Canada - World Health Organization Regional Office for Europe

Health systems in transition Canada 127
6.2 Future developments
The 10-Year Plan ends in the fiscal year 2013–2014. Debate concerning the
future of the federal role and its funding commitments to the provinces and
territories featured prominently in the 2011 federal election. Months after the
election – in December 2011 – the federal government announced its decision
on the future of the Canada Health Transfer, a unilateral decision in an area
that has been subject to considerable intergovernmental discussion in recent
years. For this reason, it was met with considerable surprise by provincial
and territorial governments as well as the media. One of the most important
substantive changes to the Canada Health Transfer will be the termination of a
regional equalization component that benefited less wealthy provinces. After
2014, provincial shares of the transfer will be distributed on a pure per capita
basis. While the federal government has agreed to continue to increase the
transfer by 6% for an additional three years post-2014, after 2016–2017, any
increases in the Canada Health Transfer will be tied to the rate of the country’s
economic growth, with a minimum floor of 3%. At the same time, the federal
government announced it would no longer use its spending power to encourage
or set health system goals. Instead, it would look to the provincial governments
to establish their own health reform priorities and objectives.
During the past decade, the buoyant Canadian economy and the positive
fiscal position of the federal and provincial governments produced a fiscal
dividend much of which was used for health care and the reduction of taxes.
With the slowing of the economy since 2008, this fiscal dividend is disappearing,
and both orders of government face harder budget constraints and more difficult
choices in terms of health spending. Similar to what occurred in the early to
mid-1990s (Tuohy, 2002), this is likely not only to put pressure on achieving
more rapid progress on existing health reforms but may also precipitate new
health reforms aimed at increasing value for money.