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In response to the view that interprovincial equity is more appropriately addressed through the Equalization program, in Budget 2007 the federal government committed to remove the equalizing component of the CHT by legislating that the cash transfer move to an equal-percapita allocation in 2014–2015

Concerns about the equalizing component of the cash transfer have been raised more recently due to economic shifts resulting from high natural resource prices, a stronger Canadian dollar, and a decline in manufacturing. For example, even though Ontario became a poorer province relative to provinces with abundant natural resources, its per capita CHT cash transfer continued to be lower than average due to its relatively strong tax point transfer.

In response to these recent economic shifts, Budget 2009 facilitated the move to an equal-per-capita cash transfer for Ontario by ensuring that the province immediately receive the same per capita CHT cash as other relatively poorer provinces

The PBO report estimates that the new health formula – which accounts for economic growth and inflation – will cause transfers to grow at 3.9 per cent annually from 2017-18 to 2024-25. In contrast, the watchdog projects provincial and territorial health spending will grow at 5.1 per cent over the same period.

a spokesman for Mr. Flaherty, disputed the PBO’s claim that provincial and territorial health spending will grow faster than the growth in federal transfers.

The budget officer states provincial-territorial net debt relative to GDP “is projected to increase substantially over the long term.” While the ratio stood at 20 per cent of GDP in 2010-11, the PBO expects that will now climb to over 125 per cent in 2050-51 and to over 480 per cent by 2085-86.

Closing this gap, according to the PBO, would require provinces and territories to take a combination of actions such as higher taxes or lower spending that would amount to $49-billion in 2011-12 - an amount that will grow over time in line with nominal GDP - in order for Canada’s finances to be sustainable.

The PBO report also analyzes the impact of Ottawa’s new transfer arrangement in terms of what it will mean for Ottawa’s contribution toward overall health spending. In 2010-11, the federal share of health spending was 20.4 per cent. The PBO projects the federal share will average 18.6 per cent from 2011-12 to 2035-36, then 13.8 per cent over the following 25 years and 11.9 per cent over the next 25 years.

Historically, federal health transfers averaged about 37 per cent of health spending from 1968-69 to 1995-96. That dropped sharply during the deep budget cuts of the Liberal government in the mid-1990s, hitting 16.3 per cent in 1995-96 and reaching an all-time low of 9.8 per cent in 1998-99.

The CHT associated equalization payment is expected to be $1.05 billion in 2008–2009.

Figure 1 – Total Canada Health Transfer Entitlement, 2004–2005 to 2008–2009

The federal government’s formula for calculating the value of the cash transfer, the tax point transfer and the associated equalization payment under the CHT ensures that the total entitlement provides an equal per capita amount across all provinces. Figure 2 presents the total CHT entitlement amount per capita and per province for 2008–2009. As can be seen, the total CHT entitlement per capita amounted to $1,100 for all provinces.

"The federal government's commitment to increase their transfer payment by 6 per cent this coming year has actually be been broken and rather than getting 6 per cent Ontario will be getting only 3.4 per cent," Matthews said, referring to the health increase.

As well, the 6-per-cent increase was a national average and not all provinces would receive the same rate.

According to Library of Parliament estimates from 2011-2012, Alberta is the only province to benefit from the change to equal-per-capita funding.

Sousa said Tuesday he was "infuriated" to learn from federal Finance Minister Jim Flaherty that Ottawa's funding to Ontario for 2014-15 would be $19.158 billion - down $641 million, or 3.24 per cent, from this year's $19.799-billion allotment

During the spring federal election campaign, Prime Minister Stephen Harper effectively snuffed out debate on health funding by vowing to maintain the 6-per-cent escalator. He did not, however, say for how long, and has played his cards close to the vest since, aside from saying, intriguingly, that the feds will expect more accountability in exchange for the money in the future.

strict conditions on the CHT as a way of ensuring specific programs are undertaken

This was done in the 2004 health accord with wait times and was moderately successful.

The provinces have largely been saying that they want a repeat of 2004, when they got a 10-year deal with 6-per-cent increase per annum, and virtually no conditions on the money.

No one honestly believes that is going to happen, not at a time when most provinces are vowing to keep increases in health spending below 3 per cent a year, and least of all in the current economic conditions.

One possibility is extending the 2004 deal to 2016 which, not coincidentally, will be time for the next federal election.

Ottawa could buy time for its larger plan to radically revamp federal transfers to the provinces (including the CHT, CST and equalization.)

A second possibility is negotiating separate deals with each of the provinces and territories rather than one national accord.

Regardless of the direction negotiations take, the current formula, which is as convoluted as it is complex, is changing.

the cash portion each province receives varies because of the way equalization payments are calculated

In 2014, that will change so that cash is distributed on a per capita basis, without accounting for tax points. Practically, this will mean significantly more cash for Alberta and Ontario, and less for B.C. and Quebec.

Another hot issue, especially for the Atlantic provinces, is a desire to adjust the CHT to reflect demographics – namely that health-care delivery is more expensive in provinces with older populations, like those in Eastern Canada.This approach, known as needs-based funding, is already used by several provinces in calculating transfers to their regions.

Regional bickering will make it a lot easier for Ottawa to negotiate a deal (or deals). It’s in Mr. Harper’s interest to drag out the talks in the hope that the common front will crumble.

It’s also in the country’s interest that the Prime Minister and the premiers be willing to go out on a limb and fundamentally revamp health financing – starting at the top – because the current formulas aren’t working.

Federal-provincial-territorial officials will continue to review the technical aspects of Equalization and TFF to ensure the proper functioning of these programs. Upon renewal, both programs will be legislated out to 2018-19.

The Government has extended temporary total transfer protection another year to assist provinces and territories in transitioning through current economic challenges.

The Duffy trial is sucking up all the oxygen because there's nothing else happening. The leaders all have significant policy announcements up their sleeves, but they are saving them for next month, when more people are paying attention. One Conservative candidate may be indulging in wishful thinking when he said "absolutely no one cares about Duffy - it's an Ottawa story."

I'm not sure that's true. The Duffy trial testimony has simultaneously undermined Harper's "strong leadership" pitch and bolstered the case for change. But it is clear the caravan will move on after the trial goes on hiatus at the end of next week. We will be celebrating Thanksgiving one week before election day. The odds are when the mornings are as crisp and golden as an apple, Nigel Wright's testimony will be a vague recollection for most folks. As a memory experiment, who remembers the details of Justin Trudeau's "32-point plan to restore democracy in Canada," unveiled exactly two months ago? Other issues will come to the fore and one battleground that Quebec Premier Philippe Couillard is keen to highlight is the way Ottawa funds health-care.

The case for a demographic funding formula received a boost last month in a paper by the Parliamentary Budget Office that suggested the demographics of an aging population are set to defeat all attempts by provinces at containing healthcare costs. The phrase was not used, but the implication was that a genuine fiscal imbalance is emerging.

Health-care is always high on the agenda of concerns when voters are asked by pollsters. Yet, the Harper Conservatives have neutralized the issue in recent elections by closely shadowing the policies of their opponents.

This time will be different. The Conservatives have long promised that in 2017, the CHT will grow at the rate of general growth plus inflation - about three per cent to 3.5 per cent. Provinces have been used to six-per-cent increases since Paul Martin signed his "fix for a generation" in 2004.

The NDP has said it will maintain that six-per-cent escalator, while the Liberal Party says it will be focused on preparing the system for the wave of baby-boomer retirements in a new health accord.

Couillard wrote to the leaders of all federal parties late last week, renewing calls for them to take into account aging populations when calculating the $32-billion Canada Health Transfer. Backed by the Canadian Medical Association, Couillard issued a challenge to the party leaders to top up the CHT to take account of changing demographics.

The report pointed out that the ratio of people aged 15-64, compared with those over 65, will fall from 4.3:1 in 2014 to 2.6:1 by 2034. The PBO suggested that provincial governments need to find savings or revenue increases of 1.4 per cent of gross domestic product, about $28 billion annually, to put themselves on a sustainable footing. At the same time, the federal government will have a similar amount of money to spare, as a result of falling public debt levels.

The wrinkle for both the NDP and Liberals is that they can commit extra billions of dollars to health-care or pledge to balance the budget. It stretches credulity to suggest they could do both, alongside the commitments they have already made. The Conservatives have already made their choice, committing themselves to reducing debt levels and ensuring the budget is balanced.

Contrasting policy positions on one of the subjects that Canadians say they really care about could provide some relief from the inertia afflicting the 42nd general election campaign. When temperatures, and tempers, cool, the leaves will cascade, the seasons will turn and so will the concerns of many voters.

Les libéraux ont également critiqué le gouvernement pour ne pas avoir cherché à conclure des alliances avec les autres provinces.

Medicare became a national program in 1957

the new funding deal the ministers are praising was imposed on the provinces by Ottawa

The agreement was that Ottawa would provide 50 per cent of costs.

The upshot is that the federal government now covers less than one-quarter of publicly funded health spending – $30-billion of the $135-billion that comes out of the public treasury. So, actually, federal funding is at a historic low.

50-50 was the norm well into the 1970s, when the federal government began to weasel its way out of its commitment by replacing the straightforward promise to pay for half of provincial health spending by introducing complex funding formulas.

And let’s not forget that the money is being transferred with no strings attached.

Ottawa changed how the money is distributed among the provinces so that it will now be allocated strictly on a per capita basis, with no provision for the fact that delivering health care is more expensive where the population is older and living in remote or rural areas; that means young, fast-growing provinces such as Alberta will get a lot more money, and aging, struggling provinces such as Nova Scotia will get a lot less.

The Conservative government takes the position that health care is uniquely a provincial responsibility. In doing so, it rejects the traditional role of the federal government to level the playing field, to ensure that health services are reasonably comparable for all Canadians, regardless of where they live. In recent years, the disparities in access to care have grown substantially because Ottawa has abdicated that role.

However, until now no federal government has had the nerve to take on serial offender Quebec. Quebec has been allowing its doctors and clinics to charge extra user fees since 1979. The province's current health minister, Gaetan Barrette, freely acknowledges this. In some cases, these fees were truly exorbitant. The Montreal Gazette reported last year that some colonoscopy clinics were charging patients an extra $600 for medications - on top of the publicly paid medicare fee. Many Quebecers were outraged. The provincial Liberal government's somewhat peculiar response was to pass a bill codifying the practice of extra-billing but giving itself the authority to regulate it. In March 2015, the then-Conservative government in Ottawa formally notified Quebec that it would be looking into the issue. This March, Liberal Philpott sat down with Barrette to discuss the practice. On Sept. 6, she sent her provincial counterpart a letter threatening cutbacks to Quebec's health transfer. A few days later, Barrette announced that extra billing will end as of next January.

It is hard to gauge the importance of Philpott's threat. User fees have become widely unpopular in Quebec. That alone may have been enough to drive the provincial government to disavow them. Still, it was bracing to see a federal health minister publicly standing up for the principles of medicare. It is not an everyday occurrence. It is particularly interesting that she targeted a province that is notoriously touchy about what it sees as federal interference. Perhaps she will do more. Certainly, more needs to be done. The latest annual report on the Canada Health Act filed with Parliament notes that private MRI clinics in British Columbia, Alberta, Quebec, New Brunswick and Nova Scotia are charging user fees to patients. It says some hospitals are avoiding the ban on charging for drugs by routing the sick through outpatient clinics - which do charge. It also notes that the portability requirement of medicare, which allows Canadians to receive care outside their home provinces, is routinely ignored.

Quebec routinely refuses to fully reimburse other provinces that provide health services to Quebec residents. Yet it has never been penalized by Ottawa for this. Nor have an unspecified number of other provinces that, at one time or another, did the same. Except for Prince Edward Island, the report says, no province appropriately reimburses residents who obtain medical care outside Canada. Such patients aren't necessarily entitled to the full cost of their out-of-country care. But they are entitled to be reimbursed for the amount it would have cost them to be treated in their home province. To work as a national program, Canadian medicare needs two things. First, the federal government must put up enough money to give it a real financial role in the system. The 2002 Romanow royal commission suggested that Ottawa provide at least 25 per cent of medicare funding. That figure still makes sense. Second, Ottawa has to use its financial clout to enforce those few national standards that do exist. A former Liberal health minister, Diane Marleau, tried to do this back in the 1990s. She was sandbagged by Jean Chrétien, the prime minister of the day. Let's hope Philpott has better luck.

It was bracing to see a federal health minister stand up for medicare principles, writes Thomas Walkom.