Standoff over health accord

This week, much of the news coming out of Ottawa has been focused on extravagant and wasteful spending involving Liberal cabinet ministers.

The spending relates to thousands of dollars spent on luxury limousine service, paid access to an elite airport lounge and revelations of an expensive personal photographer being hired to promote the minister of the environment.

Although the sums of money involved are not in the millions, the intense media focus serves as a reminder of the need for elected officials to always be vigilant whenever spending tax dollars and rightfully so.

At the same time we should also not overlook that when the media is largely focused on a single issue; other issues of importance may be overlooked.

One particular issue that has received little attention (with the exception of Huffington Post reporter Althia Raj) relates to the ongoing discussions, which in reality is negotiations, between the federal government and the provinces for a new Canada health accord.

The negotiations are going so poorly that the Quebec minister of health is quoted as suggesting the discussions are currently stuck in a Mexican standoff-like situation.

At the core of the issue is, as is often the case with any government provided service, is money. 

"We don't think that $3 billion over three or four years is nearly enough to reflect the growing need of the older Canadians, particularly in British Columbia," said B.C. Health Minister Terry Lake.

Considering the capital budget alone for the new Penticton Hospital Care tower expansion now exceeds $300 million, it is easy to understand why Canada’s provincial health ministers are concerned given our aging demographics.

In 2004, former prime minister Paul Martin announced a 10-year Canada Health Accord agreement that increased funding by six per cent a year.

In 2014, former prime minister Steven Harper extended this agreement until the 2016/107 fiscal year.

After that the increases were set to rise at a minimum rate of three per cent a year or greater in the event GDP growth exceeded this rate. So far, the Liberal government has not announced any changes to the current three per cent funding rate that is tied to potential GDP increases.

The provinces believe this annual increase in funding will not be sufficient to cover constantly rising health care costs.

The Canada Health Transfer from the federal government to Canadian provinces has gone from roughly $20 billion annually a decade ago to over $34 billion a year today.

For some provincial perspective, B.C. health care budget in 2000 was under $10 billion annually and is forecast to hit over $19 billion by the 2018/2019 fiscal year.

This rate of increased provincial health spending means that providing health care now consumes a greater percentage of the overall B.C. budget and that leaves less revenue for other important services. 

Based on these facts, it is easy to understand why Canadian health ministers are extremely concerned over long-term funding and rising health care costs.

At the same time, we must not overlook that over the next two decades the number of Canadian citizens over the age of 65 will basically double from roughly 4.7 million to over 9.3 million by 2030. This will seriously increase long-term health care costs.

It should also be recognized that the ratio of workers still in the workforce is declining over the same time frame.

I mention these facts because increased debt today carries rising interest costs that also eat into future budgets and likewise decisions to restore the age of OAS eligibility from 67 to 65 will add significant costs pressures at a time when scarce health care dollars will be even more in demand.

Ultimately, I believe more long-term strategic budgeting is essential and necessary to protect the sustainability of our Canadian health care system.

While restoring the age of OAS was politically popular, the prime minister has yet to provide a plan to address the long term needs of our aging population and required health care funding.

The current Mexican standoff over our new Canada Health Accord is a serious concern and I welcome your views on this subject. 

I can be reached at [email protected] or call toll free at 1-800-665-8711.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.