Provinces strengthen their shackles in exchange for more federal health-care dollars

For more than two years, Canada’s premiers have demanded substantial increases in federal health-care transfer payments while simultaneously stressing the importance of provincial jurisdiction over how their systems function. It turns out talk is cheap—early details suggest the premiers are on the verge of settling for a fraction of their initial dollar demands, while committing to increased oversight from Ottawa over how the money is spent.

So what’s on the table?

Prime Minister Trudeau offered $46 billion in new health-care transfers to the provinces over the next 10 years. About half of this ($25 billion) is conditioned on federally determined “shared priorities.” The rest includes an immediate and unconditional $2 billion top-up to the Canada Health Transfer (CHT) this year, as well as a guaranteed annual 5 per cent increase in CHT payments for five years (after which it reverts back to 3 per cent annual increases). Access to this new “enhanced” CHT is predicated on provincial commitments towards improved collection, sharing and use of health data.

And this comes on top of new federal health-care dollars promised earlier. Taken together, the federal government says it will effectively increase health funding to provinces and territories by $196.1 billion over the next decade.

What’s lost in this mix though, is that it ultimately doesn’t matter whether the additional money comes from Ottawa or the provinces. Canadian taxpayers will be the ones left footing the bill of increased spending, regardless of which level of government spends the money.

The federal government is expected to run a $31 billion budget deficit in 2023 (in an optimistic scenario) and provinces across the country have increased their debt levels substantially over the last 15 years. Increasing health-care funding by Ottawa means federal deficits and debt will grow further, resulting in higher interest payments and higher taxes for future generations of Canadians.

In reality, all money from Ottawa offered through CHT payments are conditioned on the Canada Health Act (CHA). Provinces that violate these regulations can lose money from Ottawa. So when the the amount of money provinces rely on Ottawa for increases, so to does the sway Ottawa has over health-care in the provinces.

It’s perplexing that the provinces, particularly those whose premiers recently asked Ottawa to “butt out” of provincial affairs, are choosing to strengthen their shackles for increased federal money.

Let’s be clear, there’s no doubt that Canada’s health-care system is crumbling. However, this isn’t the result of insufficient funding. In fact, Canada already spends more on health care (as a share of its economy) than any other universal health-care country in the world. And while COVID-19 has certainly exacerbated wait times and emergency room closures, Canada struggled with both issues (and more) long before the pandemic.

Solutions lie in the realm of policy—specifically, the ability for provinces to experiment with policies that have proven to be successful in other universal health-care countries.

Other universal health-care countries such as Germany, Switzerland and Australia generally have more health-care resources (physicians, hospital beds, MRI machines) on a per-person basis, while spending less (as a share of the economy) on health care in 2020 than Canada. All these countries also had shorter wait times for elective surgeries than Canada in 2020 and in 2016.

The difference? They do universal health-care differently. All these countries embrace the private sector as partners in providing universal coverage, or offer it as an alternative. They also generally expect patients to share the cost of treatment, with exemptions for vulnerable populations.

However, the latitude provinces have to innovate and experiment with such policies is severely curtailed by the Canada Health Act—the very instrument Primer Minister Trudeau has demanded the provincial ministers recommit to.

This is a bad deal for Canadian taxpayers and the future of meaningful health-care reform.