Social Policy in Ontario

How to resolve the impasse over health costs

Posted on January 7, 2017 in Health Policy Context

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TheStar.com – Opinion/Commentary – The Trudeau government must engage in true negotiation with the provinces to reach a compromise deal on funding health care, writes independent Senator André Pratte.
Jan. 6, 2017.   By ANDRÉ PRATTE

The health and finance ministers of nine provinces and territories wrote this week to their federal counterparts to reiterate their demand for an increase in the Canada Health Transfer (CHT).

Unfortunately, there has been no negotiating on this crucial issue: the provinces are seeking an increase of 5.2 per cent a year for 10 years and Ottawa is about to impose an increase on the order of 3.5 per cent. The federal government’s “offer” is clearly inadequate and its attitude is a far cry from the “collaborative leadership” the Liberals promised during the last election campaign.

That does not mean that the provinces should be given the blank cheque they are asking for. Under the Martin government’s approach, which was also followed by the Harper government, the Canada Health Transfer increased by 6 per cent a year for more than a decade. The health care system was inundated with money, yet Canadians did not receive better care. A more moderate growth rate is needed.

The federal government maintains that the provinces have in fact found that more reasonable growth rate, since their health spending has increased by only 2.5 per cent over the past four years. But it is turning a blind eye to the negative impacts of the cuts the provinces have had to make in order to get their finances in order. This slow growth cannot be sustained without catastrophic effects on our health system.

The provinces and territories want the CHT to increase by 5.2 per cent a year for 10 years. This request is based on a forecast by the Conference Board of Canada that this is the amount by which health care spending would have to increase to keep up with demands resulting from demographic trends, scientific developments and inflation, if nothing is done to control costs.

Most Canadian and international studies conclude that health care spending will grow faster than the economy for the foreseeable future, in large part because of the aging population. However, it’s unreasonable to ask the federal government to increase this significant transfer by more than 5 per cent a year, regardless of economic conditions.

Furthermore, based on what we have learned over the past 10 years, a growth rate that encourages tighter management of funds is needed. According to the Conference Board, a scenario that limits healthcare spending would result in increased expenditures of 4.4 per cent a year rather than 5.2 per cent.

In light of these considerations, Ottawa should propose to increase the Canada Health Transfer by the annual nominal GDP plus one percentage point. Thus, if the GDP were to increase by 3.5 per cent — the average rate projected for the coming years — the CHT would increase by 4.5 per cent.

According to the Conference Board, such a level of growth “implies that there must be efficiency gains – a more effective use of dollars spent in the health care system – if there are to be improvements in health outcomes for Canadians.” In the event of weaker economic growth, the CHT would increase at a slower rate, thus protecting federal finances.

Added to this reasonable CHT growth rate would be the $11 billion that the Liberal government wants the provinces to invest in new home care and mental health services. Ideally, this amount should be included in the CHT, so that it becomes a recurrent investment. However, for financial and political reasons Ottawa prefers targeted funding. The provinces should accept this compromise in exchange for the increased CHT growth rate.

In their letter, the provincial ministers ask for a meeting of First Ministers on this issue. Such a summit is unnecessary. What we need is for Prime Minister Justin Trudeau to give Finance Minister Bill Morneau a new mandate that reflects the Liberal government’s election promise to “negotiate a new Health Accord with the provinces and territories, including a long-term agreement on funding.”

“Negotiate” and “agreement”: these words imply good faith and compromises from both sides.

The ball is in Ottawa’s court. However, if the federal government takes it, the ball will soon be back in the provincial governments’ court and they will have to abandon their role as perpetual beggars and act responsibly as Canadians’ representatives. An agreement will then be within reach.

André Pratte is an independent senator.

< https://www.thestar.com/opinion/commentary/2017/01/06/how-to-resolve-the-impasse-over-health-costs.html >

Tags: budget, Health, ideology, jurisdiction, mental Health, pharmaceutical

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