Taking the money and running is a costly retreat

Although they gave up fighting very hard months ago, three of the four Atlantic Provinces signed the official articles of surrender late this week by agreeing to a new health care deal with Ottawa.

It was not a total surprise that New Brunswick announced on Thursday that it would accept the federal offer of more cash for home care and mental health services. When federal-provincial health talks broke down Monday in Ottawa the New Brunswick Finance minister had said her province would “pursue opportunities for a bilateral agreement.”

More unforeseen was how quickly Nova Scotia did an about face, announcing on Friday that it had signed a similar bilateral agreement. This came only days after the Premier said the province would stick with the provincial and territorial common front seeking improvement to Ottawa’s “take-it-or-leave-it” deal. But the flip-flop was not all that shocking, given the way the Premier and the Health minister have been dawdling on this issue for months now ( Nova Scotia Observer, Jan. 18, 2016).

By joining New Brunswick and Newfoundland in bowing to federal intimidation, Nova Scotia’s Liberal government not only weakened the bargaining position of the other provinces and territories, it kissed off years of campaigning by governments in the Atlantic region for health transfers that recognized the greater needs of provinces with older populations.

That notion of incorporating population age into federal transfers – particularly for long term care – has been supported by the Atlantic Provinces, Quebec and British Columbia and endorsed by the Canadian Medical Association. As I wrote in October, 2015, a CMA report –Federal Policy Action to Support the Health Care Needs of Canada’s Aging Population – called for a “demographic top-up,” to be distributed based on the impact of an aging population on health costs in each province and territory. Such a top-up would deliver a disproportionately larger share of home care funding to provinces like Nova Scotia, New Brunswick and Newfoundland.

Per-capita prevails

Based on the numbers being tossed around on Thursday and Friday it does not look like there’s any demographic component in the bilateral deal. The Nova Scotia home care allotment was described as a $157 million ten-year arrangement, indicating that the money is being doled out on a per-capita basis with no provision for demographic factors. The feds supposedly put $6-billion over 10 years on the table for home care. Based on its current population, Nova Scotia would be entitled to 2.6% of that – or $157 million over the decade, give or take a few bucks.

Dropping demographics from the conversation is yet another capitulation by regional politicians to a federal transfer system that has recently been stacked against the Atlantic Provinces. On the health transfer file, the main problem is the way in which the Harper government implemented equal per-capita cash transfers. To bring Alberta up to the same level as the other provinces (ignoring the value of transferred tax points) the Conservatives gave the province an extra $800 million in 2014-5, paid for by reducing the health transfers to the other provinces.

That decision has had a knock-on effect beyond 2014-5, with the six-per-cent annual increases under the CHT being applied to a base that is diminished for the Atlantic Provinces and enlarged for Alberta. On top of that, the percentage increase in the CHT envelope has never translated into an identical percentage increase for each province. The overall envelop increase by  six per-cent (or more) but population size determines the per-province increase.

Population, combined with the 2014-15 skim, means that over the last three years the Atlantic Provinces have been getting significantly less than the much-cited six-per-cent increases per year.

  • Three-year average increase in overall health envelope 6.37%
  • Three –year average Newfoundland: 2.88%
  • Three-year average P.E.I. 4.91%
  • Three-year average Nova Scotia 4.17%
  • Three-year average New Brunswick 4.02%
  • Three-year average Quebec 4.76%
  • Three-year average Ontario 5.15%
  • Three-year average Manitoba 5.52%
  • Three-year average Saskatchewan 5.95%
  • Three-year average Alberta 23.3%
  • Three-year average B.C. 4.18%

In addition to having smaller increase in health transfers than other provinces, the Atlantic Provinces have the highest proportion of persons over 65 in the country. They also have proportionately more people living in rural areas, where it is usually more costly to deliver health services.

A reformed health funding formula that took into account the needs of the provinces with older populations was put forward as a form of redress for sins committed in the name of equal per-capita transfers. By knuckling under to pressure from their Liberal counterparts in Ottawa, three provinces with the strongest case for modifying the per-capita formula have left the table in pusillanimous retreat.

The three faint hearts in provincial capitals can hardly expect the remaining provinces to give a fig about the predicament in which they have left their citizens. Perhaps some of the 32 Atlantic region Liberals on the government benches will take up the cause. But don’t count on it.

-30-

About Richard Starr

RICHARD STARR has had careers as a journalist, public servant, broadcaster, political staffer and freelance policy adviser. He is author of numerous newspaper and magazine articles, appearing in everything from Atlantic Insight to Atlantic Progress. A lifelong student of Maritime history, Starr is married to playwright and former MP Wendy Lill. They live in Dartmouth.
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