Ottawa favours targeted health-care spending over increased transfer to provinces

The federal health minister says she is unconvinced that putting more money into the federal health transfer to the provinces is the best way to improve the health-care system.

Jane Philpott and her provincial counterparts are inthe midst of negotiations for a new multi-year health accord.

The provinces want Prime Minister Justin Trudeau's government to change the agreement put in place by the previous Conservative government.

In 2004, former prime minister Paul Martin put a 10-year health accord in place. That deal provided for a sixper cent annualincrease in the federal health transferuntil 2014. The Conservatives extended the deal to April 1, 2017.

After that date, the health-care transfer will be cut to either an annual minimum rise ofthreeper cent, or an increase matched to the rate of Canada's GDP growth, whichever is higher.

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With an aging population and the costs of health-care rising, many provinces are saying an increase of more than three per cent isneeded, but Philpott suggested that such an increase isunlikely.

"I'm not convinced that putting more money in through the transfer is the most effective way for us to transform the health-care system in the way that it needs to be done," Philpott told CBC News in an exclusive interview.

"So I'm having further discussions with my colleagues about that. There is some real advantages in us actually focusing on some specific areas like home care and investing it separately from the transfer," the federal health minister added.

The federal government needs to increase the amount of money it's paying for health care across the country if they want to have more of a say in the kinds of programs that are delivered.- Terry Lake, B.C.health minister

The Liberals promised to invest $3 billion inhome careduring last year's election campaign, but that money was not part of the Liberals' first budget this spring.

"We not only need the support in areas like homecare, and we welcome the $3 billion, but it's going to take more than just that to allow us, and enable us, to deliver the services that Canadians are expecting us to deliver as health-care providers at the provincial and territorial level," SaskatchewanHealth Minister Dustin Duncan said Thursday.

B.C. Health Minister Terry Lake also said Ottawa must give the provinces more money, in part to recognize an aging population.Untilthat is settled, Lake doesn't see an agreement coming together on home care.

"I think it would be difficult to come to any agreement on other priorities, because the federal government needs to increase the amount of money it's paying for health care across the country if they want to have more of a say in the kinds of programs that are delivered," said Lake.

Provinces lobby federal minister

Provincial health ministers had a phone meeting with Philpott a few days ago where they all made the same argument that provinces need money for health care in general.

Duncan said thatif the current transfer remains in place, Saskatchewan will receive an estimated $15 million less for health care next year, even with money for home care.

"If the federal government is serious about seeing the continuation of the medicare system in Canada, they need to be partners at the table," he said.

Saskatchewan isn't alone in making this argument.

CBC News has obtained a copy of a letterQuebec's ministers of health and finance sent a letter to Philpott and federal Finance Minister Bill MorneauonJune 7.

The Quebec ministers write, "It was mentioned that any new additional federal funds for health care would be paid through targeted funds rather than through the Canada Health Transfer (CHT) mechanism. In this respect, it should be emphasized that only an increase in the CHT can fully and completely support provincial priorities and orientations and ensure the sustainability of the health-care systems."

The ministers further argue, "By their very nature, targeted funds are temporarily and generally conditional on the achievement of new initiatives that do not necessarily correspond to the priorities of the provincial governments. Moreover, history has taught us that when targeted funds run out, the provinces must solely take up responsibility for the expenses related to the new initiatives, which only further increases the financial pressures bearing upon them."

The best way to transfer federal money for health care to the provinces, they say,is one that dates back to theLiberal governments of Jean Chrtien and Paul Martin.

Philpott, however, is arguing that targeted funds are what the health-care system and Canadians need now.

"We can show Canadians what we're doing with that new money and Canadians can see new spending through the federal government's support into health care will actually deliver the kinds of things Canadians want," Philpott said.