Canada’s health care crisis? That is so last week. It was just a few days ago that the provinces were sounding dire warnings about the imminent collapse of medicare unless Ottawa handed them tens of billions of dollars to inject into the system. The federal Liberals, instead, gave them only billions of dollars.
After a few days of undoubtedly tense deliberation, the premiers grudgingly agreed to accept that free money. But they are not yet rushing to spend their own, if fiscal updates that landed this week are anything to go by. Or, if you prefer another measure, the provinces’ recent spending history.
Inflation-adjusted health care spending by the provinces and territories is projected to be essentially flat in the current 2022-23 fiscal year, according to data from the Canadian Institute for Health Information. The national average will nudge up just 0.1 per cent, although there is considerable variation between jurisdictions, ranging from a 7.8-per-cent increase in Nova Scotia to a drop of 18.2 per cent in Nunavut.
Health care spending is actually declining this year on average, once population growth is factored in, with inflation-adjusted per capita expenditures projected to dip 0.7 per cent. Again, there are large differences between jurisdictions. But among the big provinces, real per capita spending in fiscal 2023 is projected to decline in Quebec and Alberta, and to rise only modestly in Ontario and British Columbia.
Those spending projections include the amounts that Ottawa gives the provinces under the Canada Health Transfer; provincial increases are even less impressive than they first seem.
Only the three Maritime provinces are planning to boost health care spending faster than the increase in the federal transfer. For the other provinces and territories, Ottawa’s health care spending is rising faster than their own.
At this point, the cry will go up from provincial finance departments – but the pandemic! It’s true that health care expenditures are up across the board for all provinces and territories from the pre-pandemic year of fiscal 2019.
But the point is that the pace of health care spending is set to slow significantly this year, even as the premiers ramped up the pressure on Ottawa to splash federal cash their way.
Another caveat is that the figures from CIHI, released in November, are a little long in the tooth. But this week’s fiscal update from Ontario indicates that not much has changed.
The province’s third-quarter fiscal update projects spending on health care and long-term care of $75.2-billion – unchanged since the spring budget. The Ford government did hike COVID-specific health care funding by $168.7-million, amounting to a 0.2 per cent increase.
Further east, New Brunswick did boost its health care expenditures from the original budgeted amount by $82-million, just over 2 per cent, according to its third-quarter update this week. But more than three-fifths of that extra spending can be accounted for by the province’s higher-than-forecast federal health transfers.
It’s unlikely that Ontario and New Brunswick are outliers. So far, the provinces have been much more focused on prying cash from Ottawa than spending their own money.
Budget season is gearing up, so Canadians will soon get a better picture of where provincial and territorial health care spending is headed as new federal transfers materialize.
In the short term, federal Health Minister Jean-Yves Duclos is on the right track when he warns that the provinces cannot reduce their health care spending as Ottawa increases its transfers. That is a remarkably low bar to clear, though. According to CIHI, nominal health care spending has declined in only one year since fiscal 1975.
More fundamentally, the contrast between the urgent rhetoric of the premiers and the tepid growth of spending underscores, again, the need to firmly place the responsibility for health care funding on the provinces.
As we have argued before, the best path forward for Ottawa would be to reduce its tax rates so that the provinces could raise theirs a corresponding amount. The federal government would still have the existing Canada Health Transfer to wield as a stick to enforce portability of coverage. That shift could be accompanied by reform of the equalization system to assist provinces with smaller tax bases.
But the provinces would be responsible for the sustainable funding of health care, striking what they saw as the correct balance between entitlements and tax burdens.