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Politics Ottawa, provinces race ahead with health-care deal, as Kathleen Wynne makes request

Premier of Ontario Kathleen Wynne speaks in Toronto on Dec. 12, 2016.

MARK BLINCH/REUTERS

Ottawa and the provinces are negotiating behind the scenes with the goal of reaching a new health-care deal by Monday worth billions of dollars.

Talks are under way both at the political level and among federal and provincial bureaucrats in an effort to reach an agreement-in-principle that would include new federal money and province-by-province pledges on how it will be spent.

Quebec has already been assured it will have fewer restrictions under a long-standing practice that Ottawa calls asymmetric federalism, a concept that was part of a major 2004 health accord.

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Provinces insist the matter is urgent given that a new formula is set to take effect in April, 2017, that would scale back the rate of growth in federal health transfers by as much as half.

"I have been very enthusiastic to finalize an agreement in principle at least as soon as we possibly can," Federal Health Minister Jane Philpott told reporters Tuesday when asked if she is aiming to have a deal in place by Monday.

That is the date when federal, provincial and territorial finance ministers will hold their annual gathering to discuss issues such as federal transfers and broader economic matters.

Health ministers have been invited to join the finance ministers. The gathering follows a dinner last Friday hosted by Prime Minister Justin Trudeau in which health policy was discussed with the premiers following a first ministers meeting on climate change.

Ontario Premier Kathleen Wynne went public Tuesday with her province's health-care request, calling for a new 10-year accord that would see transfers rise by 5.2 per cent annually.

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Such a pledge would commit Ottawa to spending about $10-billion more on health transfers over five years in comparison to existing plans.

However, some provinces have expressed concern that Ottawa appears unwilling to make a significant new contribution to health-care transfers.

"Until I get something a little more concrete, I really don't feel the justification to be going all the way to Ottawa," British Columbia Health Minister Terry Lake told The Canadian Press this week.

Since 2005, federal health transfers have increased by 6 per cent a year. However starting next year, transfer growth will be tied to the rate of growth in the economy as measured by nominal GDP. The formula sets a minimum annual increase of 3 per cent. The Parliamentary Budget Officer (PBO) estimates that nominal GDP will average about 3.8 per cent over the years 2016 to 2021. The PBO has also noted that the rise in health-care spending outpaced nominal GDP in 2015, when health-care spending grew by 1.5 per cent and nominal GDP was 0.6 per cent.

The PBO has warned that provinces will need to either raise taxes or cut spending to avoid a major spike in public debt over the coming decades.

"Premiers are very worried about the sustainability of the health-care system," Ms. Wynne told reporters in Toronto Tuesday, pointing to the PBO's work as justification for her call for increased federal transfers.

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An internal Ontario government memo obtained by some media outlets, including The Globe and Mail, indicates the province is urging Ottawa and the provinces to reach a deal at the Monday meeting.

The document, titled "Towards a health-care funding agreement," makes reference to giving ministers a mandate "to reach a final health-care funding agreement at a joint meeting on December 19, 2016."

The document states that without new promises of federal money, provinces will face "enormous pressure" to maintain health-care programs.

"While provinces and territories have made difficult decisions in order to manage health-care spending, even the most conservative estimates project that health spending will grow faster than in recent years – due to cost pressures such as population, aging and technology," the Ontario memo states.

This year, Ottawa transferred $36.1-billion to the provinces and territories for health care. According to the Ontario memo, this would have risen to $48.3-billion by 2021-22 if the 6-per-cent escalator was maintained. Instead, the smaller increases scheduled to take effect next year would see the transfer rise to $43.2-billion in that same period. Adopting Ontario's request for annual increases of 5.2 per cent would bring transfers to $46.5-billion by 2021-22.

With a report from Adrian Morrow in Toronto

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