Diagnosing changes to health-care funding

TheStar.com – news/Canada/politics
Published On Tue Dec 20 2011.   Kenyon Wallace, Toronto Star

Provincial health and finance ministers are expressing anger at the news that Ottawa will claw back increases in health transfers beginning in 2017, but have so far failed to provide any examples of how the change will affect patients.

It’s easy to get lost in the rhetoric, not to mention the bureaucratic terminology, that comes with any announcement about health-care funding in this country.

Here’s a field guide to the policy change and what it means to you.

What do the transfer cutbacks entail? Finance Minister Jim Flaherty announced Monday that the annual 6 per cent increases enjoyed by the provinces since 2004, when Paul Martin’s Liberal government and first ministers signed the 10-Year Plan to Strengthen Health Care, will continue to 2016-17. After that, increases in the health transfer will slow to match economic growth plus inflation, with the promise that annual increases will never fall below 3 per cent.

How much money are we talking about? The Canada Health Transfer — the largest major transfer made by the federal government — this fiscal year is nearly $27 billion and is expected to climb to $30 billion by 2013-14, reaching $38 billion by 2018-19. The health transfer currently represents about 10 per cent of all federal spending. For the sake of comparison, health-care costs make up 42 per cent of the Ontario government’s total program spending.

What effect will the change have on patients? That depends on who you ask. Patrick Fafard, a health policy expert at the University of Ottawa, says the clawback will have an minimal effect as it’s spread over many years. He says there are other things, such as the rate of economic growth, that will have a bigger effect on health care than federal transfers.

“About 80 per cent of what Ontario spends on health care comes from provincial taxes. So if the economy slows down and revenues decrease, that will be a much bigger deal than the size of the federal transfer,” Fafard said.

On the other hand, Gordon Guyatt, a professor in the department of clinical epidemiology at McMaster University, calls the clawback “unequivocally bad.”

“What the change ignores by tying transfers to economic growth is the fact that Canadians may well be willing to pay more for health care if they gain increasing benefits,” he said. “Over the next decade, we anticipate major technological advances that will improve the quality of care. Furthermore, with restricted funding, those who could get those benefits will be those who can pay out of pocket. The result will be two-tiered health care.”

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