Justin Trudeau uses divide and conquer tactic on health care funding

Just before Xmas last December the Liberal government offered the provinces a little more than half of what the previous right-wing Harper government had been paying Canadian provinces.

As mentioned in a previous Digital Journal article, the offer ran for just one day. There was no discussion of alternatives such as the 5.2 percent increase put forth by the premier of Prince Edward Island. Finance Minister Morneau's offer was 3.5 percent over five years. The Conservatives had been paying six percent. The rate will go back to three percent in April unless there is an agreement. The provinces were angry that the Liberal government came with a take-it-or-leave it attitude. They had hoped that there would be discussion and a negotiated agreement. The tactic shows the Liberal government is not willing to negotiate with the provinces but will try to impose policy on them, a policy far less liberal in its funding then that the right-wing Conservatives had been following. Ever since the meeting Ottawa has been trying with considerable success to strike deals with individual provinces.

Three eastern Liberal provinces broke ranks. First New Brunswick struck a deal and then Nova Scotia and, Newfoundland and Labrador. Also in the north Yukon and two territories came to an agreement with Ottawa. Now one of the prairie provinces, Saskatchewan, has also broken ranks and reached an agreement with Ottawa.

Saskatchewan has also reached a separate agreement with the federal government over private MRI clinics. The province will have a one year reprieve to show that private MRI's do not hurt the public health care system. Under the deal Saskatchewan will receive $190.3 million for home care and $158.5 million for mental health services but over ten years. The agreement comes just a day after the agreement with the Yukon, the two territories Nunavut and the Northwest Territories.

While Ottawa may have succeeded in destroying the solidarity among the provinces in opposing the original deal, the five most populous provinces have yet to sign, as well as Prince Edward Island. Even though they have struck a deal with the Liberal government, Saskatchewan and the territories added their signatures to a letter sent by the other provinces to the PM Trudeau:"Premiers remain united and determined in seeking a multilateral agreement. Premiers also recognize that provinces and territories face unique local circumstances, which led some of them to sign bilateral health agreements. However, premiers representing 90 per cent of Canada's population continue to seek a fair deal for long-term health funding from the federal government."

The holdout provinces have said the deal offered by Ottawa last December will further reduce the federal government's share of health spending to unacceptably low levels. Health care is jointly funded by the provinces and the federal government with each province having its own plan that must be in accord with the Canada Health Act. The federal funding helps out particularly those poorer provinces who have problems funding the level of service of richer provinces, so that there is a more uniform quality of service across the country.

The Quebec health minister criticized the Saskatchewan agreement and argued that the agreement on MRI's violated the law as MRI are to be free and publicly paid for. Saskatchewan allows residents to pay for an MRI test in a private clinic. In return the private clinic must offer a scan free to someone on the public waiting list. Back in November Jane Philpott, the federal health minister warned the Saskatchewan health minister that under the Canada Health Act the federal government could withhold funds from provinces that charged for medically necessary services. Federal officials claim that the MRI agreement is unrelated to the deal on funding. Obviously it sweetens the deal for Saskatchewan.

The Saskatchewan Health Minister Jim Reiter said that Saskatchewan would have a year to prove to the Liberal government that its policy on MRI's is consistent with the Canada Health Act. Of course it is de rigeur in Canada for politicians to claim they support our health care system, even Conservative Premier Stephen Harper did so. However politicians at the same time would like to "modernize and improve it" often by having more private involvement which pleases some lobbyists and can bring in more donations. Philpott's office displays the common rhetoric in its statement:"Minister Philpott is committed to working with Saskatchewan to strengthen our publicly funded, universal health-care system, while at the same time upholding the principles of the Act, and has asked officials to work with Saskatchewan officials over the next year in this regard,"Among the ways the Liberals are strengthening the system is by reducing funding and refusing to negotiate funding with the provinces. When a province such as Saskatchewan introduces private for profit services as with the MRIs, it does not punish the province but gives it a year to show that it does not harm the operation of the Canada Health Act. Former Conservative PM Harper who was always criticized by the Liberals provided almost twice as much.

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.