Bureaucratic shuffle not enough to fix health care in Alberta

Alberta Premier Danielle Smith spent a good portion of her yearend interviews discussing upcoming changes to the province’s health-care system including the shift from the single Alberta Health Services to multiple authorities each tasked with overseeing one area of the health-care system. But will the government pair this bureaucratic shuffle with reforms that will actually improve matters for Albertans?

Indeed, Albertans shouldn’t get too excited about reforms to the health-care system’s administrative structure. Back in 2008, Alberta Health Services replaced nine regional health boards, which themselves were amalgamated from 17 authorities created in 1994. Yet wait lists grew continuously over the entire period up to new record highs in 2023.

In 1993, a typical Albertan could expect to wait 10.5 weeks between GP referral and treatment by a medical specialist. By 2008, that wait time had increased to 18.5 weeks and now stands at a remarkable 33.5 weeks (longer than the national median wait of 27.7 weeks).

A lack of money is absolutely not to blame. On the contrary, Alberta’s provincial health-care spending ranked second-highest per person (after adjusting for age and sex) in 2021, while Canada nationally is a relatively high spender among universal health-care countries. At the same time, Canada 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.

In other words, there’s much more wrong with health care in Alberta than the number of authorities overseeing the governmental system.

So what’s the solution?

Simply put, Alberta should learn from other countries that deliver more timely universal care with comparable spending such as Switzerland, Australia and Germany. For example, in 2020 (the latest year of available data) only 62 per cent of patients in Canada received elective care within four months compared to 72 per cent in Australia, 94 per cent in Switzerland and 99 per cent in Germany.

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.

Based on details released so far, the Smith government’s bureaucratic shuffle appears to bear little resemblance to these higher-performing approaches pursued abroad. In fact, it looks a lot like the provincial government working from the same old playbook, with another costly exercise to distract Albertans from the real problems in their health-care system. If that’s all this reform amounts to, then we can expect no real improvement for Albertans in need of care or the taxpayers who fund it.

On the bright side, there’s some hope that the Smith government is setting the stage for more meaningful reform. To move toward a higher-performing model with competitive patient-focused delivery, the government must first separate and clearly define the roles of the purchaser of health care and the providers of that care. If moving from one large health authority to multiple authorities is 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 be on the road to shorter wait times and higher-quality health care.

But we’ll have to wait and see.

Author:

Nadeem Esmail

Senior Fellow, Fraser Institute

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

Published on November 21, 2024

Todayville

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.

Author:

Tegan Hill

Alberta

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

Published on November 21, 2024

Government of Alberta

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