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Doing it all except for what counts

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It seems that Alberta’s provincial government is fully committed to doing everything it can to keep provincial spending as low as possible. Everything, that is, except for the one thing that a growing number of economists and international studies are saying it should do.

Almost every Government of Alberta news release issued these days ends with some iteration of the phrases “spending responsibly” or “living within our means.” When Minister of Finance Doug Horner released the province’s third-quarter fiscal updates recently, he boasted at length about how the government’s commitment to responsible spending was clearly paying off, given that the province is on track to finish the fiscal year better off than originally budgeted by some $2 billion. Despite the fact that, as always, the current financial position has nothing to do with anything the government has done, and everything to do with the price of oil internationally, Horner seems determined to take the credit. And in this case, taking the credit means using our improved situation to justify his ongoing austerity program for public services and public servants.

In the same vein, Minister of Health Fred Horne recently told the Calgary Herald that rather than invest more money in health care, his government will continue to squeeze more value of the dollars it already spends on health. He warned Albertans to prepare for another year of restraint in health care, despite the fact that Alberta will be receiving an extra $1 billion in health transfers from the federal government over the course of this year. In the same interview, Horne suggested that increased efficiency comes not from investing more money, but rather from doing things differently.

He’s right, of course, but there is no indication that he is really interested in improving efficiency by doing things differently.

New research released by the Parkland Institute in the lead-up to this week’s provincial budget provides a clear recipe for how Alberta could save more than $1 billion in health care while improving the health of Albertans at the same time. Research and evidence from around the world has shown there is a direct link between the level of inequality that exists in a particular jurisdiction and the health of people living in that jurisdiction. The more unequal your society is, the more unhealthy it is. The more unhealthy your society is, the more you spend on health care.

There is also broad consensus among researchers that people in different income brackets access the health-care system in very different ways. A list of indicators generally referred to as the social determinants of health makes clear that income level and social status have a huge impact on your health and the type of interactions you have with the health-care system. Essentially, being poor makes you more likely to require acute care and hospitalization for injuries and conditions than people higher up on the income scale. In other words, the poorer you are, the more you are likely to cost the health-care system.

The Parkland fact sheet brings together these two realities to determine what impact reducing inequality in the province would have on provincial spending. What they found was that bringing Albertans in the lowest income quintile up to the income level of the next-lowest income quintile would result in significant changes in their health-care habits. Those changes would save our health-care system $1.2 billion per year. The improved health that would come from reducing overall inequality in the province, currently the most unequal in the country, could reduce annual health-care expenditures by up to $5.7 billion.

It’s not rocket science. The way governments around the world reduce inequality is by having progressive-tax systems and well-funded public services, and it would be no different in Alberta. That’s it. That’s the recipe for saving $1.2 billion to $5.7 billion per year in health-care expenses. Get rid of the flat tax and stop starving public services—the health of Albertans will improve significantly and the costs of front-line services will go down.

Of course, this provincial government is not likely to move on either of those fronts in Alberta Budget 2014, which makes me wonder to what degree their drive to cut costs is really about improving efficiency and outcomes, and to what degree it’s about an ideology obsessed with getting rid of public services and with not properly taxing the rich. That’s the degree to which this government is more interested in the private interests of a few wealthy friends than they are with protecting and promoting the public interest: they would rather fight for a dysfunctional status quo than take the simple steps required to actually turn things around. Shame. V

Ricardo Acuña is the executive director of the Parkland Institute, a non-partisan, public policy research institute housed at the University of Alberta. The views and opinions expressed are his own and do not necessarily reflect those of the Institute.

 

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