When provincial and territorial health ministers recently met in Halifax to discuss the 2004 federal-provincial-territorial agreement on health transfers, which is set to expire in 2014, the resulting news reports simply reinforced the status quo. The provinces expect more money for health care from Ottawa.

It would have been refreshing to hear something different, some new ideas to ensure the sustainability of Canada’s health care system. The fact is, the pending expiration of the health accord provides an ideal opportunity for the provinces to demand sensible policy reform. Provincial leaders need only look to other developed countries that have universal health care, but achieve better access and more sustainable growth in costs by incorporating practical economic incentives.

Total health spending in Canada is expected to reach $200 billion by the end of this year. Provincial health spending has grown faster than the economy since public health insurance was established. Between 1975 and 2009 government health spending in Canada grew annually by 8.1 per cent on average while GDP grew by 6.7 per cent. Over the past 10 years - averaged across the provinces - government health spending has grown at an average annual rate of 7.5 per cent. This compares to the average annual growth rate of total available revenue (including federal transfers) of 5.7 per cent and the average annual growth of GDP of 5.2 per cent. At this pace, six out of 10 provinces will be spending half of their total available revenues on healthcare by the year 2017. Ontario and Quebec have already reached 50 per cent.

This is despite the federal government transferring billions of dollars to the provinces to finance health care services. Between 1997/98 and 2006/2007, the feds provided $115.7 billion in health transfers. This is $36 billion more than needed to keep up with population growth and inflation over the period. In 2004, federal-provincial-territorial first ministers agreed upon “a 10-year plan to strengthen health care” that increased existing federal health transfers by $41.3 billion in new funding, including an automatic escalator of six per cent annually to the new base of federal funding.

Yet none of the additional funding has led to improved access to medical services for Canadian families. Although the feds transferred $5 billion to the provinces to reduce wait times, in 2010 Canadians waited 18.2 weeks on average from referral by a GP to receiving treatment by a specialist. Last year 4 million people – or 15 per cent of the population aged 12 and older – reported that they did not have a regular family doctor.

An international comparison indicates that Canadians are getting poor value for money from their health system. In 2007 Canada had the sixth most expensive health care system in the OECD, yet ranked between seventh and 21st in 16 out of 18 indicators measuring availability of medical resources and services.

It’s time to accept the fact that simply injecting more public money through federal transfers to pay for health care services is not a viable solution. Provinces are increasingly faced with growing debts, and while many Canadian families are struggling during times of economic uncertainty, increasing federal transfers through debt financing or raising taxes to pay for future health care costs will clearly do more harm than good.

Governments play a significant role in health care financing throughout Europe, but in most countries, patients are required to pay a portion of the costs of the service that they use through some form of copayment or user fee.

Indeed, several European countries achieve universal health insurance coverage by requiring their citizens to purchase private health insurance in a competitive market and subsidizing those who cannot afford it on their own. In contrast to Canada, patients in these countries have the freedom to choose health care coverage that suits their personal or family’s medical needs.

Co-payments, user fees and competitive health insurance plans encourage patients to use the health care system more responsibly and incentivize providers to allocate resources where they are most efficient and effective.

Regrettably, one reason that our provinces cannot experiment with these types of policies is because of specific prohibitions in the Canada Health Act. The Act stipulates that the federal government will financially punish provinces that allow user fees or extra billing by withdrawing federal transfer payments. Eliminating this federal restriction on provincial policy freedom should be the focus of any future federal/provincial health agreement.

When provincial premiers meet in January to begin negotiating the next health accord, they should pressure the federal government to take a ‘time out’ on the Canada Health Act so that the provinces can experiment with sensible economic reforms that are currently practised throughout the rest of the developed world.