Commission on the Reform of Ontario's Public Services

Chapter 5: Health
In Ontario, a few simple messages emerge from the polling results that do seem robust:
Ontarians regard health care as the single most important public policy issue; they are wedded
to the single, public payer model; and they will not tolerate anything that causes deterioration
in access and quality of care. Also, there now seems to be less concern that all services be
delivered under public administration, as long as the bill can be covered by an OHIP card.
Clearly, Ontarians want their health care system not only sustained, but also improved. Can
fears of unsustainability — that the system will not remain affordable — be eased by proposing
some of the more obvious — or at least most often cited — solutions? Again, unfortunately,
there is no straightforward response. Sustainability involves many moving parts; any number
of changes to the equation can render health care more sustainable or less so. Three of the
moving parts come to mind:
� First, stronger productivity growth, by generating more economic growth, would make it
easier to afford more health care spending. But even if productivity growth doubled from its
low levels of the past decade, trend growth in nominal GDP would still fall far short of the
projected increases in health care spending. In any case, such an aggressive assumption
about productivity growth is mere wishful thinking since we have no ready answers on how
to revive it. Wishful thinking, needless to say, cannot be the foundation of a policy
response to the sustainability issue.
� Second, we could afford more health care if we raised taxes, but tax rates would have to
rise persistently to keep the new revenue received above income growth. This might
generate voter tax fatigue and would inevitably result in broader economic losses as the
economic distortions induced by rising taxes magnified.
� Third, we could restrain all other government spending severely to leave more room for
health care. But as TD Economics pointed out, status quo trends suggest that by 2030,
health care would account for 80 per cent of Ontario’s program spending. The remaining
20 per cent would not even cover the current education system, let alone any other
public services.
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