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The 2014 Health Accord Backgrounder

In 2002, Ottawa is contributing only 18 percent of the public spending on Medicare --‐ in contrast to the previous 50--‐50 cost sharing arrangement the federal government kept with the provinces up until 1977.

In 2001 Prime Minister Jean Chretien, promises to repair the nation's health--‐care system after deep cuts in the 1990s that have seriously compromised access and quality of care. He appoints former Saskatchewan premier Roy Romanow to head the Commission on the Future of Health Care in Canada.

One of the Romanow Commission's key recommendations is a boost in federal cash contributions with a guaranteed minimum amount of money every year to allow the provinces to improve the way they budget health care dollars. Romanow says Ottawa should never pay less than 25 percent of the cost of insured medical services under the Canada Health Act.

In September 2004, two months after an election campaign in which the Liberals focused on health care, Ottawa and the provinces negotiate a 10--‐year, $41--‐billion deal during a first ministers' conference on health care in September of that year.

The resulting 2004 health accord is a legal agreement between the federal and provincial governments on health care funding that runs from 2004 to 2014. The accord sets in law that the Canada Health Transfer (CHT) will increase by six percent each year until the end of the 2013/14 fiscal year. This annual increase is often referred to as the "escalator".

The six percent annual increases in the CHT infuses $41.3 billion in new federal funding over ten years and brings the federal government's share of public health care spending back up to 25 percent from a low of 10.2 percent in 1998/99.

The 2004 accord provides long--‐term funding with steady increases in a legislated framework, reaffirms the Canada Health Act and sets a number of key goals. The goals are not tied to funding, and in many areas they fall short of what is needed.

Provincial government health care spending goes up on average 6.9 percent each year since the 2004 accord and a number of provinces cut Medicare services, ignore the growth of user fees, and hand more public health dollars to for--‐profit providers. 2 In 2010 key figures in the federal government call for a complete end to the annual $30--‐billion health transfer to the provinces and the removing of any federal role in the handling of health care.

In 2010 the federal government for sends a review of the 2004 health accord to the unelected Senate rather than allowing elected Members of Parliament to conduct public hearings. The previous review was conducted in 2008 by the House of Commons Standing Committee on Health. The decision moves the review outside of the elected House of Commons, where the Conservative government is in a minority, to an unelected Senate committee where it is now are now in a majority.

May 2011: Health care polls as the number one issue during 2011 federal election campaign and Prime Minister Stephen Harper promises to continue with the six percent annual increases in the CHT. Finance Minister Jim Flaherty repeats this message promising "six percent for the duration of [a new] accord."
December 2011: Finance ministers meet in Victoria and Flaherty surprises provinces with a health plan presented as a fait accompli. The plan will continue the six percent annual increase in the Canada Health Transfer until the 2016--‐17 fiscal year; after that, until at least 2024, the Harper government will reduce its level of support, tying increases in the CHT to economic growth.

The new funding formula divides provinces, with general support from a prosperous, growing West and protests from the economically fragile East. Smaller provinces with declining and aging populations say that by tying health care dollars to GDP, the federal government is making the burden even heavier for them.

The federal government also announces that it will not be sitting down with the provinces and territories to craft meaningful national standards, and places no restrictions on how the provinces spend the $40--‐billion a year they receive in federal health transfers that critics say will effectively reduce the federal role in health care to cheque--‐writing.

Critics say that with no enforceable interprovincial policy in place, the new federal approach abandons any real effort to ensure that all Canadians can access appropriate care across the country, and it disadvantages poorer provinces.
Critics maintain the arrangement would eventually return the country to where it was in 2002 — with Ottawa putting little into Medicare and the federal government losing all ability to enforce national standards that Canadians accept as given.

January 2012: A report by the Parliamentary Budget Officer estimates that under the proposed plan Ottawa's share of provincial health--‐care funding will fall to an average of about 18.6 percent for the coming two decades from about 20.4 percent today, and will continue to slide significantly if the policy persists.