Health Care: Giving Provinces the Incentives to Deal with Wait Times and Rising Costs

Issue

Canada’s public health care system has the dubious distinction of having the worst wait times of any developed country. Health care costs have been increasing at an unsustainable rate, putting more and more financial pressures on the budgets of provincial governments. The situation is likely to get worse with Canada’s aging population.

Healthcare is an exclusive provincial jurisdiction. However, for years the federal government has insisted that the provinces satisfy a series of conditions set in the Canada Health Act in exchange for transfer payments. These conditions discourage innovation. Also, the money does not directly fund health care services. It is simply added to the provinces’ budgets and they decide where and how they spend it.

All this confusion and undue interference leads to bickering between Ottawa and the provinces over who is responsible for the failings of our health care system, and how much money Ottawa should contribute. It prevents the implementation of sound reforms.

Facts

Canada is among the OECD countries that spend the most on health care. Ottawa’s health care transfers to the provinces have doubled since 2006, from $20 billion to $40 billion in 2019-20, with nothing to show for it.

The fundamental problem is that we are the only developed country where the government has a monopoly on medically required care. All other OECD countries have mixed private-public systems and (with the exception of the United States) universal systems that guarantee citizens equal access.

Patients in these countries have a lot more choice than Canadians. They can be treated in public or private hospitals, with the government or their private insurance paying for the treatment. Wait times are non-existent or very short, and nobody is denied care because of low income.

Our Plan

It is up to the provinces to implement reforms in line with the more efficient and less costly mixed universal systems of other developed countries. Throwing more federal money at the problem is not the right approach. On the contrary, it is part of the problem. Provincial governments will never make the tough decisions if they can always blame Ottawa for not sending enough money. We must end the current confusion over who does what and who is responsible for the problem.

A People’s Party government will:

  • Replace the Canada Health Transfer cash payments with a permanent transfer of tax points of equivalent value to the provinces and territories, to give them a stable source of revenue. In practice, Ottawa will give up its Goods and Services Tax (GST), and let provincial and territorial governments occupy this fiscal room. In 2019-20, the GST is expected to bring in $40 billion in revenues, the same amount currently transferred by Ottawa.
  • Establish a temporary program to compensate poorer provinces whose revenues from the tax will be lower than the transfer payments they used to receive.
  • Create the conditions for provincial and territorial governments to innovate. They will be fully responsible for health care funding and management, and fully accountable to their citizens for the results, while Ottawa will respect the Constitution and stop meddling.


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