Provinces get uneven health-care funding from Ottawa

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When is a 6-per-cent increase not a 6-per-cent increase?

That may sound like one of those philosophical "if a tree falls in the forest"-type riddles, but it's actually a very pertinent question in Canadian health policy circles, and one that provincial finance and health ministers should be asking themselves.

Earlier this week, the Health Accord, a deal that increased federal transfers to the provinces by 6 per cent per annum over a decade, expired.

The accord expired with a whimper, not a bang, in large part because the government of Stephen Harper announced a while back that it would continue the 6-per-cent annual increases until 2017, with none of the conditions (albeit vague and unenforceable) placed on the the transfers by the Liberal government of Paul Martin. After 2017, the increases in transfers will be tied to GDP growth plus 3 per cent.

In other words, on the surface, nothing will really change for the provinces. They will continue to get money from Ottawa under the Canada Health Transfer – $32-billion this year – and that will increase slowly but surely for another decade.

The grumbling has by and large been about the slow, steady withdrawal of Ottawa from health care. When medicare began, Ottawa contributed 50 per cent of all hospital and physician costs. That cost-sharing formula ended in the late 1970s and the federal government has regularly re-jigged payment formulas to contribute less.

Today, Ottawa covers about 20 per cent of health costs and, if the current formula remains in place, that will fall to 12 per cent over the next 25 years.

However, beyond the total amount, we don't pay enough attention to how the federal monies are apportioned among the provinces and territories.

The federal government has long embraced the principle of equalization – essentially giving proportionally more money to poorer provinces for various programs, including health care. This evening-out is done with a complex formula that awards provinces tax points.

But when Mr. Harper's government presented the provinces with a take-it-or-leave it deal, there was an asterisk beside the promised 6-per-cent increase. Going forward, health dollars will be distributed strictly on a per capita basis; no more equalization.

Practically, what this means is that the increase for individual provinces will range from zero to 30 per cent, and that only three of the 13 provinces and territories will get an increase of 6 per cent or more.

Here are the percentage increases, courtesy of Roberta Hawkes, a master's in health administration student at Dalhousie University:

• NL: 0.00
• PEI: 2.29
• N.S.: 2.01
• N.B.: 2.20
• QUE: 3.27
• ONT.: 3.32
• MAN.: 3.63
• SASK: 4.12
• ALTA.: 27.41
• B.C.: 0.38
• YUKON: 6.06
• NWT: 30.77
• NUNAVUT: 0.00

There is an argument to be made for tying transfers to population increases; after all, provinces with more people have some additional expenses.

But the jurisdictions where numbers are growing also tend to have younger, healthier and wealthier populations so the cost of delivering care is lower.

With this new federal formula, the provinces with aging and poor populations – those whose health costs are rising most dramatically – take it on the neck.

The ultimate result will be growing disparities between provinces and territories; for example, provinces like Nova Scotia will no longer be able to offer services that are comparable to Alberta.

In short, the rich get richer and the poor get poorer.

This new formula is not a 6-per-cent solution to health funding woes; rather, it will result in the undermining of the key principles of medicare, that care should be accessible, affordable and equitable for all Canadians.

It should also lead us to wonder aloud what the role of the federal government really is in health care. Is it simply to transfer money to the provinces and territories – about $1,000 per capita for every Canadian – and wash its hands of how the health care system takes shape (or doesn't) nationally? Is the federal motto: Disparities be damned?

Or should Ottawa be a unifying force, one that smooths out the imbalances and tries to make medicare seem like a semblance of a national program?

It is surprising that the health ministers – and the finance ministers – of the provinces and territories are not asking these questions publicly, especially considering that their silence is costing most of them millions.

Hopefully there will not be the same silent indifference during the federal election campaign next year.

André Picard is The Globe's public health columnist.