Health funding: Why 12 federal-provincial deals are better than none
Federal, provincial and territorial governments have been busy recently. After a standoff among health ministers in November, there has been a flurry of deals between Ottawa and the provinces and territories.
These deals are bilateral – meaning the federal government has negotiated them with each province individually instead of with the provinces and territories as a group. That represents a major shift in how the federal government funds health care. In the past, funding of health services has been largely provided through the Canada Health Transfer (CHT), block grants that were negotiated multilaterally. Bilateral arrangements were restricted to smaller, more targeted initiatives, such as research on specific primary care reforms and elective wait time reduction efforts.
Ottawa continues to fund block grants through the CHT. But it will also add an estimated $11.5 billion to provincial and territorial governments to finance a range of improvements and reform in home care and mental health, a much broader initiative than those targeted in past bilateral agreements.
The CHT money becomes part of overall provincial-territorial revenues, so it’s impossible to know if those federal dollars are spent on health care, other programs or even tax reductions. At just over $36 billion, the CHT is one of Ottawa’s largest expenditures, and changes to it have a major impact on the provinces and territories. When Paul Martin’s government committed to an annual CHT increase of six percent for 10 years, it was a win for the provinces and territories; when Stephen Harper’s administration lowered the annual increase to 3 percent, it was a major long-term hit for them.
The new bilateral agreements function differently. The idea sprang to life after the meeting of health ministers on October 18, 2016. The background was that Prime Minister Justin Trudeau had stuck to Harper’s 3 percent escalator – but he also offered an additional $3 billion, on the condition that it would be used for home care and mental health. All provincial and territorial health ministers refused, arguing that any increases in funding should come through the CHT instead, and that the CHT increase should be 5.2 percent a year.
The Trudeau government rejected the provincial counter-offer, but soon sweetened the original offer to increasing the CHT annually by 3.5 percent and an additional $10 billion on home care and mental health – eventually increasing this to $11.5 billion but only through bilateral deals. One by one, all the provinces and territories accepted the offer, with only Manitoba refusing to sign a deal by the end of March 2017.
As Globe & Mail columnist André Picard quickly calculated, when you combine the money that comes out of the CHT with the $11.5 billion from the bilateral agreements, it’s the same amount as the 5.2 percent CHT increase the provinces originally demanded. In other words, the provincial and territorial governments still got what they wanted – but in a different package. So is this approach better than simply funneling all the money through the CHT?
The CHT’s purpose is to enforce the five criteria of the Canada Health Act: public administration, comprehensiveness, universality, portability and accessibility. The money the provinces receive through the CHT is more than enough to accomplish those objectives, and is used mainly to support the existing system.
But the majority of Canadians are dissatisfied with the status quo. They want to see improvements in access (especially timeliness of service) and in quality of care. Are the bilateral deals an effective way to achieve this, and to provide better value for taxpayers’ money?
Perhaps. If the bilateral deals have the requisite degree of accountability, transparency and experimentation: in other words, only if provincial and territorial governments use the new money for innovative health reforms.
So, will this $11.5 billion spur the experimentation and innovation in home care and mental health that we so desperately need in Canada?
Unfortunately, we will never know unless the bilateral agreements require independent and rigorous evaluation of these investments, and the results are communicated to the general public.
The news releases we’ve seen so far state that the provinces and territories entering into bilateral agreements have agreed to work with Ottawa to “develop performance indicators and mechanisms for annual reporting to citizens, as well as detailed plans on how these funds will be spent.” This is a start, but the wording implies that the bilateral agreements are still being negotiated, and that at this point they are only statements of intention.
If the detailed agreements that are eventually signed are properly monitored by the federal government and managed by the provincial governments, and ongoing evaluation is built in, they may be able to deliver both government-to-government accountability and government-to-citizen accountability.
This may already be the case with the bilateral deal between Ottawa and Quebec. In contrast with the other deals, Quebec has only promised to develop “mechanisms for report to its citizens” thereby reflecting “the principle of asymmetrical federalism.” This may produce government-citizen accountability, but it omits the government-to-government accountability we should now expect in the other bilateral agreements once finalized. We will see what this difference produces in the months and years ahead.
Once the bilateral agreements are finalized, the Canadian public deserves to see their actual content. We would then be able to assess, based on publicly released evaluations conducted by credible and independent experts, whether our respective governments are living up to the potential promise of these bilateral bargains.
Greg Marchildon is a professor and Ontario Research Chair in Health Policy and System Design of the Institute of Health Policy, Management and Evaluation at the University of Toronto. He is the former executive director of the Commission on the Future of Health Care in Canada, and former deputy minister of intergovernmental affairs and cabinet secretary in the government of Saskatchewan.