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Health costs are slowing, but we’re not getting enough value for money

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Apparently, all is well. We can all go back to sleep now.

The year-over-year increase in health spending has hit its lowest level in 15 years, according to the Canadian Institute for Health Information.

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Overall health spending increased 2.6 per cent last year – a little less than inflation. (That's a mere $4-billion.) Sure spending is still increasing – but it's a decreased increase! And it's a marked improvement over the 2000-2010 period, when increases in health spending averaged around 7 per cent per annum.

This, ladies and gentlemen, is what passes for progress and is cause for celebration in Canadian political and public policy circles.

So giddy were some, that there were whispers to the effect that we may finally be "bending the cost curve" – a reference to the classic health spending graph that usually features a single line rising at a 45-degree angle.

Now there are suggestions that, after three years of modest hikes, the line may be flattening out for good and that all the worries about financial sustainabilility of medicare may be behind us.

Who are we kidding exactly?

For as long as we have been systematically tracking national spending, costs have increased relentlessly – driven by population increases, inflation, aging, ballooning salaries and, above all, increased utilization.

Along the way, there has been an ebb and flow, periods of orgiastic out-of-control spending in good economic times followed by reluctant restraint in the hard times.

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There is nothing to suggest that we are seeing anything but a temporary dip.

After all there has been no grand plan to control health spending. The dip has been brought about largely by circumstance – low inflation due to a global economic slowdown.

Spending went down because cash-strapped government tightened their belts a bit. There was a long-overdue move to bring down the regulated price of generic drugs, which brought significant savings. There was some restraint in the wage increases paid to health professionals like nurses and physicians. And there were nickel-and-dime cuts in services.

History tells us that, once the economy picks up a bit, we will make up for these reductions and then some. That's because, in healthcare, we have not changed our way of doing business one iota.

In 2013, Canadians will spend an estimated $211-billion healthcare. That includes $148.2-billion from the public purse and another $63-billion in private spending.

The CIHI numbers tell us how much we spend. They also tell us, at least generally, how we spend health dollars:

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  • Hospitals: $62.6-billion;
  • Drugs: $34.5-billion;
  • Physician services: $31.4-billion;
  • Other institutions (nursing homes, etc.): $22.3-billion;
  • Dental care: $12.6-billion;
  • Public health: $10.8-billion;
  • Capital spending: $9.7-billion;
  • Other health professionals (vision, physio, etc.): $8.4-billion;
  • Administration: $6.4-billion;
  • Health research: $3.4-billion;
  • Other: $9.1-billion.

The distribution of funds hasn't changed a lot in recent memory; the pie just gets bigger.

In Canada, we obsess far too much about how much we spend on health care and far too little about how and why we're spending the way we do.

Are we investing our health dollars in the right areas? Are we actually getting value for money? Are we using our public health dollars wisely to ensure that all Canadians have access to essential care?

The evidence is pretty overwhelming that the answer to all those questions is a resounding "No." We spend far too much on hospital care and too little on community care. We spend too much on sickness care and not enough on health promotion and prevention.

We spend a lot on drugs but there is a strange mixture of overuse, underuse and misuse that suggests we are not getting a lot of bang for the buck.

Whether health spending rises or falls, whether the increases are above or below the rate of inflation, and the degree to which the cost curve is bent (or not) are all nice little accounting footnotes, but they are not what's important.

Are we delivering what the public expects (or should expect) from a universal health system: accessible, prompt affordable, quality care, regardless of what individuals earn or where they live?

Are Canadians, individually and collectively, getting value for money?

That's what really matters. That's the bottom line that should concern us a lot more than year-over-year spending.

But if you ask the wrong questions, you get falsely reassuring answers.

André Picard is The Globe's health columnist.

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