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Ottawa missing an important opportunity

A version of this commentary appeared in the Hill Times

Towards the end of December the Harper government announced a new formula for its transfer payments to the provinces in aid of health care, following the current ten-year accord negotiated in 2004 by then Prime Minister Martin and the provincial/territorial premiers. Several provinces, most notably Ontario, complained loudly that the money will be insufficient. But the funding is actually quite generous.

The current 6% annual rate of increase set to expire in 2013-14 will be extended three more years, and then beginning in 2017-18 the annual increase will be equal to the three-year moving average of GDP growth (essentially replicating the formula that was in place from 1977 to 1995, though over these years this formula was disregarded about as often as it was observed). The plan includes a commitment not to allow the growth rate to dip below 3%.

The real problem with the new funding arrangement is that it is only about money.

Prime Minister Harper made clear in a year-end interview shortly after the announcement that in his view managing and improving health care delivery is strictly a matter for the provinces. Some have referred to this as a return to “classical” federalism. That position reflects a view that each order of government should stick to its respective constitutional knitting.

Health care is a provincial responsibility and, after all, are not provinces democratic and responsive to their electorates and would they not protect and improve their health care systems if that is what their populations want?  Haven’t the provinces “come of age” and aren’t their governments sophisticated and fully capable of undertaking necessary reforms?

The answer is: “certainly, but…”. What this position misses is that Medicare is a Canadian undertaking, embodying national values of equity and sharing, not just a collection of provincial/territorial programs, and that it contributes significantly to the efficient operation of the economy, especially the labour market.

While the provinces recognize and support these objectives, there are tensions between national and provincial policy objectives that can make it difficult for the provinces to “do the right thing” from a national perspective. In these cases federal leadership and facilitation can make an important contribution.

For example, Ottawa could serve as a catalyst in the development of a Canadian pharmaceutical bulk purchasing agency, which would bring about substantial cost savings even in the absence of a universal pharmacare plan.

The federal government could assist in fostering the development of a comprehensive electronic health records system, more effective health human resource planning, and best practices dissemination.

Ottawa’s transfer could be employed to support specific provincial initiatives to, say, increase access to long-term care facilities and home care services, or to restructure primary care delivery. In theory, the provinces could take these steps without Ottawa, but past experiences in health, and other provincial domains, shows this is very unlikely.  For example, recall how difficult it has been – even with federal prodding — to move towards inter-provincial free trade even though all provinces profess to be in support.

It does not require a suspension of belief to envision a scenario where a province under financial pressure establishes a 12-month residency requirement or a “pre-existing conditions” clause for new residents, even while paying lip-service to the portability principle in the Canada Health Act. A move of this sort would quickly diminish inter-provincial labour mobility and damage economic growth.

Is Ottawa not prepared to uphold the principles of the Health Act because health care is a purely provincial responsibility?  The question needs to be raised because the federal funding announcement makes no reference to continued adherence to the principles of the Act as a requirement for a province to receive its transfer.

More broadly, the heralded return to “classical” federalism evokes a model that has rarely if ever, actually existed. Some policy fields are explicitly shared. Some, like health, are implicitly shared.

While the provinces have primary responsibility, Ottawa is responsible for matters such as the regulation of pharmaceuticals and medical devices, for some public health issues and international concerns, for medical research, and for providing health services to specified groups, most notably Aboriginal people.

In still other policy areas, changing circumstances may make it desirable to modify jurisdictional authority. Such was presumably the rationale behind Ottawa’s desire for a national securities regulator. Since the Harper government is prepared to move the jurisdictional yardsticks in other areas, asserting strict adherence to principles of classical federalism when it comes to health care is strange to say the least.

A call for a meaningful federal role is not radical, or even new. Medicare itself came about as a result of this kind of leadership from Ottawa.

Yes, federal-provincial engagement can be messy, and it can involve conflict; the birth of Medicare certainly did. But, ultimately the objective is neither tidiness nor placid inter-governmental relations. The objective is to build the best Medicare system we can, and that objective cannot be realized without Ottawa’s active participation any more than it can without Ottawa’s transfers.

Allan Maslove is a Professor at the School of Public Policy & Administration, Carleton University.  He is also an expert advisor with EvidenceNetwork.ca. 

February 2012

This work is licensed under a Creative Commons Attribution 4.0 International License.