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Canadian health care system shows little improvement despite extra $97.6 billion in federal health transfers since 1997/98; time to reform Canada Health Act

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Release Date: March 21, 2012
VANCOUVER—Ottawa has transferred an extra $97.6 billion to the provinces for health care with little noticeable improvement in access to medical care for Canadians during the past 13 years, concludes a new report from the Fraser Institute, Canada’s leading public policy think-tank.

And now Ottawa is repeating the costly mistakes of the past with its recent changes to health transfer payments that maintain a six per cent annual increase in health transfers until 2016/17 and thereafter link increases to economic growth until 2024, warns Nadeem Esmail, Fraser Institute senior fellow and co-author of Canadian Federal Health Transfers to the Provinces.

“The federal government’s new plan for health transfers makes little change to the current failed arrangement other than linking transfer increases to economic growth. This approach fails to address what matters most to patients and their families: improved health care in Canada,” Esmail said.

“To improve Canada’s health care system, the federal government should modify the Canada Health Act to allow each province to experiment with different methods of delivering, regulating, and managing health care within a universal and portable framework.”

Canadian Federal Health Transfers to the Provinces shows that since 1997/98, Ottawa increased provincial health transfers by $97.6 billion more than was needed to compensate for population growth and inflation.

Yet in 2011, the average Canadian could expect to wait 19.0 weeks for medical treatment, more than 50 per cent longer than in 1997, and the longest wait recorded since the Fraser Institute began measuring wait times in 1993.

The report examines whether or not marked increases in federal cash transfers have improved the Canadian health care system and recommends reforms to federal health care transfers.

In comparing the performance of Canada’s health care system in 1997 with the present, the report identifies improvements in only four categories: availability of MRI units and CT scanners, wait times for MRI scans, and availability of physicians. In contrast, all of the remaining indicators, including wait times for care and access to nurses, showed declines in performance. Notably, while there were more CT scanners and physicians available, wait times for their services increased over the same period.

“Clearly, transferring more and more money to the provinces while constricting their ability to reform health care policy is the wrong approach but Ottawa has signalled its intent to keep doing so,” said Niels Veldhuis, report co-author and Fraser Institute senior economist.

The report points to the successful reforms of the mid-1990s, which made significant changes to federal transfers to the provinces for social services, including welfare. The changes gave provinces greater autonomy and responsibility for these services, giving them incentives and the ability to design and deliver better social services.

The increased flexibility accorded to the provinces resulted in an outburst of innovation and experimentation. The results were largely positive: welfare dependency was reduced, employment rates increased, services were often improved with less money spent, and provincial governments trimmed social assistance spending.

The lessons should be applied to health care today, Veldhuis said.

“If the federal government were to modify the Canada Health Act to allow provinces to experiment with different models of health care financing and delivery within a universal and portable frame work, innovation would blossom and Canadians and their families would enjoy improved access to health care without putting additional strain on government budgets,” Esmail said.