Alberta
Healthcare Innovation Isn’t ‘Scary.’ Canada’s Broken System Is
From the Frontier Centre for Public Policy
“Our healthcare system is a monopoly installed at every level with the culture inherent to monopolies, whether public or private. The culture is based on regulation and budgetary controls, closed to the outside world, impermeable to real change, adaptation and innovation. It is a culture that favours inefficiency.”
Why is the Globe and Mail afraid of healthcare reform that works?
The Globe and Mail editorial board seems to find healthcare innovation “scary.”
On Sept. 3, it published an editorial called “Danielle Smith has a scary fix for healthcare,” criticizing the Alberta Premier’s idea to introduce competition in the province’s health system. Premier Smith’s plan involves third-party leasing of underperforming hospitals while the government retains ownership and continues funding.
Let’s be clear: the real problem isn’t Smith’s proposal – it’s the current state of healthcare across Alberta and Canada. Sticking with the status quo of underperformance is what should truly alarm us. Rather than attacking those trying to fix a broken system, we should focus on much-needed reforms.
So, what exactly is Smith proposing? Contrary to what you may have heard, she isn’t dismantling Alberta’s universal healthcare or introducing an American style system. Yet the public sector unions – and certain media outlets – seem to jump into hysterics any time innovation is proposed, particularly when it involves private-sector competition.
Predictably, groups like Friends of Medicare, with their union ties, are quick to raise the alarm. Yet media coverage often fails to disclose this affiliation, leaving readers with the impression that their views are impartial. Take Global News’ recent coverage, for example:
In late August, Global News reporter Jasmine King presented a story on potential changes to Alberta’s healthcare system. She featured a spokesperson from Friends of Medicare, who predicted that the changes would be detrimental to the province. However, the report failed to mention that Friends of Medicare is affiliated with public sector unions and has a history of opposing any private sector involvement in healthcare. The news segment also included a statement from the dean of a medical faculty, who was critical of the proposed changes. Missing from the report were any voices in favour of healthcare innovation.
Here’s the real issue: Canada is an outlier in its resistance to competition in healthcare. Many European countries, which also have universal healthcare systems, allow private and non-profit organizations to operate hospitals. These systems function effectively without the kind of fear-mongering that dominates the Canadian debate.
Instead of fear-based comparisons to the U.S., let’s acknowledge the success stories of countries that have embraced a mixed system of healthcare delivery. But lazy, fear-driven reporting means we keep hearing the same tired arguments against change, with little context or consideration of alternatives that are working elsewhere.
It’s ironic that The Globe and Mail editorial aims to generate fear about a health care policy proposal that could, contrary to the alarmist reaction, potentially improve efficiency and care in Alberta. The only thing we truly have to fear in healthcare is the stagnation and inefficiency of the current system.
Claude Castonguay, the architect of Quebec’s Medicare system, released a report in 2008 on that province’s health system, calling for increased competition and choice in healthcare.
“In almost every other public and private areas, monopolies are simply not accepted,” he wrote. “Our healthcare system is a monopoly installed at every level with the culture inherent to monopolies, whether public or private. The culture is based on regulation and budgetary controls, closed to the outside world, impermeable to real change, adaptation and innovation. It is a culture that favours inefficiency.”
The fear of competition is misguided, and Canadians are increasingly open to the idea of paying for private treatment when the public system falls short.
Let’s stop demonizing those who propose solutions and start addressing the real issue: a system that is no longer delivering the care Canadians need. The future of healthcare depends on embracing innovation, not clinging to outdated models and misplaced fears.
Joseph Quesnel is a Senior Research Fellow with the Frontier Centre for Public Policy.
From the Fraser Institute
By Tegan Hill
In February 2024, the Smith government promised to share a plan to grow the Heritage Fund—Alberta’s long-term resource revenue savings fund—with the public before the end of 2024. But 2025 is upon us, and Albertans are still waiting.
The Lougheed government originally created the Heritage Fund in 1976/77 to save a share of the province’s resource wealth, including oil and gas revenues, for the future. But since its creation, Alberta governments have deposited less than 4 per cent of total resource revenue in the fund.
In other words, for decades successive Alberta governments have missed a golden opportunity. When governments make deposits in the Heritage Fund, they transform onetime (and extremely volatile) resource revenue into a financial asset that can generate more stable earnings over time. Eventually, the government could use annual income from the fund to replace volatile resource revenue in the budget.
Historically, however, rules that would have helped ensure the fund’s growth (for example, a requirement to deposit 30 per cent of resource revenue annually) were “statutory” rather than “constitutional,” which meant Alberta governments could easily disregard, change or eliminate these rules once they were no longer convenient.
And they did. The government changed that 30 per cent requirement to 15 per cent by 1982/83, and after an oil price collapse, eliminated it entirely in 1987/88. Due to a lack of consistent deposits, paired with the real value of the fund eroding over time due to inflation, and nearly all fund earnings being spent, the Heritage Fund is expected to be worth less than $25 billion in 2024/25.
Again, while Premier Smith has promised to grow the fund to between $250 billion to $400 billion by 2050, we’ve yet to see how she plans to do that. Whatever plan the government produces, it should heed lessons from other successful resource revenue savings fund such as Alaska’s Permanent Fund.
The Alaska government created its fund the same year Alberta created the Heritage Fund, but Alaska’s fund is worth roughly US$80 billion (or C$113 billion) today. What has the Alaska government done differently?
First, according to Alaska’s constitution, the state government must deposit 25 per cent of all mineral revenues into the fund each year. This type of “constitutional” rule is much stronger than a “statutory” rule that existed in Alberta. (While Canada does not have separate provincial constitutions, it’s possible to change Canada’s Constitution for province-specific measures.) Second, the Alaska government must set aside a share of the fund’s earnings each year to offset the effects of inflation—in other words, “inflation-proof” the principal of the fund to preserve its real value. And finally, the government must pay a portion of fund earnings to Alaskan citizens in annual dividends.
The logic of the first two rules is simple—the Alaskan government promotes growth in the fund by depositing mineral revenue annually, and inflation-proofing maintains the fund’s purchasing power. But consider the third rule regarding dividends.
The Alaska government created the annual dividend, paid out annually to Alaskans, to create political pressure for future governments to responsibly maintain the fund. Because citizens have an ownership share in the fund, they’re more interested in the state maximizing returns from its resource wealth. This has helped maintain and reinforce robust fiscal rules that make the Permanent Fund successful.
Based on this success, if the Smith government began contributing 25 per cent of resource revenue to the Heritage Fund and inflation-proofed the principal, it could pay each Albertan a total dividend between roughly $600 to $1,100 from 2024/25 to 2026/27, or roughly $2,300 to $4,400 per family of four. And as the fund grows, so would the dividends.
Almost one year ago, the Smith government promised a new plan for the Heritage Fund. When the plan is finally released, it should include a constitutional requirement for consistent contributions and inflation-proofing, and annual dividends for Albertans.
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