Health-transfer plan good for Ottawa, bad for provinces

New projections show Ottawa’s health-financing plan will solve federal fiscal problems at the expense of the provinces — a conclusion that increases pressure on the premiers meeting next week to devise a solid rescue plan for medicare.

OTTAWA — New projections show Ottawa’s health-financing plan will solve federal fiscal problems at the expense of the provinces — a conclusion that increases pressure on the premiers meeting next week to devise a solid rescue plan for medicare.

Parliamentary budget officer Kevin Page crunched the numbers from the federal government’s new, post-2014 health-care funding formula and found that the transfer scheme will put Ottawa on firm fiscal footing for the future.

Ottawa’s share of provincial health-care expenditures will slowly recede over the next two decades, the budget officer said in a report issued Thursday.

The provinces, on the other hand, will see their debt skyrocket — unless they curtail other spending or significantly raise taxes.

That’s because as federal funding increases slide to an average of about 3.8 per cent a year, health care costs will be rising at a 5.3-per-cent pace, Page’s report said.

“The projected increase in consolidated program spending relative to the size of the economy — resulting from population aging and assumed program enrichment — now falls squarely on provincial and territorial governments.”

Some of the richest provinces may be handle the climbing costs, but most won’t be able to without compromising quality of care, argued Liberal health critic Hedy Fry.

“You are leaving people in different provinces vulnerable,” she said in an interview. “Even if one or two provinces can weather the storm, a lot of the provinces can’t.”

A spokesman for Finance Minister Jim Flaherty did not dispute the findings, but pointed out that federal transfers on health care are generous and are growing faster than planned spending in many provinces for the time being.

It’s up to the provinces to take that funding and put it to good use, Chisholm Pothier said in an email.

“Now is the time for provinces and territories to focus on what really matters: delivering high-quality and timely health care to Canadians.”

Flaherty took provinces by surprise in December by handing them a set-in-stone formula for federal health transfers. The plan sees Ottawa continue with six-per-cent annual increases until 2016-2017, but then ties increases to growth in the economy.

No strings were attached, although Health Minister Leona Aglukkaq is travelling the country to see if provincial health ministers are interested in discussing some kind of national co-operation.

The move signals that the federal government will take a lesser role in determining national health-care goals and has prompted widespread speculation that the days of medicare under a national health accord are coming to an end.

The provinces have been grappling with the fiscal and policy implications of the federal decision. Premiers will meet in Victoria starting Sunday night to attempt to figure out what the federal role is in health care and how the provinces should collaborate on health-care goals.

There’s some hope within provincial governments that the federal government will agree to fund specific, goal-oriented national initiatives on health care — above and beyond the promised health transfers.

Aglukkaq has said she values the impact that such arrangements have had in the past. Federal-provincial pacts to decrease wait times, for example, have proven effective.

But the head of the Canadian Medical Association says the provinces shouldn’t hold their breath waiting for extra money.

“It would be a shame though if the (premiers’ meeting) didn’t use this opportunity to actually fundamentally overhaul or transform the health systems in this country,” John Haggie said in an interview. “To sit back and hope that there will be something more may not be prudent given the fiscal environment we’re in at the moment.”

Provinces have agreed in the past that they should join together and buy drugs in bulk — an idea that may resurface at the Victoria meetings.

They also have a common need to deal with chronic disease management, home care and long-term care, wait times and mental health, notes a new report from the Health Action Lobby, a coalition of 34 national health organizations.

The national nature of the issues calls out for a federal role that should be clarified, the network said in a new report on the future of health-care policy.

“We need some vision and some leadership in health care, to change it, to transform it, so it actually works for the needs of Canadians,” Haggie added.

“Where that change comes from, I don’t honestly think Canadians mind if it comes from provincial governments, federal governments or a collaboration.”