Fraser Forum

Minister Philpott should stand firm on federal health transfers

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As we head deeper into the fall, and Federal Health Minister Jane Philpott’s self-imposed year-end deadline to negotiate a new health accord with the provinces approaches, the chorus of provincial health ministers begging for more money from Ottawa is getting louder.

On Sept. 15, for example, the premiers sent a letter requesting a meeting with the prime minister to discuss health-care funding. Their primary concern, presumably, stems from the fact the Trudeau government said it will proceed with the reduction in the rate of growth for federal health transfers announced by the previous federal government.

Although the provinces hope they can cajole the federal government into reversing this decision, the government should stick to its guns. The plain fact is, as Minister Philpott (pictured above) has observed, we cannot return to the unsustainable and ineffective trajectory we’ve been on for more than a decade.

Back in 2004, a federal-provincial health accord—promising an annual six per cent growth in Canada Health Transfer (CHT) payments to the provinces for 10 years—was signed. At the time, it was heralded as a landmark agreement that would solve many of the wait-time issues plaguing Canada’s health-care system.

History, however, reveals it was nothing more than an attempt to throw money at a problem without addressing the root cause.

Consider that in 2014, towards the end of the health accord, physicians reported that their patients faced an 18.2 week wait from referral by a general practitioner to receipt of treatment—about the same length of time they faced in 2004 (when the accord was introduced).

The additional cost for such a (non)result? The cumulative increase in CHT payments between 2005/06 and 2014/15 totalled $63 billion. For perspective, federal debt during this period increased by $150 billion. Put differently, the cumulative increases in CHT payments equals 42 per cent of the increase in federal debt during the same 10-year period.

The arbitrarily determined six per cent annual increase in CHT payments to the provinces is finally set to end next year.

This does not mean that CHT transfers to the provinces will end. Nor does it mean they will decrease. Rather, the transfers will continue to increase—in tandem with the rate of growth of the economy—and with a minimum three per cent guaranteed increase regardless of the country’s economic performance.

While it’s understandable that provincial health ministers will make their best pitch to receive the most money they can get from Ottawa, a better course is to negotiate for greater freedom to experiment with innovative health-care policies.

At present, CHT payments come with a tangle of strings attached (outlined in the Canada Health Act) that discourage provinces from implementing a number of policy options commonly found in other successful universal health-care systems such as Switzerland, the Netherlands, Germany and Australia. Predictably, most of the provinces haven’t innovated much, and the health-care policy arena has been characterized by inertia.  

Canada’s history shows us the benefits of cutting the strings attached to federal funding in provincial policy areas. Consider the successful welfare reforms provinces implemented when Prime Minister Jean Chretien’s Liberals cut the strings attached to federal funding for social assistance during the 1990s. Provincial policy reforms were implemented, welfare rolls (and spending) went down, and employment went up. The lessons from the Chretien welfare reforms provide a blueprint for how the federal government can stimulate innovation in health-care policy—by simply allowing provincial governments to do what they believe to be in the best interests of their respective populations.

Rather than trying to push the federal government into a deeper fiscal hole by demanding a return to unsustainable increases in CHT payments, provincial governments should negotiate greater freedom to implement policy reform that will potentially help deliver better health care to patients for similar (or lower) costs.


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