When the numbers are too complicated, there’s usually a reason.
For health funding, the provinces and the federal government do not have the same concern for clarity.
On the one hand, the provinces’ request is easily explained: that the Ottawa health transfer be increased by $28 billion per year, so that the federal share of the bill goes immediately from 22% to 35%. They then demanded an annual indexation of 5% in order to maintain this generous proportion.
It wasn’t realistic. It was an inflated request from which to negotiate. But at least it was clear.
On Tuesday, we finally got the Liberal government’s counter-proposal. The document summarizing it is eight pages long. The amounts are divided into four envelopes: health transfer, tailor-made bilateral agreements, other bilateral agreements and support salary for personal support workers. During the technical briefing, we finally understood that this is equivalent to a total addition of $46 billion over 10 years. That’s $4.6 billion a year for all provinces and territories.
This explains why the proposal has been presented with so much rubbish. It was necessary to soften the disappointment. Especially since for a week, the government has raised expectations by promising a “substantial” offer.
Let’s keep it simple, if possible.
Demographics, technology and inflation drive up health care bills. Each year, system costs grow by about 5.4%, according to the Conference Board.
The latest agreement was signed by the Harper government. The increase in the transfer is equivalent to that of nominal GDP (three-year average, including inflation). There is a floor – a minimum upside of 3%.
Before the pandemic, the provinces were losers. Their expenses increased by 5% per year, while the transfer grew at a lower rate. The federal government thus paid a smaller and smaller proportion.
This changed with COVID-19. The Trudeau government assumed the majority of the aid measures. And with the recent inflation, nominal GDP has jumped. The transfer has therefore also swelled. For 2022-2023, it will increase by 9%. Inflation could boost the transfer for about three more years.
But the provinces counter that this temporary increase does not compensate for the underfunding of previous years. And they remind us that in the medium and long term, the past trend will resume.
It is in this context that negotiations take place. Justin Trudeau proposes to add a guarantee: by 2027-2028, the transfer floor will be 5%. The increase in system costs will therefore be covered. But then it gets worse. Between 2028 and 2033, provincial spending will start growing faster than the transfer. The imbalance will widen again.
Mr. Trudeau has given up on interfering too much in provincial jurisdictions. Its main request: that the provinces and territories digitize patient records, facilitate their circulation in the health system and transfer this data in order to assess the quality of care. It is a priority of the Canadian Medical Association to avoid errors and verify which practices work.
Politically, Mr. Trudeau is also under pressure. As a recent Abacus Data poll showed, 66% of Canadians believe that the federal government does not do enough about health care. This is the third subject for which they are calling for more action, after housing and the cost of living.
Just talking about health should please the Prime Minister. His start to the year is laborious. He must show that he takes care of “the real business”.
Without being enthusiastic, the reaction of the provinces was not catastrophic. They weigh their words while waiting to have properly analyzed the details – the offer was presented to them on Tuesday in the middle of the afternoon.
Nobody expected to see an agreement reached during the day. The provinces’ request, $28 billion, was unreasonable. But a counter-proposal of 4.6 billion is equivalent to cutting the pear in six.
Unsurprisingly, the Bloc and the New Democrats would have liked us to give more. The reaction of the Conservatives is more revealing. They are the only ones with a good chance of taking power, and they are careful not to offer more. Because federal public finances are also under pressure.
And in Ottawa, we will not hesitate to remember that if François Legault lacked so much money, he would not have promised to lower taxes.
If it’s a negotiation, Mr. Trudeau hides it well. It looks like a final offer. The only leeway, he said, is in bilateral agreements.
Certainly, time is running out. The federal and provincial budgets are beginning to be written, and in Ottawa, the Minister of Finance is under pressure both to spend more, for example in the case of the Armed Forces, and to fight against inflation.
This urgency, Mr. Trudeau fabricated it – he waited two years before meeting with the provinces. It is in this time trial that the future of health systems is at stake. And perhaps also, a little bit at least, that of Mr. Trudeau.