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Ottawa and the provinces must be equal partners on health care

Faced with an aging population, it will take increased funding from Ottawa but also better management by the provinces to address Canada’s health care challenges
Erich Hartmann
Health Ministers 20161018
Federal Health Minister Jane Philpott speaks during a federal, provincial and territorial health ministers’ meeting in Toronto on Tuesday, October 18, 2016. THE CANADIAN PRESS/Christopher Katsarov

The latest series of intergovernmental meetings on health care funding has sparked a somewhat predictable set of disagreements. Does the federal government transfer enough money to the provinces for health care? Should the money come with more or fewer strings attached? Who is ultimately accountable for how the money is spent?

Federal Health Minister Jane Philpott seems to have set the federal government’s opening position by arguing that provincial health systems are achieving middling results and that she can’t even be sure federal health transfers are spent on health care.

The federal government’s desire to have more influence on health care policy is understandable. Every year, it transfers significant fiscal resources to provinces and territories to support their spending in the health care system. But have they earned the additional influence they seek to exercise? The answer to that question lies in the numbers.

Canada’s health care system was designed to be a partnership. Costs were supposed to be shared (more-or-less) equally between provinces and the federal government. At least, that was the idea fifty years ago when Prime Minister Lester B. Pearson and the provinces agreed to extend universal access to medicare.

However, in the wake of a decades-long series of unilateral freezes and cuts, the federal government has downgraded its funding role to junior-partner. Despite recent increases in transfers, federal support for provincial health care spending through the Canada Health Transfer (CHT) and tax points still stands at 35 per cent (as of 2015-16). If the federal government were to fund health care like a partnership between equals, it would have to add $10 billion to the envelope it currently spends annually.

Instead of a partnership, provinces have been left holding the bag by a series of federal governments largely indifferent to the costs of funding the health care system. The impact of that federal indifference will be made even worse by an aging baby boomer population that will severely strain Canada’s health care system.

It is unfair to be too critical of the current federal government in this regard. This is the state of affairs it has inherited from decades of accumulated instances of unilateralism by its predecessors. The new federal government has communicated that it understands the need to collaborate with provinces and territories to affect meaningful change on a number of fronts.

However, on the issue of health funding, so far the federal government has been non-committal. It appears content to let the CHT funding escalator fall to the minimum 3 per cent floor currently set out in legislation. Doing the bare minimum set by law is the equivalent of phoning it in. It doesn’t send the strongest signal when trying to re-build a collaborative partnership. The very real challenges that will face the health sector are significant and will require a real partnership between Canada’s orders of government to address them.

Re-establishing an intergovernmental health funding partnership presents an opportunity for the federal government to facilitate transformation in the health sector. Restoring the intergovernmental funding partnership in health care should not be a simple exercise of cutting a series of cheques to the provinces. It should be informed by a collaborative approach between equal partners seeking to facilitate transformational change in the health sector.

For their part, provinces also need to commit to further making the health system sustainable, to respond to the challenges of an aging population. This does not mean that federal funding must come with stringent conditions. But the money from a new health accord must buy real change, not more of the same. The current health care model funnels far too many chronic cases through the acute care system; this is inefficient and expensive. Canada needs to build a robust, patient-centred community care system to take pressure off hospitals. Provinces have taken steps in this direction, but much more needs to be done. Investments in this area should be made now if we expect the system to be ready for the large cohort of aging baby boomers.

To help see these changes through, the health system sorely needs a pan-Canadian institution mandated to promote transparency and accountability in health care. Such an institution can report on how wisely health care dollars are being spent by bringing impartial, evidence-based assessments and recommendations to an area too often tinged by intergovernmental tensions. It could also play an important role in setting a course for the health care system for the next fifty years.

Lastly, fairness in the allocation of funds cannot be overlooked. The fairest, most predictable and most practical allocation method for new federal health funding health would be to mirror the current per-capita allocation method for federal health transfers.

The complex challenges facing Canadian governments at all levels can’t be solved in silos. So they’ll have to find new ways to collaborate. That requires trust. When it comes to health care, a lot of that trust could be re-established by restoring the health care funding partnership.


Erich Hartmann is the Intergovernmental Practice Lead at the Mowat Centre. His report Partnership Renewed: Transforming Canada’s Health Funding Arrangements is available at mowatcentre.ca