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Economy Lab

Ottawa’s health plan: When money misses the point Add to ...

Armine Yalnizyan is a senior economist with the Canadian Centre for Policy Alternatives

As Christmas presents go, this one was a shocker: Over lunch on Monday, cash-strapped Finance Minister Jim Flaherty promised provincial and territorial finance ministers he'd increase federal funding for health care by six per cent each year for the next five years. No strings attached. No negotiations. A done deal. With a catch.

The provinces and territories have five years to figure out how to make health care sustainable on their own terms, every Premier for himself. After that, the Harper Government will contribute less, tying federal contributions to the growth in the economy, with a floor of 3 per cent.

That punts serious discussions about tackling growing health and regional disparities to the other side of the next federal election. And it maintains the Harper government's "talk to the hand" stance on major changes in public policy which affect other jurisdictions, like the senseless census long-form debacle and the evidence-free crime and punishment agenda.

But, politics aside, what does the six per cent mean economically and fiscally?

For starters, it means one more year of a sure thing than what was on offer a mere 72 hours ago.

In terms of cold hard cash, the feds will put up $27-billion this year through the Canada Health Transfer. By 2017, when the deal ends, the annual transfer will have grown to $36-billion. See this post for more about the history of federal contributions to health care in Canada.

In the context of austerity and slow growth, a budget item worth $9-billion more in five years sounds sweet. In the context of what the provinces and territories spend on health care ($130-billion), not so much. See the related chart.

Over the next five years the automatic 6 per cent escalator will pump an accumulated $26-billion more into provincial and territorial coffers.

That's not chump change, but it pales in comparison with the more than $220-billion dedicated to tax cuts since 2006, or the 20-year, $490-billion commitment to refurbishing military hardware.

As costly as these other priorities are, nobody's scrutinizing their sustainability the way the future of public health care is regularly questioned.

If sustainability means bending the cost curve for health care, we need more than what Flaherty's Done Deal offers. I'm not talking more money. The $26-billion over five years could buy important reforms if it's harnessed to that purpose, just like our federal, provincial and territorial governments agreed to do in 2004.

The 2004 Health Accord was negotiated, not decreed. Everyone agreed, new money had to buy change. It provided an injection of $41-billion in new federal funds over 10 years to "fix" health care.

It named wait times, diagnostic equipment, pharmaceuticals and access to primary care as the biggest problems to fix.

Seven years later, we see that the provinces and territories delivered results on the first two problems and dropped focus on the last two.

Wait times for cataract, knee and hip and cardiac surgery and screening for cancers have fallen dramatically across the country. That means that in every part of Canada more citizens are getting more care more quickly.

You never hear about that. The attention is always on what isn't working. For sure, everyone knows there is plenty of room for improvement. So, as the 10-year 2004 Health Accord comes to a close, the question is: what is the most important thing for our governments to focus on improving, together, right now?

The Harper Team boiled down the meaning of the 2004 Health Accord to an automatic escalator. That misses the point. The Accord has shown that focus and commonality of political will, with a long-term financial guarantee, can bring about positive and meaningful change.

More money without a plan is just that, more money. Canadians deserve better than that. Our most valued social program needs a plan. A plan that tackles growing disparities in health outcomes and growing gaps in access to care. A plan that brings our best minds together, working in concert, to bend the cost curve by focusing on improving health and improving care. It's possible, but it requires more than the blunt tool of cost control. It requires a shared strategy and focus on improvement. A health "plan" without a plan is just a fancy way to say "devolution".

Economy Lab, winner of the 2011 Eppy Award for best business blog. Follow Economy Lab on twitter


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