Provinces and federal Liberal government fail to agree on health-care funding

The federal government and the provinces have failed to reach an agreement on health-care funding. The Liberal government had offered $11.5 billion to increase targeted spending on home care and mental health.

The Finance Minister Bill Morneau said on Monday, December 19, that the government has now taken the offer off the table. The Canada Health Transfer (CHT) will go back to only a three percent increase on April 1, 2017. Morneau had offered to increase the transfer to 3.5 percent over five years but the provinces rejected this. Morneau complained: "We came to the provinces with a significant offer of funds ... We're disappointed we weren't successful." Morneau ended the meeting early Monday. Federal health minister Jane Philpott said: "This was an historic offer. I think there is widespread agreement that the systems themselves need some transformation, and we're going to continue to look for ways to do that."

The provinces were angry that the federal government came with a take it or leave it attitude. Ontario Finance Minister Charles Sousa noted: "There was an urgency to close the meeting off. We're here, we desire an agreement, we need to come to a conclusion. Why have anybody attend if there's nothing to negotiate or discuss?" Sousa complained that the Liberal government in Ottawa was not willing to hear evidence that the federal funding plan would imperil the health-care system. Prince Edward Island premier Wade MacLauchlan said that Morneau refused to discuss a counter-offer of 5.2 percent per year.

The provinces will leave with an increase only half of that which they had under the Conservatives of six percent, a rate that started under the Liberal government of Paul Martin in 2004. However, former Conservative finance minister Jim Flaherty had unilaterally changed the rate to three per cent or if the nominal GDP increase is greater than that to the rate of nominal GDP growth. The change takes effect in 2017. As it is now, the Liberals have simply accepted the Conservative reduction.

The premiers have been united in arguing that the rate is not high enough to keep up with the rapid increase in the numbers of older Canadians. MacLauchlan pointed out that the provinces have been asking for a first minister's meeting on health-care spending with Prime Minister Trudeau but this has been repeatedly rebuffed. He said that the provincial ministers would like to hold such a meeting early in the new year. Trudeau claimed that his government would engage in collaborative federalism.

The Quebec Health Minister Gaetan Barrette threatened to walk out of the meeting if the federal government did not put more money on the table. He said: "This is not a negotiation process; this is an ultimatum. We cannot resolve that over a one-day period... and we will walk away if the proposal doesn't change." The ministers from the provinces and territories were infuriated by what was in effect a federal ultimatum with no negotiation and much less money on the table than the provinces wanted. Many provincial premiers wanted to see a transfer of 5.2 percent per year. Ontario had proposed a ten-year funding plan that would have the federal government increase transfers to the provinces by 5.2 percent each year. Ontario Premier Kathleen Wynne said the plan was a starting point for discussion. In exchange for the increase transfer provinces would agree to spend the money on priorities they agreed to with the federal government such as mental health and home-care services.

Canadian premiers have complained that federal funding as a percentage of provincial health care spending has decreased from 50 cents on the dollar when the public funding began to 16 cents on the dollar now. The federal government claims this is wrong since the numbers the provinces are using ignore tax transfers and that federal funding was never 50 percent of provincial health care costs.