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The Health Accord in Disaccord

March 01, 2017 - Federal Retirees

In the lead-up to the 2015 federal election, the Liberals promised to negotiate a new Health Accord with the provinces and territories. The newly appointed Federal Health Minister Jane Philpott hit the ground running, meeting with provincial and territorial health ministers early in her mandate – but the outcomes of these meetings did not bode well for a unilateral agreement. 

Under the now-defunct Health Accord, the Canada Health Transfer grew at six per cent per year.  With the formula set to expire March 31, 2017, the Harper government in 2011 announced the Health Transfers would increase by three percent or the equivalent nominal GDP growth, whichever is higher. It was a contentious decision, one fought by provinces and policy wonks alike – and one that Prime Minister Trudeau’s Liberal government is upholding. 

The provinces and territories believe this amount will leave shortfalls in their health care budgets. According to the Canadian Institutes for Health Information (CIHI), government spending on health care is expected to grow 2.3 percent this year (or 2.7 percent, if you factor in out-of-pocket expenses Canadians pay), while spending increases to cover inflation and population growth have fallen short for six straight years, thanks in large part to belt-tightening since the financial upset that began around 2008. Along with the Health Transfer being issued on a per capita basis rather than on populations in most need (for example, provinces with significant numbers of seniors), this will leave provincial health care systems and patients feeling the pinch.

In talks with Minister Philpott, the provinces and territories called for a 5.2 percent increase. The Parliamentary Budget Office and The Conference Board of Canada research have concluded that an increase to the health transfer of 5.2 per cent per year is needed to maintain health care costs. By December 2016, the feds countered with 3.5 percent as a last-ditch compromise to reach an agreement.They then announced negotiations to reach a new Health Accord and funding had failed, despite the $11.5-billion pledge by the federal government to boost targeted spending on home care and mental health, with federal Finance Minister Bill Morneau committing to 3.5% increases for Health Transfer funds over the next five years. Strings attached to the federal offer would hold provinces accountable for real, measurable results. The federal government is now in the process of determining what these health outcome measures will be.  

Initially, the provinces and territories vowed they would not bow under pressure, but this resolve was short-lived: as of February 2017 six of the ten provinces accepted separate Health Accord and health funding agreements. New Brunswick was the first to sign, with Nova Scotia, Newfoundland, Prince Edward Island, and British Columbia following close behind. Nunavut, Yukon, and the Northwest Territories signed a new agreement as well. Ontario, Quebec, Manitoba, and Alberta are the last hold outs, hoping for a better deal on the dollar amount and a unilateral agreement that binds the provinces together.

The federal government’s argument is that the provinces do not need more than a 3.5 percent annual increase to improve the health care system. The 2004 Health Accord proved that more money was not the panacea needed to fix all aspects of the health care system. 

Striking deals with individual provinces is getting health funding agreements in place, and dollars have been committed for homecare and mental health care: both key deliverables for Health Minister Jane Philpott in her mandate letter from Prime Minister Trudeau in November 2015, though little visible progress has been made on landing on a new multi-year Health Accord. 

Some argue that the individual agreements with provinces could stand to help those provinces meet their own unique needs, and that health spending is too high anyway. Others are concerned the divide-and-conquer approach eliminates the shared vision on how all orders of government should come together to improve health care delivery and outcomes for Canadians, in the universal, publicly-funded system that plays a heavy role in defining our country and national identity.

The Canadian health care system is evolving, and Minister Philpott is beginning to deliver on her mandate. Whether or not the mode of delivery is right for Canadians remains to be seen.