Increase in MSP Premiums Won’t Fix Health Care

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Appeared in the Trail Daily Times

Last week, the BC government announced it was increasing Medical Service Plan (MSP) premiums by approximately six per cent in 2010 to help fund rapidly growing health care costs. The government also pledged to keep increasing taxes for British Columbians through annual increases in MSP premiums to match continuously increased health care spending.

While the government may claim it needs the extra revenue for health care, the reality is this tax increase will do nothing to improve health care for British Columbians, and in fact, it’s the wrong approach altogether.

Consider for a moment the reality within which the BC government is operating.

Canada maintains the developed world’s second most expensive universal access health insurance system on an age-adjusted basis. Within Canada, provincial health expenditures in BC are only slightly below the national average on a per person age- and sex-adjusted basis. In spite of these high expenditures, British Columbians endure relatively poor access to medical professionals and medical technologies, are cared for using far too many old and outdated pieces of medical equipment, and must wait for health care in some of the longest queues for treatment in the developed world.

The fact that British Columbians are spending more and getting much less than their counterparts in other developed nations makes clear the reality that more money is not the answer to improving health care. Yet the provincial government seems to have concluded just that by committing to increase health spending in coming years, in part supported by increased taxation through MSP premiums, while outlining no plans to reform the health care system.

This decision stands in stark contrast to the state of affairs in neighbouring Alberta where activity-based funding of hospital care is part of the reform plan for 2010—a change that will provide Albertans with more and better health care services for the dollar.

The decision also stands in contrast to how other developed nations have improved access to publicly funded health care services and made better use of health care dollars by employing private competitive providers in the delivery of publicly funded services, or by introducing cost sharing for publicly funded services.

Any of these three policies would have allowed the provincial government to make better use of the already generous financial resources the health care system has at its disposal.

British Columbians should also not be fooled into thinking that the MSP premium increase will help protect health care or make health care more sustainable.

Importantly, the MSP premium increases will only ease the budgetary pressure of health expenditures, and do not cover the lion’s share of increases in provincial health spending. According to the budget update, MSP premiums provide enough revenues to cover a little less than 12 per cent of expenditures by the Ministry of Health Services. For 2010/11 and 2011/12, budgeted increases in MSP premium revenues will cover less than one-sixth of the budgeted increases in Health Services’ expenditures.

Further, since MSP premiums are a tax partially linked to income, with no link between the cost of the premium and an individual’s use of care, increases to the MSP premium have no impact on the demonstrably unsustainable growth in the cost of the health care system. Health spending growth will not be reduced by the increase in MSP premiums because the change in premiums does not encourage individuals to make more informed decisions about accessing the health care system. Nor does it encourage health care providers to operate more efficiently.

And MSP premiums (taxes) cannot be perpetually increased to help pay for health care without having a significant impact on economic growth (and thus incomes, unemployment, and living standards).

In total, the MSP premium increase asks British Columbians to pull even more money out of their pockets in the name of Medicare but offers them little in return. If the goal was to ensure the availability of a high quality universal access health care system for British Columbians, enacting sensible reforms to improve the efficiency and quality of the health care system as other nations have done and at least one other province is planning to do would have made a lot more sense.

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