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Budget: Cuts to health spending but not transfers to health authorities

The growth of health-care spending will slow as the B.C. Liberal government struggles to harness costs. The Health Ministry's base budget is projected to increase by $2.
Health Ministry building generic photo

The growth of health-care spending will slow as the B.C. Liberal government struggles to harness costs.

The Health Ministry's base budget is projected to increase by $2.4 billion in new funding during the next three years, however, "in an ongoing attempt to bend down the cost curve in health care" the rate of those yearly increases will be further reduced to an average of 2.6 per cent over the next three years beginning 2013-14, according to B.C. Finance Minister Mike de Jong.

That 2.6 per cent increase in overall health-care spending is down from an average 4.4 per cent increase this year and a high of seven per cent increase between 2005-06 and 2008-09, according to the budget.

The finance minister says that while the government is bending the rate of spending growth "significantly" it will do so without affecting the transfers to the health authorities according to the existing fiscal plan that was tabled last year, which is three to four per cent annually, according to the Health Ministry.

"The health authorities will continue to receive the amounts that they expected to receive pursuant to last years budget but this will have implications for things like drugs, pharmaceuticals, lab fees and costs, and other areas," de Jong said.

The Vancouver Island Health Authority, with a budget of about $2 billion, was given a lift of 2.7 per cent in its provincial funding allocation in 2012-13.

The B.C .Nurses Union and the Hospital Employees Union argue health authorities will not get the same funding and instead will be forced to do more with less.

"These cuts will make it more difficult for health authorities and front-line staff to deliver quality health care to the public," said HEU secretary business manager Bonnie Pearson.

And with Medical Services Plan premiums to increase by four per cent in January, families will be on the hook for $2.39 billion by 2015-16 and MSP revenues will at that point outstrip corporate taxes, according to the HEU.

University of Victoria professor Michael Prince says today's budget is bold and politically risky 12 weeks before an election in that it "de-emphasizes health care" and focuses on a so-called balanced budget.

De Jong said today a significant portion of the savings in Budget 2013 in health care will come from patient-focussed funding — a program introduced about three years ago — which gives incentives to health authorities for more efficient use of resources used for procedures in hospital. Through this program about $50 million was saved in 2012-13, according to the Health Ministry.

Other savings will come from PharmaCare and the province's Medical Services Plan.

Drug spending has come down from about 4.4 per cent four years ago to almost zero in 2013-14 due to the introduction of generic drug legislation in 2012, which will come into effect April 1.

That new drug pricing regulation will bring down the price of generic drugs to 25 per cent — from 35 per cent — of the brand name price immediately, and to 20 per cent as of April 1, 2014. This drug pricing measure is long overdue and was applauded by the HEU today.

The finance minister also said today the government will introduce measures to reduce the rate of MSP expenditures which cover the costs of most physicians and other health care practitioners.

The financial agreements in the Physician Master Agreement between the government and the B.C. Medical Association — which covers about 10,000 specialists and family doctors — "will have to be consistent with the ministry budget," says the budget.

De Jong conceded today that negotiations scheduled this summer with physicians will be "intense" but he would not commit to saying physicians will be forced to accept a reduction or no increase in fees, following the lead of Alberta and Ontario.

MSP also funds lab testing under the doctors' agreement. Budget 2013 indicates it will sharply curtail the amount of money available for lab fees.

The government pledges in the budget that the spending restraints in Budget 2013 will protect the growth of funding for regional services which include key hospital, acute care, mental health, emergency and community care services.

However, Reid Johnson, president of the Health Sciences Association of B.C. representing 17,000 members, says the bulk of savings in the government's last-ditch attempt to balance the budget come out of the health-care system.

"If you reduce spending in health care, you reduce services to British Columbians," Johnson said. "It's that simple."

The health minister reiterated today that this province remains the second least costly province in terms of per-capita spending on health care and the best in terms of life expectancy, cancer mortality, and mortality related to diseases of the heart.

The HEU says B.C. lags behind the rest of the county in terms of per-capita investment in the health care taking the office since 2001 to the ninth from second compared with other provinces.

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