March 1, 2011

Canada’s Medicare: Shattering the ‘Unsustainability’ Myth

By admin

This report by Canadian Doctors for Medicare is a must read for those who are interested in health or who pay taxes.

In other words, if you’re a Canadian citizen.

The key quote and takeaway (bold, italics mine):

While the cost of Medicare has not grown as a percent of GDP over the last 35 years, there have
been significant increases in total health care system costs over the same period, and those
increases have accelerated in the last decade. Overall health spending in Canada has risen from
about 7% of GDP in 1975 to about 10.7% in 2008. In 2010, health care spending was estimated

to be about 12% of GDP.

If Medicare costs are stable, and public sector costs are rising slowly, why are total health care
costs increasing rapidly? The real cost driver is precisely the thing that critics of Medicare tout as
the solution: private health care.

Currently 30% of all health spending is in the private sector, up from 24% in 1975.  That growth
is a result of significant increases in costs in the private health care sector, including out‐of‐pocket
spending and the costs of private insurance. Pharmaceuticals and private prescription drug
insurance are the most significant driver of these costs
, followed by dental care and private
dental insurance.

The overall cost of care has been driven most significantly by the rising cost of pharmaceuticals. In
fact, the rising share of privately financed health care would be much more modest were it not
for the impact of pharmaceutical costs. Canada’s drug costs are higher than the per capita costs
of all Organisation for Economic Co‐operation and Development (OECD) countries with the
exception of the United States and Switzerland, and 30% higher than the OECD average.  Drug
costs overall rose from $4 billion in 1985 to an estimated $26.5 billion in 2007.  During that time, Canadian drug prices rose an average of 9.2%, far faster than in any other OECD country.

In other words, we’re getting hosed, folks. Mega-pharma companies are using Canada’s health care system to line their pockets and it has to stop.