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Ottawa is slowly, stealthily getting out of health care

Canadian Prime Minister Stephen Harper attends a question and answer session at the Prospectors and Developers Association of Canada in Toronto on Monday, March 3, 2014.

Chris Young/THE CANADIAN PRESS

The Health Accord will expire on Monday, March 31, and it won't make a whit of difference. At least technically.

The Canada Health Transfer – the money the federal government transfers to the provinces, $32-billion this year – will continue to increase at a rate of 6 per cent per annum until 2017, then the increase will be tied to GDP growth plus 3 per cent. The money comes with no strings attached, meaning the provinces need to deliver nothing specific in return.

In short, Ottawa will gradually reduce its financial contributions to healthcare while washing its hands of any policy-making.

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This is what passes for federal leadership in healthcare: Mindlessly shovelling money at the status quo, while quietly skulking away.

We shouldn't shed any tears for the end of the 2004 Health Accord. The $41-billion, 10-year "fix for a generation" resulted in modest improvements in some areas, like reducing select surgical wait times.

Essentially it allowed the stewards of medicare to tread water for a decade instead of undertaking needed structural reforms and tackling tough questions.

That lack of reform and absence of leadership is what we should be bemoaning today, not the expiry of a contract.

There were only three Health Accords – in 2000, then 2003, a deal that was quickly supplanted by the 2004 deal.

Having First Ministers negotiate an accord like a peace treaty was an odd method for transfering money from Ottawa to the provinces and territories.

For all the moaning about Stephen Harper unilaterally imposing a new transfer formula, he would be a fool to subject himself to the method employed by the Liberals in the past – where the premiers gang-up and extort money from the prime minister.

When medicare began as a national program, back in 1957, the formula was simple: The federal government paid for half of all hospital costs incurred by the provinces, as long as they met certain conditions, notably that access was universal, "free" (meaning no additional user fees) and that each jurisdiction offered a comparable level of services. A few years later, in 1962, that same formula was extended to paying for physician services.

The 50-50 formula continued for a long time, but new conditions were added under the Canada Assistance Plan (CAP) in 1965, and side deals were made, mostly to pay for infrastructure. In that period, health costs were soaring, due to a time of rampant inflation.

In 1976, prime minister Pierre Trudeau announced that Ottawa was ending cost-sharing in healthcare. Instead, the federal government introduced Established Programs Funding (EPF) – block grants that were a combination of cash and tax points.

The reduction in federal transfers led provinces and practitioners to look for new sources of cash and extra-billing returned, sparking a political crisis. It was resolved with the adoption of the Canada Health Act, which spelled out the conditions for provinces receiving federal money, but didn't address how much they would get.

In 1995, the CAP and EPF were merged into the Canada Health and Social Transfer (CHST), another block grant. (They would later be uncoupled to create the Canada Health Transfer that exists today.)

But one constant was that the provinces were dissatisfied with the amounts transferred. This became a key issue in the report of the commission led by Roy Romanow, a former Saskatchewan premier. He called for a cash infusion of $8.5-billion, then an additional increase of $6.5-billion per year. Filling this so-called "Romanow gap" was the impetus for the Health Accords that would come later.

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All this to say that there is no perfect formula for the transfer of dollars.

What we do know is that the federal contribution to health spending, which started at 50 per cent, fell to about 35 per cent in the EPF era, then to roughly 25 per cent in the health accords. Now, Ottawa contributes a little less than 20 per cent of publicly-funded healthcare and, according to the Parliamentary Budget Office, that will fall below 12 per cent in the next 25 years.

Here's the blunt reality: Medicare is no longer a joint venture. Ottawa is a minority partner.

That may or may not be acceptable to Canadians. What is not acceptable is that this change has occurred stealthily, without any real discussion.

Are we happy to have 14 autonomous health systems – the provinces, territories and the federal system (for indigenous peoples, the Canadian Forces and RCMP) – or do we want some semblance of a national system?

If it is the latter, then transfers should be used explicitly to create some uniformity, through national standards. And if Ottawa is going to have any real power of persuasion, it has to up transfers significantly, which would, in turn require tax reform.

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If it is the former, then the provinces have to step up and take charge of their health systems, and be clear with the electorate that health care services would differ markedly around the country.

A fundamental choice awaits us: Do we want a national medicare system or not? It's not a decision that should be made in the backrooms or, worse yet, by default.

André Picard is The Globe's public health columnist.

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