Quebec got raw deal from Ottawa on health-care funding, study finds

Federal Health Minister Jane Philpott received a high-five in the House of Commons when she announced last month that the government had struck health-care funding deals with Ontario, Alberta and Quebec.

Ottawa had outlasted a common front of the big provinces, all hoping to increase their annual share of the Canada Health Transfer by 5.2 per cent.

As the common front collapsed, and the provinces resorted to bilateral deals instead, Quebec settled for an annual increase in financing estimated at 3.6 per cent.

Philpott's triumphant high-five did not go over well in Quebec. The province's health minister, Gaétan Barrette, called it "out of place," given that Ottawa's hard-ball tactic would result in funding cuts for Quebecers.

"This is not a great day for Canadians. This is not a great day for Quebecers," Barrette said of the new health accord, which will allot Quebec $2.5 billion over ten years, in addition to annual increases of at least three per cent.

Barrette now has some non-partisan research to back up his grumbling.

A fair share?

Researchers based at the University of Ottawa released a report on Tuesday that concludes "the Government of Quebec should have rejected the federal government's offer on health funding and held out for a better deal."

Between now and 2019, the federal government's share of Quebec's overall health-care costs amount to more than 27 per cent.

But after that, Ottawa's share will gradually decline, to 25.5 per cent by the end of the deal in 2026. That's below the federal government's current funding share, which is pegged at 26.6 per cent for 2017.

"The federal contribution to health spending will fall through 2026, forcing Quebec to disproportionately bear the burden of the additional health care costs beyond the increases in federal health transfers," reads the study published by the Institute of Fiscal Studies and Democracy, a think-tank headed by the former parliamentary budget officer Kevin Page.

Furthermore, the authors note, much of the federal funding is only slated to come in 2019 and 2020, when Canadians will next head to the polls, meaning those amounts are clouded in uncertainty.

All provinces lost leverage

Quebec was not alone in getting a bad deal from Ottawa, however. All provinces (Manitoba is the only remaining hold-out) fell short of the 5.2 per cent increases they were seeking to cover rising health-care costs.

Over the ten years of the health accord, the difference between what the provinces asked for and what they received from Ottawa adds up to a whopping $33.5 billion.

In other words, provincial governments will have to dramatically increase their contributions to health-care funding over the next ten years if current performance indicators are to be maintained.

"If the federal government and the provincial governments cannot agree on a way to put more money into the health care system, this will have negative consequences on health-care performance and health-care access," said Dominique Lapointe, one of the authors of the study.

So why did the provinces agree to a deal that runs so clearly against their interests?

According to Barrette, Quebec didn't have much of a choice.

"We didn't leave any money on the table. There wasn't any money on the table to begin with," he told Radio-Canada.

"There were no negotiations. It was imposed."

But the provinces may also have made a strategic mistake when they broke ranks with each other.

"Their leverage diminished every time someone [left] the group," said Lapointe. "When you're alone against the federal government, it's much harder to get a better deal."