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Health as if everybody counted blog

Life A.D. (After Drummond), Part 2: Structural adjustment for Ontario?

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
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on Monday, 19 March 2012
in CHNET-Works!

On February 15 the Government of Ontario released a far-reaching report on reorganizing public service provision in response to the budget deficits that followed the post-2008 recession. The central theme of the report was that “just to meet the government’s goal of a balanced budget seven years hence, the government will have to cut even more deeply from its spending on a real per-capita basis, and over a much longer period than the Harris government did in the 1990s, without the option of an immediate deep cut in social assistance rates” (p. 121). Ontarians will remember that the Harris government cut those rates by 21 percent almost immediately after coming to power. Despite some increases, in 2009 they remained (depending on the type of household receiving assistance) between 17 and 38 percent lower than in 1996 after adjusting for inflation, according to the National Council of Welfare.

The Commission says much that is important and worthwhile about health care in Ontario, starting with the recognition that Ontario does not really have a health care system, but rather “a series of disjointed services working in many different silos” (p. 152), and that Ontario health care does not perform well based on international comparisons. Well grounded hypothetical descriptions of patient trajectories spotlight shortcomings in health care performance (pp. 153, 159, 164), measured against what ought to happen as a matter of routine. The report makes a compelling case for improving coordination among the silos, through measures both large and small, and making the non-system’s current approach to complex and chronic conditions (the management of which is also very costly) more effective – all of which should have been accomplished long ago, for reasons unrelated to cost. The report urges “aggressive” negotiation with the Ontario Medical Association on compensation (p. 189) – bringing to mind Robert Evans’ long-standing insistence that "cost containment is in aggregate income control, by definition" – and, perhaps more importantly from a health policy perspective, insists on moving “critical health policy decisions out of the context of negotiations with the Ontario Medical Association and into a forum that includes broad stakeholder consultation” (p. 185).

life-ad-part-2-pic-1 A leaner, meaner Ontario: Locked out workers at the Electro-Motive plant in London, Ontario, January 2012. Photo: CAW Media; reproduced under a creative commons licenceAlthough such changes are overdue, hard questions remain unanswered. The Commission proposes to strengthen Ontario’s 14 Local Health Integration Networks (LHINs, the province’s variation on regional health authorities) so that they can improve coordination among silos and health care management in general. But can these entities accomplish such critical tasks as ensuring that best practices are rapidly adopted province-wide? What are the pitfalls of specifying that the accountability of LHINs, currently with no requirements for public participation, is to the Ministry of Health, as per the Commission’s recommendations, rather than to the clients they serve? And the proposed transformation of an organization called Health Quality Ontario, now an advisory body, into “a regulatory body to enforce evidence-based directives to guide treatment decisions and OHIP [Ontario Health Insurance Plan] coverage” (p. 186) could be a dream or a nightmare. Since “nothing works” is a fiscally attractive conclusion, we can imagine immense pressure to compromise transparency and scientific integrity, and ignore standard of proof issues, in the interests of cost containment.

The report further acknowledges the importance of social determinants of health: “Socio-economic factors such as education and income explain 50 percent” of population health outcomes, and the physical environment another 10 percent (p. 132) although the percentages, drawn from a Canadian Senate Committee report, appear to be guesstimates and no supporting evidence is provided. This acknowledgement is ironic, to say the least, given what the Commission has to say about social policy.

The Commission’s proposed 0.5 percent limit on annual spending growth for all social programs means that no increase in social assistance rates is envisioned, despite the decline from mid-1990s levels. In fact, the Commission proposes slowing the provincial takeover of social assistance costs downloaded to municipalities during the Harris era (p. 483), prolonging the nineteenth-century practice of leaving “poor relief” to local governments. (Unfortunately, some surveys find that nineteenth-century attitudes toward economic hardship remain widespread.) No new resources are contemplated for social or affordable housing, despite the existence of multi-year waiting lists in much of the province. As the Toronto Star’s Thomas Walkom and a policy analyst for the Ontario Nurses’ Association have pointed out, despite Drummond’s long career as a professional economist, the report ignores the employment consequences of taking billions of dollars out of the provincial economy. Walkom predicts that implementation of the Drummond recommendations would cause unemployment in Ontario to rise to 11 percent by 2018, “even without another global crisis”. Poverty reduction is nowhere acknowledged as a legitimate goal or priority of government; indeed, the word “poverty” appears only six times in the text of the 562-page report.

To put this discussion into context: on Thanksgiving weekend in 2010, the Premier of Ontario was quoted by CBC News as urging Ontarians to donate to food banks, and in March, 2011 395,000 Ontarians relied on a food bank to feed themselves at least once. Rents and food prices are not going down. So the Commission has said to a significant proportion of Ontarians: forget about any hope that your opportunities to lead a healthy life will improve before 2017-2018. The cupboard is bare.

But is it, really? In order to answer this question, we have to look at both the revenue side and the expenditure side of Ontario’s public finances, in historical perspective. The Commission itself emphasizes that “spending is neither out of control nor wildly excessive. Ontario runs one of the lowest-cost provincial governments in Canada relative to its GDP and has done so for decades” (p. 5). Further, it notes that the provincial treasury’s “own-source revenues” – taxes and user fees collected by the province, as distinct from revenues received from federal transfers – as a percentage of provincial Gross Domestic Product (GDP) were considerably lower (13.65 percent) in 2010-2011 than in 1999-2000, midway through the Harris era (15.9 percent). Although precise comparisons are impossible, this is consistent with estimates by the Canadian Centre for Policy Alternatives that, every year since the start of the century, provincial tax cuts (mainly in personal income tax rates) begun in 1995 have reduced revenues by between $10 billion and almost $18 billion relative to the revenues that would have been received if tax rates had remained at their 1994-95 levels. In other words, well before the post-2008 and its undeniable effects on revenue stream, the province’s fiscal capacity was suffering from major self-inflicted wounds.

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The Commission was instructed not to consider the possibility of raising taxes. However, as shown in the illustration, if we accept the Commission’s estimates of the growth of the provincial economy and the spending restraints incorporated into the Drummond Commission’s “preferred scenario,” but are willing to consider tax increases sufficient to return own-source revenues as a percentage of provincial GDP to their 1999-2000 level by 2017-2018, we see that the budget is in surplus by more than $22 billion. Stated another way, if the province were to pursue what Hugh Mackenzie of the Canadian Centre for Policy Alternatives has called “an adult conversation about the public services we need and the revenue we are going to have to raise to pay for them,” the provincial budget could be balanced in the target year while making available $22 billion more than the Drummond projections for program spending. According to one commentator the province is not even planning pre-budget legislative hearings, thus making it difficult to start such a conversation. Indeed, the Commission’s description of the provincial budget as “a powerful educational tool” (p. 13) suggests that most of the key immediate decisions have already been made. Its proposal for a centralized expenditure management process involving the Premier’s Office, Cabinet Office and Ministry of Finance that “should stay in place for at least several years” warns of little room for debate in the future (pp. 140-141). Shouldn’t public finance be a matter for public debate?

At several points in its report the Commission underscores the difficulties created by the government’s refusal to consider tax increases, anticipating (for instance) a $38.5 billion shortfall in financing planned and necessary public transit investments in the Greater Toronto and Hamilton Area. For those who can afford to drive everywhere, this means only the inconvenience of more traffic jams; for those who can’t, it may seriously limit mobility … and of course that foregone investment also means lost employment. The Commission states that its budget-balancing strategy would mean “tough decisions that will entail reduced benefits for some” (p. 69) – although not, it seems, for everyone. On the matter of soaring compensation for people like Drummond’s fellow commissioners at the top of public sector salary scales, the report says that “focus must remain on the larger picture, which is the government’s need to get the right people into the right positions at a cost that is both compatible with its fiscal circumstances and appropriately aligned with private-sector compensation” (p. 138). Well, workers at Electro-Motive Diesel’s London, Ontario plant know about that kind of alignment: they were locked out after refusing a 50 percent pay cut before the parent company closed the plant and moved the work to Indiana. In the Ontario of tomorrow, it seems that what Saskia Sassen calls “the savage sorting of winners and losers” characteristic of the contemporary global marketplace is to be accepted, and indeed welcomed.

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Any assessment of the Commission’s implications for population health (and never was there a better example of the need to apply health equity impact assessment to macro-scale economic and social policies) should keep this in mind. As pointed out by (among others) economist Erin Weir of the United Steelworkers, there is quite a bit in the report that those of us committed to social justice can support. At the same time, the report is about much more than public finance. Effectively, it recommends for Ontario a variant of the structural adjustment programs* of marketization and social policy retrenchment demanded by the International Monetary Fund in return for loans enabling low- and middle-income countries to reschedule their debts to external lenders, in the process creating widespread economic hardship and seldom leading to long-term economic improvements. Equity, for both the IMF and the Drummond Commission, was an unaffordable luxury. Against a background of worsening economic disparities that would be further magnified in the future envisioned by the Commission, what is the future of health equity in Ontario? And who will decide?

 

* For readers unfamiliar with the history of structural adjustment, two excellent recent review are Babb, S. (2005), The Social Consequences of Structural Adjustment: Recent Evidence and Current Debates, Annual Review of Sociology, 31, 199-222 and Pfeiffer, J. & Chapman, R. (2010), Anthropological Perspectives on Structural Adjustment and Public Health, Annual Review of Anthropology, 39, 149-165. Unfortunately, so far as I know neither of these is available on an open-access basis.

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