Healthcare Funding and Delivery Post-COVID

The Federal Government Survives the First Round

On February 7, Prime Minister Justin Trudeau met with all 13 of Canada’s Premiers for a “working meeting” on healthcare spending. Unlike the first attempt by federal Health Minister Jean-Yves Duclos to negotiate a deal, this time the federal government didn’t take any chances. Most of the $46.2B in new health spending announced, with the Premiers serving as the backdrop to the announcement, was already negotiated through bilateral discussions that had been happening with individual provinces and territories since last December. The deal was made before the meeting took place and so the meeting was more of a formality.

The $46.2B in new spending will bring total healthcare spending through the Canada Health Transfer (CHT) to $196.1B over 10 years. The announcement also included an additional $2.5B in support for Indigenous health priorities.

While the federal government has reached a deal with the provinces, it remains an open question as to whether this spending will make a dent in emergency room capacity or delivering primary care in Canada. The system not only requires more funding but also some fundamental conversations regarding healthcare delivery that money alone can’t fix. The federal deal with the Premiers may buy some time to have more of these conversations on how healthcare is delivered. But, for now, there’s some money on the table.

A breakdown of the funding included in the proposed deal is included below our analysis.

Our Take: The Politics

Poilievre has said little about the deal. He released a statement saying that a Conservative government would honour the commitments made under the proposal and keep additional sums in place. He added that, if elected, his government would spend more on healthcare, funded by cutbacks in other areas.

One of the main questions following the proposal’s release was its impact on the Liberal – NDP Supply and Confidence Agreement (the “Agreement”). Since signing the Agreement in March 2022, the Canada Dental Benefit is only healthcare priority the Liberals have delivered. The new spending announced on February 7 will not provide enough money to support a National Pharmacare program, the second healthcare priority under the Agreement.

NDP leader Jagmeet Singh was quick to critique the announcement, claiming that giving funds to provinces and territories “unconditionally” will worsen staffing shortages in the healthcare sector by allowing Premiers to integrate more private healthcare services into the system. It is an open question as to whether Singh will consider the new healthcare spending a “deal-breaker” for not dealing with pharmacare.

Within the federal Liberal caucus, the proposed funding is intended to demonstrate to caucus members that the government is spending money to “fix” a broken system. Several federal Liberal MPs from Ontario have expressed concern over Premier Ford’s recent announcement that he would seek private options for the delivery of healthcare within the public system. This form of healthcare delivery is well known to residents of Quebec and Alberta but less well socialized in Ontario. The extent to which this money will be used to fight a public vs. private debate about healthcare delivery in the next federal election remains an open question.

What Does This Mean?

For some time, the Premiers have been calling on the federal government to increase its share of Canada’s healthcare costs from 22% to 35% and this proposal is not close to that amount. To meet this demand, the federal government would have to distribute an additional $28B annually. The Prime Minister suggested that it would be a matter of weeks, compared to months, before bilateral agreements with the provinces are signed. With both the federal and provincial governments crafting their 2023 budgets, agreements will need to be finalized for funding to be accounted for in the upcoming fiscal year.

Following the working meeting, the Premiers made it clear the federal government’s proposal does not meet their funding demands. Ontario Premier Doug Ford stated that the agreement “is a starting point” and that “it is a down payment on further discussions.” Ford also indicated he is hopeful conversations on more sustainable funding will happen down the road. Alberta Premier Danielle Smith and Quebec Premier François Legault both indicated that the deal was significantly less money than they are seeking, and British Columbia Premier David Eby stated that the proposal was “fiscally limited.” Manitoba Premier Heather Stefanson said the proposal is “unfortunately disappointing” and that the Premiers will take time to review how it will impact healthcare. Despite initial complaints, Ontario Health Minister Sylvia Jones stated, “there is no doubt that any new healthcare spending and investments, we will accept.”

So, the Premiers have accepted the money from the federal government, but this announcement should be viewed as a down payment to future discussions on this issue. The debate on healthcare delivery, data collection, and funding is far from over at all levels of government.

Funding Breakdown

The proposed deal includes:

  • An unconditional $2B CHT top-up intended to address the immediate needs of the healthcare systems, with an emphasis on pediatric healthcare;
  • An annual 5% CHT increase for the next 5 years, which will be provided through annual top-up payments as required. This is projected to provide an additional $17.3B over 10 years.
  • $25B over 10 years for bilateral agreements with each province and territory. These agreements are intended to address specific needs for each jurisdiction under each area of shared priority:
    • Expanding access to family health services, including in rural and remote areas;
    • Supporting health workers and reducing backlogs;
    • Improving access to quality mental health and substance use services; and
    • Modernizing the healthcare system with standardized health data and digital tools
  • $1.7B over 5 years to support hourly wage increases for personal support workers and related professions, as governments work together on how best to support recruitment and retention.
  • $505M over 5 years to the Canadian Institute for Health Information (CIHI), Canada Health Infoway and federal data partners to work with governments on developing new health data indicators, support the creation of a Centre of Excellence on health worker data, advance digital health tools and an interoperability roadmap, and underpin efforts to use data to improve safety and quality of care.
  • $150M over 5 years for the Territorial Health Investment Fund, in recognition of medical travel and the cost of delivering healthcare in the territories.
  • $2B over 10 years for Indigenous health priorities. These funds will be distributed through a separate health equity fund, with Ministers of Indigenous services, Crown-Indigenous Affairs and Northern Affairs working with Indigenous partners to prioritize investment.

To access their respective funding shares under the CHT increase, provinces and territories have been asked to commit to improve how health information is collected, shared, used and reported to Canadians. This will include an agreement to develop and use comparable indicators through CIHI, with a broader suite of indicators to be developed through additional consultation with provinces, territories, Indigenous Peoples, healthcare experts and CIHI.

Provinces and territories are also being asked to streamline foreign credential recognition for internationally educated health professionals and to advance labour mobility, starting with multi-jurisdictional credential recognition for health professionals. This proposal is straight out of the federal Conservatives’ playbook. It is an oft-quoted policy plank of Pierre Poilievre, the Leader of the Opposition.

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