The difficult path to a better system

On matters of social policy, relations between the federal and provincial governments often turn on the trade-off between money and flexibility. When Ottawa decides to reduce a transfer, it almost invariably offers provinces the freedom to spend it as they wish. Less money, more flexibility.

The result, however, is often fragmentation and, at worst, a race to the bottom.

When Ottawa decides to increase a transfer, it’s almost always because it wants to impose conditions. The result, more often than not: messy squabbles and imperfect compromises.

We saw this dynamic play out yet again this week as Canada’s health ministers met in Toronto — an early step on the long, treacherous path to a new health accord.

The inevitable squabbling focused on two points of contention: whether the Trudeau government is right to insist that strings be attached to certain investments in health (yes); and whether Ottawa’s funding formula, a holdover from the Harper era, is sufficient given the challenges the provinces face (no).

The Harper government was a proponent of extreme flexibility. When the $41-billion health accord struck by Paul Martin’s Liberal government expired in 2014, Stephen Harper refused to wade into the mire of a new intergovernmental negotiation.

Instead, he simply extended existing transfers, with annual increases of 6 per cent until 2017, at which point the hike would be reduced to about 3 per cent.

That formula was imposed unilaterally, without consulting the provinces. And the money came with no new strings, meaning Ottawa effectively abandoned leadership in the realm of national health care, providing provinces pretty much full flexibility.

Justin Trudeau seems to understand the limits of such an approach. The Trudeau government came to power promising to “provide the collaborative federal leadership that (was) missing during the Harper decade.” It has begun to make good on that vow, undertaking the hard work of trying to negotiate a new accord, bringing the provinces together to create a vision for a 21st-century national health-care system and insisting that strings be attached to transfers to ensure that vision is made real.

That’s as it should be. Only the federal government, by applying conditions to investments, can secure national objectives and ensure reasonably comparable health care for all Canadians, wherever in the country they may be, as the Constitution demands.

Moreover, the priorities the Trudeau government is advancing are sensible, if incomplete.

The promise of a $3-billion investment in home care, a key challenge as our population ages, is welcome. As is Ottawa’s emphasis on innovation and mental health, two areas in dire need of attention. It’s disappointing that the government continues to avoid the subject of a national pharmacare plan, which would have perhaps the most profound impact on quality, access and costeffectiveness. But otherwise its direction is encouraging.

Despite predictable complaints from provincial health ministers, Ottawa is not wrong to demand some measure of accountability to ensure that money intended for home care, for example, is in fact spent on home care. But, as Ontario Health Minister Eric Hoskins has argued, the Trudeau government undermines its influence by embracing Harper’s inadequate funding formula.

The Parliamentary Budget Office has warned that while the halved hike in transfers would stabilize federal finances, it would do so at the peril of the provinces, decreasing Ottawa’s share of rising health-care costs over the coming years. The $3 billion for home care is a welcome contribution, but how can Ottawa ask the provinces to transform health care when it’s not even planning to do its part to keep the lights on? The feds need to pay their fair share to maintain the system we have, as well as making adequate investments for the system we need.

Some critics suggest the provinces have actually spent less on health care in recent years, as Ottawa’s contribution has grown. But as the population ages and health-care demand balloons, costs are projected to surge over the short term. This is not the moment for Ottawa’s contribution to flag.

That’s especially true given that the federal government, despite the Martin health accord, hasn’t paid what many consider to be its fair share in decades. Provinces have long called for the federal portion of total health spending to rise to 25 per cent, as former Saskatchewan premier Roy Romanow recommended in his landmark 2002 health-care report. At one time it was a 50-50 split, but Ottawa’s contribution is now around 23 per cent. The Harper funding formula will move the federal share in the wrong direction. If Ottawa wants to reclaim leadership in health, it ought to carry some of the risks.

Making matters worse, the reduced escalator especially disadvantages provinces with older populations — and thus higher healthcare costs — like Nova Scotia, which are already hurting from another Harper-era tweak to the formula.

Under the pre-Harper system, the transfer took into account both population and need. But since 2011, only population counts. That shift has benefited Alberta enormously, despite its relatively young population, while costing every other province hundreds of millions of dollars.

That makes no sense. Universal access to quality health care for all Canadians requires that need be taken into account. Specifically, provinces with more seniors should get more money, as the Canadian Medical Association has forcefully argued.

The Harper-era funding formula was designed in isolation from the provinces by a government uninterested in the preservation of our country’s most important social program. It’s the wrong foundation for the Trudeau government to build on as it seeks to bring that program into the future.

Of course, it’s essential that federal money come with strings. Some provinces will gripe, but there can be no meaningful universal health-care otherwise. However, strings should come with money. Conditions are only credible if Ottawa’s commitment is long-term, its funding sufficient and every attempt is made to work out shared objectives.

Sound messy? Medicare was born, with great difficulty, amid the mess of intergovernmental compromise — and only there can it be secured.

As the population ages and health-care demand balloons, costs are projected to surge over the short term