Diana Carney

Issues: Securing our health system for the future

May 6, 2012

The debate in health is far from where we expected it to be when we started work on The Canada We Want in 2020.

In December 2011 Minister Flaherty announced a surprise new funding ‘deal’ for the provinces. They will receive continued 6% annual increases in federal transfers until 2017, after which transfers will be pegged at the rate of nominal GDP growth with a guaranteed base of 3% a year. Payments will be per capita based with no provision to differentiate according to population characteristics (age, etc.).

This unilateral announcement has significantly curtailed debate about healthcare funding and the federal role. The focus is now on the provinces and how they can rein in their own spending and make their health systems more effective.

Some facts

  • Health spending accounted for 11.4% of GDP in Canada in 2009, almost two percentage points higher than the OECD average of 9.5%. The US spends over 17% of GDP.
  • Canadian provinces currently spend an average of about 40% of their total budgets on healthcare (range between about 33% – Quebec and NFL – and 45% – Alberta and Manitoba)
  • Approximately 70% of healthcare costs in Canada are publicly-funded. This is low compared to most countries (22ndin the OECD) largely because there is no national pharmacare program and only a limited focus on meeting chronic care needs.
  • Despite the relatively high level of health expenditure in Canada, there are fewer physicians per capita than in most other OECD countries, although numbers have been growing in recent years. We also have less equipment (8 MRI machines per million people as opposed to OECD average of 12, and 14 CT scanners vs. OECD average of 22).
  • Canadian physicians’ salaries are the third highest in the OECD.


Key issues

  • How do the provinces stand on the unilateral federal funding announcement? They get more money than they thought they might and less interference, but they also have nobody to blame but themselves as they move forward.
  • Are the provinces capable of working together to address issues of common concern? What are the main constraints to reform of the various provincial health systems? Will federal withdrawal spawn a culture of leadership, innovation (and mutual learning) at provincial level that could be highly beneficial?
  • What are the implications for the Canadian health system of the federal withdrawal? Does care become more uneven across the country? Do continued challenges to the Canada Health Act eventually weaken this beyond recognition? Is the federal government giving up an important opportunity to `buy change’ or exercise leadership (or was this never possible anyway)?
  • Financing problems have not gone away. No developed country has succeeded in keeping healthcare spending in check. We are therefore likely to require new sources of funding for health at either federal or provincial level over the next decade. Where will the money come from?
  • What of the crisis in aboriginal health? We have had few indications of how the federal government expects to move in this area. The National Aboriginal Health Organization is being cut, but ostensibly for governance reasons. Devolving aboriginal healthcare away from the federal govt. may well be the best solution. How does this happen?
  • Does this deal signify the end of any meaningful federal role in health or are future governments likely to try to reverse the withdrawal?

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