National Column: Both sides are right in health-care fracas

by Thomas Walkom

In the federal-provincial dispute over who should pay what for health care, both sides are right.

The provinces are right when they say Ottawa has a historic obligation to pay for 25 per cent of medicare.

The federal government is right to demand that if it allocates extra funds for something specific, such as home care or mental health, that money should be spent accordingly.

The two sides clashed Monday in Ottawa over how much each should pay. Since then, in an attempt to influence public opinion, they have been pitching to the media.

At base, the dispute goes back 50 years to the beginning of national medicare.

The federal Medical Care Act of 1966, passed in Parliament by a Liberal minority government with the support of the New Democrats, offered to pay half the costs of physician and hospital services for any province that met certain conditions.

Not every province was anxious to join in. When the law came into force in 1968, only Saskatchewan and British Columbia signed on.

But the lure of federal cash proved irresistible. By 1972, every province and territory was onside.

In 1977, cash-strapped Ottawa moved away from direct cost-sharing. It also offered so-called tax points to the provinces – that is to say, it lowered its taxes so the provinces could raise theirs by an equivalent amount.

At the time, these tax points were deemed to be worth roughly 25 per cent of medicare spending. Cash transfers from Ottawa to the provinces made up the remaining 25 per cent.

Over time, Ottawa slashed its cash transfers until, by the late ’90s, they were paying for only 10 per cent of medicare.

Roy Romanow’s 2002 royal commission into the future of health care recommended this cash portion be raised back to 25 per cent – both to restore the original bargain and to give Ottawa enough financial leverage to ensure provinces abided by the conditions of medicare. He also recommended everyone forget about tax points which, until Conservative leadership candidate Max Bernier resurrected the concept this year, most did.

So when the provinces call for the federal share of public health spending to reach 25 per cent (it’s currently slightly less) they are channelling their inner Romanow.

And while the provinces are being slightly devious (their calculation of public health spending includes items, such as provincial drug plans, that are outside of medicare) they are essentially correct. If Ottawa wants a national medicare system, it must be willing to pony up at least 25 per cent of the cost.

But here’s the other thing: Medicare is not comprehensive. It covers doctors and hospitals only. It does not cover drugs prescribed outside of hospitals. Nor does it cover home care. Nor does it cover mental illness services provide by non-physicians.

The 2002 Romanow commission recommended that Ottawa give extra funding to the provinces on the condition they spend in these and other underserviced areas. But the provinces balked at being told how to spend and the Liberal government of the day capitulated to them.

The 2004 health accord, which is due to expire in April, provided the provinces with pots of money. But there were no strings attached. Wisely, Ottawa is trying to ensure it doesn’t make that mistake again.

From this comes the federal offer to give the provinces $11.5 billion over 10 years if they agree to spend it on home care, mental health and pharmacare.

Right now the talks are stalled. The provinces turned down Ottawa’s initial deal. The federal government responded with the tried and true bargaining tactic of offering less.

But ultimately the country is faced with a situation where one side (the provinces) wants to receive money and the other (the federal Liberal government) wants to spend it.

An arrangement of some kind will be reached even if, as with medicare, the provinces end up agreeing one by one.

Let’s hope the eventual deal meets two key criteria: first, that Ottawa cover 25 per cent of the cost of
medicare; second, that medicare be expanded to include home care, more aspects of mental health and ultimately pharmacare.

Thomas Walkom appears Monday, Wednesday and Friday.

Copyright 2016-Torstar Syndication Services

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