Making The Right Choice On Federal Healthcare Funding

The federal Liberals have not shown much flexibility on healthcare funding for the provinces. Their proposals closely mirror those that Stephen Harper had communicated to the provinces in 2011.

It is pretentious to suggest that these discussions are “negotiations”. The federal government agrees to give the money, and the provinces agree to take it.

They will never say that it is enough. Complaining about the inadequacy of federal support is a way to share blame for the shortcomings in provincial healthcare delivery.

Oddly enough, the federal formula will serve Nova Scotia better than the various proposals put forward by the provinces collectively.

When Paul Martin was Prime Minister, he committed to 6% annual increases in funding for ten years. When Stephen Harper was elected, he honoured that commitment and extended it by three years.

Starting in 2017, the formula was to be the greater of 3% or nominal growth in GDP (i.e. real growth plus inflation). The provinces had lots of notice of what was coming.

The Liberal platform gave strong hints that they would be more generous:

“…it has been more than a decade since a Canadian Prime Minister sat down with provincial and territorial Premiers to strengthen the program, and ensure that it can meet current needs and the challenges that come with an aging population. We will restart that important conversation and provide the collaborative federal leadership…”

The only specific promise was for an additional $3 billion over four years for home care. In the week before Christmas, it was packaged with variations that go for longer time periods and also include mental health, but none of them offered more money than the Harper formula plus a little less than a billion a year for those two specific areas.

In addition, the federal Liberals want the provinces to be accountable for how they spend the extra money, a step that Harper skipped and which causes no end of angst in some provincial premiers.

One of their proposals is for annual increases of 5.2% with no accountability. The irony in all this is that the provincial health spending has been growing at a much slower rate than federal support.

Across all provinces, the increase last year was 2.7%. The much larger increase in federal health transfers was being used to subsidize non-health spending. In Nova Scotia, the increase this year is less than 1% and over the last four years averages about 1.7%.

Consider, in the context of the current public sector wage negotiations, what would happen in Nova Scotia if the proposal for 5.2% increases with no accountability was accepted.

The provincial government has based its position in collective bargaining on the need to balance the books. The 5.2% proposal would add perhaps $15-$20 million each year to provincial revenues, so $30-$40 million in the second year, $45-$60 million in the third year, and so on.

That is not enough to meet union pay demands, but the unions would argue that the government could–at a minimum—add that amount to their pay packets. That is what happened across Canada to much of the 6% increases in healthcare funding over the last 13 years.

New Brunswick was the first to break ranks with the other provinces, and moved briskly to strike a deal with the federal government. It will receive the same regular increases as offered to the other provinces, plus $230 million over ten years for homecare and mental health. There is a “me too” clause that would enhance the arrangement if another province or territory strikes a better deal.

The government was right to follow New Brunswick’s example. On a per capita basis, Nova Scotia’s equivalent is $288 million over ten years. Even better, the federal government insists that the money be spent on homecare and mental health, and cannot be diverted to fund pay increases in the broader public sector.

As for the federal Liberals, it could be argued whether or not they are showing leadership, but it is certainly not “collaborative”. When dealing with provinces for whom there is never enough money, how could it be?


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