Whither the Canada health accord?

The existing health care accord between Ottawa and the provinces and territories is set to expire on March 31, 2014 and the long term consequences are alarming. The issues are complex and the amount of money involved is in the many billions, but the key to understanding what is happening is this: Canada has a public, single payer health system for visits to the doctor and stays in hospital thanks to earlier political leaders, including Tommy Douglas, Woodrow Lloyd and Lester Pearson. Publicly-funded expenditures account for about 70% of all health care spending in Canada. The remaining 30% is private spending on items such as dental and vision care and pharmaceutical drugs. When publicly funded health care was first introduced in the 1960s, its costs were shared on a 50-50 basis by Ottawa and each of the provinces, which actually deliver most of that care. That cost-sharing arrangement has evolved greatly and will change even more dramatically in future, given a unilateral announcement made in 2011 by Jim Flaherty, who was Canada’s finance minister at the time.

Federal contribution dropping

According to a 2013 study by the Canadian Institute of Actuaries and Society of Actuaries, health care transfers from Ottawa to the provinces, which once accounted for 50% of all public expenditures, had fallen to 21% in 2012. The actuaries estimate that the federal contribution would drop to a mere 14.3% by 2037 under the revised formula announced by Flaherty.

Jean-Denis Frechette, Canada’s Parliamentary Budget Officer, says that the change forced by Flaherty will set in motion Ottawa’s downloading health care costs to provinces, most of whom can ill afford to foot the bill, and whose residents will be the ones affected.

The Canadian system has worked quite well. Everyone has access to doctors and hospital care and Canada’s total spending on health as a percentage of our Gross Domestic Product (11.4% in 2010) is comparable to that in similar industrialized countries and is considerably less than that in the United States. But there have been problems as well and there are fears that an aging population will place further stress on the system.

Paul Martin’s health accord

In 2004, Prime Minister Paul Martin negotiated an accord with provinces and territories through 2014. He added $41-billion to federal contributions toward health through 2014, which included an escalation of six per cent a year, well above the rate of inflation. Provincial and territorial governments fully expected to negotiate a new agreement in 2014 with the Harper government, but Flaherty stunned them at a meeting in December 2011 by announcing, over lunch, that there would be no negotiations for a new health care accord. The government had decided unilaterally how much money it would provide and the provinces and territories could take it or leave it.

The Liberals and NDP have long accused Stephen Harper of having a secret agenda to dismantle public health care. He attempted to put that issue to rest prior to the May 2011 federal by promising that he would continue to support public health care, and that he would extend Paul Martin’s six per cent increase in the annual federal contribution until 2016.

Harper’s long term goal

In the short term, Harper can point to a promise kept but what about the long-term consequences of the unilateral funding announcement? Veteran Ottawa-watcher Paul Wells, who writes for Maclean’s magazine, has just written a book called, The Longer I’m Prime Minister. In it, he describes Harper as a man with a mission but someone who is prepared to pursue his conservative goals incrementally.

Wells writes, “He can do some of the big conservative things that would be the end of his career, or he can do the small conservative things that won’t.”

The health care announcement may well fit this mould. A frontal attack on medicare would be politically suicidal for the Conservatives but a slowing of health transfers to the provinces over a period of years would place increasing pressure on their ability to provide services. It would also lead to increasing frustration among the people using the service and a demand for alternatives, including more privately offered services.

Day of Action

This scenario is not lost on other organizations such as the Canadian Health Coalition and the Council of Canadians who are among groups organizing a national day of action in support of public health care.

A slightly shorter version of this article appeared as a blog the United Church Observer website on March 27, 2014.