Madam Speaker, I am pleased to have the opportunity to speak in support of Bill C-95.
In creating the Department of Health, this bill not only makes good administrative sense, it also makes good economic sense. The concepts of health and economics are intertwined. The health of the Canadian people is vital to the health of the Canadian economy and the health of the Canadian economy is vital to the health of Canadian people.
Our medicare system is based on sound economic principles, the same kind investors look for in evaluating a private sector enterprise. There are four main reasons for the success of this system.
First, our publicly funded system has enormous economies of scale. We have only one insurer in each province that provides standard health insurance coverage to all residents. No risk rating is needed. Payments to providers are simple. Financing the system is streamlined.
Second, our system results in lower overhead costs. Researchers at Harvard have found that Canada spends only 1.1 per cent of gross domestic product on health care administration. The United States with its private health insurance scheme spends about two and a half times that much. If we spent as much as the Americans do on administration, health care expenditures in Canada would increase by $18.5 billion a year. That is more than the entire health care budget for the province of Ontario.
Third, a publicly financed system can ensure universal coverage. That is an important element to a healthy workforce which contributes to a more competitive economy and economic growth. When there are fewer work days lost to illness productivity increases. Healthier people make fewer demands on the system. They live longer and they contribute more to the overall wealth of the nation.
The fourth factor that makes public health insurance more efficient is government's tremendous bargaining power in negotiating the cost of service by setting and enforcing global budgets for hospitals and physicians' fees. This gives government powerful levers to keep health care costs under control. In fact real per capita public health expenditures in this country have been declining since 1993. Estimates for 1994 suggest public spending on health declined in real terms by about 3.4 per cent.
Economic analysis makes it clear that Canada's health system provides major economic benefits. These benefits stem from efficiencies and cost savings associated with public funding.
Our health system attracts investment to Canada and it helps business to compete from Canada. Enormous economies of scale, lower overhead costs, improved worker productivity, tremendous bargaining power and proven results; if you heard, Madam Speaker, of a private company that could point to those attributes you would be rushing off to call your broker.
Our public health insurance system is a major asset to business. It is not a subsidy. It is an efficiency. We have entered an era when the public sector's role is quite appropriately being re-examined. Valid questions are being asked about government's place and the values of public funding versus private funding.
Health care is one area where government is not just as efficient, it is more efficient. It is not by accident that the United Nations rates Canada number one in the human development index. It has taken effort, and the development of the medicare system has been an important part of that.
It is also not surprising that an Environics survey in late 1993 concluded that 79 per cent of Canadians believe it is very important for the federal government to sustain the health system. Medicare, as we know, is an insurance program. In effect we have used our ingenuity, our foresight and tax dollars to create a giant insurance pool covering all Canadians. Health care needs and the related costs that medicare covers would generally exist no matter what system we have in place to pay and as we know health services are never free. Public or private, somebody must pay.
All we have to do is look at the auto industry. For every car that rolls off the assembly lines of Detroit the cost includes an average of more than $700 U.S. for privately funded health insurance. Is it any wonder that the big three automakers have consistently been among the strongest voices for a comprehensive public health insurance plan in the United States? Universal coverage is much more difficult, if not impossible, in a system based on private insurance schemes. We have evidence of that in the United States where fully 15 per cent of Americans are without any health insurance at all.
One fact will put this in perspective. We spend only 1.1 per cent of our GDP on health care administration. That is about $272 per person. The U.S. spends about two and a half times that much, about $615 U.S. per person and not one of those billions of additional dollars goes to patient services.
There is no direct relationship between increased health care spending and health outcomes. Health is determined by a number of factors of which health care is only one. The environment within which we are raised and live in is another. We do not necessarily gain better health from extra health care spending.
With those two facts it is clear that controlling health costs makes sense for both the public and the private sector. The need is to spend money wisely. Our medicare system, through federal-provincial funding, covers 72 per cent of total health spending in Canada, but some costs add nothing to positive outcomes.
The first economic benefit of our medicare system is that we have administrative overhead costs under control. We have one organization in each province that provides insurance coverage, not dozens or hundreds, as in an American state. We do not have the elaborate and costly processes that private insurers need to rate the risk of people or groups.
Think for a moment about private car insurance and the different premium structures for young, old, men, women, experienced and accident-prone drivers. We do not require the intensive control systems private insurers use to monitor premiums and set payment schedules. Simply put, we do not spend as much on overhead.
The relative difference in spending between us and our neighbour to the south saves our economy $30 billion a year. That is why we have large employers, seniors, working people, and health activists warning against the erosion of medicare. They know that costs will increase significantly with a two-tier system. They know another thing: we will all foot the bill.
Hon. members might be interested in another related economic benefit of Canada's medicare system; that is, a better record of controlling costs. Each provincial and territorial government is the predominant buyer of health care in their jurisdiction. This gives them enormous leverage to give the most service at the best price to taxpayers. They can negotiate fee structures and service costs in a
way no private insurer could ever hope to. They can shift spending to achieve more cost-effective outcomes.
In comparison with the public sector record, the private health sector has had little success in cost control. It accounts for more than a quarter of all health spending, and its costs have been growing at more than six per cent per year since 1990. Individuals and insurers in the private sector have found little leverage to bring these costs under control.
Canadians understand this difference. We have agreed as a country to pool our risk across society. We have agreed to let governments work out fair prices as the buyer on our behalf. The economic benefits of our medicare system are something all Canadians can share. We win in the quality of our health care system, which is second to none in the world. We also win in economic terms.
I am proud to support the passage of Bill C-95, which gives a new name to a department that has been working hard and well for all Canadians.
