fpinfomart.ca

Funding health care, cutting taxes not mutually
exclusive: C.D. Howe Institute study: Government priorities key in
deciding strategy
National Post
Fri 18
Jun 2004
Page: FP4
Section: Financial Post: News
Byline:
Jacqueline Thorpe
Source: Financial Post

The Canadian government could cut taxes significantly
and maintain the health care system without slipping into deficit, but only if
it reduces spending elsewhere or makes the system much more efficient, an
economic think tank said yesterday.

"It appears that Canada could afford its public health-care system at lower
levels of taxation by running the system more efficiently and by shifting
resources away from other public services that are inefficient or of lower
priority," Yvan Guillemette and Jack
Mintz, of the C.D. Howe Institute, said
in a note on the health-care debate in the ongoing election campaign.

"It would certainly be hard to cut taxes and spend more on health care if
such efficiencies in public services cannot be achieved," they said.

Both the Liberals and the Conservatives have promised to pour billion of
dollars into the health-care system but Stephen Harper's Conservatives have
also promised a 25% middle-income tax cut -- and to hold the line on spending
in areas other than health and the military.

Paul Martin, the Prime Minister, has said it would be impossible to cut
taxes and spend more on health care without pushing Canada into deficit.

No necessarily so, said C.D Howe. Mr.
Guillemette said a study of OECD countries show only a loose correlation
between government spending on health care and government tax revenue.

Governments with higher tax revenue do tend to spend more on health care
but there are many exceptions. Austria, Belgium, Finland, Greece, Italy,
Luxembourg and the Netherlands all raise more revenue than Canada while
spending less per capita on health care. Several countries, including
Portugal, the Czech Republic, Britain, Australia and the United States, spend
between 6% and 7% of their gross domestic product on health care, just like
Canada, but at much lower levels of taxation.

Proportions of total health care expenditures covered by governments vary
widely across countries, and depend on many things, including whether private
systems are allowed and the age of the population.

The United States, for example, has the most expensive system, with total
costs equal to 13.9% of GDP in 2001, but the government only covers about 45%
of the costs.

By contrast, Sweden has a two-tier system that covers about 85% of the
costs while Denmark, Iceland, Norway and Britain all cover more than 80% of
the costs.

Canada was on the low side among OECD countries, covering 70% of total
public and private health-care costs.

Some countries, such as Germany, spend more on health care (8% of GDP)
because their populations are older.

As well, some governments may simply spend less because they run a more
efficient system, C.D. Howe said. This
seems to be the case with Sweden, which achieves better health care results
than Canada at a lower private-public cost.

"Denmark, with the same per capita GDP as Canada in 2001 and a somewhat
older population, spends 11% less on public and private health care than
Canada and the government covers over four-fifths of the cost," said C.D. Howe.

In short, the amount of government revenue devoted to health care is all
over the map, as are levels of taxation and different combinations of private
and public health care.

Much depends on government priorities and that should form the basis of the
health-care debate, C.D. Howe said.

Edition: National
Story Type: Business
Note:
Decision Canada; [email-masked]
Length: 548 words