Prime Minister Stephen Harper attends his national caucus meeting on Parliament Hill in Ottawa on Jan. 22, 2010.FRED CHARTRAND
Health care ignited a debate for Barack Obama that risks derailing his ambitious policy agenda - if not his presidency. Prime Minister Stephen Harper, in contrast, has successfully hit the snooze button on the health file throughout his four years in power.
This is about to change.
On March 4, the Harper government is set to deliver a federal budget that aims to wrestle big deficits back to zero by about 2015 by scaling back spending. But along the way, there's a ticking bomb - the expiry of agreements governing three major transfers to the provinces that cover social programs, equalization and health care and cost Ottawa about $54-billion annually.
How Mr. Harper manages these arrangements - particularly on health, whose bite out of provincial budgets is huge and ever-growing - is shaping up as his greatest challenge.
"I think [health care]s the No. 1 issue," said Don Drummond, TD Bank's chief economist and a former senior official in the federal Finance Department. "It's the Pac-Man. It's eating everything else in people's budgets."
Consider the numbers. In 1998, when governments starting increasing health spending again after a couple of years of restraint, the annual public health tab was $59.2-billion a year. It's now $128.6-billion.
Health-care costs are also growing as a percentage of the Canadian economy. They hovered around 7 per cent of gross domestic product in the 1970s, rose to 10.5 per cent in 2007 and are forecast to hit 11.9 per cent of GDP for 2009.
The fact that Mr. Harper has largely been able to sidestep the health-care policy quagmire is due to two large federal-provincial deals - one by the Liberals and one by the Conservatives.
In 2004, Paul Martin's Liberal government pledged $41-billion in new spending over 10 years for health care, billing it as a "fix for a generation." Mr. Harper pledged his support for the deal during the 2006 campaign and largely succeeded in removing health care as an issue during the past two election campaigns.
The Harper government further enriched transfers to the provinces in the 2007 budget by the tune of $39-billion over seven years. As if to one-up Mr. Martin's rhetoric, Finance Minister Jim Flaherty declared that the new money erased the so-called fiscal imbalance between Ottawa and the provinces that had been a particular gripe in Quebec.
"It's the end of the discussion. C'est fini ," Mr. Flaherty declared.
Not quite. Both deals expire in the fiscal year starting April 1, 2013 - right about when Ottawa promises to be on the verge of a balanced budget.
Mr. Flaherty has said he will not cut transfers to the provinces to balance the books, but what does that mean exactly? The 10-year health deal projects continued growth of about 6 per cent annually until 2013-2014. What rate of growth should the provinces expect after 2014?
John Abbott, CEO of the Health Council of Canada, says provinces need answers long before the deals expire. He predicts Ottawa will scale back the 6-per-cent yearly increases once the health accord ends and governments need to find ways to save money.
"Right now, provincial and territorial spending is growing beyond 6 per cent," he said. "Is this sustainable? If you look at certain provinces, it is definitely not sustainable."
Health-care spending eats up more than 40 per cent of government budgets in Ontario, Manitoba, Nova Scotia and B.C. The most manageable provincial ratio is in Quebec, where health spending represents 33 per cent, while of the three territories, only Nunavut spends more than 20 per cent of its budget on health.
The Health Council, a creation of the 2004 Health Accord, is responsible for tracking health-care spending trends and reporting on the effectiveness of Canada's system. Mr. Abbott said the debate is not whether there should be more or less private health care. Rather, the council's research shows there are other sensitive debates with ethical dimensions that could potentially produce big savings.
For instance, the council's "value for money" analysis questions the large amounts spent on "futile attempts to treat conditions, beyond pain relief, when death is inevitable and near." Other areas identified include encouraging doctors to prescribe less often and convincing provinces that buying the best and latest technology - whether it be in drugs or equipment - is not always worth the extra cost.
Despite the years of political silence on health care, there are signs that politicians are turning their minds to the issue. In a recent interview with The Globe and Mail, when asked how he'd handle future rates of growth in health transfers, Mr. Flaherty noted his government did put a cap on equalization transfers in November, 2008.
He said the provinces and Ottawa are in this together: "We all share the challenges of coming out of deficit in the medium term if we can and the ministers in the provinces have the added challenge of health care, and health care growing at a significant pace."
Mr. Flaherty stressed that as a former Ontario cabinet minister in the 1990s, he will not cut transfers to the provinces to balance the books as the Liberal government did at the time.
"I lived through that as a provincial cabinet minister and I know the harm it caused to people. So we won't do that," he said.
The Liberal opposition is also dusting off the issue. Leader Michael Ignatieff said health care will be among the topics his MPs will discuss in Ottawa while Parliament is prorogued.
Health care is traditionally a good issue for the Liberals, according to Harris Decima's Bruce Anderson, but the pollster says Mr. Ignatieff would be unwise to return to "stale" warnings about a two-tier system. Mr. Anderson said the President's troubles in Washington show the perils of creating fear, particularly among the well-off, that their health care could diminish as they enter old age.
"I think the Obama experience would probably say, 'Don't try to change too much, too radically,' because lots of people can find reasons why they don't support that change," he said.
Yet Mr. Anderson says there are political opportunities for either the Liberals or the Conservatives should they express an openness to small-scale "innovation" or experiments with increased private care - even at the risk of being labelled a supporter of "two-tier" health care.
Attitudes on health care are changing, he said, because older Canadian are increasingly going online to research waiting times and services available in the United States.
"People may at some point say: 'Look. The profit motive being involved in health care isn't always a toxic idea,' " he said. "We're heading into a period where more people are going to wonder which side of that tier that it's implied that they're on."
Bill Curry