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As First Ministers meet to discuss health care financing, let's explore the demand from the premiers that the feds raise their share of the cost of medicare from 22% to 35% (abt $28B/yr). The demand fundamentally rewrites & misunderstands the history of health financing 1/20
The premise of the demand is simple. Once upon a time the federal gov't contributed 50% of the cost of medicare, now it contributes only 22%. The provinces, it seems, are being generous by requesting that the feds need only raise their share to 35%. 2/20
It is true that beginning w hospital insurance in 1957 and medical insurance in 1968, the feds agreed to what was a roughly 50/50 deal on medicare financing. This was in addition to block transfers for PSE & social assistance programs as well as Equalization payments. 3/20
BUT in 1977 the premiers agreed to change the 50/50 split for medicare & the PSE transfer under the Established Program Financing (EPF) transfer. EPF created a single transfer paid half in cash and half through the value of a tax point transfer from the feds to the provs. 4/20
In other words, medicare costs were allocated as 50% from provinces, 25% as a fed cash transfer and 25% from the value of the tax points. So, this made the provinces responsible for 75% of medicare's costs. 5/20
But the myth of the 50/50 split persists, perpetrated by govts. The feds liked to claim the value of the tax pts as an annual transfer (thus boosting their profile as a defender of medicare). But it's not. It was a 1 time transfer that generates revenue for provs every year 6/20
The premiers always want to ignore the value of the tax points because then they can plead poverty to Ottawa & bash them for no longer paying half of health care costs. They conveniently forget that they agreed to this deal cuz the value of the tax points grows w the economy 7/20
So, when the premiers issues little infographics like this, the public should know they are misrepresenting the facts and ignoring decisions their predecessors agreed to. In other words, they're lying. 8/20
But there's more to the story. In 1984 EPF was made conditional on the provs abiding by the principles of the Canada Health Act. Alas, those principles of universality, comprehensiveness, accessibility, portability and public administration have never really been enforced. 9/20
In 1995, in order to balance its own budget, the feds unilaterally rolled EPF and the remaining transfers into the Canada Health & Social Transfer (CHST). And they cut the value of that transfer by about half. (The tax point transfer remained in place.) 10/20
The provs were justifiably angry as they were left with either cutting health spending or raising taxes. This was the basis of the 'health care' wars of the late 90s and early 2000s. The feds appointed the Commission on the Future of Health Care to propose solutions. 11/20
The Romanow Commission (as it was known & for which I worked) called for a massive federal reinvestment of $$ in health. It also laid out the real story of the fed transfers in a detailed statistical appendix & called out both the feds & provs for their past "misstatements" 12/20
In 2003 the Fed-Prov Accord on Health Care Renewal split the CHST into the Cdn Health Transfer or CHT (62%) and the Cdn Social Transfer or CST (38%) and provided an additional $16B as a Health Reform Transfer. The provs promised to improve health system performance. 13/20
But, wait, there's more. In 2004 the 10 Year Plan to Strengthen Health Care raised the cash in the CHT and added a 6%/yr escalator. It rolled the Reform Transfer into the CHT and signalled a move to per capita funding by 2014/15. All agreed to by the feds & the provs. 14/20
In 2011 the 6%/yr escalator was extended to 2016/17. In 2017 the feds set the escalator at a "3yr moving average of growth in the GDP with a minimum of 3%/yr". Not a cut in federal funding, but a decline in the growth of the federal contribution tied to economic performance 15/20
The CHT & the CST are up for review in 2024. It should also be noted that the feds and provs were unable to agree to a new Health Accord following 2017. Instead then Min Philpott negotiated a series of bilateral agmts w each prov (though they're all roughly the same). 16/20
So when the premiers now turn around and say to the feds, "We'll forget your 50% obligation if you agree to pay 35%" they are being, at best, disingenuous and, at worst, dishonest. That ship sailed long ago and the premiers bid it a fond adieu at the time. 17/20
If there is any precedent for what the fed cash contribution to provincial health care costs should be it is that there is no precedent. Not any more. It is up to what my former prof Richard Simeon dubbed 'federal-provincial diplomacy' ... to negotiation 18/20
Too many agreements have come and gone to give any one of them some kind of magical authority. If the premiers want a $28B increase in the transfer then I think Canadians should be able to ask what we will get for that investment. 19/20
Will provs enact long-promised reforms? Get docs off fee-for-service? Restructure primary health care across the board? Integrate new professions? Effectively manage waits? Renew infrastructure? Improve outcomes? Yet more cash w/out real change would be a betrayal. 20/20
