Why the Harper funding diktat endangers medicare

By Thomas Walkom
TheSun.com
Tue Dec 20 2011

For medicare, the federal government’s new health financing ultimatum is a clear and deliberate step backward.

By scaling back cash contributions to provincial medicare plans, it will gradually and inevitably destroy Ottawa’s ability to enforce the Canada Health Act.

By tying these contributions to the vagaries of the overall economy, it will make it harder for provinces to forge long-term health-care strategies.

And by cutting back health spending during slump periods, it will remove money and jobs from health care precisely at those times when they are needed most.

Most provincial governments were furious when federal Finance Minister Jim Flaherty formally unveiled his non-negotiable scheme Monday. Justly so.

The new plan from Prime Minister Stephen Harper’s Conservatives threatens to undo key medicare gains that Canada has made in the past eight years.

To understand those gains, we have to understand what medicare is. It is a national public health insurance scheme administered and partly funded by the provinces.

The only incentive for individual provinces to adhere to national standards set out in the Canada Health Act is that doing so allows them to get cash from Ottawa.

But since its inauguration by the Liberals in 1968, medicare has been under attack from those who think the federal government has no business in health care.

Indeed, it was a Liberal government that, in 1977, first devised a way to gradually extricate Ottawa from what had been a 50-50 cost sharing arrangement with the provinces.

The Liberals did so by first tying annual federal health transfers to the ups and downs of the economy. Like Flaherty, they explained this as a cost-saving measure

More important, they began to count any tax room ceded to the provinces as part of their health contribution.

The use of these so-called tax points allowed successive Liberal and Conservative governments to gradually reduce the actual cash they transferred to provinces.

By 2002, Ottawa was contributing only 18 per cent of the public cash going to medicare. An increasingly unenforceable Canada Health Act was on its way to becoming a dead letter.

This is why Roy Romanow’s 2002 Royal Commission into health care recommended a boost in federal cash contributions.

And it is why the federal-provincial health accord two years later was so important.

That accord eliminated any linkage between federal health transfers and economic growth. More important, it committed Ottawa to put more real cash into medicare.

Thanks to that accord, the federal government’s cash share of health-care funding has gone back up to about 25 per cent.

Flaherty’s new plan very carefully doesn’t mention the accounting fiction known as tax points. But even so, the Conservative arrangement would eventually return the country to where it was in 2002 — with Ottawa putting little into medicare and the federal government losing all ability to enforce national standards that Canadians accept as given.

Think of this as stage one.

Stage two has not yet been announced. But it is intriguing to see that Ottawa still wants to continue talking to the provinces about health, even as it insists that the main topic of contention — money — is non-negotiable.

What will they talk about? My guess is “flexibility.” Having warned the provinces that he plans to eventually starve them of cash, Prime Minister Stephen Harper can now tell the premiers that he’ll turn a blind eye if they try to make up this shortfall through creative solutions — even if such solutions (delisting of all but core services? user fees?) run directly counter to the letter and spirit of medicare.