Fraser Forum

Mo money, mo health-care problems

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The classic song “Mo Money Mo Problems” by late rapper Notorious B.I.G. is a fitting way to describe the current state of federal health transfers from Ottawa to the provinces. As federal transfers have grown over the past decade, Canada’s health-care system continues to be plagued by long wait times. In fact, there’s evidence things have gotten worse. Spending more money on our expensive and inefficient system is not the solution. The country needs genuine reform.

Canada’s finance ministers are currently meeting in Ottawa and one of the items on the agenda is federal health transfers. Both sides are no doubt eager to come to an agreement as changes to the transfer formula are set to kick in next year. As usual, the provinces want more money, while the feds want to contain transfers as they stare down a barrel of self-inflicted deficits.

The federal government would be well-served to look back at our recent history, which shows that simply transferring more money to the provinces is not an effective way to solve Canada’s health-care problems.

Back in 2004, a new federal-provincial health accord was reached, which promised the provinces large increases in the Canada Health Transfer (CHT) each year. At the time, the accord was heralded as a landmark agreement that would solve many of the wait-time issues plaguing Canada’s health-care system.

In retrospect, it achieved very little and was very expensive to boot.

The 2004 health accord specified that the CHT, the major federal funding transfer to the provinces for health care, would grow at six per cent annually for 10 years until 2014.

During this period, annual health transfers increased from $19 billion in 2005/06 to $32.1 billion in 2014/15. And yet, despite significantly increased federal transfers, the 2004 health accord didn’t fix one the biggest flaws in Canada’s health-care system—long waiting times for medical care.

The Health Council of Canada itself noted that “wait time benchmarks are not yet fully met in most of the priority areas”, and that “[o]verall, the accords didn’t lead to the major changes that were expected.”

The Fraser Institute’s annual report on wait times found that when a broad range of specialties are examined, Canadians on average faced an 18.2 week wait from referral by a general practitioner to receipt of treatment in 2014. That’s about the same length of time they faced in 2004 (when the accord was introduced) and significantly higher than the 9.3 week wait in 1993. Worse still, this year’s report found that Canada’s health-care wait times were the longest ever recorded.

The previous federal government promised an extension of the annual six per cent increase in transfer payments until 2016/17. Starting next year, the rate of increase was supposed to be set by a three-year moving average of nominal economic growth, with a minimum three per cent annual increase guaranteed.

While this interim commitment better balances the health-care demands of our society with our ability to pay for them, it ignores the fact that the real source of Canada’s health-care ills is not a lack of funding and they will not be cured unless there’s fundamental policy reform.

For these reforms, Canadian policymakers should look to the many countries around the world with universal health care that spend about the same as Canada does, but that generally have more resources, greater choice, and shorter wait times. The key difference is that these countries better structure incentives in the health-care systems. They generally embrace the private sector as a partner or alternative for the insurance and delivery of health-care services, and expect patients to share in the costs of treatment.

If the finance ministers are truly interested in improving health care for Canadians, and not just receiving more transfer money, they should negotiate greater freedom from Ottawa (and the Canada Health Act) to experiment with proven policies that work, and structure their health-care systems according to the needs of their own unique populations.


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