Health Tax Study Slammed:
CD Howe Scheme 'Benefits Wealthy'
By Mark Kennedy
Southam Newspapers (May 3, 2002)
OTTAWA - Canadians should pay a new tax directly linked to how much they cost the medicare system every year, says a provocative new report. The detailed proposal, outlined in a report released Thursday by the C.D. Howe Institute, says a person's health-care costs should be treated as a "normal consumption expenditure," just like food and housing costs.
As a result, it argues, individuals and families should be taxed 40 per cent on their yearly health-care services, with an upper limit so that the tax would never exceed three per cent of their annual income. Under the think-tank's proposal, families with annual incomes below $10,000 would not pay the health tax, which it dubs a "co-payment contribution."
But it estimates that 62 per cent of Canadians would end up seeing the maximum three per cent of their income directed towards the new tax. Nearly half of the "typical" families and individuals with incomes between $30,000 and $60,000 would pay the maximum - with the average tax in this group being $760 a year.
The institute says that had this scheme been in place in 2000, the new tax would have raised $6.6 billion, which governments could have put towards lowering personal income tax rates.
As well, it says the scheme would have another benefit - informing patients about the costs of their own health care and making them think twice about whether to seek medical attention. In that regard, the report says the scheme would have slashed overall medicare costs by 13.5 per cent ($6.3 billion) in 2000. This "reduced use" by patients would lead to shorter waiting lists and the cost savings would give provinces more flexibility to fund health-care priorities, says the institute.
"Canadians deserve a public health-care system that is funded both efficiently and fairly," says the report. "Yet the current financing of health care is neither. . . . Our proposal is consistent with good health care and tax policies."
The institute says its idea would enhance efficiency because it would "encourage" patients and health-care providers to be more accountable for costs. It would also be more fair because people who use medicare a lot would bear a greater burden for paying the costs than those who don't. But Mike McBane, of the Canadian Health Coalition, issued a scathing condemnation of the proposal.
"It is a user fee but it's of a different sort," he said. "Instead of nailing you at the hospital, they nail you at the end of the year.
"It's quite simply a tax on the sick, a scheme to benefit the healthy and the wealthy."
McBane said the proposal strikes at the heart of the basic question being asked by Roy Romanow, whose royal commission on medicare is urging Canadians to decide on the core "values" that should underlie the future public health system.
"The values behind the C.D. Howe and many other right-wing think-tanks is that health care is a commodity," said McBane.
He added that unlike food and housing, patients aren't in a position to make an informed decision on whether to "spend" health-care dollars because they are in the hands of medical professionals.
"It would discourage people who are sick from seeking treatment so that it would make their conditions even worse, costing hospitals even more. In the meantime, people would be suffering and there would be needless deaths. All in the name of some blind ideology."
OPTIONAL CUT
But the C.D. Howe Institute flatly rejected the charge that its proposal is a tax on the sick.
"This statement is based on the assumption that all health-care needs are unrelated to a person's activities," said the report. "Although it is often the case that luck or heredity affects a person's health, personal preventive actions also have some influence on health outcomes."
Under the proposal, when a patient visits a doctor or hospital, their provincial insurance card would "work like a credit card."
At the end of each visit, the patient would sign a receipt that details the type and cost of services received. A form which lists all services incurred would be sent to the patient, either on a quarterly basis or with the annual tax forms.