New 2024 Health Spending Plan

Finance Minister Jim Flaherty announced a new plan yesterday in Victoria, B.C., which would set a new plan for health spending in Canada.

Federal transfers to the provinces will continue at at six per cent increases until 2016-2017, a total of $178 billion for health services, and them move to a system tied to increase in nominal GDP.   The new changes will account for inflation, and will never drop below 3 per cent.

Provincial Ministers expressed some regrets for Flaherty’s unilateral approach.  Transfer payments are usually negotiated with the provinces, who present their own finacial situations and needs,

“I do not want to stand back quietly,” said a visibly angry Stan Struthers, Manitoba’s finance minister. “I’m open to any discussion on any angle in terms of the whole ball of wax of transfers — equalization, health, social transfers. I’m open to speaking with the minister on any of that. We didn’t have that today. This was very unilateral.”

Ontario Finance Minister Dwight Duncan said he also expected to be involved in health funding negotiations that addressed the formula, but that wasn’t the case.

“We thought we’d come and hear that sort of thing again, and then get an invitation to work together on these things, recognizing the challenges that all of us face.”

Although some provinces like B.C. could benefit from the changes, others, like those in Atlantic Canada, could receive as low as half of their current transfers.  The changes were projected by statements by Minister Kenney over the weekend,

Immigration minister Jason Kenney says the renewal of the Health Accord with the provinces beyond 2016 would be fiscally unsustainable and mean less money for other programs.

“I think everyone recognizes that we cannot continue annual increases of six per cent, or more in some of the provinces, year after year,” Kenney said Saturday on the CBC radio program, The House.

“For some of the provinces, if they continue in that trajectory, there will be nothing left for education, for universities, for anything else,” he said.

The new plan could signal some of the tough challenges that the Canadian healthcare system has ahead,

“Former Bank of Canada governor David Dodge says the status quo simply isn’t working anymore — we need fundamental reform of how Medicare is delivered to Canadians. And Canadians are going to have to pay more whether in the form of higher taxes or user fees or perhaps through health savings plans.”

…Prime Minister Stephen Harper said that Canadians are going to have to make difficult choices.

“We all understand that the rate of health care system can’t be sustained and will have to be tackled, so that we keep a system that Canadians value, Canadians depend on, but, can manage in a way that is affordable and will continue to be available for future generations.”

But it is specifically because of Canada’s future challenges that some representatives are questioning the logic of the move,

…federal Liberal Leader Bob Rae said tying the federal government’s contribution to health care costs to economic growth makes no sense. He said an aging population, new technologies and a demand for higher levels of service are driving increases in cost — not the economy.


Omar Ha-Redeye is the Principal of Fleet Street Law, a full-service law chambers in Toronto.