December 21, 2011 – In today’s Vancouver Sun, MLI’s Jason Clemens and Brian Lee Crowley discuss the recently announced Canada Health Accord between the federal and provincial governments. They say, “Ottawa’s plan is to make some token effort at cost control in five years’ time. That’s five years too late. Refusing to turn up the heat on the provinces is a lost opportunity Canadians can ill afford.” The full op-ed is below:
By Jason Clemens and Brian Lee Crowley, The Vancouver Sun, December 21, 2011
Comment on Ottawa’s pre-emptive proposal in Victoria this week for renewing the Canada Health Accord has focused largely on the tiny reduction in the growth in the Canada Health Transfer (CHT) that will occur in 2018. Provinces are apoplectic because health care costs are rising and “miserly” Ottawa makes a convenient fall guy. But if we know anything about Canadian health care it is this: We get poor value for the hundreds of billions we spend, and increasing federal transfers only delays the day when we reform health care to make it affordable and effective.
Ottawa’s plan is to make some token effort at cost control in five years’ time. That’s five years too late. Refusing to turn up the heat on the provinces is a lost opportunity Canadians can ill afford.
Evidence of the poor value we get for our health dollars abounds. Measure Canada against most other major Western countries with a universal health care system and you’ll find that our access to doctors, nurses, therapeutic drugs, surgery and other specialist care and the latest technologies is inferior, often shockingly so. Yet our system is the one of the most expensive in the world.
You’d think that the renewal of the CHT would be a golden opportunity for the federal government to call the provinces to account. Au contraire.
The Conservatives propose increasing the CHT by six per cent until 2017-18. It will thus rise from roughly $27 billion today to $38 billion by 2018-19, up by over 40 per cent in less than a decade. Then the CHT will rise by a minimum of three per cent annually, and more if growth and inflation combined are higher. This means a minor reduction in the growth of the CHT starting in 2018-19.
Finance Minister Jim Flaherty’s announcement focuses exclusively on the value of the health transfer. Yet if we learned anything from the Liberals’ hugely successful fiscal reforms of the 1990s, it is that reforming transfers to the provinces is a powerful way to shake them out of their torpor.
Remember that, faced with spiral-ling debt and out-of-control spending, the Liberals both reduced and reformed provincial transfers in 1995 as part of their larger effort to balance the budget.
What the Liberals inadvertently discovered was the two-pronged approach that makes provinces take seriously the need for reform.
First, they told the provinces that Ottawa is not an ATM and would not continue to enable their undisciplined spending behaviour through ever-growing transfers. Finance Minister Paul Martin didn’t just stop increasing the transfers for health and social services – he cut the absolute amount transferred.
Second, and crucially, however, the Liberals provided the provinces with greater flexibility and autonomy in designing, regulating, and providing social welfare. They did this by removing conditions attached to federal social transfers and eliminated most national standards for social assistance. Less money coupled with greater autonomy and flexibility meant that the provinces had the power and incentive to actually solve welfare problems.
The result of these federal reforms was a wave of innovation and experimentation by the provinces in welfare. Alberta, for instance, focused on getting employable young people into work, while Ontario implemented workfare. British Columbia set time limits for welfare use.
The results were stunningly successful: welfare dependency rates were more than halved, labour participation improved, and poverty rates declined.
The Liberals failed to give the provinces that same freedom to experiment with health care reform, and that is why reform never took root there. It is not too late, however.
Applying the lessons of the 1990s to our desperate need for new thinking in health care today, Ottawa should cap the CHT immediately. Having got the provinces’ attention, it should then tell them Ottawa will be a supportive partner in facilitating change by making it clear that the Canada Health Act will be interpreted flexibly and liberally, providing the provinces with maxi-mum autonomy in financing, regulating, and providing universal and portable health care to their citizens.
Just as with welfare, such changes would unleash a period of experimentation and innovation by the provinces-just what the doctor ordered.
Ottawa can and should ignore self-interested bleating by the provinces. They’ve had decades to put their health care house in order and failed despite years of ever greater federal dollars.
Ottawa’s CHT announcement suggests that they get that transfer reform can help, but they are being far too timid when Canadians need bold action on health care reform now.
Brian Lee Crowley is the managing director and Jason Clemens is the director of research at the Ottawa-based Macdonald-Laurier Institute.