Our Neighbors To The North Are Cutting Back

Recently, we have been focusing on our neighbors to the south as we discuss issues of illegal immigration. But while we have been focusing our energies down there, something has been going on up in Canada. And it's big.

What is it, you may ask? Well, this: Soaring Costs Force Canada To Reassess Health Model. Oh, dear. Isn't this the model the Democrats claimed worked so well, and was one to emulate here in the States? Wasn't that the constant rallying cry to shove through Obamacare, whether we wanted it or not (and "or not" was what we wanted)? Were not those of us who tried to point out that there were very real problems with the Canadian system scoffed at, derided, and dismissed? Yes, yes we were.

Well, here's the thing. Once again, we were right, as the article mentioned above demonstrates:

Pressured by an aging population and the need to rein in budget deficits, Canada's provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.

Ontario, Canada's most populous province, kicked off a fierce battle with drug companies and pharmacies when it said earlier this year it would halve generic drug prices and eliminate "incentive fees" to generic drug manufacturers.

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit -- an idea that critics say is an illegal user fee.

And a few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery.

It's likely just a start as the provinces, responsible for delivering healthcare, cope with the demands of a retiring baby-boom generation. Official figures show that senior citizens will make up 25 percent of the population by 2036.

"There's got to be some change to the status quo whether it happens in three years or 10 years," said Derek Burleton, senior economist at Toronto-Dominion Bank.

"We can't continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.

"At some stage we're going to hit a breaking point."

Huh. Here Canada is having problems, and their relationship with drug companies seems to be a tad bit different from the one Obama has. That is to say, they are actively fighting them, and fighting FOR their citizens, as opposed to Obama making a deal with Big Pharma from the Get-go which definitely was in Big Pharma's favor. Yt, Canada is having problems:

MIRROR IMAGE DEBATE

In some ways the Canadian debate is the mirror image of discussions going on in the United States.

Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net.

Healthcare in Canada is delivered through a publicly funded system, which covers all "medically necessary" hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets, or some C$183 billion ($174 billion) last year.

Spending has been rising 6 percent a year under a deal that added C$41.3 billion of federal funding over 10 years.

But that deal ends in 2013, and the federal government is unlikely to be as generous in future, especially for one-off projects.

"As Ottawa looks to repair its budget balance ... one could see these one-time allocations to specific health projects might be curtailed," said Mary Webb, senior economist at Scotia Capital.

Brian Golden, a professor at University of Toronto's Rotman School of Business, said provinces are weighing new sources of funding, including "means-testing" and moving toward evidence-based and pay-for-performance models.

"Why are we paying more or the same for cataract surgery when it costs substantially less today than it did 10 years ago? There's going to be a finer look at what we're paying for and, more importantly, what we're getting for it," he said.

Other problems include trying to control independently set salaries for top hospital executives and doctors and rein in spiraling costs for new medical technologies and drugs.

Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked.

SEVENTY PERCENT?? Well, I don't have to be a Nobel Prize Winner in Economics to know THAT is not good (though these days, accomplishments have become passe - ahem):

"Our objective is to preserve the quality healthcare system we have and indeed to enhance it. But there are difficult decisions ahead and we will continue to make them," Ontario Finance Minister Dwight Duncan told Reuters.

The province has introduced legislation that ties hospital chief executive pay with the quality of patient care and says it wants to put more physicians on salary to save money.

In a report released last week, TD Bank said Ontario should consider other proposals to help cut costs, including scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care.

Those sound like some possible options, but the outcome is unclear:

WINNERS AND LOSERS

The losers could be drug companies and pharmacies, both of which are getting increasingly nervous.

"Many of the advances in healthcare and life expectancy are due to the pharmaceutical industry so we should never demonize them," said U of T's Golden. "We need to ensure that they maintain a profitable business but our ability to make it very very profitable is constrained right now."

Scotia Capital's Webb said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional. "(The public) will use the services more wisely if they know how much it's costing," she said.

"If it's absolutely free with no information on the cost and the information of an alternative that would be have been more practical, then how can we expect the public to wisely use the service?"

But change may come slowly. Universal healthcare is central to Canada's national identity, and decisions are made as much on politics as economics.

"It's an area that Canadians don't want to see touched," said TD's Burleton. "Essentially it boils down the wishes of the population. But I think, from an economist's standpoint, we point to the fact that sometimes Canadians in the short term may not realize the cost."

($1=$1.05 Canadian) (Reporting by Claire Sibonney; editing by Janet Guttsman and Peter Galloway)

Isn't that the single biggest issue right now? Once a social program has begun, people do not want to give them up? Isn't that what happened in Greece? Isn't that a big problem for the US, too? We continue to expand and extend programs that have massive benefits we cannot afford. For example, did you know in some states Unemployment Benefits were extended to 99 weeks? I'm sure you can do the math, but that's almost 2 years! Could that money not have been better used in a WPA sort of way? Or some other jobs-creation plan? There are claims that the EUC is actually expanding unemployment. That is, simply put, problematic.

But here's the biggest problem with the whole Canadian health care crisis compared to ours - our financial numbers were fudged. Only after the bill became a law did the REAL numbers start coming out, and they are NOT good. Check out what former CBO Director Douglas Holtz-Eakin stated recently:



Yikes. Again, this is what happens when a bill is rammed through without people bothering to read it first, filling it full of pork and giveaways, and expecting more service for less money. That is to say, it was fraught with problems from the beginning. We can only hope that before it is fully implemented, there is a massive overhaul or repeal.

I am all for people having health care, but as I have said before, let's be smart about it. Do our homework first. REALLY look at the numbers, get out of Obama's Big Pharma deal, and do right by all of our citizens, not corporations or political parties. Let Canada be a warning to us.