Health Care costs will bankrupt society

No government faces reality

Everyone dies. No one wants to die. Few want to suffer ill health. These natural instincts are forces which converge to create one of the largest and most costly industries in the world.

Reported health care costs in the industrialized world range from 9% to 17% of Gross Domestic Product according to data from Statista. In countries like the United Kingdom and Canada which have “single payer” health care models, virtually all of that expense is paid by taxpayers through their government rather than directly by individuals.

Coincidentally, Canadian government tax revenue is running at 12.3% of GDP, compared to 2021 health care costs at 11.7% of GDP. Give that some thought.

Stated simply, at current rates of taxation virtually all money paid to government in income taxes is spent on health care, and all other programs plus interest on the national debt is funded through other sources of revenue and borrowing. One other source of revenue which is vital to government’s fiscal balance in royalties on oil & gas. In 2021, governments received $48 billion from oil & gas, primarily in royalties. This is the same oil & gas industry Justin Trudeau would like to shut down based on the incoherent belief that CO2 causes global warming, an absurd concept inconsistent with the laws of physics but useful to create fear and lobby support for a political party.

Health care costs continue to outpace GDP growth. As our health care system commands more funding, other programs will have to give way. How is that going to create the happy ending the Liberals tell us they have in mind - you know “build back better”. Build back poorer is a more accurate label for left wing government policies.

My ancestors came to the Ottawa Valley so many years ago the house on the old farm in Moose Creek dates back to 1850. There was little healthcare then, few prescription drugs, and it was an event to actually see a doctor. Yet my great grandparents, grandparents and my own parents lived long lives - typically reaching between 97 and 105 years of age. Something tells me the “health care” we are being sold is a bill of goods. Big Pharma, the “medical establishment” and our physicians and nurses have a commitment not only to assisting Canadians to live healthy lives but also to the perpetuation of disease and trauma without which they would be unneccessary. Doctors encourage patients to have annual medicals, to come into to have any complaint diagnosed and treated, and, to subject themselves to “preventative” tests like colonoscopies, mammograms, chest X-rays and blood tests - not for any particular symptom but to identify health issues “early” to permit “early treatment”. Those tests are “marketing tools” more than anything.

Health is big business. So is wellness. The wellness industry is estimated at $4.4 trillion in 2020. That can be added to the estimated $9 trillion global health care costs (about 11 % of global GDP). Most of the expense is in the industrialized world since the third world population can’t spend that kind of money on health care or wellness.

Physicians comprise a large portion of Canadian health care costs, amounting to about $29 billion in 2021. Canada’s 313,000 registered nurses who on average earn about $70,000 per year comprise another $22 billion. Prescription drugs are even greater at an estimated $39 billion. Hospitals, over-the-counter drugs, adminstrative staff, ambulances, paramedics, and a host of other costs make up the balance.

In total, Canadians pay $330 billion for health care (2022 data) annually or about $8,500 per person. That comprises about one third of Canada’s average household income (for a family of three) of about $75,000.

The typical Canadian household today spends about $39,000 per year on taxes at all levels (income tax, HST, sales tax, property tax, etc.) Do the math - Income $75,000, taxes $39,000 (most of which is going to pay health care costs of $24,500), and there is $3,000 a month. The average rent in Canada is today almost $2,000 a month leaving $1,000 a month for utilities, food, transportation, recreation, etc. It should be obvious this picture is unsustainable. It is small wonder most young Canadians can’t afford a home, that Canada’s homeless problem is growing and that drug abuse is an epidemic.
Averages don’t tell the whole story. Half of Canadian households have above average income and live relatively comfortable lives despite these high costs. The other half live in poverty and virtual despair. Our government policies inflict so much pain on society escape into drugs seems almost rational. And Canada’s Liberal government is dead set on making the picture worse - they want to spend more on health care, increase taxes, and stifle the growth of the energy industry which carries a lot of the freight.

A significant amount of health care costs can be traced to lifestyle choices which are imposed on all of society by persons who choose to live unhealthy lives by smoking, overeating, abusing drugs, etc. McKinsey & Company, Inc. proposed policies that engaged consumers to encourage healthier lifestyles. I would go further - if you choose to abuse drugs and potentially become a drug addict society should leave you on your own for related health care and stop subsidizing your antisocial conduct. Substance abuse cost Canadians an estimated $46 billion in 2017 about $13 billion of which comprised health care costs .

Worldwide, health care costs are growing faster than GDP. A McKinsey & Company, Inc. study found that “If health care spending is left unchecked, by 2100 it could take up 97 percent of GDP in the United States and more than half of GDP in most other OECD countries—astonishing proportions.”¹ Our elected politicians need to act to get ahead of this avoidable outcome.

It is about time for common sense. We need fewer hospitals, fewer doctors, fewer nurses and fewer drugs. Canadians need to accept that life cannot be extended forever. My father and his seven siblings lived well into their nineties (my Aunt Helen to 105), rarely visited a hospital or a doctor, and looked after themselves until they passed with their retirement income no more than CPP and OAS. They lived in small towns like Moose Creek, Avonmore and Maxville where they were able to buy their homes for a few thousand dollars 50 years ago, had small gardens and enjoyed the company of friends and relatives in their communities. They were happy people and asked nothing of society.

Health care costs during the last month of life are about $14,000 per person. Maybe society should just let people on death’s door walk through that door.

A courageous leader would deal with the problem with policies that might include the following:

• A nominal fee of $10 for every visit to a doctor that is not an emergency, to “nudge” lower the needless visits to doctors from nervous nellies every time they sneeze or cough. A ten Euro fee applied in Germany for such visits saw a 7% decline. Overall morbidity and mortality were unchanged.

• Limits on the number of physicians based on population. An unpublished study by McKinsey & Company, Inc. partner Jim Bennett in the late 1970’s demonstrated that single biggest factor in rising health care costs was the number of doctors. The number of doctors per capita in Canada has reached a record high.

• Limit publicy-paid care for persons over 90 years of age to trauma care and palliative care. Encourage Canadians to have private health care insurance to cover late in life health care costs.

Now that I am an old man I can see the problems with our left wing policies more clearly and in the case of health care issues, I have concluded that “you won’t live forever, but if you marry the right person it can feel like forever”.

1. Health Care Costs, a market based view, McKinsey Quarterly, September 2008, page 6.