Days of blindly topping up medicare are over

Posted on in Health Debates

Source: — Authors: – life/health/new-health/andre-picard
Published Monday, Nov. 21, 2011. Last updated Wednesday, Nov. 23, 2011.   André Picard

When Canada’s health ministers meet this week, one issue will dominate discussions, at the table, in the corridors and in the media: The 2014 Health Accord.

The meeting in Halifax on Thursday and Friday will be the first formal opportunity for Ottawa, the provinces and territories to feel each other out on this crucial financial and political issue.

There will be a lot of posturing, but this must be a priority for the health ministers because the way we finance health care in Canada is going to change profoundly in the next few years. The transfers from Ottawa to the provinces and territories are just one piece of the puzzle, but an important one, especially politically.

Renegotiating the Canada Health Transfer – the mechanism Ottawa uses to transfer health-care dollars to the provinces – is a golden opportunity to send a message: The days of blindly shovelling money into health care are over.

We need targets, we need accountability, we need budgets that are respected. And we need to stop pretending we can keep doing the same old thing and get better results.

The CHT money is significant – $27-billion in cash and $13.6-billion in tax points – and increases six per cent a year. Aside from helping round out provincial/territorial budgets, the money carries symbolic weight.

Constitutionally, health is a provincial responsibility. But the CHT gives Ottawa the moral authority (if not the legal right) to impose conditions on provincial health spending, and to create a semblance of a national system. When medicare began as a national program in 1965, the federal government paid half the tab; today, it covers less than one-quarter of public health spending, so the moral authority is waning.

(The Canada Health Act, the cornerstone of medicare, sets out the five conditions the provinces and territories must meet to receive federal cash: universality, comprehensiveness, portability, accessibility and public administration. The law gives Ottawa the power to claw money back if the provinces violate these provisions. Some of them do, routinely, but there is virtually no enforcement.)

During the spring federal election campaign, Prime Minister Stephen Harper effectively snuffed out debate on health funding by vowing to maintain the 6-per-cent escalator. He did not, however, say for how long, and has played his cards close to the vest since, aside from saying, intriguingly, that the feds will expect more accountability in exchange for the money in the future.

Most interest groups, whether they represent hospitals, physicians, nurses, patients or others, have been saying for years that they want Ottawa to place strict conditions on the CHT as a way of ensuring specific programs are undertaken. This was done in the 2004 health accord with wait times and was moderately successful. The other priorities in the 2004 accord were so vague that little progress was made.

The provinces have largely been saying that they want a repeat of 2004, when they got a 10-year deal with 6-per-cent increase per annum, and virtually no conditions on the money.

No one honestly believes that is going to happen, not at a time when most provinces are vowing to keep increases in health spending below 3 per cent a year, and least of all in the current economic conditions.

But what is the alternative?

One possibility is extending the 2004 deal to 2016 which, not coincidentally, will be time for the next federal election. The provinces, rather than accept much smaller increases in the CHT, could gamble that this will become an election issue. Ottawa could buy time for its larger plan to radically revamp federal transfers to the provinces (including the CHT, CST and equalization.)

A second possibility is negotiating separate deals with each of the provinces and territories rather than one national accord. This fits Mr. Harper’s philosophy of decentralization and could prove attractive to many provinces, who believe they could do better than they do now.

Regardless of the direction negotiations take, the current formula, which is as convoluted as it is complex, is changing.

The CHT amounts to about $1,100 per capita. But the cash portion each province receives varies because of the way equalization payments are calculated.

In 2014, that will change so that cash is distributed on a per capita basis, without accounting for tax points. Practically, this will mean significantly more cash for Alberta and Ontario, and less for B.C. and Quebec.

Another hot issue, especially for the Atlantic provinces, is a desire to adjust the CHT to reflect demographics – namely that health-care delivery is more expensive in provinces with older populations, like those in Eastern Canada.

This approach, known as needs-based funding, is already used by several provinces in calculating transfers to their regions.

These seemingly technical matters will be on the table this week in Halifax, so don’t expect any earth-shattering news, especially because the Senate committee studying the 2004 accord has not yet tabled its report. When it does, we will have a much clearer idea of Ottawa’s tack.

In the meantime, the health ministers jockeying should serve as an important reminder that we have focused too much on the amount Ottawa is transferring to the provinces/territories overall and too little on how the $40-billion-a-year pie will be divvied up.

Regional bickering will make it a lot easier for Ottawa to negotiate a deal (or deals). It’s in Mr. Harper’s interest to drag out the talks in the hope that the common front will crumble.

It’s also in the country’s interest that the Prime Minister and the premiers be willing to go out on a limb and fundamentally revamp health financing – starting at the top – because the current formulas aren’t working.

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