The premiers met again this week for the first time since the pandemic and you’ll never guess what they talked about. What’s that? Why yes, they did demand more money from the federal government. Would you be any more surprised if I told you it was for health care?
Whining for federal cash is what premiers do. It’s a major part of their job description. It’s the only thing they agree on. Of course, they never simply ask for the money; that would be unseemly, and beneath their dignity. Rather, the request – I should have said “demand” – is dressed up with all sorts of impressive-sounding rationales (remember the “fiscal imbalance”?) and contrived formulas meant to lend it an air of pseudo-scientific objectivity.
Thus the current provincial position is that the feds must increase the amount they transfer to the provinces annually for health from 22 per cent of total health spending to 35 per cent. Why 35 per cent? What makes that the correct standard? Because it’s 13 percentage points more than 22. Obviously.
The 22-per-cent figure, needless to say, is meaningless, if not altogether bogus. In the first place, as federal officials never tire of pointing out, it excludes federal transfers in the form of “tax points” – reductions in federal taxes, enacted as part of a package of reforms in 1977, in favour of provincial increases. Today those are worth about $20-billion.
More to the point, there is no such thing as federal transfers “for health.” The provinces can spend the money any way they like. It might be called the Canada Health Transfer (CHT), but it all goes into general revenues: the dollars do not have little labels on them marked “health.”
All told, the federal government will send $90-billion in cash to the provinces this year: $45-billion for the CHT, plus another $45-billion for the Canada Social Transfer, equalization and other programs. If the provinces choose to spend some of that money on things other than health, that’s not Ottawa’s fault.
At any rate, the feds are also in favour of an increase in transfers to the provinces. The two sides differ only on the terms: the provinces want the money to be unconditional, while the federal Liberals insist on attaching it to their own preferred priorities – pharmacare, mental health, long-term care, and so on. Both sides have it wrong.
There is no good argument for Ottawa to dictate how provinces allocate funds within their health budgets. The Canada Health Act was one thing: making sure provincial health care systems were compatible with one another was arguably a valid federal concern.
But whether to spend the marginal dollar on expanding drug coverage versus improving hospital care? How are the feds any better placed to make these decisions than the provinces – the governments with constitutional responsibility for the portfolio?
On the other hand, there’s no good argument for federal transfers that don’t have conditions attached to them. The only thing achieved by that exchange is to allow two sets of politicians to claim credit for spending the same money – and to allow each to evade blame for the results.
It isn’t that the provinces don’t need more money. Well, they don’t, or they haven’t until now: Canada already spends more on public health, both as a share of GDP and in dollars per citizen, than most developed countries. The problem, as countless studies have shown, is not that they don’t spend enough, but that so much of what they do spend is wasted: because in our centrally planned system no one knows what anything costs.
But the story of the boy who cried wolf ends in the wolf devouring the boy: the remorseless arithmetic of population aging is finally vindicating provincial whining. As it is, the provinces now spend close to half of their revenues before federal transfers on health care. And that’s with the Baby Boomers only part way through their decades-long transition into retirement, dotage and ever-increasing consumption of health resources.
So there’s a case to be made that the provinces will need more money in future, even if they don’t now. But it must be accompanied by clearer provincial accountability for the results. Experience teaches that otherwise any increase in funds is likely to be dissipated in higher pay for provider groups, rather than improving care.
How to square that circle? Complete the work begun in 1977: convert the whole of federal (non-equalization) transfers into tax points. Only when health care dollars are spent and raised by the same level of government will we end the finger-pointing and blame-shifting that has blocked reform until now. If the provinces don’t want to answer to Uncle Ottawa for how they run their health care systems, they can’t also depend on it for their allowance.
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