[stop-imf] IMF warns Canada about medicare cash boost

[rob@essential.org]

Canadian Press=09  November 26, 2002

IMF warns Canada about medicare cash boost

Sandra Cordon

Ottawa =97 Canada must be cautious in boosting health-care spending or
risk undoing all its efforts to balance the national books and lower
taxes, the International Monetary Fund said today.

The major study into Canada's finances came only two days before the
long-awaited final report of the Romanow commission on the future of
health care.

Romanow is expected to call for sizable increases in health budgets in
his report, to be released Thursday.

In its study, completed last week but only released today, the IMF
praised Canada's efforts to eliminate its deficit and cut deep into the
country's long-term debt.

That has helped insulate Canada's economy from the global downturn and
put it on the best growth track seen this year among the world's richest
countries, said the IMF.

But all the sacrifices Canadians have made to achieve fiscal stability
could be undermined if Ottawa goes too far in health-care spending, the
report said.

And that will jeopardize the federal books and even the future viability
of the health care system, when the country's aging population will be
putting greater demands on the system, the IMF added.

"It will be important to ensure that reforms pay due attention to the
cost-effectiveness as well as the equity and quality of health care
delivery, in order to ensure that the system is sustainable and
consistent with federal and provincial fiscal constraints over the long
run," said the economists who completed the IMF study.

"Meeting these competing challenges will be difficult."

It suggests reallocating existing spending rather than increasing health
budgets.

That's typical of the IMF, which is obsessed with minimizing social
spending, said NDP health critic Judy Wasylycia-Leis.

"There's a point to be made in terms of reallocation from within," she
said.


"But I'd be reluctant to see the government of Canada take advice from
the IMF with its longstanding commitment to balanced budgets and debt
elimination as its fundamental focus and at all costs."

The IMF report also suggested increased use of "incentive-based systems
that would encourage efficiencies and cost containment by both providers
and patients."

But that might not be of much interest to Romanow whose report is
expected to propose new publicly funded home-care and pharmacare
programs.

He is also expected to say that his recommendations can be funded from
future government surpluses, avoiding the need for tax increases.

Ottawa won't be able to spend every spare dollar on health, given the
long list of projects that Prime Minister Jean Chr=E9tien is committed to,
said Don Drummond chief economist with TD Bank and a former senior
federal Finance department official.

"If that was all you wanted to do ... but the government did announce a
lot of other priorities in the speech from the throne," said Drummond.

In September's throne speech, Chr=E9tien outlined priorities before he
retires in early 2004, including ratification of the Kyoto treaty on
climate control and increased spending on children and aboriginals.

A rising chorus of voices has also demanded significant new spending on
the country's cash-strapped military.

Finance Minister John Manley has predicted money will be tight. He
expects a surplus of only about $1 billion in fiscal 2002-2003 with $3
billion set aside in a contingency reserve.

The finance minister has forecast a much larger kitty in future years,
based on expectations of improved economic growth, rising to $3.1
billion in 2003-04 and $3.5 billion in 2004-05.

The IMF agrees that growth will continue in Canada but at a slower pace
than Manley expects.

It predicts three per cent growth next year following a 3.5 per cent in
2002 =97 slightly below federal government projections.

Manley has predicted the economy will expand by an average 3.4 per cent
in this year and 3.5 per cent in 2003.

Still, Manley was enthusiastic about the IMF report.

Its findings demonstrate that "Canada's sound fiscal and monetary
policies have helped our economy post robust growth during a period of
international uncertainty," Manley said in a statement.