George Abbott may try to be the Bob Hope of the BC Legislature, but he'll never come close trying to be its Paul Samuelson. An economist, he isn't. Speaking in conclusion on second reading debate for Bill 21, Abbott said: "There was a fascinating debate between whether we should view health care costs as a percentage of total gross domestic product or view it, as I would suggest, as a percentage of the provincial budget. This is a fascinating debate. About seven people, in addition to David Schreck, find this a fascinating debate across the province of British Columbia."

My late friend Bruce Erikson always said: "They don't shoot at dead ducks." In other words, thank you, George, for acknowledging that you have a problem with your reasoning.

Try searching Google or Yahoo on the term "health spending". You'll find many references to health spending as a percentage of GDP, but little or nothing with respect to health spending as a percentage of government budgets. There is a good reason for that, and it needs to be understood by everyone, including George Abbott.

According to BC Stats, Gross Domestic Product (GDP) is a measure of value added to the economy. Notwithstanding the philosophical debate on public vs. private health care, much of health spending has always been private, including dentistry, many prescription drugs, medical appliances and home care. According to the Canadian Institute for Health Information (CIHI), whose board includes BC's Deputy Minister of Health : "Public-sector spending is forecast to reach $113.0 billion in 2007, representing 70.6% of total health care spending, while private-sector spending (including privately insured and out-of-pocket expenses) is projected to reach $47.1 billion this year, a 29.4% share of the total."

Keep in mind the 70/30 split between public and private health spending when you consider Abbott's position that what counts is public health spending as a percentage of the provincial budget. According to Abbott's measure of health costs relative to the total government budget, eliminating Pharmacare would shift $1.02 billion in costs from the provincial government to patients who need pharmaceuticals. Assuming that consumption patterns wouldn't change as a result (not likely), government spending on health care would decrease by 7.3% while private spending on health care would increase by about 17%. Total health spending as a percentage of GDP would not change, but instead of paying for drugs through your taxes, you'd pay the full cost when you are sick. You could do the same exercise for any other component of health spending, doctors, hospitals, or public health (restaurant inspections and the like). As long as you assume that use doesn't change, the result is the same: spending as a percentage of GDP doesn't change, but cost shifting decreases government spending.

Of course the assumption that consumption doesn't change whether payment is public or private is nonsense. Many studies support the observation that the lower one's income the higher the likelihood of almost every type of disease and disability, and the shorter one's life. Consequently, shifting health spending from public to private sources is the ultimate in shifting costs and taxes from high incomes to low incomes, something the Campbell government has been doing since its first big tax cut in 2001 and which it continues to do with its carbon tax.

Abbott argued that GDP is an inappropriate measure for heath spending because we wouldn't want health spending to be cut simply because GDP declined. Some well-known political columnists have repeated that line, thereby showing that the government's spin machine has good reach. The reason health spending as a proportion of GDP is an international standard is that it shows the amount of an economy's capacity that is devoted to providing health care, whether public or private. No one has suggested that provincial health spending be tied to GDP, but it is true that if GDP stagnates or falls, then provincial revenue is likely to fall and make decisions regarding spending and taxation more difficult. The Campbell government has shifted the tax burden to make revenues less sensitive to GDP, when the economy slows revenues don't drop as much because of more regressive taxation. The carbon tax will contribute to that regressive tax shift. Nevertheless, the importance of the growth in GDP is illustrated by the space the Ministry of Finance devotes to discussing it in both the annual budget and in quarterly budget updates.

Measuring health spending as a percentage of GDP or of the provincial budget, is not just an exercise in statistics. It demonstrates fundamentals about how the economy works, and how incomes are distributed. When the government cut spending by 30% across all ministries except health and education, including the Ministry of Children and Families, it made health and education spending a larger percentage of total provincial spending. That's an exercise that could be used in a math class; elementary students would understand that the size of the health pie doesn't change just because other services are cut, although its percentage relative to total provincial spending changes.

Abbott's refusal to accept the standard of health spending as a percentage of GDP suggests that he is not being straight with British Columbians.

Any serious student of health economics knows that we need to find strategies to deal with rising health costs. Since everyone's costs are other people incomes, fights over health costs are frequently the same as fights over incomes ; how much doctors and nurses will be paid often gets translated into issues about quality and access to health care. It's not easy to separate the issues, but it is not made any easier when the provincial government speaks in code rather than being open and transparent. Instead of trying to disguise attempts to shift costs from the public to the private sector, the government should accept responsibility for controlling costs, and maximizing value for money, whether spending is publicly or privately incurred. For example, dentists get away with fixing minimum prices because the provincial legislation (the Dentists Act, Section 5(c)) allows their College to provide fee guides. In other words, even when health costs are mostly private, the province has a role to play.

There are many reasons why costs are better controlled, and access to care is more equitable, when health spending is entirely through a single-payer public system, but whether that happens or not, the province has to accept responsibility for the total level of public and private health costs, and the quality of health outcomes, rather than hiding behind cost shifting as if it doesn't matter when spending is private.