The pandemic has brought to light two important and urgent problems concerning the health care system in Quebec as for Canada as a whole, namely its funding, but also its operation. To try to find a solution to these two problems, the federal and provincial health ministers began discussions during 2022. What emerges from these is that the federal government would be ready to increase the amount of transfers it makes for health on the condition that the provinces agree to achieve certain objectives aimed at improving the functioning of the system.
The provinces have difficulty accepting this approach, since health care is a primarily provincial jurisdiction. As the discussions between the health ministers have already been going on for several months, the provincial premiers would like to discuss them directly with Prime Minister Trudeau to break what seems to be an impasse.
What should we think of this impasse? First of all, it reflects the difficulties inherent in the functioning of federalism when it comes to properly coordinating the policies and interventions of two levels of government. The Government of Quebec has always protected its areas of jurisdiction, particularly in education and health, and the concern to protect our jurisdictions became particularly important when the federal government adopted, in 1957, the Hospital Insurance Act, and, in 1966, the Medical Care Act.
The two laws allowed it to reimburse half of the expenses incurred by the provinces for these two programs by respecting certain conditions, including universality, complete coverage of services and permanent accessibility for the insured. These conditions were then considered acceptable, as they were essential to the proper functioning of these two regimes.
A few decades later, in 2004, in order to correct shortcomings in the functioning of the health care system, all the premiers agreed to produce a ten-year plan to consolidate health care. This plan included specific objectives aimed at reforming, among other things, the management of waiting times, the management of human resources and the development of home care. However, the Government of Quebec had obtained an exemption relating to these objectives, which allowed it to continue to manage its system according to its own priorities.
Is the request from the provinces justified?
The heart of the problem in the current discussions stems from the fact that the annual growth of the federal government’s contribution, as calculated according to the Canada Health Transfer formula, will only increase over the next few years by approximately 3.5%, while the increase in total provincial health spending will be around 5%. The provinces would like the federal contribution to also increase at the same rate in order to help them assume the budgetary weight of their health expenditures compared to other sectors.
Is the request from the provinces justified? It is based on a logic that is difficult to defend, as if the federal budget should serve the budgetary priorities of the provinces. At the same time as it makes this request, the government of François Legault will probably proceed in its next budget with a reduction in income tax for Quebec taxpayers, as it promised during the election campaign. But the federal government also has its priorities that it must fund.
In the context of the insecurity created by the war in Ukraine, it will have to invest much more in the defense budget if it wants to fulfill its role at the international level and better protect Canada’s North.
The provinces’ refusal to discuss the federal government’s proposal to increase its share of funding by associating performance objectives for the healthcare system does not appear justified. If they want to, they can meet the needs of their citizens themselves, because they have access to more or less the same tax fields as the federal government without the less wealthy provinces being penalized since they will automatically receive compensation through the game of the equalization program.
A huge challenge
But what is currently happening in the health sector is the reflection of a crisis which is much more global and which affects the whole of the public sector and the economy. The pandemic has exposed the fragility of services in most public sectors, first and foremost health, but also education and care for the elderly and other groups, whether in institutions or at home. Even the justice sector and security services are handicapped by lack of resources.
Added to this is the ecological catastrophe which is at our doorstep and which is already causing increasingly difficult atmospheric consequences. We have abused the use of natural resources, and we will have to reinvest in a new style of life, which will require a profound change in our development priorities.
The consequences for public finances will be enormous, especially since we will have to fill in the next few years a budgetary gap which is the result of poor management which began with the zero deficit policy at the end of the 1990s. and which has worsened with the pandemic.
It now poses such a challenge that a real balanced budget objective cannot be achieved over the next five years. It will take a much longer period to get there. Be that as it may, it would be surprising if the Minister of Finance did not present a five-year scenario for returning to balanced budgets in the next budget. Everything is possible when you make forecasts, but given the uncertain economic situation, such a scenario should be accompanied by a range of probabilities.