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What you need to know about the Canada Health Transfer

The Canada Health Transfer is the money the federal government sends to the provinces and territories to help pay for health care, which is a provincial responsibility.

Oleg Prikhodko/iStockphoto

What is the Canada Health Transfer?

The Canada Health Transfer is the money the federal government sends to the provinces and territories to help pay for health care, which is a provincial responsibility. Ottawa can use the CHT to enforce the Canada Health Act, although, in practice, it rarely does. The transfer can be clawed back if a province fails to uphold any of the act's five principles: universality, comprehensiveness, portability, accessibility and public administration.

The CHT, which is set to top $36-billion in 2016-17, is now divided among the provinces on a purely per-capita basis. (That was not always the case.) Under the Health Accord that former prime minister Paul Martin struck with the provinces and territories in 2004, the CHT has grown by 6 per cent per year, but that formula was scheduled to expire on March 31, 2017. In 2011, Stephen Harper's Conservative government announced the escalator would drop to 3 per cent or the equivalent of nominal GDP growth, whichever is higher, beginning in the 2017-18 fiscal year. The provinces have been fighting that looming change ever since.

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How is health-care spending growing in Canada?

Government spending on health care – mostly by provinces and territories – is expected to grow by 2.3 per cent this year, according to the Canadian Institute for Health Information. (The projected increase is 2.7 per cent if you factor in the money individual Canadians spend on health expenses, such as prescription drugs.) Spending increases have fallen short of inflation and population growth for six straight years, the CIHI said in a report released last week, largely as a result of provinces reining in their spending after the financial crash in 2009.

Meantime, the Canada Health Transfer has increased by 6 per cent per year. "The transfers have been growing quite generously," said Livio Di Matteo, a health-care economist at Lakehead University in Thunder Bay. "If you go back to about 2007, if you look at public-health spending, which is largely provincial, it's grown about 40 per cent. The Canada Health Transfer to the provinces has grown about 70 per cent." The provinces counter that federal spending makes up only about 23 per cent of provincial health-care budgets; if the escalator is reduced to 3 per cent a year, Ottawa's share will drop below 20 per cent, they say.

Some provinces' populations are older and unhealthier than others. Does the transfer formula take that into account?

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No. Some provinces, particularly in the Maritimes, have been urging Ottawa to adjust the formula so that regions with a larger proportion of elderly residents receive extra money. But the federal government has not shown a willingness to bend on that point. The Canadian Medical Association, which represents the country's 83,000 doctors, has been advocating for a "demographic top-up" of $1.6-billion a year that could be split among the provinces and territories based on their proportion of seniors. CMA president Granger Avery said that subpar care for seniors trickles down to the rest of the health-care system, hurting everyone. "We need more long-term-care beds in this country and we need to have those properly attended," he said.

Can Ottawa tell the provinces how to spend health-care funds?

It can try, but experts warn it could be tricky. "Once the money goes to the provinces, the federal government really does not have a mechanism, or has not developed one to this point, that allows it to track where the money is spent," Prof. Di Matteo said. According to B.C. Health Minister Terry Lake, the federal government has offered the provinces $8-billion over 10 years for home care and mental-health care, over and above the Canada Health Transfer. But provinces are generally wary about starting new programs or expanding services with federal funding that is scheduled to expire. They fear "being left to hold the bag – a very expensive bag," said Katherine Fierlbeck, a political science professor who specializes in health-care policy at Dalhousie University in Halifax. Health Minister Jane Philpott has been clear, however, that she wants targeted funds for home care and mental-health care to produce real results that can be measured.

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Health reporter

Kelly Grant is a health reporter with The Globe and Mail. More

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