Written by Kathryn Nix
The United States isn't the only country in North America grappling with the fiscal problems caused by an aging population and mounting federal deficits-Canada faces a similar fate. The difference is that, while the United States just passed a $1 trillion-plus government overhaul of health care, incorrectly justified by claims that it will reduce health care spending, Canada's provinces are trying to figure out how to pay for their nationalized health care system, a major source of out-of-control growth in government spending.
Reuters reports that each province is scavenging for its own fix. In Ontario, the solution will be severe price controls for generic drugs. British Columbia is looking at a fee-for-service payment system. And Quebec implemented a new flat health tax. (enlarge)
This will just be the beginning of tightened belt straps for Canadians'. According to Derek Burleton, a 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."
Though the U.S. does not promise universal health care, government programs like Medicare and Medicaid threaten to create the same predicament Canada is facing in this country. In Heritage's 2010 Federal Budget Chart Book, we show that by 2052, these programs, along with Social Security, will consume all federal revenues. This means that any additional federal spending in crucial areas such as education and national defense will be completely reliant on deficit spending.
In the face of ever increasing costs in health care, the President and Congress passed Obamacare, which creates more reliance on government for health benefits by expanding current public health programs and creating new health entitlements. The Center for Medicare and Medicaid Services' Chief Actuary reports that this will actually increase health spending over the next ten years by $311 billion, thus doing nothing to avert the effects of skyrocketing health expenditures.
According to Reuters, Mary Webb, a senior economist for Scotia Capital, "said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional". Webb claims that "[the public] will use the services more wisely if they know how much it's costing." She's right-when patients follow and control their medical costs, they are more likely to make cost-effective choices. Unfortunately, Obamacare moves the United States one step closer to a Canadian-like system rather than a patient-centered one.
Kathryn Nix is a Research Assistant for the Heritage Foundation's Center for Health Policy Studies and the Roe Institute for Economic Policy Studies. She studies health care reform, entitlements, and doctors' and patients' issues.Follow Kathryn on Twitter @katenix927