Social Policy in Ontario

Kathleen Wynne is right that Ottawa should pay more for health care

Posted on January 13, 2017 in Health Policy Context

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TheStar.com – Opinion/Editorials – Ontario Premier Kathleen Wynne is right to say Ottawa must do its part and earn the right to lead.
Jan. 12, 2017.   Editorial

Premier Kathleen Wynne can’t have liked the new report from Ontario’s budget watchdog. After all, it seems to suggest that for the premier to keep her commitment to balance the provincial budget by 2018, a promise on which she has pegged her political future, one of two things will have to happen: 1) Ontarians will have to stop aging, or 2) Ottawa will have to start paying its fair share of health costs. And given the signals coming out of Ottawa, Wynne may want to start investing in fountain-of-youth R&D.

As Ontario’s population continues to grow and age, demand for health care is expected to soar in the coming years. The new report predicts cost pressures will rise more than 5 per cent annually. Yet the province’s plan to balance the budget depends on containing growth in health spending to 1.7 per cent per year over the next three years, about the level of inflation. To succeed, the new report from the Financial Accountability Office suggests, the province will have to find $2.8 billion in additional savings over that period.

The Wynne government has had significant success in reining in health costs, which account for more than 40 per cent of the province’s total spending. Between 2001 and 2012, Ontario’s health outlay grew by an average of 6.8 per cent annually. Since then, under Wynne, growth has been tamed to 2.4 per cent per year, much of that due to inflation.

The government achieved this primarily by freezing hospital funding and reducing physician pay, as well as by limiting the number of nursing home beds. Of course these cuts have consequences for quality and access, and as demand balloons, it’s not at all clear there will be any room for more of the same. The watchdog warns that the province may not be able both to meet its budget goals and provide quality care.

So what’s to be done? Well, for a start, Wynne is right that for the province to “meet all the competing needs,” Ottawa will have to pay its share – especially as it attempts to restore its leadership role in health.

Provinces have long called for Ottawa’s portion of total health spending to rise to 25 per cent, as former Saskatchewan premier Roy Romanow recommended in his landmark health-care report. Last month, the provinces rejected the Trudeau government’s offer to increase health transfers by 3.5 per cent annually, a proposal that would see the federal share shrink from its current 23 per cent.

The formula Ottawa put on the table is a slight variation on the one unilaterally imposed on the provinces by Stephen Harper – a framework designed primarily to protect federal coffers. By linking transfers to nominal GDP, Harper ensured that in tough times, when growth is lowest and health care costs tend to be highest, Ottawa transfers less. As a recent Parliamentary Budget Office report concluded, the feds’ current approach is sustainable for them and perilous for the provinces, which have been asked to assume a growing share of the growing risk.

The difference is that the Harper government offered the money with no strings, abdicating its leadership role in national health-care, whereas the new government seems to want to impose its priorities – home-care, mental health, system transformation – through targeted investments. These priorities are totally sensible, but why should the provinces listen to Ottawa as it downloads risk?

It must rankle Wynne, especially as she moves toward an unpromising election, that the feds were able to implement a politically popular middle-class tax cut last year, leaving the provinces with the hard choices – steal from other already underfunded programs, raise taxes, cut spending or some combination of all this. It must especially rankle that the feds want the provinces at the same time to do more on home care and mental health, offering incentives but not covering the full cost and certainly not paying their fair share just to keep the lights on.

Harper offered much the same fiscal framework without pretensions of federal leadership, seeming content to leave policy to the provinces even if at the risk of fragmentation and a race to the bottom. Justin Trudeau wants to reassert leadership by working out national plans on home-care, mental health and other priority areas. That’s a good thing, but he can’t have it both ways. Wynne is right to say that Ottawa must do its part and earn the right to lead.

< https://www.thestar.com/opinion/editorials/2017/01/12/kathleen-wynne-is-right-that-ottawa-should-pay-more-for-health-care-editorial.html >

Tags: budget, Health, jurisdiction, mental Health

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