Canada healthcare needs tough medicine, Dodge says

Wed Apr 6, 2011 6:38pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Whoever wins Canada's May 2 election faces an "enormous problem" in funding the country's public healthcare system and will have to make tough choices to keep it ticking, former Bank of Canada chief David Dodge said on Wednesday.

Dodge, co-author of a study on the system published by the market-friendly C.D. Howe Institute, said Canadian healthcare spending will rise to 19 percent of gross domestic product in 2031 from 12 percent in 2009 if it keeps growing at its current pace.

That will force Canadians to consider sharp cuts in other public services, higher taxes, more private spending to keep the system going, as well as a degradation of public healthcare standards, the report said.

"None of them are very easy...the reason we did this (study) is because unless we get on with thinking about it and beginning to make those decisions, then we're going to run into real trouble," Dodge told Reuters after presenting the report.

"The default option is what we did in the early '90s and what we did in the early '80s and we know that doesn't work. It's the one option that will not work...just cutting without doing anything else."

Dodge was a federal deputy minister of health before becoming governor of the Bank of Canada.

Dodge said he sees nothing wrong with explicit healthcare premiums, already adopted by several provinces including Ontario, British Columbia and Quebec.

The goods and services tax might also need to be increased to cover rising costs, he said. "The GST would be a sensible (choice) because it's based on how much you take out of production, not on how much you put into production.   Continued...

<p>David Dodge in a file photo. REUETRS/Chris Wattie</p>