Health care and the Canadian Confederation

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Pontiac Perspective  Peter J. Gauthier

The Quebec government recently made a number of changes to its health care system which has reduced the quality of service delivered through its publicly-funded health care insurance plan.  However, much of the trouble with health care in Quebec, and the rest of Canada, stems from the federal government’s

Pontiac Perspective  Peter J. Gauthier

The Quebec government recently made a number of changes to its health care system which has reduced the quality of service delivered through its publicly-funded health care insurance plan.  However, much of the trouble with health care in Quebec, and the rest of Canada, stems from the federal government’s
failure to maintain its share of the cost to provide
public health care services.
Canada’s health care system started in 1966; under this system, the federal government provided 50% of the funding. In return, the provinces agreed to follow five basic principles: universality, comprehensiveness, portability, accessibility, and public administration. Further, free access to health services was to be a pillar of the system. In 1977, the formula for shared costs was replaced by block funding and tax point transfers. However, because federal funding was no longer linked to provincial health expenditures, provinces began direct patient charges.
The problem of health care funding is complicated by progress in medical practices: people are living longer and new medical procedures and drugs
have improved the quality of life of many patients. Unfortunately, this progress has come at a cost; health service costs have risen much faster than the rate of inflation. One result has been
placing caps on health care funds transferred from the federal government to the provinces. By 2012, federal transfers accounted for only 20% of government (federal and provincial) costs. To meet this reduced federal funding, provinces have had to increase taxes and direct patient charges.
In 2013, the Harper
government dropped a bomb shell on the health system; starting in 2014, the federal government began limiting health payment increases to the rate of inflation. The funding formula was also changed and tax point transfers (intended to help the “have-not” provinces) were dropped. Amounts transferred are to be calculated on a per
capita basis only and
federal funding will now cover only 11% of total costs.  The result is that the provinces have been dealt a $36 billion dollar shortfall – for Quebec the amount is $8 billion.
The Canadian Institute of Actuaries did a study on the effects of these changes on the provinces. By 2037, health care will absorb 69% of total revenues available to the provinces. Their summary: in order
to safeguard the sustainability of its health care system, Canada has to
significantly limit health care cost increases, or boost GDP growth, or raise taxes and fees, or
substantially reduce or cut
altogether other government programs and services, or implement some
combination of these.
The fact remains: the Harper government has preferred to give tax breaks to wealthy individuals and large corporations at the expense of a fair
system for all Canadians while ignoring a basic
tenant from Canada’s
confederation:  the federal government is in the best position to ensure a fair tax regime and social equality among the provinces.