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Federal health transfers expected to dominate upcoming health accord meeting

OTTAWA – A familiar sore spot between Ottawa and the provinces is beginning to flare up once again: how much money should the feds be handing over for health care?

July 15, 2016  By Andy Blatchford The Canadian Press

As efforts continue to forge a new federal-provincial health accord, Quebec’s health minister says Ottawa intends to let the annual increase in health transfers fall to as low as half its current rate at the end of the fiscal year.

Gaetan Barrette said his officials have been told Ottawa has no appetite to keep the escalator at its current level of six per cent. Starting in 2017-18, the transfer is scheduled to grow only as much as Canada’s nominal GDP, with a guaranteed minimum increase of three per cent.

Barrette argued in an interview that such a shortfall in health transfers would create a “scary situation” for cash-strapped provinces that face emerging heath-care costs linked to factors such as aging baby boomers.

The thorny debate over federal health transfers has been dormant in recent years, but appears poised to re-emerge as the current funding formula expires.


The discussion is expected to dominate the agenda at next week’s meeting of provincial and territorial premiers in Whitehorse.

Barrette expects Quebec Premier Philippe Couillard to deliver a strong message during the Council of the Federation talks because the Quebec government considers a three-per-cent escalator a “freeze” in the level of health services.

“We’re not even discussing – we are being told – that the escalator will go from six (per cent) to three,” Barrette said of the messages his staff has received from the federal government.

“It hasn’t been said (quite this) way, but it was close to: ‘Don’t expect too much and don’t call us.'”

The annual increase in transfers was part of the of last health accord that expired in 2014. The previous Conservative government refused to renegotiate it and unilaterally declared it would end in 2017.

Barrette said while his federal counterpart Jane Philpott has been attentive during the discussions, he believes the federal Liberal government as a whole appears headed in the same direction as the Tories were.

Other provinces are also worried about the fate of the health transfers.

Ontario Health Minister Eric Hoskins said the premiers previously called on Ottawa to boost transfers so they cover at least a 25-per-cent of share of health costs. Currently, Hoskins said the federal government’s share is about 22 per cent.

Allowing the escalator to drop would move Ottawa further away from the 25-per-cent target – and even that level is too low for Ontario, he added.

“Ontario would like to see that federal share continue to increase beyond 25 per cent,” Hoskins said in an interview, noting that the provinces are now waiting to hear how much funding they can expect.

Asked about the escalator, Philpott would only say that the transfer provides a “stable funding base” and that any additional cash would be focused on priority areas like home care and mental health.

“Decisions on federal funding linked to a new health accord will be made once the areas for reform are identified through negotiations with the provinces and territories,” she said in an email.

The federal government, which aims to sign a deal with the provinces by the end of 2016, has said it remains committed to boosting health-care funding.

Its maiden budget, however, contained no money for a new health accord with the provinces. The budget also omitted cash for the Liberals’ “immediate” campaign commitment to invest $3 billion over four years to deliver more and better home care.

Finance Minister Bill Morneau has said the health funding was left out of the March budget because negotiations with the provinces had yet to provide a clear direction.

Hoskins said Thursday that some commitments, such as the Liberal home-care vow, may ultimately be included in the health transfers.

Nova Scotia Health Minister Leo Glavine said the provinces and territories would make use of the home-care investment.

The health transfer, however, is the “stumbling block” in the talks, Glavine said.

He said Ontario and Quebec are “certainly driving hard” to see the escalator stay at six per cent, while his province – with its rapidly aging demographic – is seeking a formula that provides funding based on the percentage of residents over 65.

“So far, Ottawa really has not shown their cards,” said Glavine, who called the Whitehorse meeting “very, very critical” to the negotiating process.

“We’re down to just a speck over five months and there’s a lot yet to be accomplished and I think it’s critical before the end of 2016 that we have a very, very clear direction for the next number of years.”

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