Federal-provincial squabbling over funding responsibilities has not been beneficial in the evolution of Canadian Medicare
As of now, it looks like there will be no new health accord between the federal and provincial/territorial governments in the immediate future. It would be a pity if this means no reallocation of aggregate healthcare spending toward home care and mental health programs, two areas where additional spending could greatly benefit patients. Barring this, however, the failure to agree on a new accord is better than a repeat of the 2004 agreement and could ultimately lead to a better alignment of responsibilities in Canadian healthcare.
The federal government’s willingness to help provinces pay for healthcare helped establish Canada’s universal Medicare system in the ‘60s and ‘70s. Half a century later, however, our model of divided federal-provincial responsibility for healthcare has become an obstacle to the reforms needed to stop our system’s performance from sliding even further behind our peers in the U.K., France, Germany and Australia.
Management of a publicly funded healthcare system is a challenging task for elected officials: They seem to be cornered by constant pressures to provide more resources to health but also do not want to raise unpopular taxes. In this respect, our existing model of shared federal-provincial responsibility for healthcare financing has a fatal flaw: The provincial/territorial politicians who have the main responsibility for making sure the system responds to the pressures from patients and providers don’t have to raise all the revenue necessary to pay for it. If the expectation is that increases in provincial/territorial healthcare spending will lead to increased transfers from the federal government “for health” (and vice versa), much of the blame for raising taxes necessary to pay for it is shifted to federal politicians. Canadians don’t care whether it is the federal or provincial portion of their tax bill that pays for healthcare, but to elected politicians it matters a great deal.
Politicians at the federal level are not interested in paying a larger share of healthcare costs unless they can take credit for specific improvements. The result is the stalemate we have just seen: The federal government offering additional funding provided that it is spent on clearly identifiable new programs, and provincial/territorial governments digging in for more money to pay for expansion of existing programs, with “no strings attached.”
As matters now stand, the failure of the two levels of government to agree means that federal payments to provinces under the Canada Health Transfers will grow at three per cent per year — not chump change, but a big shift in health funding from the six per cent historical increases — and additional increases in provincial/territorial healthcare spending will have to be paid for out of provincial revenue. There will be no buck-passing: If provincial politicians agree to expand existing services or come to very generous settlements with professional provider groups in healthcare, for example, they will have to either raise provincial taxes or cut back on other types of spending.
As a result, they may be more willing to push for other types of cost-saving reforms, like new methods of compensating physicians, new methods of funding hospitals and community care, or relaxed rules to allow less expensive professionals, such as nurse practitioners, to provide more primary care — reforms advocated for in last year’s federal Advisory Panel on Health Innovation.
With no new accord, the federal government can focus more on its own pressing health delivery issues, such as improving indigenous and veterans’ health — areas where health needs are poorly met, to put it mildly. These should be top priorities for a government that is the fifth largest provider of services in the country.
Federal-provincial squabbling over funding responsibilities has not been beneficial in the evolution of Canadian Medicare. If the federal government sticks to its guns, what now looks like a failure — the inability to reach a new accord — may, in retrospect, come to be seen as the beginning of a long overdue process of rejuvenating a health system that has not been performing very well in recent years.
