New Brunswick’s Lost ‘Export’ Revenue From Health Care
David Campbell is a Moncton-based economic development consultant and co-host of the Huddle podcast, Insights. The following piece was originally published on his blog, It’s the Economy, Stupid!, on Substack.
By now, avid readers will know that I advocate turning over every stone to find economic development opportunities. I took this philosophy with me when I joined the Government of New Brunswick as chief economist in 2015. And, yes, I went there: health care as an economic development opportunity.
I know, I know. I got schooled real quick.
In theory – and I state this as theory – it’s not a crazy idea. Or at least not that crazy an idea. A province like New Brunswick gets great at something related to health care (maybe the Stan Cassidy rehab centre combined with UNB’s expertise in biomedical engineering) and then we offer that as an export service (or medical tourism, let’s say). Again, in theory, people from all over Canada and beyond would come here to get world-class rehab services, technology, or clinical trials.
I thought about this idea again when I read recently that Nova Scotia is basically fed up with residents from the province’s west using health care services in Moncton, even though it is 1/3 the distance to Halifax. So, the province is beefing up services in Amherst.
Now, when I raised this idea while in government, I got a polite response. I was even able to have a consultant develop a report on the Stan Cassidy opportunity but I was told there were multiple reasons why this is a terrible idea. First, we don’t have enough capacity to serve our own population, so what about the queue? The amount provinces charge each other for interprovincial health services is also not great (at or even below cost). Plus, there is the additional canard about private health care: could we really charge people from Maine to get world-class rehab services in Fredericton?
This antipathy helps explain why New Brunswick generates only 19 cents in “export” revenue from health-related services for every dollar of “imports” over the five-year period for which we have recent data. We bought $575 million in services, mostly government-related but this includes dental service (two of my three kids went to Pugwash for braces and if many of you are honest, you did this too – there was a guy down there charging half). Over the same five years, we only “sold” $112 million in services, for a deficit of $463 million.
To put this into some perspective, the New Brunswick government likely lost close to $100 million in tax revenue. Instead, it went to the provinces where these services were procured. Note that this doesn’t cover the lost economic activity from health-related training. New Brunswick ranks ninth among the 10 provinces for health care-related graduates from PSE every year. I haven’t quantified this, but it would be in the millions.
Again, with the shortages of health care workers and everything else going on right now, even putting this on paper is likely to trigger a lot of folks.
But, please, let me just live in fantasy land, just for a while. In that fantasy, New Brunswick is pumping out health care workers in an area where we have developed a national expertise Those high-paying jobs are creating high-value economic activity and generating tens of millions of dollars in tax and fee revenue that is used to reduce the cost of health care for residents.
Maybe in this fantasy land we reduce our health services trade deficit to the same as Saskatchewan, which has no deficit at all.
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