Get Ottawa out of health care

Posted on April 14, 2014 in Health Debates – Full Comment
April 14, 2014.   Ake Blomqvist and Colin Busby

The federal government’s decision to revise its Health Accord with the provinces has been greeted with widespread criticism, culminating with a mock funeral procession on Parliament Hill for the “death” of the old Health Accord. Critics argue the federal government should take an active leadership role in health reform. In our view, the new agreement is a good move that should improve the performance of public healthcare in Canada.

The now-extinct 2004 health accord ratcheted up federal health transfers to the provinces, to the tune of 6% increases each year. In addition, it stipulated a few areas — such as waiting list reductions — where the provinces had to improve their performance to receive the additional funds. But this agreement fell short of its goals.

A 2013 Health Council of Canada report on implementation highlighted the accord’s major shortcomings. Even its biggest proponents would admit that the accord underachieved, making only modest progress in a few areas at a great cost.

The new funding formula continues to allow health transfers to the provinces to grow by 6% until 2016/17, and from 2017/18 onwards it will increase in line with average economic growth in Canada, subject to a minimum of 3% each year.

So health transfers to the provinces will continue to grow at a reasonably predictable rate. What is new is that the transfers will come with essentially no strings attached, which is what the critics lament.

Government policy in health care involves balancing the interests that all of us have as patients against our interests as taxpayers. The responsibility for doing this lies with the provincial governments who negotiate with the doctors, hospitals, and pharmaceutical companies regarding which services and drugs will be supplied to patients and paid for by the provinces. No one likes high taxes, but health care invariably is high on lists of voter concerns, so provincial politicians have every incentive to get the balance right.

Federal politicians, in contrast, don’t have to worry about this balancing act. The money each province receives from the federal government under the Canada health transfer does not depend on how much the province spends on health care, and there really is no difference between the monies it receives under the CHT and those under no-strings-attached transfer programs such as equalization.

The only way the federal government directly influences health policy is through restrictions or requirements that it imposes on the provinces as conditions for receiving the CHT in the first place — through the way it interprets and enforces the Canada Health Act principles — but politicians at the federal level do not bear the consequences that these restrictions give rise to.

Health policy in Canada is complicated by the powerful special interest groups that are part of the sector — medical associations, associations and unions representing nurses and other hospital employees, the pharmaceutical industry, etc. The positions they take are usually presented as being motivated by a concern for patients, even in cases where it is clear that they also involve providers’ economic interests in major ways.

Ironically, the fact that responsibility for health policy in Canada is divided between the federal and provincial governments may indirectly increase the ability of these interest groups to influence policy and resist reform — they may find a ready audience among federal politicians. After all, the political incentives at the federal level are such that it is attractive for MPs to present themselves as “defenders of Medicare” and oppose controversial provincial reforms, because it will be the provincial politicians, not federal ones, that will bear the consequences of failing to reduce health-care costs and making the system more efficient.

The new agreement will give the provinces room to decide what changes are necessary, and open up the opportunity for them to collaborate with each other to overcome political resistance to change. The new Pan-Canadian Pricing Alliance, which allows the provinces to negotiate drug prices as a collective unit, is a good example.

Federal expertise and policy advice does not have to be tied to the funding formula for health transfers

Critics will persist in arguing that federal expertise and input is beneficial on matters of health policy – and to some extent, they might be right. But federal expertise and policy advice does not have to be tied to the funding formula for health transfers.

If it comes with few strings attached, the CHT essentially becomes a part of the Canadian system of revenue-sharing, along with equalization grants and other transfers that are intended to enable governments in the poorer provinces to supply better public services in general. But provincial politicians have to balance health-care spending against other priorities such as education and social assistance, for example.

Those who advocate a stronger leadership role for the federal government in health policy and reform have never explained why they think the politicians we elect federally should be able to do a better job in this area than the ones we elect provincially.

The decision by the federal government to return the CHT to its role as simply a part of the system of revenue-sharing, and to place responsibility for health policy squarely on the shoulders of provincial politicians, should be welcomed.

National Post

Ake Blomqvist is adjunct professor at Carleton University and health policy scholar at the C.D. Howe Institute, where Colin Busby is senior policy analyst.

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Seven things to know about federal government’s failed $41-billion health care ‘fix for a generation’ – Canada/Politics.   
March 30, 2014.   Joseph Brean

In one of its final acts after the federal government cut its funding last year, the Health Council of Canada issued a report saying the 2004 health care “fix for a generation” was nothing of the sort. On the contrary, it reported, the $41-billion deal negotiated between Paul Martin’s Liberal government and the provinces raised expectations beyond reality and failed to keep pace with societal shifts — everything from aging to economics — and their impact on access to care. The Council was not alone in that view. With its aim of dictating the delivery of health care to provinces, who are constitutionally in charge, the plan was ambitious, expensive and politically charged. And yet, the First Ministers ultimately agreed to it in September, 2004, setting today as the expiry. The National Post’s Joseph Brean breaks down some of the ways the great experiment succeeded and failed.


In 2004, Ottawa was funding about 17% of provincial and territorial health spending. Expert advice suggested it be boost to a full quarter, coupled with efficiency-minded reforms by the provinces. Today it is about 20%, and slated to fall under a new funding model pegged to economic growth, rather than iron-clad guarantees, with Ottawa taking the back seat to provincially led strategy. Under the deal, the federal government pledged $41.3-billion, most through the Canada Health Transfer, which was to rise at a guaranteed 6% each year. There was also $5.5-billion to reduce wait times, and more for smaller projects. The Harper government has committed to keep the same increase until 2017, with future ones dependent on economic growth. Protests planned for Monday are expected to focus on this uncertainty, and a form letter is being circulated urging the government to extend the 6% pledge for another decade.

Wait Times

With a focus on cancer, heart, diagnostic imaging, joint replacements and sight restoration, wait times were a fundamental part of the accord. In 2012, a Senate report found objectives were met in every area except imaging, and eight of ten people were getting treatment within established time frames, but the news was not all rosy. A 2010 international survey found Canada the worst of 11 countries on wait times to see a doctor or nurse when sick, and in waits for specialist appointments, of which nearly half were more than two months. “The rationing of health care in Canada through queues for medically necessary health services imposes direct costs on those waiting for care,” according to a Fraser Institue study last week by Nadeem Esmail. The trajectory of improvement, as he describes it, belies the idea of a permanent fix, and although “both wait times and the estimated private cost of waiting generally moved downward between 2004 and 2009, deteriorations in both since then have resulted in an overall lack of improvement since 2004.” On a per patient basis adjusted for inflation, he found the $1.1-billion private cost in 2013 of the 930,000 Canadians waiting for treatment was the highest on record since 2004.

Human Resources

One of the few strongly positive indicators, the Senate report found “significant increases” in the supply of health professionals since the accord was enacted. It also recommended the federal government play a greater role in “pan-Canadian collaboration” to keep this indicator pointing up.

Home Care

This indicator revealed troubles not so much in what it measured, but in how the measurements were reported. A key aspect of “patient-centred medicine,” home care was flagged for increased funding in three targeted areas: short-term acute conditions, mental health care, and end-of-life care. But for the Senate, tracking proved difficult because “governments did not meet their reporting requirements relating to home care due to a lack of agreement regarding developing indicators and targets for progress.”

Primary Care

The clearest of the all the goals was the accord’s target that, by 2011, 50% of Canadians would have round the clock access to multidisciplinary health-care teams. They did not make it, and the Senate called for the government to better share its best practices, and re-establish this goal, as yet unreached.

National Pharmaceuticals Strategy

The most obvious of the accord’s failures is this pledge, which has gone essentially dormant since the election in 2006 of the Conservative government. Early discussion revealed local jurisdictions wanted to focus on catastrophic drug coverage, expensive drugs for rare diseases, and market strategies. After an interim report in 2006, the Senate found progress on this file “slowed substantially” and “disparities and inequities” persist.


A particular success, innovation has stood out as an area in which demonstrable progress has been made, as the Senate found the “federal government was making significant investments in health research that was allowing for discoveries, which were reducing adverse reactions and mortality rates, and were cutting costs across health care systems.”

National Post

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