B.C. Health Minister Adrian Dix, front right, is flanked by his provincial counterparts as he listens to a question during a news conference without federal Health Minister Jean-Yves Duclos in Vancouver, on Nov. 8.DARRYL DYCK/The Canadian Press
The premiers aren’t quite asking for a blank cheque from Ottawa on health care funding. They’d like for the federal Liberals to pencil in the amount of $28-billion before handing it over, thank you very much.
That immediate infusion, plus steep annual increases thereafter, are needed to increase the federal government’s share of health care funding, they claim. Provincial and territorial leaders are rejecting the idea that Ottawa can impose any conditions on that largesse: The federal government should pay up, then shut up.
The premiers are misleading Canadians about the degree of Ottawa’s underfunding. Even worse, their demands for a strings-free spending spree, if successful, could end up slowing down desperately needed reform of Canada’s overly expensive, underperforming health care system.
Any increase to federal health care grants has to start with an accurate assessment of Ottawa’s current contributions.
The premiers’ complaint goes something like this. Once upon a time, the federal government shouldered half of health care costs, but that share has declined and now sits at just 22 per cent. Federal payments to the provinces are slated to hit $45.2-billion this fiscal year, but they should immediately jump by $28-billion to push Ottawa’s share of health care spending to 33 per cent. After that, the federal government should guarantee annual increases of 6 per cent, twice as big as the current legislated minimum.
It is true that federal cash transfers for health care, while rising every year, now account for a smaller share of national spending. But those targeted cash transfers are just part of the picture. Nearly a half-century ago, Ottawa cut personal and corporate taxes so the provinces could raise theirs, ceding tax points that grow in value as the economy expands. The federal government correctly points out that its share of health care spending already sits at 33 per cent, once the value of those tax points is included.
There are also targeted health care measures that would further boost Ottawa’s share. A significant omission is the federal equalization program, worth $21.9-billion this year. Not all provinces receive funding but the program’s purpose is to give poorer provinces the means to fund public services – including health care. While it’s impossible to parse how much of equalization flows to health care, those billions indisputably add to Ottawa’s spending share.
None of that is to absolve Ottawa from its responsibility to help finance reform of the health care system. Canadians waiting for hours in emergency rooms, and waiting years for family doctors, don’t much care about which level of government is able to claim the upper hand in the funding debate.
But an accurate accounting does matter in that it is a critical first step in avoiding the fiscal distortions that would result if Ottawa were to accede to the premiers’ demand for $28-billion, an increase in the federal cash transfer of more than 60 per cent. (Over the next decade, the 6-per-cent annual escalator would mean hundreds of billions of dollars in additional federal health care spending.)
The immediate effect of a massive boost in health care transfers would be to add to the bottom lines of the provinces and territories, not to enhance services. Even if they were so inclined, no province or territory could find a way to spend those extra billions of dollars in the next year, even two. In the short term, the supposed health care transfer would simply go to pay down the debts of subnational governments.
Eventually, however, provinces would rise to the challenge of sloshing that $28-billion into health care budgets. With recent history as a guide, much of that money would go to increasing salaries of health care workers, not to improving services. And such a rapid infusion of cash would dissipate whatever momentum exists for a fundamental reconsideration of how Canadian health care works – or rather, is not working.
In that light, Ottawa’s position that ties new funding to a national health data system makes sense. So does its push for goals in key areas of reform, including family health and long-term care. Such a system need not be run by Ottawa. The Canadian Institute for Health Information could administer the data system, avoiding any intimation that the provinces require the supervision of the federal Liberals.
Setting goals is the most critical part of the equation. Those goals should aim to relieve chokepoints and to increase Canadians’ access to early – and less expensive – intervention. More on that tomorrow.