More federal dollars won’t cure Ontario’s health-care problems

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Appeared in the Ottawa Sun, October 26, 2016

Once again, Ontario’s provincial government claims it needs more money from Ottawa to fund its programs.

This time, the immediate cause for Ontario’s complaint is the Liberal government in Ottawa’s decision to proceed with its predecessor’s plan to slow the rate of growth in federal health-care transfers to the provinces. Ontario Health Minister Eric Hoskins recently stated that if the federal government reduces the annual growth rate from six per cent to three per cent, federal funding will become “inadequate.”

It’s hard to square Minister Hoskins’ rhetoric with the fact that federal transfers to Ontario have increased rapidly over the decade, and are currently near an all-time high. A quick review of recent history demonstrates this point.

From 2005/06 to 2015/16, major federal transfers to Ontario increased by 87.8 per cent. This is a much faster increase than would have been necessary to offset cost pressures resulting from inflation and a growing population.

As a result, federal transfers per person to Ontario (after adjusting for inflation) increased by 43 per cent during this period.

While Minister Hopkins laments that the partnership between the federal government and the provinces is being “eroded,” in reality, Ontario is getting a lot more assistance from Ottawa than it was 10 years ago when federal transfers represented 12 per cent of all revenue collected by Ontario’s government. Last year, it was 16.4 per cent.

It’s true that Ontario’s health-care system (like all Canadian provinces) has serious problems, especially when it comes to wait times for care. More money from Ottawa, however, is not the solution to these problems. If it were, they would have been solved a long time ago.

Instead of crying poor and asking for even more money from Ottawa, the provincial government should demand that the federal government give all provinces more freedom to pursue innovative health-care reform strategies.

Currently, federal health-care transfers come with a number of strings attached—meaning that provinces must comply with a series of regulations or else risk seeing health transfers withheld completely.

Some of these rules seem to prohibit the provinces from pursuing policies that might help shorten wait times and reduce costs.

For example, most universal health-care systems around the world use some sort of cost-sharing program (user fees, co-payments or deductibles) to encourage efficient use of scarce health-care resources. These programs generally include annual limits and exemptions for vulnerable populations to prevent financial hardship. But despite this fact, Canadian provinces have not yet experimented with such policies, likely out of fear of seeing their health-care transfers cut.

This is just one example of how federal regulations tie the hands of provincial governments, preventing them from developing solutions to the unique problems they face.

Indeed, Ottawa is making it harder to improve health-care in Ontario—but not by failing to supply enough money. Rather than increasing transfers even more, the federal government should cut some of the strings attached to health transfers that inhibit health policy innovation at the provincial level, for the benefit of Ontarians and their families.