Alberta Budget 2017: What does it mean to health care?

By Terry Inigo-Jones,
HSAA Communications and
Gaetan Drapeau,
HSAA Researcher

Health-care spending

Total spending on health care in Alberta is budgeted at $21.406 billion in fiscal year 2017-18 (excluding Climate Leadership Plan and debt-servicing costs). The operating expense budget will increase by 3.2 per cent over the previous year, an increase of $623 million. This increase is in line with the projected combination of population growth and inflation. Anything less than population growth and inflation is considered to be a cut in real terms. The government says this shows it is keeping its commitment to maintaining stable funding for health care.

  • Total spending in fiscal year 2017-18 by Ministry of Health, which includes the Department of Health, Alberta Health Services (AHS) and the Health Quality Council of Alberta (HQCA): $21.406 billion.
  • Increase over last year: 3.3 per cent
  • Forecast rate of population growth and inflation: 3.2 per cent
  • Forecast total spending in fiscal year 2018-19 by Ministry of Health: $21.937 billion.
  • Increase over previous year: 2.5 per cent
  • Forecast rate of population growth and inflation: 3.4 per cent
  • Forecast total spending in fiscal year 2019-20 by Ministry of Health: $22.609 billion.
  • Increase over previous year: 3.1 per cent
  • Forecast rate of population growth and inflation: 3.4 per cent

The government is projecting a combined population growth and inflation rate of 3.4 per cent for 2018, 2019 and 2020. Average annual growth since 1997 has been 4.4 per cent.

Alberta Health Services spending

Spending by Alberta Health Services will not increase by as much as population growth and inflation in fiscal year 2017-18 or for the following two years, according to government forecasts. The budget says: “AHS will continue to identify operational efficiencies and clinical best practices.”

  • AHS budget for fiscal year 2017-18: $14.654 billion.
  • Increase over last year: 1.3 per cent
  • Forecast rate of population growth and inflation: 3.2 per cent
  • Forecast spending in fiscal year 2018-19 by AHS: $14.892 billion
  • Increase over previous year: 1.6 per cent
  • Forecast rate of population growth and inflation: 3.4 per cent
  • Forecast spending in fiscal year 2019-20 by AHS: $15.169 billion
  • Increase over previous year: 1.9 per cent
  • Forecast rate of population growth and inflation: 3.4 per cent

Acute care and home care: Spending on acute care by AHS will be cut by $57 million in fiscal year 2017-18, to $3.909 billion from $3.966 billion. Then government says this will be possible because of it shifting from a focus on hospitals and facilities to more community-based and home care. Spending on community care is set to rise by $200 million.

Ambulance services: AHS spending on ambulance services will be cut by $17 million in fiscal year 2017-18, to $471 million from $488 million. It will be held at $478 million for the following two years. The government says the reduction in 2017-18 is partly because AHS has finished paying for some ambulances, so those payment s don’t need to be in the budget. The government says that there will be savings because of the change in EMS dispatch in Calgary. It says there will be no cuts to front-line ambulance services as a result of the drop in spending. HSAA has disputed these claims. For years, paramedics have been saying that ambulance resources have not kept up with population growth and inflation. This had led to frequent Code Red shortages around the province, including in Calgary on budget day. A Code Red is when there aren’t enough ambulances to answer incoming emergency calls. HSAA has written to Minister of Health Sarah Hoffman and AHS asking for a detailed explanation of how these cuts will be implemented without affecting front-line care. For more information, read our media release.

Alberta Health Services employment

  • AHS is predicted to increase employment by 1,500 full-time equivalents (FTEs) in fiscal year 2017-18, an increase of 1.9 per cent from 2016-17.

Building health infrastructure

The Capital Plan will invest $4.492 billion over four years to continue to build health infrastructure. A total of 15 per cent of total Capital Plan spending over four years will go to health facilities and equipment.

There will be $400 million invested over four years toward the planning and implementation of a new hospital in Edmonton, starting in fiscal year 2018-19.

The plan includes $519 million for two new facilities at Edmonton’s Royal Alexandra Hospital campus. These are 145 long-term care beds at Edmonton’s Norwood Long-Term Care facility and a Child and Adolescent Mental Health facility.

There will also be $131 million to build 200 long-term care beds in Calgary’s Complex Continuing Care Facility.  

Meanwhile, construction is continuing on a new cancer centre in Calgary and work on the Willow Square long-term care facility in Fort McMurray is back on track after last year’s wildfire.

The government had previously committed to building 2,000 long-term care beds across the province, but it’s not clear if or when the rest of these beds will come and whether they will be publicly or privately operated.

Future pharmacy services will be bolstered through investment in a Provincial Pharmacy Central Drug Production and Distribution Centre.

Capital maintenance and renewal funding of $600 million across the province will ensure health-care facilities continue to provide the services Albertans need, including $65 million to support modernization and emergency-room renovations at Edmonton’s Misericordia Hospital.

However, there is nothing in the budget for fiscal year 2017-18 for Red Deer Hospital. AHS has said it needs 96 more inpatient beds, 18 more emergency beds and three more operating rooms.

Alberta government revenue, deficit and debt

The government says the deficit in fiscal year 2017-18 will be $10.344 billion, a decrease of $462 million on the deficit for fiscal year 2016-2017. Alberta is forecast to have $71.126 billion in debt by the 2019-20 fiscal year.

However, as economist Trevor Tombe points out in this analysis of the budget: “There’s no fiscal crisis here, not even close.”

The province’s debt is a little over three per cent of GDP now and is expected to rise to 11 per cent by 2020. While higher than Alberta has seen for decades, it is lower than any other province and it is sustainable, says the assistant professor of economics at the University of Calgary.

Finance Minister Joe Ceci boasted in his budget address that Alberta still has a tax advantage over other provinces. If Alberta had the same tax regime as the second-lowest taxed province of B.C., our government would raise another $8.7 billion. Alberta has a $9-billion tax advantage over Saskatchewan and a $13.4-billion tax advantage over Ontario.

However, while lower tax policies offer some advantages when competing for business investment and affordability over other provinces, the budget offered no new ways to increase revenue in order to lower government deficit and debt and to protect vital public services. The government’s slow path back to the black seems to rely on improvement in revenue from resources as oil prices improve.

Other reaction to the budget

The Parkland Institute at the University of Alberta has analysed the budget and listed 10 key things you need to know. Read the report here.

Friends of Medicare says the budget resists pressure to cut needed health services. Read its reaction here.

A breakdown of health funding in Budget 2017 can be seen here.