In the 1990s, Canada's governments faced deficits that were ballooning out of control, causing fiscal angst and years of cost-cutting measures to bring spending in line. And of course, as the largest government expense, health care took its share of the whacking.
As federal health transfers started to wane, drug costs began to skyrocket, waiting lists became a national issue, Alberta introduced private diagnostic clinics, and hospital emergency rooms started to clog.
Former Saskatchewan premier Roy Romanow.
In short, Canada's much-loved system of universal health care started ailing under the pressures of fiscal restraint. Provinces complained loudly that the federal government was shirking its responsibilities and was losing its moral authority to dictate how health should be delivered across the country.
In recent years, however, fiscal pressures have started dissipating as Canada's governments crawled out of the red. Money has become available to re-invest in health.
Federal and provincial governments are now facing the task of mapping a course to fix Canada's publicly administered health system. Does it need structural change? How much money is needed to live up to the Canada Health Act's principles of universality, comprehensiveness, portability between provinces, accessibility and public administration?
To tackle these questions, Prime Minister Jean Chretien commissioned former Saskatchewan premier Roy Romanow to consult Canadians and propose a remedy.
"Our most cherished national program is at a crossroads," Romanow said when he delivered his final report, Building on Values, in November 2002.
Saying that "the medicare house needs remodelling, not demolishing," Romanow called for:
- a $15-billion increase in federal funding by 2006
- home-care coverage
- a limited drug insurance plan
- a ban on extra billing for diagnostic services
- accountability to taxpayers
- private electronic health records
- improved Aboriginal health care
- support for the changing roles of health-care providers
- a plan to promote preventative care.
But any major changes required agreement between the provinces and the federal government. So, at the start of February 2003, Canada's first ministers met to hammer out a new health agreement.
Ottawa took Romanow to heart, upping its health contributions by $16 billion over three years. It also offered $16 billion to establish a fund to reform primary care and home care, and for catastrophic drug coverage.
The provinces complained the federal offer fell short by at least $12 billion, but accepted the arrangement because they "felt it was important to put the interests of patients first," according to P.E.I. Premier Pat Binns.
Ontario Premier Ernie Eves also accused Ottawa of exaggerating its contribution, claiming the federal offer included some $3 billion that had already been committed under a previous deal.
The federal government responded by accusing the provinces of not accounting for how federal health transfers are spent.
Both disagreements over numbers flow from the complicated way the federal government distributes money through Canada Health and Social Transfer (CHST) payments. As implied by its name, the CHST bundles money for more than just health. It provides funding in cash and in tax credits, so breaking out absolute numbers is a difficult task and differs dramatically depending on whether you sit on the federal or provincial side of the fence.
It's widely acknowledged that the feds needed to put in more cash, but it's more of a mug's game when dealing with the tax credits. Some observers have noted that by dramatically cutting provincial income taxes, Ontario's entitlement to CHST tax credits has diminished, exacerbating the province's health funding crunch during the lean years.