The pitch from the NDP is compelling: the party would “end the legacy of health care cuts” by the Conservatives and Liberals by ramping up cash transfers to the provinces.
Then there are the Liberals, criticizing the Conservatives for reducing health care transfers the last time they were in power, warning that Conservative Leader Erin O’Toole would resume those budget-slashing ways.
The Conservatives are returning fire, saying they would reverse a Liberal decision to slow the rate of health care cash transfers to the provinces.
Those contradictory claims have one thing in common: They are based on myth or misinformation that takes advantage of Canadians’ ever-present worries over the availability, quality and sustainability of publicly funded health care.
For a start, there is no need for the NDP (or anyone else) to reverse federal health care funding cuts – because they never happened.
By any measure, Ottawa’s cash payments to the provinces for health care, the Canada Health Transfer (CHT), have grown over the past decade, even before the pandemic arrived and spurred the injection of billions of additional dollars.
The myth of federal health care cuts stands on the shaky assumption that the 2012 move by the Harper Conservatives to eventually reduce the rate of growth in those cash payments (a decision the Trudeau Liberals implemented in 2017) constitutes a cut. The change meant that federal health transfers increased, just not as quickly has they had previously.
It is akin to expecting a 10-per-cent raise, getting 5 per cent, and then complaining of a pay cut.
The Liberals’ contention that the Harper government cut health care funding largely rests on that same assumption that slower growth in spending equates to a spending cut. But the party’s criticism of the Tories ignores the fact that Justin Trudeau’s government reduced the rate of growth in those transfers.
As for the Conservatives, they do correctly point out that the Liberals cut the rate of increase in health care transfers in half, but omit the key point that it was a Conservative policy they enacted.
In reality, federal health transfers have been on the rise for a decade and a half. Federal support through the CHT is “definitely increasing,” says Haizhen Mou, a professor at the Johnson Shoyama Graduate School of Public Policy at the University of Saskatchewan.
As the chart below shows, the CHT has risen sharply on a nominal dollar basis, nearly tripling from the 2004-05 fiscal year to the current fiscal year of 2021-22.
The big jump between fiscal 2005 and 2006 – the CHT rose to $20.3 billion from $15.3-billion – was part of a 10-year health accord that the Liberal government of Paul Martin signed with the provinces, including a provision to increase the base funding of the CHT. From then, the CHT was scheduled to grow by 6 per cent every year through to fiscal 2013-14.
Of course, nominal dollar figures don’t take into account either inflation or population growth, meaning that tripling overstates the true growth rate of the CHT. But as this second chart shows, even the per capita inflation-adjusted trend is clear: Ottawa’s transfers are increasing. Other than a short-lived decline in 2006-07, that figure has risen steadily, although the rate of increase slowed after 2017.
That slowdown is a result of the Trudeau government reducing the rate of increase of the CHT. In 2012, the Harper government did decide to cut the annual growth rate of the CHT to 3 per cent, or to the three-year moving average growth in nominal GDP, whichever was greater.
But the Conservatives also extended the 6-per-cent growth rule for an extra three years beyond its scheduled expiry in fiscal 2014. After the Liberals took office in 2015, the decision on whether to implement the plan for slower increases was in their hands.
They chose not to reverse that decision, making it their own. That undermines the Liberal assertion that the Harper era saw cuts to federal funding (although the campaign also includes reductions in funds to supervised injection sites as part of its justification for the statement).
Both the Conservatives and the NDP say they would increase federal cash transfers for health care by at least 6 per cent a year. The Liberals so far have stuck with the current formula, while proposing billions of dollars tied to specific goals on top of the existing cash transfer. But those specific proposals add up to much less than the additional $60-billion over 10 years that the Tories say would flow to the provinces under their plan.
Another way to evaluate the claims that federal health transfers have been cut is to measure those expenditures as a proportion of the national economy. If that proportion rises, a greater share of GDP is being funnelled into federal health transfers. If it falls, the reverse is true.
As this third chart shows, the pattern is clear. Federal cash health transfers have generally increased over the past decade and a half, rising to 1.67 per cent in fiscals 2018 and 2019 from 1.07 per cent in fiscal 2005. But there is a slightly stronger case to be made for cuts, or at least stagnation; expenditures as a percentage of GDP were essentially flat from fiscal 2016 to 2019. (In the 2020 and 2021 fiscal years, that proportion rose in part because the economy contracted sharply.)
One last way to evaluate federal health transfers is the proportion of costs that Ottawa bears. One of the chief complaints of the provinces is that the federal government is not paying its fair share.
In June, Canada’s premiers called on the federal government to immediately boost its share of health care spending to 35 per cent, and to then increase that funding by at least 5 per cent a year. The Bloc Québécois includes that 35-per-cent figure in its platform.
As this final chart shows, current federal funding is well below that mark, hovering around 23 per cent, according to figures from the Canadian Institute for Health Information. The Parliamentary Budget Officer, with a tighter definition of provincial health care spending, pegs the federal share at just over 32 per cent.
But Ottawa’s share has increased over the past 10 years, a reflection of the unconditional nature of the cash transfers. Provinces are free to set their health care budgets, and if their overall spending rises more slowly than Ottawa’s transfer, they keep the difference. In essence, Ottawa’s health dollars get shifted to other kinds of spending.
The premiers’ demand amounts to an immediate increase in the annual CHT of $28-billion, and hundreds of billions more over the next decade, far beyond what any federalist party is proposing. On Thursday, Quebec Premier François Legault upped the ante, saying he wants the federal government to assume 35 per cent of health care costs immediately, and then increase the CHT by 6 per cent annually. University of Calgary economist Trevor Tombe points out that such a large surge in funding would likely be pocketed by the provinces in the near term, doing more to reduce deficits than bolster health care. Longer term, it would be difficult to predict how the provinces would spend the extra cash, if the CHT remained unconditional.
Barring exceptional economic growth, even a 6-per-cent escalator would mean that health care would account for a growing share of GDP, and likely the federal government’s spending. But Prof. Tombe says that rate of annual growth in Ottawa’s health transfers is sustainable. It would simply mean that the federal government would need to constrain other spending programs, raise taxes or take on more debt.
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