Harper Sticks Provinces With Take-it-or-Leave-it Health Care Approach

Gregory Marchildon
Canada Research Chair
University of Regina
February 8, 2012

In December, the federal Minister of Finance announced that the federal government would extend the current six per cent annual escalator on the Canada Health Transfer (CHT) to 2015-16 and thereafter link increases in the CHT to the rate of economic growth with a floor of three per cent per year.

The announcement caught everyone -- pundits, governments, and experts -- by surprise. Most expected some sort of First Ministers' meeting to deal with the issue along the lines of the 2004 meeting between the Premiers and Prime Minister Martin that produced the last deal. Instead, provincial governments got a take-it-or-leave it proposition, putting them in the ridiculous position of complaining about aspects of the decision -- the escalator, the new per capita formula, and the unilateral nature of the announcement -- even as they accepted the money.

While we have seen much media attention on the consequences of this decision, a basic issue of accountability seems to be missing.

Health transfer payments represent the single largest expenditure of the federal government amounting to billions of dollars annually. Is this money for nothing -- or should it serve a policy purpose?

I think it is time we remind ourselves what the CHT money is supposed to deliver to Canadians.

From the time that universal hospital insurance was introduced in the late 1950s, federal health transfers have been used to protect some basic national principles or standards. Similarly, when the terms of federal cost sharing were introduced for universal medical insurance through the Medical Care Act of 1966, four basic national dimensions were introduced: universality, comprehensiveness, public administration, and portability. The Canada Health Act of 1984 added an additional principle of accessibility and discouraged user fees and extra billing for necessary hospital and physician services by threatening to reduce, dollar for dollar, transfers to provinces that permitted these practices.

In the initial decades after medicare was introduced, this arrangement generally worked. The provinces were responsible for administering and delivering their own universal health systems, but if they wanted federal money they had to agree to these few very basic national principles.

Things started getting complicated by the mid-1990s.

A major reduction in federal cash transfers led to a more relaxed view of the federal role in ensuring adherence to national principles. Later, when the federal government put more money back into the purse through First Minister agreements in 2000, 2003, and 2004, it used new transfer investments to begin the process of directing some high-level health reforms.

For a number of reasons, including a lack of federal focus on what it was trying to achieve and provincial avoidance of any conditionality, including Quebec's refusal to sign the main accords, the results of these agreements have been mixed at best. At the same time, the federal government has made a hash of its main job -- protecting the national dimensions of medicare -- the original rationale behind health transfer payments.

The concept of portability is in shambles as a number of provinces no longer automatically honour health insurance from other provinces. Universality and accessibility are under siege too, with the mushrooming of private diagnostic clinics and surgical centres in places like Montreal, Vancouver, and Calgary, where queue-jumping among the more affluent is now encouraged.

Some -- maybe most -- of this damage was done before the Harper government came into office. But if the Canada Health Act, along with this basic funding accountability, continues to be ignored, the country as a whole will be worse off.

Putting aside the social objectives represented by the principles of universality and accessibility for a moment, there are good economic reasons for the federal government to reinforce this accountability.

Universal, single-payer medicare supports economic competiveness.

By not having to carry the burden of providing expensive hospital and medical insurance for employees, Canadian businesses have had a competitive advantage over their American counterparts for decades. Portability encourages economic mobility by allowing Canadians to choose where they live based on economic opportunity rather than the type of health insurance that might be available in one jurisdiction rather than another.

These basic aspects of our citizenship also enhance our global economic position. They are worth taking seriously after years of neglect. It is the bare minimum in accountability we should expect from our federal and provincial governments.