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Overspending on health is good for the economy


     Most people today are very concerned about our health care system. Will the aging population bankrupt us? Will there not be any money left for health care when our children grow old? Is healthcare taking such a large bite out of our economy that there will be no money left for education and infrastructure?

So it was quite a surprise to see the Conference Board of Canada, in a recent report, remind us that there are benefits to this gross overspending.

Our health sector, both public and private is an economic driver, a generator of wealth, a source of good-paying jobs and a stabilizer in bad economic times. Remember, the health care we receive is not just the paid services from the government but also the services we pay for such as optometrists, naturopaths, chiropractors, physiotherapists and pharmacists.

The report was quite clear when it stated that while health care spending has outpaced economic growth for the last 30 years, it has also stabilized our economy in very tough times.

Our government leaders like to brag that while the world went into deep recession in 2008, we were a lot better off than most countries (especially the U.S.) because of our sound fiscal management and a well regulated banking industry that only allowed people with sufficient incomes to buy homes.

What our fearless leaders neglected to say was that our universal health care system employs so many people and spends so much money that it is the engine that drives the train of our economy even in the worst of times.

The Conference Board charted the growth (actually shrinkage) of the economy from 2007 to 2012 and alongside, the slow and steady growth of the health sector during those same years. When the economy shrinks and health care goes up, our economy actually becomes recession proof. Health care is so big in Canada that it represents about 10 per cent of our gross domestic product, which is exactly the same as our total manufacturing industry. In poorer parts of the country it is even a bigger proportion.  In Nova Scotia health care represent 13.2% of GDP compared to only 7.6 per cent in Alberta.

Canada has approximately 1200 hospitals and they are very often the largest employers in their cities and towns, and the other 93,000 health care centres such as dentists offices, doctor’s offices, optometrists, health care centres , hearing clinics, sleep clinics and wellness centres not only provide key services we need but pay a lot of taxes to the federal government.

The health industry in our country accounts for one in every eleven workers, 1.6 million direct jobs and another 500,000 indirect jobs such as suppliers of pharmaceuticals or surgical utensils. These 2.1 million recession- proof jobs virtually guarantee that Canada will never slip into a deep economic hole.

The total compensation for those health care workers is $127 billion dollars each year. That works out to about $60,000 per job. Not only did those workers pay a lot of taxes but they bought a lot of things such as automobiles, flat-screen TV’s and clothes, all of which delivered more sales taxes to our governments.

According to the Conference Board of Canada, the health care industry generated $30.6 billion dollars in tax. So at least for every $5 Canadians spend on health care, our government gets back $1 in taxes.

Sometimes we forget that the health care system, when it is working properly, contributes to a more stable and productive workforce by keeping people healthier and maintaining their ability to work. We replace hips, knees, remove cataracts and even repair limbs so that our population can spend more time at work and be more productive. In many cases we provide cognitive therapy which allows many people to maintain their place in the workforce without having a nervous breakdown.

Having said all that, we all know that spending more tax money on health care is useless as long as we use antiquated old systems such as doing nearly all elective surgery in hospitals rather than in private clinics where it could done far more efficiently at half the price. We all wonder when our physicians will leave the Stone Age and answer our questions using email. In this day and age of computers why do they still keep huge paper files and write illegible prescriptions on tiny little prescription pads? We also know that providing more access to all kinds of medical testing does not actually improve outcomes. Health care varies from province to province but overall whether it is very good or very bad, life expectancy is about the same in every province in Canada.

Of course I am not advocating spending dollars because it is good for the economy. They could be better spent but at least we know that the $200 billion spent each year in this country does not just drain down a dark hole.

The money we spend on health care in Canada is actually good medicine for our economy.