No mystery behind crisis in Ontario hospitals

May 6, 2002

The claim that health spending in Ontario is out of control has no factual basis, according to a study released today by the Canadian Centre for Policy Alternatives' Ontario Alternative Budget Project.

The research paper, entitled "Ontario's Health Spending: Bleeding Our Hospitals," contains several important findings:

  • Contrary to much-repeated mythology, health spending in Ontario is not out of control. Nor is it taking a bigger share of the economic and fiscal pie. Health care spending has increased as a share of total government program spending, but only because all non-health care spending has been reduced or flat-lined.
  • Measured as a share of the Ontario economy, provincial health care spending has dropped from 6% of GDP in 1994 to 5.8% of GDP in 2001.
  • The government's Health Services Restructuring Commission was an enormous drain on health care budgets. Between 1994-95 and 2000-01, 51% of the cumulative net increase in hospital spending went toward the costs arising from hospital restructuring. Nothing better illustrates the folly of the government's failed hospital experiment than the fact that nearly $2 billion has been spent on the costs arising from closing hospital beds, shutting down hospitals and firing health-care workers. There is no mystery behind the crisis in Ontario hospitals.
  • The paper estimates that more than $500 million has been spent on severance and benefit costs for hospital employees who were terminated as a result of orders by the government-appointed Health Services Restructuring Commission.
  • And while hospitals did receive increased funding, they only got 25% of the increase in annual health spending between 1994-5 and 2000-01. As a result, the hospital share of the health operating budget has shrunk from 41% in 1994-95 to 37% in 2000-01.

The paper provides a breakdown of Ontario's health spending under the current Conservative Government. It shows how badly Ontario hospitals were hit and how taxpayers are paying hundreds of millions of dollars for the government' failed experiment in restructuring, instead of for real health services. And it demolishes the claim that health care in Ontario is unaffordable.