Alberta
Province freezes funds for doctors and launches process to work out a new funding formula
New physician funding framework announce
Alberta will maintain physician funding at $5.4 billion, the highest level ever, and implement its final offer to the Alberta Medical Association (AMA) to avoid $2 billion in cost overruns.
Existing terms will remain in place until March 31, 2020. A new funding framework will then be introduced, in a multi-year process that will require consultation with the AMA at all stages. The new framework will make changes proposed during negotiations to prevent cost overruns, align benefit programs and administrative fees with those of comparable provinces, and improve services for patients.
The eleven consultation proposals will also be implemented on March 31. This includes phasing in changes to complex modifiers, reducing the rate physicians can charge for this billing code to $9 from $18, for a period of one year before the code is removed in 2021-22. In summer 2020, at the direction of the Minister of Health, the Government of Alberta will also introduce a new alternative relationship plan (ARP) with built-in transition benefits to encourage physicians to move from fee-for-service to a three-year contract.
“Our province is facing cost overruns of $2 billion in the next three years due solely to physician compensation. If left unaddressed, these costs would impede efforts to reduce surgical wait times, improve mental health and addiction services, and expand the number of continuing care beds. Despite repeated efforts, the AMA failed to put forward alternatives that would hold the line on physician compensation. The new framework announced today will prevent cost overruns, allow our province to improve services for patients, and still ensure that Alberta’s doctors are amongst the highest paid physicians in all of Canada.”
Background
- The new funding framework will maintain government’s current level of spending on physicians at $5.4 billion.
- The new funding framework avoids anticipated cost overruns of $2 billion over the next three years.
- Alberta has been spending more on physician salaries than other provinces, yet most of its health outcomes are below national averages.
- A doctor in Alberta earns approximately $90,000 more than a doctor in Ontario and physicians’ fees have almost tripled since 2002.
Elements of the new funding framework
- Changes to Alberta’s complex modifier billing system. The rate physicians are able to charge for complex modifiers will be reduced to $9 from $18 for a period of one year before this billing code is removed in 2021-22. Once the new framework is fully phased in, physicians will be able to bill an additional fee after spending 25 minutes with a complex patient case. Alberta remains the only province in Canada that allows for a top-up payment for complex visits.
- Removal of the comprehensive annual care plan from the list of insured services. Currently, physicians can also bill for a similar consultation called a comprehensive annual visit. No other province in Canada compensates physicians twice for annual care consultation.
- Implementation of a new daily cap, modelled after a cap in place in British Columbia, of 65 patients per day. Large patient loads can contribute to physician burnout and may compromise patient safety and quality of care.
- Removing physician overhead subsidies from all hospital-based services. Physicians who work in AHS facilities should not be billing for overhead costs that their community physician colleagues face, such as leases, hiring staff and purchasing equipment.
- Ending of clinical payments, or stipends, by AHS to physicians. This change ends duplication of payments to contracted physicians.
Timeline
- In September 2019, government provided notice to the AMA that it intended to begin negotiations on the AMA Agreement. The notification provided time for the AMA to prepare its proposals.
- In November 2019, negotiations began with the AMA to reach a new agreement; government began consultations on 11 proposed changes to the schedule of medical benefits (SOMB, or “insured services”).
- In January 2020, negotiations and consultations proceeded with no agreement reached. Mediation, on both the negotiation and consultation proposals, began January 31 and continued into February.
- The parties were not able to reach an agreement during mediation.
- Government will implement its final offer from the negotiating table, including the 11 consultation proposals, on March 31.
Alberta
Alberta government should eliminate corporate welfare to generate benefits for Albertans
From the Fraser Institute
By Spencer Gudewill and Tegan Hill
Last November, Premier Danielle Smith announced that her government will give up to $1.8 billion in subsidies to Dow Chemicals, which plans to expand a petrochemical project northeast of Edmonton. In other words, $1.8 billion in corporate welfare.
And this is just one example of corporate welfare paid for by Albertans.
According to a recent study published by the Fraser Institute, from 2007 to 2021, the latest year of available data, the Alberta government spent $31.0 billion (inflation-adjusted) on subsidies (a.k.a. corporate welfare) to select firms and businesses, purportedly to help Albertans. And this number excludes other forms of government handouts such as loan guarantees, direct investment and regulatory or tax privileges for particular firms and industries. So the total cost of corporate welfare in Alberta is likely much higher.
Why should Albertans care?
First off, there’s little evidence that corporate welfare generates widespread economic growth or jobs. In fact, evidence suggests the contrary—that subsidies result in a net loss to the economy by shifting resources to less productive sectors or locations (what economists call the “substitution effect”) and/or by keeping businesses alive that are otherwise economically unviable (i.e. “zombie companies”). This misallocation of resources leads to a less efficient, less productive and less prosperous Alberta.
And there are other costs to corporate welfare.
For example, between 2007 and 2019 (the latest year of pre-COVID data), every year on average the Alberta government spent 35 cents (out of every dollar of business income tax revenue it collected) on corporate welfare. Given that workers bear the burden of more than half of any business income tax indirectly through lower wages, if the government reduced business income taxes rather than spend money on corporate welfare, workers could benefit.
Moreover, Premier Smith failed in last month’s provincial budget to provide promised personal income tax relief and create a lower tax bracket for incomes below $60,000 to provide $760 in annual savings for Albertans (on average). But in 2019, after adjusting for inflation, the Alberta government spent $2.4 billion on corporate welfare—equivalent to $1,034 per tax filer. Clearly, instead of subsidizing select businesses, the Smith government could have kept its promise to lower personal income taxes.
Finally, there’s the Heritage Fund, which the Alberta government created almost 50 years ago to save a share of the province’s resource wealth for the future.
In her 2024 budget, Premier Smith earmarked $2.0 billion for the Heritage Fund this fiscal year—almost the exact amount spent on corporate welfare each year (on average) between 2007 and 2019. Put another way, the Alberta government could save twice as much in the Heritage Fund in 2024/25 if it ended corporate welfare, which would help Premier Smith keep her promise to build up the Heritage Fund to between $250 billion and $400 billion by 2050.
By eliminating corporate welfare, the Smith government can create fiscal room to reduce personal and business income taxes, or save more in the Heritage Fund. Any of these options will benefit Albertans far more than wasteful billion-dollar subsidies to favoured firms.
Authors:
Alberta
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