EXCERPTS:
There is a great ad from the 1980s about Fram oil filters you can still find on Youtube. A mechanic is telling his customer that his colleague, Joe, has been fixing a lot of engines recently. To avoid this cost, he affirms in a friendly and confident way that it is important to change the oil regularly and "put in a new Fram filter when you're supposed to." The ad concludes with these legendary words:
Narrator: "You can pay me now [for the filter]."
Joe: "Or you can pay me later [to fix your engine at a much higher cost]."
Since the dawn of the welfare state in Canada (and everywhere else in the developed world for that matter), policy makers and citizens alike have struggled, whether consciously or not, with whether the state should pay now or pay later for health and social services. To a large degree, the pay-later school of thought has won out. With a few exceptions, our systems of care for individuals and families in need are almost exclusively of the last resort and emergency kind. Unlike the Scandinavians and many European countries, Canada and its provinces have tended to patiently let people find their own way out of trouble and intervene only when life or limb is at stake. The examples are endless. Child welfare systems across the country put the onus on families to work out conflict before social workers swoop in to try to salvage the situation. Poor people and poor families have to deplete their assets before being eligible for a social assistance cheque. Mental health patients wait endlessly for services more often than not in a homeless shelter. The physical and cognitive abilities of seniors need to deteriorate significantly before publicly funded institutional or home supports are made available. In other words, we are on our own until we really cannot be.
A poignant example of this habit was the age-old policy in New Brunswick to fund the extraction of social assistance clients' diseased teeth and not their repair. In 2008-09, the provincial government reversed the practice upon realizing it was in the long-term interest of client and government alike that beneficiaries keep their own teeth and keep their self-esteem and their job prospects as high as possible.
We all know in our hearts that the smarter approach is to pay now. This knowledge leads us to get our cars tuned up every 5,000 kilometres or so. It leads us to fix the cracks in our homes before they become bigger, more expensive ones later on. It is why we grudgingly head to the dentist every six months for a cleaning and examination (if our private insurance covers it). We know intuitively that an ounce of prevention is definitely worth a pound of cure.
Here is proof from my own professional experience. Children in New Brunswick, like anywhere else in Canada, can be removed from their families if, according to a risk assessment analysis, they are suffering from abuse, neglect or the imminent risk thereof. New Brunswick's foster care numbers had grown alarmingly in the last few decades notwithstanding known research that showed kids are almost always better off in the long term if they have stayed at home and maintained a relationship with their parents. The provincial government launched New Directions in 2005-06 to try to reverse this trend. Drawing from New Zealand's child welfare reforms, New Directions introduced "family group conferences," "family enhancement," "kinship care" and "child protection mediation" into its child protection toolbox to be used not when the children and the family are in a state of crisis but when there are early signs of trouble. The idea is simple: intervene earlier with the family, when the risk is low, and social workers will not have to intervene later when the risks-and their associated costs-are high. After New Directions was implemented in legislation, and staff, including lots of new staff, were trained in using the new tools, something remarkable happened. The number of kids coming into foster care started to drop dramatically (20 percent drop in the first full year alone). The amount of court time necessary to process high-risk child protection cases also dropped like a stone. This is not only morally invigorating for children and families but also financially invigorating as the cost to government of New Directions is significantly less than the cost of foster care. Paying now is paying off, literally.
Yet this is an exceptional case. In general, when it comes to human service systems, Canada does not seem ready to pay for prevention or early intervention.
You would think we would be talking more about it now given the fact that federal and provincial governments alike are in intense restraint mode. "Cut," "rationalize" and "right size" are on the lips of every senior civil servant in the country. But the debate does not include how to save money by preventing costly problems from arising in the first place, or at least the most expensive manifestations of the problem. How come?
There are lots of possibilities. A report launched by the National Council of Welfare in September 2011 called The Dollars and Sense of Solving Poverty considers several of them. The NCW advises the federal government "regarding any matter relating to social development that the Minister [currently Human Resources and Skills Development Canada minister Diane Finley] may refer to the Council for its consideration or that the Council considers appropriate." It has been reflecting, publishing and making recommendations about social issues in Canada since its founding in 1968. Dollars and Sense is one of its most ambitious projects to date. A note in the introduction makes this clear: "Many Canadians are concerned that reducing poverty means more spending on people living in poverty, leaving others worse off. The growing body of research and experience tells a very different story. It shows that investing to reduce poverty benefits everyone."
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In "Dollars and Sense," the NCW lauds those provinces that have initiated and begun to implement poverty reduction plans given their general orientation on investment and improved outcomes for vulnerable Canadians. However, it is in the subsection on seniors that the council shows its full colours. The report says this about the federal income supports for seniors: "the policy framework for low-income seniors offers the longest running Canadian example of an investment approach, policy coordination, and considerable success in achieving objectives ... The reduction of poverty among seniors has brought with it many benefits that would not otherwise have been possible."
The investments made by the federal government in Old Age Security, the Guaranteed Income Supplement and the Canada Pension Plan pay off in numerous ways including better health and wellness (and therefore reduced healthcare costs), increased capacity of seniors to provide child care to grandchildren, and improved ability to volunteer and donate to local charities. This is the NCW's template for action and it puts mental health, education, early learning, literacy, aboriginal policy and other sectors under the same microscope with the same conclusion. It affirms categorically that our systems of support are too costly from both a human and a financial point of view and that a strategy of investing in people is ultimately less expensive if all costs over the lifetime of the affected population are measured.
In fact, the NCW refers to a number of studies that attempt to calculate the total savings that an investment approach would produce if adopted. In the United States, "investing in the eradication of poverty ... would increase the resources of each American household by an average of more than $18,000 a year." In Canada in 2007, poverty cost the country conservatively $24.4 billion in direct, indirect and societal costs while eliminating it would cost $12.3 billion. The report suggests that Canada would, in time, save the difference-$12 billion-if an investment approach were taken.
So why have we not forged ahead and paid now for the necessary services and supports to avoid the massive costs associated with poverty, ill health, incarceration, homelessness and their evil kin?
Here is another possibility to explain why Canadian governments will not pay now (aside from ideological reasons). Remember the story about the kid needing food and medicine? Investing to address these needs represents a new direct cost to government. For it to produce a return, government must, at some juncture, be able to reduce an indirect cost it is currently assuming. In the example, the nutritious food and medicine are supposed to prevent the child from needing emergency health services. So the investment will not translate into indirect cost savings unless and until government also eliminates the hospital bed, medical services, emergency staff and health infrastructure that the child will no longer need. And that is tough to do. It is the height of political risk to cut emergency health services.
Think about it. If you were premier of your province, would you announce a new low-income food benefit program to be paid for by an eventual cut to emergency health services?
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This does not mean an investment approach to eliminate poverty in Canada is a naive and hopelessly impracticable concept. It is not. It is this very philosophy that drove the development of the better components of today's social safety net including universal education and health care, the National Child Benefit Supplement and the OAS and GIS. Although Dollars and Sense does not pinpoint the indirect costs avoided through these seminal undertakings, it is very difficult to imagine the state our country would be in without these programs. Nonetheless, taking an investment approach is a lot more complicated than saying, "We'll save if we spend." This is no doubt why the NCW in its concluding chapter does not propose to Minister Finley a massive Great Society-like spending season. Rather, it suggests the development of a "design framework" for future investments that ensures the long-term costs and benefits are known and considered before final decisions are made as well as an ongoing conversation among Canadians about the different ways poverty can be solved including the investment way.
Dollars and Sense is itself a valuable addition to the national debate on reforming our mostly pay-later social safety net. The NCW might consider putting its considerable brainpower into a sequel on how to implement an investment agenda that helps the approximately 10 percent of Canadians who live in poverty to leave that life behind1. There is both art and science to it, but it begins with a transparent discourse that does not penalize politicians or civil servants for being honest about the fact that solid social investments should be followed by responsible program cuts. Albeit on a smaller scale, this was New Brunswick's experience regarding New Directions. Social workers were added to handle the increasing caseload of low-risk families and, in time, foster care and related budgets for high-risk (and high-cost) families were reduced because there was less and less need for the services they financed.
Governments need public support to make these wicked political decisions. Organizations advocating for the far more humane approach that a pay-now system represents have to also use their voice to protect the governments that dare to heed their calls.
-reprinted from the Literary Review of Canada