P: Provincial Health Care Transfer Payments Should be Tied to the GDP

Recently the provincial and territorial leaders traveled to Victoria to discuss health care funding. The thing is, once they got there they realized that there was nothing to discuss. That is because the federal government had already decided how much they are going to throw at the provinces and they are not negotiating. Despite all the huffing and hawing and quotes of “dictatorial federalism” from the Premiers the thing is: health care is a provincial responsibility and therefore should be funded by the provinces. Now don’t get me wrong, the federal government still has some responsibility to ensure that all Canadians get sufficient healthcare provided by the government but they have definitely fulfilled that responsibility. This is done through the Canada Health Act, a law that all provinces must abide by in order to receive their funding for health care. Ultimately, though, the provincial governments have to realize that it’s the federal government’s money and they get to choose how much of it they give away, plain and simple. They way the Premiers are acting is almost like getting money for Christmas or you birthday from your grandparents and saying “Hey that’s it? You have to give me more!” Although instead of money you would be using on beer it’s money used for cancer treatments and the like. Still, the provincial government should be grateful for what they are getting.

Harper’s plan isn’t even that unreasonable. The federal government will increase payments by 6% every year until 2017 where afterwards it will be pegged to inflation and the GDP (estimated to be about 4% and never lower than 3%). How can the premiers expect any more from that in a time where the government is trying to save every penny they can?  There is no way the government could keep increasing healthcare payments by 6% every year without doing something drastic like raising taxes, I mean, 6% is roughly twice as much as the economy is growing and definitely unsustainable for the government in the long term, the federal coffers just are not that deep.

Pegging healthcare payments to the GDP and inflation makes perfect sense; it ensures that the government is making payments that it can afford and that they increase payments as they get more money. Matching at inflation ensures that the government is always paying at least the same amount that they did the year previous and the addition of matching the GDP will let them increase those payments at a sustainable rate. By tying the healthcare payments to the national GDP the Conservatives have ensured Canada’s economic prosperity through these troubled times; much like what the Liberal’s did in the 90’s when they slashed $6 billion in healthcare transfers. That cut made by the Liberals was one of the reasons why Canada has one of the better economies right now, not a major reason but still a contributing factor and the Conservatives aren’t even slashing funds, they are just increasing them at a lesser rate.

Now, I know some nay-sayers would say that people’s health and lives should not be linked to the economic situation and I would tend to agree with them, but that is not what is happening by linking the GDP to transfer payments. By linking the medicare transfer payments to the GDP the federal government has forced the provincial governments to actually work together and reduce the cost of medicare. You see, just because the federal government is reducing the payment increases doesn’t mean that the health care system is going to get any less money than if it stayed at 6%. It just means that the provincial governments are going to have to foot the rest of the bill. Basically, this means that people aren’t going to die from not having enough money.

Now that the federal government isn’t throwing money at the provinces they have realized that they have to start saving money and should look at solving all the inefficiencies in the health care system. The premiers are now forming a joint commission to investigate ways to save money and improve patient care. Things like switching to electronic health records and moving responsibilities from doctors to nurses would be ways to save money while maintaining the same level of patient care. And why haven’t the provinces tried to be more efficient the last couple years? Simple. They didn’t need to take the time and effort if the federal government was just going to throw more money at them.

When the liberals essentially froze provincial and territorial health spending in the 90’s they showed that they could maintain adequate healthcare for all without spending lots of money. But in 2004 Paul Martin had a surplus and needed the NDP support to keep his minority. Jack Layton’s bottom line was increasing healthcare spending and that’s exactly what Paul Martin did which led to the standard 6% increase annually. But this is a different time, one where there is no surplus and the Harper majority doesn’t need to appease anyone; which leads us to the reduction of annual increases to federal health care payments. Obviously the healthcare budget has to increase over time to accommodate the increase in population and new more expensive treatments, but that still doesn’t justify an increase from $49 billion in 1995 to $130.3 billion in 2011 overall spending of the provinces on healthcare. Harper’s decision to tie the federal payments to the GDP is a smart, sensible and economical one. Before 2004 the healthcare system did just fine without 6% increases from the federal government so why can’t that be the case now? By pegging the annual increases to inflation and the GDP; Harper has ensured that the payments are increasing every year but at a reasonable rate that government can afford. Conservatives have given economic stability to the government and more efficient healthcare to the people.