Calgary·Analysis

We need to have a 'difficult conversation' about Alberta's health-care costs

The governing New Democrats have promised to end deficit spending by 2023-24. A potentially big part of meeting that goal likely involves slowing health spending.

Spending has been soaring — particularly on our oldest patients — and at this rate, something's got to give

Alberta's health-care spending, in particular on older patients, has rapidly grown over the past decade. (Shutterstock/Bright097)

If you talk with enough health-care thinkers about why Alberta has historically spent so much on health, you'll hear the same answer: We could afford it!

Whatever the rationale, we spent. And then we spent some more. More than just about every other place in Canada.

But now, Alberta is not as flush as it once was.

And plummeting oil prices have politicians and bureaucrats sharpening their budget pencils — looking to bend the curve of spending on health care. To reduce the trend toward ever rising costs.

"We simply can't afford it," said Fiona Clement, the Director of the Health and Technology Assessment Unit at the University of Calgary.  

"We need to think very critically about how we are using the available budget that we have — and what are we getting for that," she added.  

On Thursday, when the NDP reveals its budget, we will find out how much money we are planning to spend on health care. Where it's going. Who gets what. All this in light of the government's promise to end deficit spending by 2023-24.

But in the meantime, it's worth looking at the history of our health-care spending, and how that brought us to where we are today. Plus, where the most money gets spent, and who it gets spent on. And how we compare with our neighbours in British Columbia. They spend less.

So what can we do to change what we do?

The price of health care

Last year, the province's total spending was almost $56 billion.

That included everything from schools, roads, fighting fires and the $1.36 billion the province spent in interest payments for our growing debt.

Of that $56 billion, $21.4 billion went to pay for the province's health-care bills.

It's more money than Alberta brings in from all personal income taxes.

On an individual level, the Canadian Institute for Health Information (CIHI) forecasted total health spending in Alberta would have reached $7,329 per person by last year.

Per-capita health-care spending by province in Canada in 2017. (Canadian Institute for Health Information)

Only Newfoundland and Labrador spends more among the provinces. But when economists adjust for age and gender differences across provinces, Alberta comes out as the biggest provincial spender.

And health care continues to gobble up more and more of government revenue.

As a percentage of the budget, its soared over the past 30 years. In 1980, health spending accounted for about 18 per cent of the Alberta's total budget. 

And the price tag for health care is expected to grow at a rate of two times faster than spending on the rest of the government, according to the province's auditor general.         

At the the current rate, the Auditor General predicts, public dollars spent on health care, relative to other public services, will likely surpass all other government spending by 2029.                                 

The Parkland Institute points out that health care spending has become a larger proportion of the province's total spending because previous Progressive Conservative governments made big cuts to other public services.

Despite the nuance — and however the math adds up as a ratio — Alberta still spends a lot on health care.

So, is it worth it?

But how to measure results?

You'd expect with all that spending, Alberta would have some pretty impressive health outcomes.

In a comparison with other provinces and 15 other similar jurisdictions, Alberta ranked 13th, according to report card released in 2015 by the Conference Board of Canada.

And that money doesn't translate into the shortest wait times for treatment, according to analysis done by the the Fraser Institute.  

While some point to Alberta's health care performance as an indication of bureaucratic inefficiency in the system, others caution against reading too much into the often-cited health care outcomes.

"Top line figures, they can make really good headlines — but it's easy to actually draw incorrect conclusions," said Chris McCabe, a longtime health economist and executive director and CEO of the Institute of Health Economics.

Chris McCabe is a longtime health economist and executive director and CEO of the Institute of Health Economics. (Institute of Health Economics/YouTube)

McCabe says it's not fair to judge Albertans' overall health by looking only at health outcomes — life expectancy, infant mortality, cancer deaths, etc. — and spending.  

Other social factors, such as housing, education and genetics (how many people are prone to get diabetes in Alberta, for example) also play a role in disease rates and life expectancy.   

Plus, McCabe argues it's not a bad thing that Alberta spends so much on health care in comparison with the rest of the country.

"That spending," he said, "is a reflection of a reasonable expectation of a historically very wealthy province that's had a lot of money and it chosen to invest it in expanding its health care delivery capacity, addressing challenges around rural vs. urban access … [and] adopting newer technologies."

Others, however, are skeptical — pointing to British Columbia's healthier population and lower per-capita health-care spending.  

But it's the difference over who the money is being spent on, that's really interesting.

Alberta vs. British Columbia

British Columbia and Alberta make for a good comparison.

B.C. spends $19.8 billion on health care, while Alberta spends $21.4 billion per year — more as a total, and more per capita.

It wasn't always the case.

Back in the year 2000, Alberta and B.C. spent about the same on health care for patients of all ages.

If anything, B.C. spent slightly more on its oldest residents.

Estimate of total per-capita provincial government health spending, by age of patient, in the year 2000. Data from the Canadian Institute for Health Information. (Robson Fletcher/CBC)

But data from the Canadian Institute for Health Information shows that the provincial government started accelerating spending on older Albertans in 2004.

And it hasn't taken its foot off the pedal.

By 2015, Alberta's health spending on its oldest residents had reached a rate nearly double that of B.C.

To see the difference, compare the chart above with the one below.

Estimate of total per-capita provincial government health spending, by age of patient, in the year 2015. Data from the Canadian Institute for Health Information. (Robson Fletcher/CBC)

Health economist Chris McCabe is not surprised by how much more Alberta spends.

"We're a wealthier province," he said.

During the boom, in particular, Alberta stepped up its spending on seniors.

"There was a legitimate expectation that we look after our own and that we spend some of our wealth on looking after our own," McCabe said.

And while the public may grouse about health spending, "they also want access to innovative technologies, they want us to be at the leading edge of health care" he added.  

Alberta's health minister, for her part, says she's "proud" of how well her province takes care of seniors, when compared with B.C.

Health Minister Sarah Hoffman is "proud" of how much Alberta spends on seniors' health care. (CBC News)

"Seniors," said Sarah Hoffman, "shouldn't have to choose between being able to buy a present for their grandchildren at Christmas or pay for their medication."

That's one way to frame it. 

Still, Alberta is decidedly more generous than B.C. when it comes to paying for drugs for people more than 65.

Alberta provides premium-free coverage for all its seniors, regardless of income. Seniors pay 30 per cent of prescription costs to a maximum of $25 per prescription.

In British Columbia, seniors have to shell out for co-payments, deductibles and premiums.

Alberta Health estimates that a senior suffering from a chronic disease in Alberta pays about $513 per year, while in B.C., a senior can expect to pay $689 for out-of-pocket drug costs.

British Columbia's Ministry of Health says it can't verify Alberta's estimate. As well, the province moved recently to make prescription medicine more affordable for low-income individuals.

But Alberta's more generous spending on seniors is not limited to medication costs.

Alberta spends more on residential care than B.C.

We also pay our doctors and nurses more than other provinces.

Alberta Health says that the number of home-care clients in the province has increased by almost 10,000 over the past four years. The shift from hospitals to home care will no doubt save money.

And Alberta is likely going to need the savings to deal with the wave of older people coming.

Aging Population

Right now, Alberta has a relatively young population in comparison with the rest of Canada.

About one in nine Albertans is a senior.

By 2041, that number is expected to increase to one in five. That will have consequences.

Last year, the province's Auditor General warned that Alberta's aging population will add another $825 million to the province's health-care bill by 2020 — and $3.80 billion by 2030

The health minister agrees that more spending on health care is in the cards.

"We're definitely looking at increases, but increases that are more manageable and sustainable over the long run for current and future generations," said Hoffman.

How sustainable is the question.

Calling it "trouble on the horizon," the Canadian Taxpayers' Federation worries that Alberta's increasingly older population will add significantly to health costs.  

Colin Craig, the federation's Alberta director, believes Alberta needs to consider expanding private health care — and thus shift some of the costs of health care away from taxpayers.

Colin Craig, a director with the Canadian Taxpayers Federation, says those in charge of Alberta's health-care system need to figure out how to cope with the coming wave of seniors. (Justin Pennell/CBC)

"We are foolish to continue to keep up this sort of Berlin Wall in between Alberta. And allowing a private sector option … would help take some of the pressure off the public system as well," said Craig in an interview with CBC News.  

That's not likely to happen under an NDP government.  

Hoffman says Alberta's public system is the most sustainable and fair model.  

"I'm proud of the fact that we have a health-care system that works to take care of each other instead of shifting more and more of the burden to individuals," she said, when asked about the different levels of spending between B.C. and Alberta.

Private or public, health-care system is undergoing change.

Is Alberta's health spending sustainable?

The NDP have embarked on a number of reforms, including increasing home care and long-term care as solutions to reduce hospital stays to reduce costs.

It will take time to calculate the long-term effects and consequences of these changes.

And the pressures are real.

Last year, the auditor general warned that, "further funding increases in line with those of the past decade may not be possible."

The AG's report concluded that "profound changes will need to be made" to Alberta's health-care system.

Economist Trevor Tombe agrees, especially with an aging population.

"It's going to require government revenue, or it's going to require fewer services being provided elsewhere, or it's going to require changing the way we deliver health care," said the associate professor of economics at the University of Calgary.  

"These are all difficult conversations to have — but it's going to become increasingly important."

Those conversations have begun.

What role do doctors have?

The governing New Democrats have stressed that bending the curve of health care costs is key to ending all the red ink in Alberta by 2023-24.

And the doctors who literally take Albertans' vital signs know it.

While they make more than the national average, doctors in Alberta agreed two years ago to a deal that will probably save the province $500 million over two years.

Dr. Ted Jablonski, a family doctor in northwest Calgary, says he's increasingly aware of the the desire to slow the growth of health spending.

"I think we have to look as a province where can we gain efficiencies, where can we tighten our belts and still have people be healthy," he said.

Dr. Christopher Naugler, who heads the department of pathology and laboratory medicine at the University of Calgary's Cumming School of Medicine, says he's witnessed an evolution over his career.

Dr. Christopher Naugler is the head of the department of pathology and laboratory medicine at the University of Calgary's Cumming School of Medicine. He says doctors are increasingly aware of economic pressures in the health-care system. (Brooks DeCillia / CBC)

He says no one talked about the cost of public medicine when he was training to be a doctor. But that's changed.

"There's gradually been a recognition over time," said Naugler, "that fiscal responsibility for maintaining the health of the system is a shared responsibility."

"With a patient in front of you, most physicians are not thinking about the cost of care. They are thinking about doing the best for that patient," added Naugler.   

"But, I think, as a group, physicians have some social responsibility to ensure the sustainability of the system."

Where to from here?

We may get a better sense of changes to the health-care system in this week's provincial budget.

And as part of our ongoing special CBC Road Ahead budget stories, we will look at some specific things Alberta is already doing to bend the curve of health spending.


Calgary: The Road Ahead is CBC Calgary's special focus on our city as we build the city we want — the city we need. It's the place for possibilities. A marketplace of ideas. So. Have an idea? Email us at: calgarytheroadahead@cbc.ca


More in the series:

About the Author

Brooks De Cillia

CBC journalist

Brooks DeCillia is a longtime journalist. He was a national reporter with CBC News for a decade. He can be reached at: brooks.decillia@cbc.ca.

With files from Robson Fletcher

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