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July 3 , 2009

BC Liberal Gov Economic Spin

The right side of the main BC Liberal government website contains a long list of links, some as graphics, a few as text. Way down the list is "positive economic indicators". With job losses and welfare claims mounting, we could all use some positive economic news. The only problem is the website is full of misleading information and half-truths.

As of July 2nd, the first item on the positive site says: "In May 2009, B.C.'s average weekly wage rate was approximately $790 per week, the third highest in Canada. The average weekly raise has risen by $142 - or 22 per cent - since 2001 ($648)." The Liberal government likes to make comparisons to 2001, the year it came to power. The positive news doesn't mention that over on the BC Stats website a monthly report is available on earnings and employment trends. Table 2.1 in the May 2009 report (issued June 5) shows that in 1999 BC had the second highest average weekly wage rate in Canada. Alberta's average weekly wage rate didn't pass BC's until 2004 when the average in BC was $686.74 and the average in Alberta $703.63 (Ontario $721.00). Also not mentioned in the positive news is that the $16.89 lead Alberta had in 2004 grew to $125.84 in May 2009; in 1999 BC was $34.25 AHEAD of Alberta.

The second item on the positive news site says: "In March 2009, the value of non-residential building permits was worth $307 million, an increase of 30 per cent compared to the same time in 2008." That sounds good until you look at the Statistics Canada report that is the source for the "positive news". It says:

"The value of building permits increased in half of the provinces in March."

"The most significant increases occurred in Ontario (+45.7% to $1.8 billion), Quebec (+30.3% to $1.0 billion) and Alberta (+34.1% to $696 million). The increases were mostly a result of higher construction intentions in the non-residential sector."

"Declines occurred in the Atlantic provinces, except for Newfoundland and Labrador, as well as Manitoba and British Columbia."

On a seasonally adjusted basis, the value of residential building permits in BC in March 2009 was $223.82 million; in March 2008 it was $670.86 million, a devastating drop of $447 million.

The third item on the positive news site says: "Despite the global economic downturn, the number and value of major construction projects planned or underway across British Columbia went up during the fourth quarter of 2008, with 880 major construction projects, worth an estimated $179.4 billion." Not mentioned on the website was that: "Forty-nine major construction projects are on hold, worth an estimated $14.2 billion". While not on the positive news site, that information was in the Ministry's February news release and in the project inventory report.

The Major Projects Inventory for the first three months of 2009 is now available but not what it says is not mentioned on the positive news site, namely:

"The capital cost of all major construction projects currently under construction in BC is estimated at $63.2 billion, up from $60 billion in the fourth quarter of 2008. Many major project proposals are listed In the preliminary stages and are not approved for construction; therefore, capital cost estimates should be viewed with caution."

You can say that again! In other words, don't believe the numbers.

The first quarter 2009 report goes on to say: "The available capital cost of proposed projects is estimated at $102.7 billion, down from $105.0 billion in the previous quarter. Approximately $18.3 billion of projects are judged to be "on hold" for the time being." The positive news website could have said that major projects on-hold increased by $4 billion, but that wouldn't be positive.

The fourth item on the positive news site says: "The 2008-09 fiscal year oil and gas land rights sales total of $2.4-billion trumped the previous record-breaking year by $1.2 billion, and broke every tracked record for oil and gas land rights sales in British Columbia." Sales of drilling rights may be the good news story, but this is not a bottomless pit. The government must take the revenue in over several years, showing it as deferred revenue on its balance sheet. That deferral increased from $1.7 billion in 2007 to $2.4 billion in 2008 (Note 15 in 2008 Public Accounts). It will be interesting to see that updated note when the next set of Public Accounts are released in a few weeks, but government needs to think about what happens when the non-renewable resources are exhausted (or at least when the drilling rights are exhausted). Just look at Alberta's deficit to see what happens when good luck with oil and gas runs out.

Why does the Liberal government continue to promote "positive economic news" on its website despite all facts to the contrary? Perhaps the almost hidden placement of the link to the positive page is a hint; they might fear the news coverage if they admitted the well has run dry and eliminated the link.

Since May 2008 over 21,700 people have joined BC's welfare rolls, and over 60,000 have lost their jobs. Those people aren't interested in government spin about positive economic news.

June 29, 2009

Falcon on Queue Jumping

"I don't have an objection to people using their own money to buy private services," he declared, in reference to patients paying for their own expedited surgery and other treatments at private clinics.
"Just as they do with dentists, just as they do with other decisions they make -- you know, sending their kids to private school or what have you. I think choice is a good thing actually -- reducing choice I don't think is a good thing."
Health Minister Kevin Falcon as quoted by Vaughn Palmer

Falcon's suggestion that people should be able to buy medical services just as they do dental or private school services, deserves more than derision. Nothing stops those who can afford it from going to the Mayo Clinic in the U.S., or to any other clinic in the world. Why shouldn't Canadians be able to spend their money at home to jump the queue since they can do it by leaving home? Apart from the costs of travel and accommodation, going abroad for health services can also mean isolation from support networks. There can be no doubt that more convenient queue jumping at home would mean much more queue jumping.

Anyone who needs care, from the removal of a cataract to organ replacement, can personally benefit by moving to the top of the queue. The question is whether queue jumping shortens the wait for anyone else. What harm to society justifies reducing or eliminating the ability of individuals to queue jump?

Queue jumpers within B.C. delay care to those with higher medical needs, the opposite of the claim that private services shorten the queue for those that need care. This could happen in two ways: 1) by bidding away scarce resources, including doctors, nurses and technologists, and 2) by reducing the incentive for government to fund public care.

One difficulty in the debate is how to quantify how many resources are diverted from public care, what the consequences are of any diversion and if and by how much government reduces public funding when private alternatives are available. One might think that answers to these questions would be the subject of substantial research, but such research is hard to find. Often arguments hinge on the fear that any adverse consequences would be the beginning of a slippery slope.

Medicare in Canada is built on the principle that access to medically necessary services should not depend on ability to pay. The Canada Health Act was adopted in 1985, as a result of pressure to stop extra billing by physicians in Alberta and Ontario and hospital user fees in B.C. It succeeded in those goals, and it remains in force even though a lot has changed in 24 years. The principles affirmed by the Act have been confirmed repeatedly. Currently B.C. is subject to fines under the Act for allowing clinics to charge for medically necessary services. The Act provides authority for the federal government to withhold $1 in federal transfer payments for each $1 charged to patients in violation of the Act's principles. The penalties under the Act are much clearer than quantification of any of the adverse social consequences mentioned above.

An attempt was made to challenge the principles of the Canada Health Act in Chaoulli v. Quebec (Attorney General), [2005] 1 S.C.R. 791, 2005 SCC 35; however, that case focused on whether private health insurance could cover private health care and hospital services. The Supreme Court of Canada ruled that Quebec's prohibition of private health insurance infringed the Quebec Charter of Human Rights and Freedoms. That doesn't mean private clinics are free to operate without regulation, nor does it answer the market question on whether any issuer would offer coverage for private clinics. The cases before the B.C. Court may offer further clarification on whether it is constitutional for a province to restrict private clinics, but once that issue winds its way to and through the Supreme Court of Canada it will still not resolve the policy questions of what the consequences are of allowing queue jumping.

A report in the Vancouver Sun in June 2005 indicated that about 1% of all surgeries that are covered by the Medical Services Plan (MSP), were being done in private surgery centres. When surveying the extent of private health insurance, called voluntary health insurance (VHI) in some jurisdictions and private medical insurance (PMI) in others, and the extent of the private provision of health services, it is important to separate queue jumping from private provision of services that are publicly paid (e.g. most doctor's offices and some contracted surgeries) and from private insurance or provision of services that are not covered publicly (most dental services and some drugs). Queue jumping is when quicker access to service is obtained through alternatives to public health insurance, as is done in B.C. with clients of ICBC and WorkSafe and as is alleged to be done by some who pay surgery fees at private clinics. In B.C. the queue jumping done by ICBC and WorkSafe is legal, but privately paid queue jumping is not. That difference, and apparent inconsistency, is before the court, the matter on which Falcon was apparently not briefed (to put it most generously).

According to a 2006 study published by the European Observatory on Health Systems and Policies, between 11% and 12% of the population in the United Kingdom have some form of private medical insurance, with about two-thirds of those covered obtaining coverage through work (a fringe benefit). The principal form of PMI in the UK is for queue jumping, insurance as an alternative to the National Health Service. According to the study, in 2002 an estimated 16.6% of UK health expenditures were from private sources, but private medical insurance accounted for only 3.6% of total UK health expenditures. Most of the 13.0% of expenditures that are private but not insured are for services not covered by the NHS, part of the 3.6% of expenditures that are from PMI are also for services not covered by the NHS. A precise estimate of how much is spent for queue jumping in the UK is consequently unavailable, but it would appear to be less than 5% of total health expenditures and possibly as little as 3%. The UK's Office for National Statistics reported that private spending accounted for 20.1% of total health spending in 2002, falling to 18.3% in 2007. There is no obvious explanation for the difference between 16.6% and 20.1%, other than all of these figures have to be taken as approximations.

There is much opinion but little evidence on whether up to 5% of total spending for queue jumping significantly distorts the public sector's ability to obtain scarce resources. Leverage may make the extent of queue jumping in the UK underestimated. A patient can shorten wait times by using PMI to queue jump for an initial consultation and then go back to NHS for any surgery, just like British Columbians can expedite their care by purchasing a private MRI scan.

Voluntary health insurance is more common in continental Europe but, according to a 2004 study published by the European Observatory on Health Systems and Policies, it is primarily for goods and services not covered by public insurance, rather than for queue jumping. When it covers user fees or co-insurance attached to public programs it can affect access to care without directly funding queue jumping. In Canada we have not had such co-payments since the implementation of the Canada Health Act.

If Falcon wants more discussion he should have paid attention during his government's $10 million "Conversation on Health Care". If he wants to push a queue jumping agenda, he should have said so during the election campaign. His job now is to guarantee that through public health insurance (Medicare) British Columbians get the health care they need when and where they need it.