provinces looks at changes to federal cash transfers to the provinces for health care spending since 1980, finding that transfers began increasing significantly in 1998. It then examines a series of indicators showing the performance of Canada's health-care system in 1997 and compares current performance to determine if any changes have occurred.

Between 1980 and 1997, federal transfers for health care spending were relatively stable. But the report found that fiscal year 1997/98 represents an important turning point. Between 1988/89 and 1997/98, the average annual growth rate in federal health care transfers was 1.4 per cent. But starting in 1997/98, it balloons to 12.9 per cent. The report notes that an increase of just 3.1 per cent would have been required to keep pace with population growth and inflation.

In total, the federal government has provided the provinces with $234.5 billion in cash transfers for health since 1980/81, but more than half that amount -- $115.7 billion -- has come since 1997/98.

"With almost 10 years of successive increases in federal health care transfers and given that Canada's health care program is the second most expensive universal access program in the developed world, you would expect that we would have one of the world's premier health care systems. But by almost all measures, the extra funding has not produced the sort of improvements and results one would expect," Esmail said.

The report compared Canadian health performance in 1997 with current performance and found some disturbing results.

Wait times for health care in Canada have increased significantly since 1997 when the average Canadian could expect to wait 11.9 weeks from the time of a referral from a General Practitioner to the time a specialist delivered the treatment required. In 2006, the average Canadian could expect to wait 17.8 weeks, nearly 50 per cent longer.

The increase in the total wait time for treatment was the result of a 72.5 per cent increase in the wait time to see a specialist after referral by a general practitioner and a 32.4 per cent increase in the wait time to receive treatment after an appointment with a specialist.

One of the most stunning examples of how additional funding has not resulted in better care is found in access to MRI and CT scanner technology. New investments were made in these technologies that increased their availability. But despite increased availability, Canadians did not experience shorter wait times for scans in 2006 than in 1997. The wait time for a CT scan increased from 4.1 weeks to 4.3 weeks between 1997 and 2006 while the wait time for an MRI scan went from 9.6 weeks in 1997 to 10.3 weeks in 2006.

"The federal government increased federal cash transfers for health care by a staggering $36 billion since 1997 and what do we have to show for it? Given that the overwhelming evidence shows we're actually worse off today than we were 10 years ago, you have to wonder about the wisdom of throwing more money at the system before considering other more effective options," Clemens said.

The Fraser Institute is an independent research and educational organization based in Canada. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.ca.