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Alberta

Alberta’s bureaucratic shuffle bears little resemblance to necessary health-care reforms

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5 minute read

From the Fraser Institute

Sometime soon, the Smith government will begin a major shift in the administrative structure of the province’s health-care system, switching from a single overarching health authority (Alberta Health Services) to multiple authorities each tasked with overseeing one area of the health-care system. Unsurprisingly, the usual defenders of the status quo were quick to decry the reform as unnecessary or problematic. To other critics, this seems a lot like a distraction tactic from the old playbook where the deck chairs on the Titanic are shuffled to make it appear as if the government is finally doing something about the province’s failing health-care system while nothing will really change.

Then again, it’s also possible that the provincial government is building the structure for some very positive reforms that will meaningfully benefit Alberta’s patients in the future. Alberta’s health-care system is not known for being efficient, effective or timely—and reforms are badly needed.

Among the provinces, Alberta’s provincial health spending ranked second-highest (after adjusting for age and sex) in 2021, the latest year of available data, while Albertans endure health-care wait times that are longer than the national average. Nationally, Canada is a relatively high spender among universal health-care countries, yet ranks near the bottom for the availability of medical professionals, medical technologies and hospital resources. And Canadian patients suffer some of the longest delays for access to care in the developed world.

Put simply, Albertans spend more and get less than their counterparts in other developed countries when it comes to universal health care. The solution to this problem is to learn from countries such as Switzerland, Australia and Germany, which all deliver more timely universal care with comparable health spending to our own.

So what do these countries do differently? They all have private competitive providers delivering universally accessible services within the public system, and payment for such care is based on actual delivery of services, known as “activity-based” funding. Alberta’s new bureaucratic shuffle appears to bear little resemblance to these higher-performing approaches pursued elsewhere. And if the bureaucratic shuffle is the entire goal, then this reform will likely generate little to no improvement.

But again, perhaps the Smith government is setting the stage for meaningful reform. Before moving from a government-dominated health-care system (like we have in Alberta and every other province) to a higher-performing model with competitive patient-focused delivery, governments must first separate and clearly define the roles of the purchaser of health care and the providers of that care. The Alberta Health Services, which the Smith government will soon begin to dissect, directly provides, oversees and pays for health-care services (e.g. surgeries) in the province. This leads to a lack of transparency and the politicization of health-care decision-making.

A shift to multiple health authorities focused on the delivery of care, accountable to other authorities and the provincial government, has hints of the more transparent and contractual relationships between payers and providers that have reduced wait times and enhanced health system efficiency in a number of European countries. If that’s indeed the government’s goal, Albertans could soon benefit from an improved health-care system.

In other words, if this reform, to move from one large health authority to multiple authorities, is really about more clearly defining government’s role as the purchaser and oversight authority for universal health care, with authorities and providers being transparently accountable for delivering timely quality care to patients, then Albertans may well be on the road to shorter wait times and a higher-quality health-care system.

However, if this is the provincial government working from the same old playbook, with another administrative shuffle to distract Albertans from the real problems in the health-care system, then nothing will really change and patients will pay the price.

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

Published on

From the Fraser Institute

By Tegan Hill

According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.

The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.

For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.

In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.

Of course, if the government falls back into deficit there are implications for everyday Albertans.

When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.

According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.

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Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

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Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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