Ottawa seeks provincial guarantees on hikes in health care funding

Prime Minister Justin Trudeau will table a significant financial offer to the premiers on Tuesday for long-term structural reform of the country’s struggling health care systems, but Ottawa also wants a commitment that none of that money will be diverted to other programs, according to a senior federal official.

The official said the “large sum of money on offer” will go to the Canada Health Transfer (CHT) as well as provide cash for separate bilateral agreements with provinces and territories on everything from primary care to mental health and long-term care. That bilateral money will largely be divided among the provinces and territories essentially on a per capita basis, the official said.

In return for the federal funding, the official said Mr. Trudeau expects a pledge from his counterparts that none of the new money will be redirected to non-health care spending, and that the provinces and territories will not reduce their contributions to medicare.

The government official said the provinces are already getting a 9.5-per-cent hike in the CHT this year and that the federal financial offer will be on top of that increase. The Globe and Mail is not identifying the official, who was not authorized to discuss the negotiations.

Still, the 13 provincial and territorial leaders, who meet Monday in Ottawa in advance of their get together with Mr. Trudeau, are no longer expecting the federal government to fully meet their health care demands, according to federal and provincial sources. The gathering will be the first step to quickly complete health care funding deals, the sources said, ending more than two years of debate over just how much Ottawa should offer to help the country cope with ballooning health costs and overwhelmed systems.

The Prime Minister has described the session as a “working meeting” and said he doesn’t expect deals to be finalized on Tuesday. Bilateral negotiations will take time, the sources said. The Prime Minister’s Office has only scheduled a couple hours in the afternoon for the talks, and the focus for premiers will be on understanding the federal offer. The Globe is not identifying the sources because they were not authorized to publicly discuss the matter.

So far, Ottawa has not shared the specifics of the proposed deal with provinces and territories but there has been a flurry of behind-the-scenes talks over the weekend at both levels of government to determine what would make a workable deal. Premiers have asked for long-term, predictable funding and the federal government is expected to offer a 10-year agreement.

Currently, the federal government ties the pace of the annual increase in the health transfer to economic growth, and sets a floor of 3 per cent for the increases. Accounting for much faster economic growth, this year’s health transfer is projected to jump to $49.4-billion, up more than 9 per cent from the $45.2-billion in projected payments in the 2022-23 fiscal year.

But as the country’s health care systems buckled under the pressures of the pandemic and systemic woes, such as long surgical waiting times and a lack of family doctors, the premiers began demanding much more from Ottawa. In 2020, the premiers asked for an immediate, no-strings attached increase to the CHT to bring the federal share of health care funding to 35 per cent. That would have meant a $28-billion increase.

Over the past few years, the Trudeau government pushed back against those demands and said new money without conditions was not an option. The premiers had stood firm against any federal conditions, until Ontario Premier Doug Ford broke the deadlock in January. He agreed to Ottawa’s demand for a national health data system. Other provinces quickly followed, including Quebec.

Ottawa wants to tie the increase in the health transfer to a data collection requirement that will make it easier to track and compare health outcomes. One of the sources said the federal government is not interested in creating a new data collection system through Health Canada and is instead looking at existing options, possibly the Canadian Institute for Health Information.

The sources said tying part of Ottawa’s funding to bilateral deals gives the federal government more power to impose conditions. It’s expected that they’ll be similar to those included in the $10-a-day child-care funding deals. Those agreements required provincial and territorial governments to submit reports explaining how the money is being spent, what the expected outcomes are and showing that the new federal money is not simply displacing previous provincial spending.

The bilateral deals will focus on improving primary care, addressing staff shortages, tackling surgery backlogs and boosting virtual care. Those areas are among the key challenges facing provincial health care systems and also overlap with the Liberal’s past election promises.

In both the 2019 and 2021 federal elections, Mr. Trudeau promised voters that his party would ensure that everyone has access to a family doctor or primary-care team. But in that time, the gulf in timely access has grown. For example, in Nova Scotia, the number of people going without a primary-care clinician climbed to about 13 per cent of the population. In Ontario, about 12 per cent go without. Both those provinces have put primary care at the top of their priority list in talks with the federal government, according to the sources.

The sources said the federal funding offer is expected to be much more than the approximately $22-billion over five years in new spending the Liberals promised for health care in the 2021 election. Almost none of that money was in last year’s federal budget, including the government’s promise of a new $4.5-billion federal transfer for mental health care and $3.2-billion for primary care.