"abolish your present system in the USA and copy the Canadian system in every way. You would save 7% of the USA's yearly budget for other things!"

Thestar.com Monday, October 26, 2009 Toronto Edition

Health care, the elephant in the room
Chantal Hébert

In Canada, as in many other industrialized countries, health care is very much the elephant in the government budget room.

Take Ontario. Last week, the province projected a record $24.7 billion shortfall for this fiscal year, with more red ink to come over the next few years. But even if Premier Dalton McGuinty gave the green light to a 5 per cent spending cut in every area except for health and education tomorrow, the government would still save less than $3 billion.

Health-care spending is the biggest item on Ontario's budget list and its costs have already been going up faster than the rate of economic growth since before the recession. Likewise, federal health transfers have been increasing yearly at a much faster pace than the GDP for much of the past decade.

Since 2001, the federal government has transferred $250 billion to the provinces for health care, with another $150 billion to come over the next five years.

By the time the current arrangements run out in five years, the federal health transfer will have almost tripled from what it was in 2000.

Those rapidly rising transfers are the result of successive federal-provincial accords, negotiated after Canada entered an era of big budget surpluses.

Five years ago, Paul Martin and the premiers signed a 10-year health accord designed, at least according to the then-prime minister, to fix medicare for a generation.

With the accord past the halfway mark, many of the reforms the multi-billion-dollar package was supposed to buy are failing to materialize. Home care and basic pharmacare programs remain embryonic in many areas of the country.

The creation of electronic health records remains at best a work in progress. On that score the eHealth Ontario scandal may not be an isolated incident.

In the years to come, the initiatives funded through Martin's health accord are expected to provide fodder for future auditor general reports at both the federal and provincial levels.

With one voice, the Liberals and the Conservatives have promised not to cut social transfers to the provinces to make ends meet federally. But that does not mean a future federal government would allow them to continue to increase at the current pace.

Once the 2004 accord runs out in five years, Stephen Harper's government has promised to allocate health transfers to the provinces on a per capita basis.

Ontario would be the big winner of that reform. But to fulfill Harper's commitment, the federal government of the day will either have to take money out of the envelope of other provinces to reallocate it to the more populous Ontario or else dig deep in its empty pockets to make the health fiscal pie even bigger.

In a surplus era, Ottawa and the provinces bought their way out of the medicare debate. The resumption of that debate at a time when government coffers are empty stands to turn commitments like the recently restated Liberal promise of a national child-care initiative or the various federal and provincial plans to green the Canadian economy into as many empty promises.