Romanow report

You get what you pay for
November 28, 2002

OTTAWA--The Romanow report is a clear rejection of the status quo and a pragmatic step in the right direction to secure the future of public health care, according to CCPA economist Armine Yalnizyan.

Yalnizyan applauds Romanow's recommendation that the CHST be scrapped in favour of a dedicated health fund which would allow greater accountability for health care expenditures. She also cites the national drug formulary as an important way to help control pharmaceutical costs.

Bruce Campbell, Executive Director of the CCPA, applauded the report's strong recommendation to protect Medicare from international trade agreements. "He clearly followed the recommendations of the CCPA's report to the commission on globalization and Medicare."

Yalnizyan points out, however, "The old saying 'you get what you pay for' has never been more relevant. The report is strong on process but weak on money."

While Romanow points to progressive taxation as the only sustainable way to fund Medicare, the report is silent on where the money comes from. "This is not the time to be coy," says Yalnizyan. Furthermore, the $3.5 billion injection into the health care system for this year is substantially less than recent estimates, including the Kirby report and Romanow's own backgrounder on these issues.

The Romanow report also does not address the issue of chronic care, a glaring omission at a time when we are faced with the prospects of an aging population.

Given this renewed commitment to a strong federal role, Yalnizyan says, "The Prime Minister and federal leadership contenders should take note: there is a short window of opportunity to see meaningful movement. Without immediate action, you can kiss a national health care program good-bye."

The Romanow Report: Hits and Misses

The Hits:

Rejection of the CHST - The report suggests putting all federal contributions for health care into a specific cash transfer to the provinces. This will ensure that amounts spent on health care can be tracked so that spending is consistent with the principles of the Canada Health Act.

Breakthrough in Potential for Cost Controls on Drugs - The report builds on the recent announcement to assess clinical and cost effectiveness of new drugs at the federal level through the Common Drug review. It recommends the development of a National Drug Formulary, signals the potential for the federal government to achieve cost savings for the provinces by bulk buying, and raises the need to review patent legislation.

Paying Progressively - Progressive taxation (income taxes) is stressed as the only justifiable and sustainable source of financing for health care. Earmarked, or dedicated, taxes are explicitly ruled out, consumption taxes (the GST) are implicitly ruled out.

Limiting Commercialization - Bringing diagnostic services into the definition of publicly insured services covered by the Canada Health Act will limit the rapid commercialization of these medically necessary procedures. It is not clear if this will challenge recent developments in Ontario, Alberta and British Columbia, where free-standing investor-owned clinics have recently been announced.

Protecting Public Health from Trade Pressures - A clear echo of the CCPA backgrounder for Romanow, the report demands that the federal government take clear and immediate steps to strengthen current protections for health care in trade agreements and to prevent future reforms to expand Medicare from being challenged. It also states that Canada should work with other nations to protect public health provisions from developments in global trade agreements that view health care as a commodity rather than as a basic human right.

The Misses:

Lowballing the Need for More Money - Romanow's recommendation for an immediate reinfusion of $3.5 billion in the coming fiscal year, rising to $6.5 in three years may be optimistic about what that money can achieve to sustain public health care. In order to avoid rapid commercialization of basic health care services, investments in capital and labour need to be made now. The Kirby report called for $9 billion more effective immediately ($4 billion for existing hospital and doctor services, and $5 billion in new initiatives, requiring new resources). Romanow's own backgrounder on the issue suggested at least $7 billion was required to bring the feds back to their historic "bargain" with the provinces on medicare of 25% of health spending.

How are we paying for it? - No comment from Romanow. Unlike the Kirby report - which at least acknowledged you need to pay for improvements, there is no mention of where even the minimalist $3.5 billion will come from. (As noted, he reinforces income taxes as the appropriate source, and suggests that Canadians are willing to pay more, but does not recommend that taxes should increase.) The Finance Minister estimates that the federal surplus will be $1 billion this year. Where will the new funds come from?

No blueprint for the future with an aging population - Chronic and continuing or long-term care needs for the frail elderly and disabled are absent from this vision of reform. This is a glaring gap given that major health reforms occur only once in a generation, and the aging of the baby boomers needs to be planned for.

No direction on human resource planning - The report ignores that collective agreements recently signed with doctors and registered nurses will cost provincial treasuries a minimum of $2.5 billion over the next two to three years. This is the price of labour shortages: you have to pay more to hang on to who you have. The report recommends that we do not deal with our own labour shortage by poaching health professionals from other nations, but makes no investment in training and upgrading skills of existing and new health care workers

Integration needs Information - Moving to a smoother continuum of health care requires better information handling. While acknowledging the need for electronic patient records, and lauding the plans in the Western provinces to reduce waiting lists through better information handling, there is no new money behind this idea to make it occur across the country.