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Finance Minister Bill Morneau arrives for a dinner with provincial and territorial finance ministers on Sunday, Dec. 18, 2016, ahead of a Monday meeting at Ottawa’s Château Laurier hotel.


Provinces are fuming over Ottawa's plans for a one-day-only, take-it-or-leave-it negotiating session Monday that will shape the direction of health funding for the next decade.

While both levels of government say they want to improve Canada's health-care system, they will each be focused on their bottom lines as finance and health ministers square off over funding.

Finance Minister Bill Morneau warned Friday that Ottawa has no appetite for a major increase in federal health transfers. He has provided his counterparts with figures showing health transfers will increase by just 3 per cent next year to $37.2-billion.

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Read more: What you need to know about the Canada Health Transfer

Read more: Health spending fails to keep pace with inflation, population growth

Read more: Ottawa takes hard line with provinces on health transfers

But the provinces and territories, which are primarily responsible for health-care delivery, argue Ottawa's latest proposal will actually shrink the federal share of health spending over time from about 23 per cent currently to less than 20 per cent. Premiers had called on Ottawa to boost funding to 25 per cent.

"We have received an insulting ultimatum from Bill Morneau," Quebec Health Minister Gaétan Barrette said in an interview Sunday. "Bill Morneau's proposal is a road map to a catastrophe, because it will end up in a reduction of federal funding for health care across the country at a time when the needs are increasing."

Mr. Morneau hosted his provincial and territorial counterparts at a dinner Sunday evening, ahead of a day-long meeting Monday at Ottawa's Château Laurier hotel. Provincial and territorial health ministers have been invited to attend the Monday meeting, along with federal Health Minister Jane Philpott.

Mr. Morneau said Sunday that his focus is on reaching a deal Monday that improves home care and mental-health care. "Our goal is to come to an agreement [Monday] and I'll go into these discussions with that as the objective," he said on his way in to the dinner, where he was the first minister to arrive.

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Provincial and territorial ministers kept Mr. Morneau waiting for over 30 minutes as they held a meeting of their own to present a common stand against Ottawa's position. "There is a united front amongst ministers of finance from across the country," Ontario Finance Minister Charles Sousa said. "What's being proposed is inadequate and more needs to be done."

The Parliamentary Budget Officer has warned that a change to the federal transfer formula that takes effect next year will put Ottawa's contribution to health care on a declining trend.

The PBO has said that single change – which shifts the growth of federal health transfers from 6 per cent to at least 3 per cent – is largely responsible for moving Ottawa's fiscal position from unsustainable to sustainable. The flip side is that the burden has shifted to the provinces, where governments face a future of skyrocketing debt.

Manitoba Health Minister Kelvin Goertzen said provinces believe a transfer increase of 5.2 per cent a year is required. He also took issue with Mr. Morneau's approach to Monday's meeting.

"This isn't the O.K. Corral and this isn't supposed to be a shootout," he said. "This is supposed to be a real discussion about how do we better the health care for Canadians."

Randall Bartlett, a former PBO official who is now chief economist of the University of Ottawa's Institute of Fiscal Studies and Democracy, expressed sympathy for the provincial position that Ottawa's current plan won't be enough.

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"With the aging population that we have in Canada and the fact that health-care costs increase exponentially with age, it's incredibly challenging for [provinces] to be able to continue to restrain growth in costs in a way that's sustainable over the long term," he said.

However, Bill Tholl, the president of HealthCareCAN, which represents regional health authorities and hospitals across the country, said his members support Dr. Philpott's efforts to earmark billions for home care and mental-health care, with the provinces and territories expected to produce specific results in return for the money.

He said the federal and provincial health ministers need to "put health first and the money second" at Monday's meeting.

"What is it that we want to buy this time?" he said. "Is it peace or is it going to be change?"

Hospital and health-authority officials also want federal funds set aside to improve indigenous health and to fix the country's crumbling hospital infrastructure, Mr. Tholl said.

The Canada Health Transfer has been growing at a faster rate than provincial health spending, he added, but that has not spurred significant improvements.

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"Chequebook federalism has not worked well over the last 10 years for Canada's health-care system," Mr. Tholl said.

Conservative interim leader Rona Ambrose has encouraged Ottawa to hold firm in negotiations with the provinces. It was the previous Conservative government that announced in 2011 that the years of 6-per-cent health-transfer increases would come to an end on April 1, 2017.

NDP health critic Don Davies said many Canadian voters are likely surprised to see such little difference between the Conservatives and the Liberals when it comes to health spending.

Mr. Davies noted that the Liberals have already promised to run much larger deficits than originally promised and should therefore be able to find more money for health spending.

"It's a curious thing for them to hold the line on," he said. "They've vastly ballooned their spending in all sorts of areas. To me, it's a misplaced priority for them to draw a firm line in the sand on health care."

With a report from Kelly Grant in Toronto

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