Health budget cut, levies introduced

The province has cut health spending for the first time in 20 years, and has reintroduced a form of health-care premium for Albertans.

The 2015 budget, announced Thursday, will see Alberta Health's budget reduced to $18.9 billion, a $159-million decrease compared to last year. The cuts include a $286 million decrease to Alberta Health Services and an $8 million reduction to the drugs and supplemental health benefits budget. Physician compensation and development will increase by $119 million.

Health Minister Stephen Mandel has said health spending in Alberta is out of line with the rest of the country, and efficiencies will be found that won't affect the quality of care for Albertans.

Richard Plain, a health economist and retired University of Alberta professor, said that might be a tall order depending how those efficiencies are achieved.

"The devil is in the details on that," he said. "There's going to have to be one of the most innovative, effective redesign of some of the existing health-care programs we've ever seen in this province to carry that out."

Nobody from Alberta Health Services (AHS) was available to comment, but a media release issued shortly after the budget was announced stated AHS will not reduce the number of beds, surgeries, cancer treatment, home-care services nor access to emergency departments. Instead, it will implement cost-containment measures including reviewing cellphone costs, reducing severance, wage freezes for management, and reviewing management and operational structures.

Plain pointed to two areas in particular where changes will have to be made to reduce strain on the hospital system: adding more long-term care beds and improving access to after-hours care to keep people out of the emergency departments.

One of the biggest expenses in the health-care system is wages and salaries, something that can't be addressed overnight with the Klein-era tactics of deep cuts, layoffs, breaking contracts and closing hospitals.

Rather, Plain said, any changes made will have to be gradual if the intent is, as Mandel has suggested, to bring those costs in line with the national average. Nonetheless, that will be a challenge because wages in Alberta are higher than the rest of the country right across the board in both the public and private sectors, which was due in large part to the need for skilled workers in the oil and gas sector.

"How do you then say to the public sector side that they're out of line with other jurisdictions?" he said. "That may be, but you may not be out of line with the general salary levels in other sectors of the province."

Local impact

In St. Albert specifically, there are some areas that will have a specific local impact: cuts to funding for Primary Care Networks and the lack of any capital funding for the Sturgeon Community Hospital, which suffers from significant overcapacity problems.

Dr. Darryl LaBuick, president of the St. Albert & Sturgeon PCN, said while he hadn't been able to look closely at the wording of the budget as of Friday morning, he doesn't anticipate any immediate impact from the cuts.

"It won't affect our present operations because we have strategized and planned around the potential cuts that could be coming," he said. "It could affect some of the programs we were hoping to expand and improve upon. No doubt that will always affect things when you have less money."

Some specific programs he hoped could be expanded in the future include improving access, chronic disease management, primary care mental health and communications strategies.

As for the overall impact of the cuts across the province, LaBuick said at this point it's just too soon to say.

"It's going to be challenging to try and do more with less," he said. "There needs to be some opportunities for some creative discussion, and that has yet to be determined."

With respect to the lack of additional capital funding for the Sturgeon Community Hospital, Plain said the hospital must be considered in the context of the entire Edmonton zone. All hospitals in the zone suffer from some degree of overcrowding, and that issue arises in part because of the shortage of long-term care beds.

"As we know now, given the condition in the whole system, it's a system-wide problem in the Edmonton area," he said. "You've got so many people waiting for placement for long-term care that that's interfering with the whole system."

Health-care levy

The province has introduced an additional revenue stream that will see Albertans contribute directly to the cost of health care, known as the Health Care Contribution Levy, which will come into effect July 1.

It will be a progressive fee, deducted from paycheques in the same way as provincial income tax. Albertans earning less than $50,000 are exempt and the total levy is capped at $1,000 for any given individual. Critics have described this levy as a tax increase by another name.

When asked how this money would specifically be directed to the health-care system, Finance Minister Robin Campbell told reporters the money collected would go into general revenues before being directed to the health budget.

"It will eventually get there," he said.

Plain said considering the significant portion of the province's general revenue directed to health care, close to 40 per cent, the difference isn't particularly relevant.

Furthermore, he noted while taxpayers tend to think no tax is a good tax, the exemption for people earning less than $50,000 per year means this levy will exempt a larger proportion of lower- and middle-income earners than in other provinces.

"I think it's a pretty good system, remembering that no tax is a good tax," he said.