A cross-border health care crisis

If Barack Obama were elected Prime Minister of Canada, how would he fix health care? It is not an idle question. American politics is necessarily interesting to Canadians for several reasons. It's inherently fascinating, even horrifying, because it's so exuberant. In American politics things actually happen, whereas here you get the feeling that if Christ were to return in glory, commentators would assess its impact on Tory prospects in Quebec.

Also, American politics affects what the hyperpower might do next, interesting to everyone but especially its largest trading partner and closest neighbour. And finally, while in many ways unique, the U.S. also shares many traits and some public policy problems with Canada. Including the crippling stress of public health care on the government budget.

I know, I know, people say the U.S. doesn't have a public health care system. It's time to wonder what else such commentators don't know, since Medicare and Medicaid already consume 20 per cent of the American federal budget, with much worse to come.

Don't take my word for it. I'm cribbing here from a Nov. 4 talk by Dr. Cindy Williams, sponsored by the University of Ottawa's Centre for International Policy Studies. She's a senior research scientist in the MIT security studies program and former Assistant Director of the Congressional Budget Office with a PhD in mathematics, so my guess is she got the numbers right.

By comparison, under the heading "Federal transfers in support of health and other programs," the Canadian federal government only spends about $33 billion out of $240 billion, or around 13 per cent, which includes support for higher education as well. On the other hand, American states are better off than Canadian provinces: Comparing the two most populous, in California "Health and Human Services" takes around $40 billion of $144 billion in spending or 28 per cent whereas in Ontario it's around $40 billion out of $96 billion or 42 per cent. But put the two levels together in either country and the result is alarming in a strangely familiar way.

Especially as Ms. Williams, who I suppose I need to add was not there to shill for the Republican party, went on to show us a very scary projection by the Congressional Budget Office of what would happen to the U.S. federal budget if current trends continued and program eligibility conditions were maintained. (You can see for yourself, at www.cbo.gov/ftpdocs/88xx/doc8877/12-13-LTBO.pdf.) Compare that to recent Fraser Institute projections of our provincial budgets, and weep.

Ms. Williams went on to point out that the United States has managed its fiscal affairs in the last quarter-century, to the extent that it has managed them, primarily by steadily reducing defence spending from nearly 10 per cent of GDP in 1968 to under five now. Despite another Canadian myth, defence only gets 22 per cent of the American national government budget, one percentage point more than Social Security, while "Other Mandatory" (mostly food stamps, unemployment insurance and public pensions) gets another 13 per cent of federal spending and interest a further seven. But as health care grows, the U.S. will among other things have to surrender any ambition to be the guardian of world order to keep funding middle class entitlements. It seems a high price to pay.

I asked at the outset what Barack Obama would do about Canadian health care. In fact I don't even know what he'll do about the American stuff since during the election he promised a massive expansion of a system already threatening the federal government with insolvency and abdication of its core responsibilities. Yes, he also said he'd go through the budget line-by-line eliminating waste. But I downloaded the detailed "Appendix" to the "Budget of the United States Government Fiscal Year 2009" and it's 1,314 pages long. If Mr. Obama can get through one page an hour deciphering the items and making intelligent judgments about what to cut, by how much and how, and devotes 10 hours a day to it seven days a week despite a few other duties attendant on the presidency, he'll be at it from Inauguration Day until late on the morning of June 1, so after lunch he can start trying to get Congress to go along with his cuts. Which will either come from the 54 per cent of the budget that's entitlements or won't make much difference. And either way won't alter the lethal long-term trends.

If he were in charge in Canada, he'd have a remarkably similar problem and dismal lack of solutions. Which surely tells you something about the sustainability of public health care. And politicians who promise to save it by expanding it.

[First published in the Ottawa Citizen]