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Understanding The Liberals' Health Care Proposal
25/05/2004

I have to admit to being a little confused about the Liberals' new health care proposal. You see, there have been so many announcements of a billion here and a billion there that it is hard to keep track of how much is being spent, and how much is new money. Not to mention the question of how much is for this year, and how much is for each subsequent year.

This isn't all the Liberals' fault, of course. Our media outlets could do a better job of keeping these things straight. But, the Liberals must benefit from leaving some voters with the impression that every new announcement is a new cheque for this year.

Maybe I'm the only one who is having a hard time. But, if you are also confused, keep reading. I did a bit of research to try to make some more sense of the Libs' health pledge -- which they have given the horrible name "A Fix for a Generation".

From their press release, here are some excerpts that speak to specific promises:

  • The PM pledged that central to his plan is a National Waiting Times Reduction Strategy to tackle long waiting times for surgeries and other crucial services. A total of $4 billion will be set aside for the plan.
  • In addition, the scheme includes legislation to create by 2006 both a National Home Care Program – plus $2-billion fund to assist provinces and territories with its cost – and a National Pharmaceuticals Strategy.
  • Further, Martin said he will work with the provinces to make available health care providers around the clock that will cut down hours spent by Canadians in emergency waiting rooms. This will be achieved by increasing the number of spaces in colleges and residency programs, and supporting a program to accelerate the credential qualifications of 1,000 new Canadians to provide first-class primary care physicians across the country. The government will provide $75 million to do just that, said the PM.
  • Today’s announcement adds another $3 billion in federal transfers and makes a commitment to develop an escalator formula to provide long-term, predictable funding increases for the future. An escalator formula allows the federal share of health spending to track inflation and adapt to changing patterns of provincial health care spending.

And here are some excerpts that lay out some background context:

  • The 2003 Health Accord – a historic agreement between the federal and provincial governments – reduced the [Romanow Gap] sizeably with an investment of $12 billion from 2003-2004 to 2005-06.
  • One of the first actions taken by the Martin government in December was to provide a further $2 billion to the provinces and territories in immediate funding to help reduce waiting times, improve access to diagnostic services and provide for more doctors and more nurses. With the addition of another $2 billion in 2005-06, federal cash transfers for health will have increased more than 70% from 2002-03.

The Ottawa Citizen added this piece to the puzzle:

Specifically, he will promise the Liberals will fulfil a key recommendation from Roy Romanow's royal commission report -- that the federal government's share of provincial medicare costs be elevated to 25 per cent. It's unclear what the federal cash portion is currently; provinces have said it is about 16 per cent, but the federal government says that estimate is far too low.

Once the 25-per-cent federal share is reached, a new formula will kick in that determines future federal contributions. That "escalator" formula will be negotiated by Mr. Martin and the premiers at their summer meeting.

And Bloomberg.com says:

Canadian Prime Minister Paul Martin promised to spend at least C$9.08 billion over the next five years to improve health care and cut surgery wait times if his Liberal Party is re-elected on June 28.

While Reuters adds:

The extra cash he pledged on Tuesday would be stretched over five years, and he also pledged annual increases in spending and some catastrophic drug coverage, which aides said could cost a further C$6 billion over the period.

The Conservatives quickly accused Martin of lying, pointing out that in a federal budget brought down in late March there had been no new money for health care.

I would love it if there was a graph somewhere that showed how much the federal government spent on health in each of the past, say, 5 years, along with annual projections for the future with and without these new commitments. With a bit of research, I was able to find such a graph for past spending on the Canada Health and Social Transfer. The CHST includes transfers for purposes other than health, and it does not include equalization benefits. The graph also includes transfer of "tax points" to the provinces, which means this money is actually collected by the provinces and, as far as I can tell, shouldn't really be included in the federal budget.

So, the bottom line on Martin's plan is that it will be $9.075-billion, plus the drug plan, spread over five years, with some specifications to the provinces about what they must do with the money. Martin also promises no new tax increases.

I'm not sure yet whether or not this is a good plan. It certainly seems like it could be clearer. In any case, Kevin Brennan says that health care doesn't matter (in this election).


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