Ontario pitches a new long-term health deal, with strings attached
Federal health transfers under proposed deal would increase 5.2 per cent a year for 10 years

Thestar.com
By TONDA MACCHARLES and ROBERT BENZIE
Dec. 13, 2016

Ontario hopes to end the national logjam over health-care spending with a proposal for a new 10-year federal health spending plan, the Star has learned.

Under it, Ottawa would agree to increase federal health transfers to the provinces every year by 5.2 per cent in exchange for provincial commitments to spend on “mutually agreed upon priority areas” like mental health and home-care services, as the federal Liberals campaigned on.

The proposal says as part of the new long-term health accord, each province and territory would decide for itself how to report on the use of the federal funds.

What it effectively would do is take the $3-billion over three years that the Liberals say they want to spend on those services and roll it into the federal transfer, then extend the spending out over a decade, giving provinces the ability to plan properly instead of seeing money dry up after a few years.

The yearly hikes Ontario proposes are a lot more than the 3 per cent provinces are soon to receive under changes put in place by the previous Conservative government of Stephen Harper. But it would be less than the 6-per-cent annual increases provinces had been receiving since 2004 and that premiers had hoped to reinstate.

According to a two-page document obtained by the Star that was circulated Friday to provincial, territorial and federal officials on Friday, Ontario warns the imminent reduction in federal transfers will slash more than $1 billion out of the health system in 2017-2018 alone.

Prime Minister Justin Trudeau, who was directly and actively engaged in horse-trading with premiers on climate change Friday, sat down afterwards for a private dinner with all 13 to talk about their views on health-care funding.

But substantive discussions were punted to next week’s meeting of finance ministers from across the country, multiple sources said. Health ministers are invited to attend Monday’s meeting.

Ontario’s analysis is based on the Conference Board of Canada’s estimate that future health costs will grow at an average rate of 5.2 per cent annually from 2015 to 2035 - a conclusion Ontario says is supported by other experts including the Parliamentary Budget Office.

It’s not clear how much traction Ontario’s proposal will have among provinces. For now, the provinces have asked that the 6-per-cent “escalator” remain in place for one more year while Ottawa and the premiers negotiate an acceptable new deal.

At Queen’s Park, officials refused to comment on the proposal other than to confirm that Ontario did table one.

Health Minister Eric Hoskins broached Ontario’s proposed formula with his colleagues across the country and sources say the premiers concluded Friday morning - before they sat down with Trudeau - that it could be workable.

Sources say the increases would “make health care sustainable and also allow for new investments in shared priority areas such as home care and mental health.”

For some, money that is committed to direct spending on services would allow premiers to ensure it goes to front-line services as opposed to collective agreements for health care workers, said one senior provincial source from Eastern Canada. Another provincial source from Western Canada said if there is a guaranteed federal increase in the range of what Ontario proposes for another decade, then a deal could be likely.

A senior federal source has suggested to the Star that the billions the federal Liberals want spent on home care and mental health services could be rolled into the federal health transfer but discounted increased funding hikes along the lines of 6 per cent.

Quebec, for one, has insisted on a 6-per-cent increase. And for Quebec, money that comes with strings attached is a non-starter. The other provinces have long recognized that federalism can make room for “asymmetrical” agreements that accommodate Quebec.

Quebec Premier Philippe Couillard told reporters Friday he would never agree to any deal that requires the province to spend on federal priorities in health. In fact, Couillard said, he had extracted a promise from Trudeau that it would never be the case.

“We want to have the same clause that was adopted in 2004 recognizing that Quebec will choose its own priorities,” said Couillard, referring to the health accord struck by former Liberal prime minister Paul Martin.

“Monsieur Trudeau privately has told me this would not be an issue so that’s fine,” said Couillard.

Couillard said any federal funding formula that would see money dry up in a short time frame is a “poisoned pill.”

“We’ve seen that in the past. We don’t want to see it again.”

But the Quebec premier also said “targeted” or strings-attached funding may not be the big stumbling block it seems because “everybody knows everywhere in the world that these sectors are the sectors where we must invest: home care, extended care, front-line mental health services. So in practice, I think everybody is there. Besides, you’ve seen the investments we’ve made. They’re exactly in these sectors.”

Manitoba Premier Brian Pallister last week made a loud and impassioned call for a “sustainable health-care system.” He refused to sign onto the Pan-Canadian Framework on Climate Change without a clear plan for how the federal health transfer will work.

At a news conference Monday, Trudeau was asked if he is willing to prolong the 6-per-cent health “escalator” until a new health accord is signed. He replied only by pointing to next Monday’s meeting of finance ministers where health ministers are invited to work out an agreement.

“I think people expect us to act in a measured way but also in an immediate way on the health file,” he said.