Fraser Forum

Provincial health ministers hope to pass the buck to Ottawa

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Provincial health ministers are calling on the federal government to return to the unsustainable rate of increases (six per cent per year) in the Canada Health Transfer (CHT) that typified the last decade. This plea comes despite the fact that the arbitrarily determined increases did little to fix the long wait times they were supposedly targeted towards.

Health Minister Jane Philpott is right to question where the money went, and tie future increases to the country’s economic climate (albeit, with a three per cent minimum increase guaranteed). In fact, it’s encouraging to hear the minister repeatedly acknowledge that a lack of money is not the problem. The provincial health ministers are clearly trying to get the federal government to do their dirty work. Because increasing health-care funding would require one of three things: cutting spending in other areas, raising taxes, or piling on debt. With those three choices, it’s unsurprising that the health ministers would prefer to pass the buck to Ottawa than present those tough choices to their own voters. However, this is nothing more than a shell game. Canadians will foot the bill either way.

Unfortunately, this type of shell game is a common exercise for Canadian provinces. It’s routine for provinces to demand, and even count upon, federal transfers to fund programs that are constitutionally allocated to the provinces. This not only allows the provinces to spend more money without raising their own tax rates, but it cushions them from having to make efficient spending decisions. After all, spending more without raising taxes is a much easier decision to make than finding ways to spend more efficiently.

If the provincial finance ministers are convinced that they require more funding for health care, they have the ability to raise that revenue themselves.

However, it isn’t obvious that they need to. After all, Canada actually spends more on health care (as a percentage of GDP) than most other countries with universal health-care systems. Unfortunately, for that level of spending, it has fewer medical resources, middling outcomes, and some of the longest wait times in the developed world. This is not a result of the universal nature of Canada’s health-care system, but rather the way it’s structured.

For instance, most other countries with universal health care generally allow cost-sharing programs (user-fees, co-payments, and deductibles) that could potentially incentivize individuals to use scarce health-care services more responsibly (with annual caps, and exemptions for vulnerable populations). Ironically, a key reason provinces haven’t experimented with these policy options is that the Canada Health Act mandates the federal government to withhold CHT transfers if a province were to introduce such fees.

Rather than pleading for more transfers, the provinces should instead push to cut the strings attached to the health transfer. This would allow them to innovate and experiment with the sort of policies commonly found in other countries with more successful universal health-care systems.

This approach wouldn’t be unprecedented. In the 1990s the Chretien Liberal government cut the strings attached to transfers for social services. This lead to successful provincial level reforms across the country, which coincided with dramatic declines in welfare usage and increases in employment levels.

Rather than continuing to throw more money at the problem with no plan to fix what ails the Canadian health-care system, health ministers should demand that the federal government untie their hands and allow them to adopt international best practices that would reduce the cost and increase the quality of health care. That may not be the path of least resistance, but it’s the path to better results for Canadians and their families.


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