Federal health transfers carry political baggage

'You can't talk about health care without talking about money," Terry Lake, B.C.'s health minister, said, repeating one of the core truisms of Canadian politics.

So, naturally, when the federal and provincial ministers of health sat down to talk in Vancouver on Thursday, there was, in addition to a lot of shared concerns about health delivery, much covert, if not overt, talk about money.

But talking about money and reaching consensus on how it should be distributed are completely different matters.

A new health accord will be hashed out. But right now, Ottawa is strictly in listening mode.

The negotiations on health transfers involve three principal issues:

• How much should Ottawa transfer in total?
• How should the total amount of transfers be distributed among the provinces?
• What kind of strings should Ottawa attach?

As contractual negotiations go, this is pretty basic stuff and should, in theory, be done quickly and painlessly.

Yet in Canadian health care, nothing is painless. And when it comes to health transfers, the negotiations are complicated by a lot of political baggage.

In 2015, Ottawa transferred $68-billion to the provinces and territories. That was principally for: health, $34-billion; education and other social programs, $13-billion; and equalization (the shifting of tax dollars from the have to the have-not jurisdictions), $17-billion.

Understanding how we got to those numbers requires some knowledge of political history.

When medicare became a de facto national program in 1957, Ottawa agreed to pay 50 per cent of all hospital spending in exchange for provinces dropping user fees and making care universal and "free." A few years later, the deal was extended to physician services.

In 1977, during a period of hyperinflation, Ottawa lumped health and education payments together. In 1996, a single health and social transfer was created. Then, in 2004, the separate Canada Health Transfer was created, including a massive infusion of new money.

Ottawa now covers about 22 per cent of publicly funded health care ($34-billion of $155-billion).

The premiers want that increased to 25 per cent, which would require about $5-billion more a year from Ottawa.

Federal transfers are also indexed, but by how much is another rancorous issue. For the past decade – thanks to the 2004 Health Accord – they have risen 6 per cent a year. They are scheduled to increase by 3 per cent unless the Liberals decide otherwise.

Beyond the "how much" is an important debate about how the money is distributed among the provinces and territories.

Currently, health funds are divvied up on a per capita basis. This is easy, but not fair – because the demographics of provinces vary.

Provinces with older populations, such as New Brunswick and B.C., want higher transfer payments because seniors consume more health resources. Provinces with large indigenous populations, such as Manitoba and Saskatchewan, want recognition that they need additional help. A strong argument can also be made for bringing back health equalization payments to the poorer provinces that the Harper government discontinued.

Whatever approach is taken, many provinces will be unhappy. One way to mitigate the political fallout is to create separate funds – such as for home care, in which the Liberals have pledged to invest $3-billion.

Finally, what should the federal government demand in return for transfers of cash? Currently, there are no strings attached, and no accountability.

Initially, the purpose of transfers was to ensure that access to care was equitable across the country.

Now, the priority is to answer the public clamouring for better and faster access.

To do so, Ottawa can earmark money for specific programs or establish benchmarks; in either case, getting more cash would depend on meeting certain standards.

All the health ministers agree the solution to our health system's woes is not doing more. Fundamental structural change is required, but that requires time and money.

The pie – the money available – will never be big enough, and how it is divided will always be contentious.

But, in the end, how much federal money and where it will be spent is just one part of a broader discussion we need to have about reforming medicare, one that has been neglected for half a century.