The last post
documented the “Four Ages’ of Ontario provincial government health spending. The
first age, in the wake of the creation of the Medicare system stretches from
1975 to 1989 and saw average annual growth of 3 percent. The second age from 1990 to 1997, encompassing
the 1991 recession and the 1995 federal fiscal crisis and transfer cut witnessed
a decline in real per capita provincial government health spending with an
average growth rate of -0.7 percent annually. From 1998 to 2010 – there was a recovery in
the average annual growth rate of provincial government health spending to 3
percent, fueled by a recovering economy, the fiscal dividend of low interest
rates, and increases in federal transfer funding. Finally, with the actions taken to meet the expiry
of the Health Accord in 2017 and the economic slowdown after the Great
Recession in 2008-09, the growth rate plummets again eking out an increase
averaging 0.5 percent annually from 2010 to 2019.
It should be noted
that the four ages of health spending marks not only Ontario, but indeed all
the provincial health care systems.
However, what is interesting is the differential performance of Ontario
with respect to the rest of Canada. As Figure 1 illustrates, when the average annual growth rates of provincial/territorial
government health spending between Ontario and the rest of the country are
compared, Ontario has been growing slower – or shrinking faster -than the rest
of country since 1990.
For the period
1975 to 1989, Ontario on average grew slightly faster at 3 percent annual
average growth compared to 2.9 percent for the rest of Canada. However, come the cuts of the 1990s, Ontario
shrank at -0.7 percent annually while the rest of the country only shrank at -0.2
percent. Meanwhile, during the recovery
period from 1998 to 2010, Ontario grows at 3.1 percent but the rest of Canada
at 3.3 percent. Finally, since 2011,
while growth has slowed everywhere, the rest of Canada still manages to edge
Ontario out with average annual growth of 0.6 percent compared to 0.5 percent
for Ontario.
The long-term effect
of this on real per capita provincial government spending have accumulated over
the long term to generate a growing gap between Ontario’s and the rest of
Canada's provincial/territorial government health spending. As Figure 2 shows, from 1975 to 1989, per
capita provincial government health spending in Ontario was lower than the rest
of Canada but rises to close the gap. It
briefly matches the rest of the country and then after 1995 again falls below where
it has since remained. Indeed, since
2010 the gap has widened appreciably. In
2010, real per capita provincial government health spending in Ontario was
$4,213 compared to $4,491 in the rest of Canada - 6 percent lower. In 2019, it is forecast at $4,386 compared to
$4,742 in the rest of Canada – 7.5 percent lower.
Ontario – the largest
economy in Canada – on a per person basis basically spends less on its government
health system than the rest of the country.
While some of that might be ascribed to a greater population density and
economies of scale in providing health services, given that there appear to be constant
calls to addresses waiting times and shortages, it is unlikely the difference
is due to superior system performance combined with greater efficiencies. Moreover, that gap has been growing over
time. In other words, the wealthiest
economy in the Canadian federation is providing less spending per person when
it comes to public sector health care than the rest of the country. Some of the growing gap is the result of the more brutal impact of the two major recession periods on Ontario compared to the rest of the country but it is also a function of Ontario's poor fiscal management as well as its choices. More on how that difference pans put across
assorted categories of health spending in the next post.
