Premiers simply demand more money while ignoring possible health-care solutions
Canada’s health-care system is plagued with problems including worker shortages and long wait times. In response, provincial premiers have demanded more money from the federal government. But this will not solve the underlying issues and ignores actual solutions.
Ottawa currently provides $45.2 billion to the provinces via the Canada Health Transfer (CHT). Growth in these transfers is tied to a three-year moving average of nominal economic growth, with a minimum three per cent annual increase.
In July, the premiers demanded the federal government increase the CHT by $28 billion this year. This should not come as a surprise as the provinces have made repeated requests for more money from Ottawa for decades regardless of the parties in power at the provincial or federal level.
At first glance it appears odd that provinces would want Ottawa to have an increased role in an area clearly within provincial jurisdiction. Premiers in many provinces are often quick to fight Ottawa over real or perceived encroachments on their respective areas of responsibility but are typically much more receptive to an increased role for the federal government if it means more revenue.
If premiers increased provincial spending, they’d either have to raise their own taxes or run larger budget deficits (which would raise taxes in the future). Tax increases are usually unpopular among voters. Recognizing this, premiers attempt to increase federal funding so they can avoid these tax increases. In doing so though, the provinces are indirectly letting Ottawa bite the bullet by asking the them to raise federal taxes today (or in the future) to pay for increased CHT funding.
In truth, these calls for permanent increases in federal funding overlook several uncomfortable realities including that prior to the pandemic Canada already ranked among the highest health-care spenders in the world. Among 28 OECD countries with universal health care, Canada had the second-highest level of health care spending as a share of the economy while being the eighth-highest spender per capita (after adjusting for age) in 2019.
Despite this relatively high spending, our health-care system offers relatively low resource availability and poor access to timely care compared to other high-income countries with universality. For example, while Canada was in the middle of the pack (14th of 28) for nurse availability in 2019, it had significantly fewer physicians (26th of 28) and acute-care beds (25th of 26) per capita (age-adjusted basis) when compared to most OECD countries.
Canada also ranked poorly (ranked 10th of 10) on wait times for specialty and elective surgical care compared to its peers. For instance, while 62 per cent of patients in Canada reported waiting less than four months for elective surgery in 2020, this was far less than in Germany (99 per cent), Switzerland (94 per cent), France (90 per cent) and the Netherlands (87 per cent).
Instead of simply asking for more money from the federal government, provinces should instead learn from previous episodes of policy reform and the potential benefits of increasing their own autonomy in the realm of health care. Currently, CHT funding comes with several strings attached and provinces risk losing federal dollars if they’re perceived to violate the Canada Health Act (CHA). The result is an inflexible arrangement that leaves provinces unable to experiment and implement policies that fit the needs of their populations and fiscal situations.
Clearly, demands for increases in CHT payments will not solve Canada’s health-care challenges. Instead of vying for simple increases in federal funding, our premiers should instead look to increase provincial autonomy. This would allow them to experiment with and craft solutions to address the complex problems within our beleaguered health-care system.