Feds shouldn’t play Santa on health transfers

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Appeared in Toronto Sun, December 21, 2016

Ontario Premier Kathleen Wynne has told Ottawa what she wants for Christmas—a promise that federal health-care transfers to the provinces will continue to increase quickly (at more than five per cent annually).

But before agreeing to play Santa and committing to big increases in health transfers, the Trudeau government should review recent history, which suggests throwing more money at Canada’s provincial health-care systems isn’t likely to shorten long wait times. In 2004, Ottawa and the provinces reached a new health accord, which promised the provinces large (six per cent, in fact) increases in the Canada Health Transfer (CHT) every year. At the time, the accord was heralded by some as a landmark agreement that would help cut wait times. And the money did flow—CHT transfers nearly doubled between 2005/06 and 2014/15.

But all of the extra money didn’t produce the desired results. Wait times remain a serious problem in all 10 provinces. In fact, the Fraser Institute’s recent annual report shows that average wait times for care across a broad range of specialties is now longer than it was in 2004 when the accord was signed.

In short, the federal government paid out an awful lot of money, but Canadians didn’t get much in return in terms of shorter wait times.

With changes to the transfer formula set to kick in next year, the provinces are predictably asking Ottawa to continue increasing transfers to the provinces at roughly the same rate. Premier Wynne said transfers should increase at a rate of 5.2 per cent annually, slightly lower than before but still at a much faster rate than projected growth in the economy and federal revenues.

Meanwhile, the federal government has proposed reducing the rate of growth for health transfers to 3.5 per cent annually. But it should go a step further and empower the provinces to take steps that will actually make a difference in health care.

Right now, federal rules and regulations restrict the ability of provinces to experiment with reforms found in other universal health-care countries such as Switzerland, the Netherlands and Germany.

For example, other universal health-care countries generally embrace the private sector as a partner or alternative for the insurance and delivery of health-care services. Furthermore, almost every other universal health-care system in the world employs user fees (with exemptions for low-income and at-risk populations) to help encourage the efficient use of health-care resources.

These types of policies may be part of the reason many other universal health-care countries are able to deliver high-quality health services without long wait times, while spending about as much, or in some cases less, than Canada.

But under the current health-care arrangements, Canadian provinces face strong incentives not to consider similar reforms because, according to federal regulations, health transfers can be cut if provinces break from the policy status quo.

Premier Wynne is asking the federal government to play Santa and stuff more federal cash into provincial stockings. But if the federal government really wants to help the provinces, the best thing it can do is cut the strings on federal transfers, freeing the provinces to innovate and search for solutions that best suit their individual populations.