Budget 1999
Strengthening Health Care for Canadians: 1
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"Our collaborative work on a renewed health partnership and on a new social union partnership more generally, along with increased health funding, will reassure Canadians that governments are working together to address their health and other social needs." Prime Minister Jean Chrétien letter to premiers and territorial leaders January 25, 1999 "The decisions we are announcing today are about much more than dollars and cents. They are about a fundamental choice Canadians have made about the kind of society in which we want to live." Finance Minister Paul Martin budget speech February 16, 1999 "What I believe we must strive for is a people-centred system in the truest sense, one that ensures the right care by the right provider at the right time in the right place at reasonable cost." Health Minister Allan Rock speech to Canadian Medical Association September 7, 1998

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Archived - Highlights

Over the next five years, the provinces and territories will receive an additional $11.5 billion specifically for health care.

• Of this amount, $8 billion will be provided through future-year increases in the Canada Health and Social Transfer (CHST), and $3.5 billion as an immediate one-time supplement to the CHST from funds available this fiscal year.

• Allowing for a gradual and orderly drawdown in the supplement by the provinces and territories over the next three years means that total support for health care would increase by $2 billion in 1999-2000 and in 2000-01, and by $2.5 billion in each of the following three years.

• However, individual provinces and territories could draw down the supplement over the next three years in a pattern which best meets the needs of their health care systems.

• The $2.5 billion increases CHST cash from $12.5 billion to $15 billion, and takes what is regarded as the health component of the CHST as high as it was before the period of expenditure restraint of the mid-1990s.

• Together with the growing value of CHST tax transfers, federal support is expected to reach a new high by 2001-02, surpassing where transfers stood prior to restraint.

The budget also strengthens the federal government's contribution to Canada's health care system by investing about $1.4 billion over the remainder of this fiscal year and the next three years in information systems, research, First Nations and Inuit health services, prevention and other health initiatives.

• $328 million to better meet the information needs of health care providers and patients and to enhance public accountability throughout the system.

• $550 million for research and innovation to improve diagnosis and treatment of diseases, to improve health care delivery and to enhance the health of Canadians.

• $190 million to address the health care needs of First Nations and Inuit.

• $287 million to improve prenatal nutrition, food safety, and toxic substances control, to foster innovations in rural and community health, and to combat diabetes.

• Combined with the $6.5-billion cash increase in the CHST over the next three years, the $1.4 billion invested in these activities means a total of $7.9 billion in new resources for health over the remainder of this fiscal year and the next three years.

Introduction

Investing in medicare to deal with Canadian's health care concerns.

Medicare is one of Canada's most important social programs and a key priority of the government.

It represents the fundamental values of fairness and equality that we all share as Canadians.

The provinces and the territories will receive an additional $11.5 billion specifically for health care from the federal government over the next five years. This funding marks the largest single new investment this government has ever made.

This investment will help the provinces deal with the immediate concerns of Canadians about health care -- waiting lists, crowded emergency rooms and diagnostic services. It will also help to build a stronger health care system -- a system that reflects the changing health care needs of Canadians and is based on timely access to high quality health care.

Since its introduction in 1968, medicare has evolved into a cherished feature of our national identity.

Canadians are justly proud of a publicly-funded health care system that provides access to high quality health care when they need it, not when they can pay for it.

The federal government is committed to working with the provinces and territories on behalf of all Canadians to preserve and enhance medicare for the 21st century.

Building on the Strengths of Canada's Publicly-Funded Health Care System

Canada's publicly-funded health care system is key to the quality of life we enjoy. Central to our public health care system is the security that all Canadians, regardless of their financial means, have equal access to high quality health care services based on need, not ability to pay.

This is the very essence of the public health care system Canadians have built and it is no small accomplishment. In many countries, basic health care services are subject to user fees and some leave large parts of their populations with little or no health care coverage.

The provinces and the territories each deliver health care services, assisted by federal financial support, within the framework of the five fundamental principles of medicare in the Canada Health Act: universality, comprehensiveness, accessibility, portability and public administration.

Principles of the Canada Health Act Under the Canada Health Act, the following five criteria or principles must be met for a province to receive its full federal transfer payments: Universality -- The provincial health insurance plan must cover 100 per cent of eligible residents on uniform terms and conditions. Comprehensiveness -- All medically necessary services provided by hospitals and physicians must be covered. Accessibility -- The plan must provide reasonable access to insured services with no user fees. Portability -- Residents are entitled to coverage when they move to another province within Canada or when they travel within Canada or abroad. Public Administration -- The plan must be administered and operated on a non-profit basis by a public authority accountable to the provincial government.

The high quality health care Canadians enjoy would not be possible without the competent and devoted health care providers who work in Canada's health care system.

Canadians have every right to be proud of their health care system. We are among the healthiest people in the world, with a life expectancy of 81 years for women and 76 years for men and a low rate of infant mortality. Death rates for most of the major diseases are declining. Our public health care system has played no small part in these impressive results.

Laying the groundwork: recent federal health initiatives

The early to mid-1990s were a period of government restraint. To restore order to the nation's finances, both orders of government reduced spending. Provincial health expenditures -- and federal transfers which support these provincial services -- were restrained.

More recently, provinces have begun to allocate increased resources to health care. Over the past three years, the federal government has also made significant investments in health care. It has:

• increased the cash floor of the CHST from $11 billion to $12.5 billion beginning in 1997-98, as recommended by the National Forum on Health;

• created the Health Transition Fund to work with provinces to develop new ways of delivering health care;

• established the Canadian Health Services Research Foundation to evaluate the effectiveness of health services and to ensure value for every health care dollar;

• invested in the Canada Health Information System to improve health information systems;

• enriched children's health programs;

• renewed funding for the HIV/AIDS Strategy and the Canadian Breast Cancer Initiative; and

• increased funding for the Medical Research Council to undertake health research.

The following table shows that these and other investments will increase annual federal health-related expenditures by close to $2 billion in each of the next two years. Most of this is the result of the increase in the CHST cash transfers to the provinces and territories, announced in 1997.

Table 1
Previous federal health initiatives¹

	1998-99	1999-00	2000-01
	(millions of dollars)
Stable funding
CHST cash floor increase(effective 1997-98)	900	1,500	1,500
Health-related needs
Community Action Program for Children and Canada Prenatal Nutrition Program	33	33	33
National HIV/AIDS Strategy	41	41	41
Canadian Breast Cancer Initiative	7	7	7
Tobacco Demand Reduction Strategy	20	20	20
Aboriginal Head Start (on-reserve)	15	33	27
Aboriginal Health Institute	1	7	7
Caregiver tax credit	30	120	125
Deductibility of private insurance for self-employed		90	110
Blood agency	30	30
Blood regulation and surveillance	25	25	25
Research and innovation
Canadian Health Services Research Foundation	13	13	13
Health Transition Fund	50	50
Canada Health Information System	17	17	5
Canada Foundation for Innovation ($800 million in l996-97)2
Increase to Medical Research Council	40	44	50
Total	1,222	2,030	1,963
1 Initiatives announced since 1996 but prior to this budget. Estimates and funding profiles for some initiatives may have changed. 2 Funding not exclusively for health. In 1998, about half the funding awarded by the Canada Foundation for Innovation was for infrastructure related to health research.

Health care in transition

Health care has undergone a profound transformation over the past decade.

One of the main reasons for this change is that it is increasingly being delivered in different settings. More and more services are being provided in the community and in the home rather than in hospitals.

Improvements in new technologies, medical treatments and surgical techniques have also considerably shortened hospital stays. As well, health care is increasingly reliant on drug therapy. Many ailments that previously required surgery or extended stays in hospital can now be treated effectively with drugs, reducing the need for prolonged hospital stays.

Finally, Canadians now are receiving their health care from an increasingly diverse range of health care providers, including doctors, nurses, midwives, physiotherapists, home care workers, pharmacists, practitioners of alternative medicine and informal caregivers.

As a result of these changes, the composition of health expenditures also changed significantly. As shown in Table 2, hospital expenditures declined from 39.3 per cent of total health expenditures in 1990 to 33.4 per cent in 1998, and public home care expenditures increased from 2.2 per cent to 4 per cent of public health spending. Spending on drugs also increased, from 11.3 per cent of total health expenditures in 1990 to 14 per cent in 1998.

The changes in health care over the past decade have taken place at the same time as governments restored order to the nation's finances by restraining growth in expenditures. Between 1990 and 1994, public health spending grew moderately from $1,643 to $1,808 per person, and levelled out. In real per capita terms, public funding for health care has actually declined since 1994.

Total public and private health spending is now $2,613 per person, up from $2,203 in 1990. Expressed as a share of GDP, total health expenditures last year represented 9.1 per cent, down from 9.6 per cent in 1994, but slightly higher than the 9.0 per cent registered in 1990.

Table 2
Facts and figures about Canada's health system

	1990	1994	1998
Total health expenditures as a share of GDP	9%	9.6%	9.1%
Per capita total health expenditures	$2,203	$2,508	$2,613
Public health expenditures	$45.7B	$52.9B	$55.8B
Per capita public health expenditures	$1,643	$1,808	$1,821
Total health expenditures by use of funds (share of total)
Hospitals	39.3%	36.2%	33.4%
Home care1	2.2%	3.1%	4.0%
Physicians	15.1%	14.6%	14.4%
Drugs	11.3%	12.7%	14.0%
1 Public home care expenditures as a share of aggregate public expenditures. Estimates of private home care spending are not available. Sources: Canadian Institute for Health Information, Health Canada.

In this changing environment, governments must continue to work together to reassure Canadians of their unwavering commitment to maintain and enhance the high quality of Canada's public health care system.

Building on a common vision

At a First Ministers' meeting on February 4, 1999, all premiers and territorial leaders confirmed undertakings they had previously given in an exchange of correspondence with the Prime Minister. They confirmed their commitment to the five principles of medicare; to spending any additional funds made available by the Government of Canada through the CHST on health services in accordance with health care priorities within their respective jurisdictions; and to making information about the health system available to Canadians.

The federal government welcomes these commitments as a demonstration of a constructive willingness on the part of provinces and territories to work with the federal government to ensure that the health needs of Canadians are met.

These commitments build on the common vision of Canada's health system adopted by provinces and territories in 1997, including:

• a new partnership between the federal and provincial governments to ensure the maintenance of a national health system with a reasonably comparable range of services based on the five principles of medicare; and

• access to a more integrated, effective and appropriate system of health care to ensure that prevention of illness, promotion of healthy lifestyles, as well as assessment, diagnosis and treatment services are better matched to peoples' needs.

Investing in Medicare: The Canada Health and Social Transfer

The federal government welcomes recent provincial assurances that any increases in transfers to provinces for health will be spent on health care. Building on these commitments and shared objectives, this budget invests in medicare through the Canada Health and Social Transfer (CHST).

The $12.5 billion in cash currently transferred to the provinces and territories through the CHST will be increased -- and this increase will be designated specifically for health care.

Over the next five years, the provinces and territories will receive an additional $11.5 billion specifically for health care. This increase will be allocated to the provinces and territories on an equal per capita basis.

Table 3
CHST: $11.5 billion in new funds for health care
Equal per capita to all provinces and territories

	1999-00	2000-01	2001-02	2000-03	2000-04	5 years
Total (millions of dollars)	2,000	2,000	2,500	2,500	2,500	11,5001
Amount each year per capita dollars)	65	65	80		79	78
	(millions of dollars)
Newfoundland	35	35	42	42	41	195
P.E.I.	9	9	11	11	11	51
Nova Scotia	61	61	76	75	75	348
New Brunswick	49	49	61	60	59	278
Quebec	482	479	596	592	589	2,738
Ontario	755	757	949	953	956	4,370
Manitoba	75	74	92	92	91	425
Saskatchewan	67	67	83	82	81	379
Alberta	192	192	241	241	241	1,107
British Columbia	268	270	341	344	347	1,570
Yukon	2	2	3	3	3	12
N.W.T.	3	3	3	3	3	16
Nunavut	2	2	2	2	2	10
1 Includes a CHST supplement of $3.5 billion which will be accounted for in 1998-99 by the federal government. It is anticipated that provinces will draw down this one-time CHST supplement by $2 billion in 1999-2000, by $1 billion in 2000-01 and by $0.5 billion in 2001-02.

Of this $11.5 billion, $8 billion will be paid through future-year increases in the CHST.

An additional $3.5 billion will be provided as an immediate one-time supplement to the CHST from funds available this fiscal year. This will provide the provinces and territories with the growing and predictable funding they are seeking for their health care systems as quickly as possible.

Allowing for a gradual and orderly drawdown in the supplement by the provinces and territories over the next three years means that total support for health care would increase by $2 billion in 1999-2000 and in 2000-01, and by $2.5 billion in each of the following three years.

However, individual provinces and territories could draw down the supplement over the next three years in a pattern which best meets the needs of their health care systems.

This means that cash transfers under the CHST will increase from $12.5 billion to $15 billion. This $2.5-billion increase takes what is regarded as the health component of the CHST as high as it was before the period of expenditure restraint in the mid-1990s.

Table 4
Canada Health and Social Transfer

	1999-00	2000-01	2001-02	2002-03	2003-04	5 years
	(billions of dollars)
Increased funding for health care	2.0	2.0	2.5	2.5	2.5	11.5
Of which:
CHST		1.0	2.0	2.5	2.5	8.0
CHST supplement1	2.0	1.0	0.5			3.5
Existing CHST cash	12.5	12.5	12.5	12.5	12.5	62.5
Total CHST cash	14.5	14.5	15.0	15.0	15.0	74.0
CHST tax transfers	13.9	14.4	15.0	15.6	16.4	75.3
Total CHST	28.4	28.9	30.0	30.6	31.4	149.3

¹ The $3.5-billion CHST supplement will be accounted for in 1998-99 by the federal government. Payments will be made in a manner that treats all jurisdictions equitably, regardless of when they draw down funds.

An additional $11.5 billion for health care: the largest single new investment this government has ever made

In terms of cash alone, the new funding means provinces and territories will receive $11.5 billion in additional cash over the next five years to strengthen access to high quality health care. It represents the largest single new investment this government has ever made.

This investment will help deal with immediate concerns of Canadians about health care -- waiting lists, crowded emergency rooms and diagnostic services. It will also help to build a stronger health care system over the long term -- a system that reflects the changing health needs of Canadians and is based on timely access to high quality health care.

Together with the value of CHST tax transfers, which will also grow over the next five years, federal support is expected to grow to $31.4 billion in 2003-04. CHST transfers will reach a new high by 2001-02 -- surpassing where transfers stood prior to the expenditure restraint of the mid-1990s.

Over the five-year period, provinces and territories will receive transfers projected to total nearly $150 billion, with the cash portion making up $74 billion of this.

Equalization

Under the Equalization program, the federal government transfers additional funds to the less prosperous provinces so that they can provide their residents with services comparable to those in other provinces without having to resort to higher taxation than their counterparts. Equalization is projected to total over $50 billion over the next five years; this is nearly $5 billion more than they received over the past five years.

As a result, significant new resources will be available to most of the provinces that receive Equalization for public services, including health care. Legislation is now before Parliament to renew the program for five years and make technical improvements.

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