By Karl Nerenberg
December 20, 2011
In the 1960s, when Canada’s universal healthcare system first got underway, between 40 and 50 cents out of every dollar provinces spent on health care was federal. The rest came from the provinces’ own coffers.
Today the federal figure is around 21 per cent; the rest, nearly 80 per cent, is provincially collected money.
It is not the same for every province. For British Columbia, for instance, the federal contribution is less than 15 per cent. And the federal figures do not include equalization payments, of which some can be assumed to go to healthcare.
What is clear, though, is that there has been a fairly steady decline in federal participation in health funding over the years.
The federal spending power
When the Pearson government of the 1960s went about reproducing Saskatchewan’s universal healthcare system throughout the country, it used the lure of federal money to entice the provinces. The original idea was that medicare would be a fully cost-shared program.
Health, of course, is entirely within provincial jurisdiction. How the federal government gets involved is through the federal “spending power”.
Although neither the BNA Act nor any other constitutional document mentions it, the federal government is deemed to have the right to spend in areas of provincial jurisdiction.
In the case of healthcare, the federal government did not use its spending power until the mid sixties. During that period, the NDP-supported minority Liberal government was engaged in a large scale expansion of the Canadian social safety net.
The big pieces of that expansion included: enhanced unemployment insurance; regional economic development programs; the Canada (and parallel Quebec) pension plans; the Canada Assistance Plan, through which the federal government leveraged provincial social welfare and social assistance spending; and the universal, public health insurance program.
Some of these programs were entirely federal.
But a great deal of this social expansion required federal-provincial cooperation, and over time, the federal government sought to get away from 50/50 funding arrangements.
It wanted to limit the growth of federal spending in healthcare and other provincial fields.
However, the federal government still made use of its spending power to foster national standards and equal access to services throughout the country.
Taking on "extra billing" and other corrosive practices
The Trudeau government’s Canada Health Act of 1984 is the quintessential example of federal muscle flexing. The federal health minister of that time, Monique Bégin, used the Act to put a stop to practices such as “extra billing” which were eroding the universal healthcare system.
By the early 1980s it had become almost impossible to have surgery in most Ontario hospitals, for example, without agreeing to pay an “extra” fee to the anesthesiologist.
There was an effective “closed shop” in Ontario. In order to practice, virtually all anesthesiologists had to agree to “extra bill”, to impose fees on patients over and above the provincial fee.
The Canada Health Act put an end to that practice.
The Act enunciated five main principles for healthcare throughout the country: public administration, comprehensiveness, universality, portability and accessibility. More important, the Act had teeth. It provided for financial penalties, in the form of reduced federal transfer payments, for provinces that broke the rules.
Wait times reach near crisis proportion
When the Chrétien government radically slashed health transfers to the provinces in 1995 it did not get rid of the Canada Health Act. But that cost-cutting exercise, coupled with growing demand for health services, had significant negative impacts on the healthcare system.
One of the most troubling of those negative impacts was the increase in wait times for essential treatments and services.
As a result, in 2004, when the health funding arrangement was renewed for 10 years, with 6 per cent per year annual increases in federal transfers, the provinces and federal government agreed to take on the wait-times problem.
The two levels of government agreed to reduce wait times in five priority areas: cancer treatment, cardiac care, diagnostic imaging, joint replacement and sight restoration. And the provinces agreed to accept common benchmarks to measure how well they were succeeding.
Seven years later, this seems to be a case in which federal-provincial shared goals have been effective.
By 2010, a Canadian Institute for Health Information (CIHI) report showed that a large majority of Canadians were receiving treatments in the five areas within clinically recommended time frames.
Unilateral federal funding decision; no joint undertakings
Now, the current Conservative government has put a new, non-negotiable funding proposal on the table. It will continue the 6 per cent increases for a few years (until 2017), then will peg increases to economic growth, regardless of any potential increase in needs due to an aging population or other factors.
But this time there is no effort to put joint federal-provincial goals on the table, as we had in 2004.
Finance Minister Jim Flaherty has made vague statements about the provinces making efforts to manage healthcare more efficiently and finding ways to reduce costs, and that’s about it.
There is nothing wrong with seeking to deliver healthcare more effectively and at lower cost, of course, and there are many ways to do that.
One of those is through the use of electronic health records (EHR). As a country, we are still way behind the curve on EHR, despite the millions already invested. The federal government’s contribution to the EHR effort is Canada Health Infoway, a federally funded agency designed to assist and encourage provinces and the technology industry in their efforts.
Another way to reduce costs is through improved service delivery systems. The federal government also funds a body that works in that area: the Canadian Health Services Research Foundation. It trains healthcare managers in evidence-based strategies and facilitates sharing across jurisdictions of best practices and experiences.
And there are other significant federal health investments, such as CIHI and CIHR (the Canadian Institutes for Health Research), the entities that deal with health statistics and fund basic scientific research on health matters.
A passive-aggressive approach?
Taken together these all are part of the federal government’s contribution to the national healthcare system. Their work could actually make a difference and help cut healthcare costs.
None were created by the current government and it is not at all certain that the Conservatives will be interested in supporting all of these federal efforts. There are signs that at least some are in danger.
The current Conservative approach to the whole area of health has always seemed somewhat passive aggressive.
Many Conservatives are on record as favouring a much increased private sector role in healthcare. Later this week we’ll look at what the Fraser Institute proposes. It seems to be lurking in the background of current Conservative policy.
However, the Harper government knows there is not much appetite in Canada for an American-style, private enterprise health system. Not yet, at any rate.
Do the Conservatives hope that by putting the healthcare system on a diet, and doing little to invest in improved service delivery, they may be able to build a groundswell for the private sector option?
And we haven’t even talked about the so-called “population health” issues -- the impact of poverty, inequality, pollution, diet, exercise and stress (among other factors) on healthcare and health outcomes.
We will have to leave that for another day…