Flaherty set to tighten flow of provincial health-care funding

The Conservative government is putting the provinces on notice that Ottawa plans to shrink the rate of growth in health transfers.

As Finance Minister Jim Flaherty prepares to meet his provincial and territorial counterparts Monday in Victoria, signals continue to pile up that Ottawa will not keep increasing transfers by 6 per cent a year beyond the 2015-16 fiscal year.

Since 2004, provinces and territories have enjoyed a 10-year funding arrangement in which health transfers from Ottawa grew by 6 per cent annually. The federal Conservatives promised this year to continue that rate for an additional two years, but were mum on what arrangement would follow.

A government official noted Tuesday that federal health transfers to the provinces under the Conservatives has grown from $19-billion to $27-billion this year.

“We will continue to increase funding for health care in a way that is balanced and sustainable,” said the official, noting that any future arrangement will not lead to cuts in annual spending on health transfers.

It’s a point Mr. Flaherty noted last month following the release of his fall economic update, when he told reporters the 6 per cent commitment only runs until 2015-16.

Prime Minister Stephen Harper weighed in on Nov. 25 during a stop in Vancouver.

“We have committed to the 6 per cent for a few more years. Over the long term I think all governments recognize – federal government, provincial governments – that the cost of the health care system cannot continue to rise more quickly than our revenue. And that's a problem and that's a challenge we will all be dealing with in the next few years to come as we discuss the future of our health care system,” he said.

While the comments from Ottawa clearly point to a future deal that will see transfers grow at a rate of less than 6 per cent, it is not clear yet how Ottawa would determine the future rate. Mr. Harper’s comments point to government revenue as a guide, while Mr. Flaherty has previously hinted that inflation and economic growth could be guiding statistics.

At least some provinces are already girding for a fight.

This month, the premiers of Canada’s four Atlantic provinces held a news conference to call on Ottawa to cover 25 per cent of all provincial health costs. They argued that Ottawa currently only foots 20 per cent of the bill while costs rise in Eastern Canada due to a growing population of older residents.

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Source: Globe