Trudeau’s budget: a missed opportunity at health-care reform

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Appeared in the Financial Post, April 6, 2016

Last week, Prime Minister Justin Trudeau’s government tabled its first budget. While the media (understandably) focused on the $29 billion deficit, other important aspects of the budget went unnoticed. Of particular importance, the budget represents a missed opportunity for fundamental health-care reform.

Like its predecessor, the newly minted federal government has chosen to avoid any serious reform of health care. This is unfortunate since they could have helped improve Canada’s broken health-care system by replicating the successful federal-provincial social policy reforms introduced by former Prime Minister Jean Chretien in the 1990s.

While it’s true that provincial governments are primarily responsible for health care within their borders, federal policy limits the extent and type of reform provinces can pursue. By stipulating that provinces must meet specific terms and conditions to receive federal transfer payments for health care, federal regulations discourage the provinces from introducing the sort of innovative policies that enable other countries to deliver universal health care without long wait times at similar or lower cost.

This is not dissimilar to the sort of regulations provinces once needed to meet in order to receive transfer payments for social programs.

Fortunately, in 1995 the federal government (under Prime Minister Chretien) removed almost all federal regulations on provincial social policy, allowing the provinces to experiment (the feds also reduced the transfer).

The result was a flourishing of different approaches to social policy and in particular welfare. Some provinces experimented with workfare programs while others created programs to encourage potential recipients to exhaust non-government options before receiving welfare while still others implemented time limits on benefits.

The outcomes were overwhelmingly positive with welfare rates dramatically reduced, resources better targeted at actually solving problems, and a marked reduction in poverty.

This combination of decentralized authority to the provinces within a national framework is exactly the solution needed for Canadian health care.

Canadians increasingly understand the need for health-care reform based on the costs of our system versus what’s actually delivered. Canada continues to be one of the highest-cost providers of universal health care among industrialized countries. Provincial governments also routinely spend about 40 per cent of their budgets on health care, slowly crowding-out other important priorities.

Unfortunately Canada’s high spending is not matched by results. Compared to the average OECD country (on an age-adjusted basis), we have fewer doctors, acute-care beds and diagnostic imaging technologies (like MRI machines and CT scanners). Worse, not only have wait times almost doubled since 1993 (when the Fraser Institute began measurement), but we routinely rank at the bottom of the pack in terms of timeliness of care compared to other universal health care countries.

While the need for policy innovation is clear, federal regulations continue to prevent provinces from pursuing the sort of reforms proved successful elsewhere. For example, most of the countries that outperform Canada employ some type of cost-sharing to encourage the efficient use of scarce health-care resources—a policy option effectively prohibited by current federal regulations in Canada.

Again, loosening the requirements to receive federal transfer payments would allow provinces to experiment with cost-sharing and other reforms. To be clear, such reform is not meant to either abandon universality or force provinces to employ any specific policy, but rather allow them to individually tailor their respective health-care systems to better deliver on the promise of timely access to quality care, regardless of ability to pay.

To address their health-care challenges, Canadian provinces can learn from other jurisdictions. But the first step must be to provide the provinces with greater autonomy to experiment in how health care is financed and delivered within a universal framework. Unfortunately, the federal government's first budget took no steps in this direction, and the likely result will be continued health-care policy inertia.