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Public Health Spending and Pandemic Preparedness

Summary:
As the first wave of the COVID-19 pandemic in Canada begins to peak, there have several discussions and perspectives offered on how prepared Canada was for this pandemic as well as whether we moved quickly enough to address the situation. Obviously, the situation has improved markedly given that there is now time for these retrospectives and a not insignificant amount of finger pointing. In part, this is shaping the approach to moving forward by at least Alberta’s Premier who is instructing his provincial health officials to proceed with new drugs or treatments without waiting for lengthy bureaucratic approval.  One suspects the other provinces may be doing the same but more quietly given what is now perceived as a long lag time by the federal government in moving to nip the spread of

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As the first wave of the COVID-19 pandemic in Canada begins to peak, there have several discussions and perspectives offered on how prepared Canada was for this pandemic as well as whether we moved quickly enough to address the situation. Obviously, the situation has improved markedly given that there is now time for these retrospectives and a not insignificant amount of finger pointing.

In part, this is shaping the approach to moving forward by at least Alberta’s Premier who is instructing his provincial health officials to proceed with new drugs or treatments without waiting for lengthy bureaucratic approval.  One suspects the other provinces may be doing the same but more quietly given what is now perceived as a long lag time by the federal government in moving to nip the spread of the pandemic in the bud as well as shortages in what was thought to be a national stockpile of critical supplies.

There appears to have been weakness in our efforts at preparations ranging from having plans that were not followed to lack of critical supplies of personal protective equipment at both the federal and provincial levels. According to a story in the Toronto Star, federal Health Minister Patty Hajdu essentially agreed with this but laid the blame on underfunding public health preparedness.  As the key part of the story reads:

Hajdu said the “exact numbers” of medical equipment in the stockpile being distributed to provinces changes “day to day as we dispense equipment across the country.”  However, she acknowledged that “we likely did not have enough. “I think federal governments for decades have been underfunding things like public health preparedness and I would say governments all across the world are in the same situation.

Toronto Star, Monday April 13th, 2020

I think this latter statement is quite interesting because it pretty much admits that not enough has been spent on public health measures at least by the federal government.  I suppose the first thing to do is look at health spending numbers to see how public health spending has evolved over time.  I think this is worth doing for the period since 1975 to compare with the post 2000 period that is marked by two major separate public health events relevant to the COVID-19 crisis – SARS in 2003-04 and H1N1 in 2009-10.   There are several charts provided below.

Figure 1 plots real per capita government public health spending (in $1997) – one of the nine categories of public sector health spending compiled by the CIHI National Health Expenditure Estimates – for the period 1975 to 2019 (with 2018 and 2019 being forecasts).  Of course, health is largely a provincial responsibility so It is done for both the provincial-territorial governments as well as the federal government.  Both federal and provincial government public health spending has grown over time with provincial-territorial government spending per capita substantially higher.

Slide1

However, the balance between the two levels for public health spending has remained remarkably constant since 1975 with about an approximately 80 percent/20 percent split which of course suggests that the federal government has kept pace with the provinces when it comes to spending increases.  However, during the 2000 to 2010 period, provincial-territorial shares reached as high as 85 percent before declining to about 82 percent at present. Thus, over the long haul, provincial spending has been growing a bit faster than federal but not always.

From 1975 to 1999, real per capita provincial-territorial government public health expenditures ($1997) rose from $41 to $101 while federal spending rose from $9 to $23 - with an average annual increase of 3.9 percent in real per capita spending for both levels of government.  From 2000 to 2010, P-T spending rose from $103 to $158 while federal spending rose from $25 to $32 with average annual increases in real per capita spending of 4.3 percent and 3.7 percent respectively.  From 2011 to 2019, real per capita spending rose from $156 to $172 at the provincial territorial level and $33 to $37 at the federal level with annual average increases of 1.7 percent federally and 1 percent at the provincial territorial level.  Figure 2 provides the annual average growth rates by time-period for our two fiscal tiers.

Slide1

So, it appears that while per capita government public health spending is up since 2000, it was a short-term response to the SARS and H1N1 shocks and it has essentially flattened since 2011.  As memory faded and with financial pressure in the wake of the 2008-09 recession, the growth rate of real per capita spending dropped considerably though oddly enough, the federal government’s spending increases exceeded those of the provinces.  While in retrospect, both levels of government should have been spending more, the federal government was increasing its spending more than the provinces.   

However, the provinces are a heterogeneous bunch when it comes to health spending in general and there are substantial differences among them in terms of what they spend on. In the case of public health, what is remarkable is that over the period 2000 to 2019, real per capita provincial-territorial spending on public health rose from $103 to $172 (in $1997) but in Ontario it went from $97 to $226.  Indeed, while Ontario is generally at the bottom in terms of total public sector per capita health spending across the provinces, when it came to public health spending it was near the top.  

Between 2000 and 2019, while its total real per capita health spending rose by 39 percent, Ontario’s real per capita public health spending grew by 133 percent – the largest increase of all nine expenditure categories.  By comparison, its hospitals grew 14 percent and drugs 59 percent. Meanwhile, British Columbia – which has been doing very well in the fight against COVID-19 - over the same period saw its real per capita public health spending grow from $138 to $209 – an increase of 52 percent as opposed to Ontario’s 133 percent.  True, BC started from a higher base but Ontario has more than caught up.

So, there are many questions to be answered here.  Did the federal government spend enough to prepare?  Probably not.  Did the provinces collectively spend enough?  Could they have spent more?  Sure, but some provinces did indeed spend a lot more on public health and yet their response has not been any better than those that spent relatively less.  In the case of Ontario, one really should wonder where did all that public health money go given its less than stellar performance during the current pandemic.  And in the case of Ontario, the flat lining of real per capita spending hospital spending since 2010 has not helped matters much either.  Is it a case of planning a public health pandemic response that like at the federal level has not been followed?  Has the money simply gone into very nice wages and salaries or lucrative consulting contacts? As any health economist will tell you, it is not just how much you spend on health that matters but how you spend it. 

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