Health transfer data shows Alberta wins at other provinces’ expense

OTTAWA – New calculations in Quebec’s budget this week show changes to the structure of federal health-care transfers will handsomely reward Alberta at the expense of all other provinces.

Ottawa is moving toward a pure per-capita system of calculating how much each province should receive in federal health-care funding, starting in 2014.

The new system means the existing equalization component in health transfers – intended to even things out among have and have-not provinces – will disappear.

According to Quebec’s calculations, the change means Alberta will receive $1.1 billion extra each year, on average.

Alberta Premier Alison Redford said in Calgary on Wednesday night that the figure outlined in the Quebec budget document is correct but she said it ensures that everyone is treated equally.

“There’s really a fundamental difference of perspectives with respect to this,” she told reporters.

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“We believe that every Canadian is entitled to a per capita pay with respect to the health transfer.”

Redford added that Alberta got the short end of the stick for years and this finally evens the playing field.

She said the next few years of meetings with her fellow premiers will likely be an “interesting time” but she and Prime Minister Stephen Harper are on the same page on this issue.

“We believe that is the most appropriate way to deal with this issue and we can’t be taking away health transfer payments from Albertans to somehow equalize other payments in confederation.”

As a of the change, the other provinces – especially Ontario, British Columbia and Quebec – will all receive less than they otherwise would have.

Ontario will be losing out on $382 million annually, British Columbia will be down $351 million and Quebec will see $210 million less each year.

“The move to a transfer allocated on an equal per-capita basis will further widen fiscal disparities among the provinces,” says the Quebec budget document.

Average losses in other provinces are substantially lower, according to the Quebec calculations.

A separate calculation by researchers at the Library of Parliament shows that on a per capita basis, the change in health funding penalizes Newfoundland and Labrador the most.

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Populations in Saskatchewan and British Columbia will also face steep drops from what they otherwise would have received. And Alberta’s population gains enormously.

The Library of Parliament researchers relied on data from the federal Department of Finance.

Federal officials did not immediately respond to requests for comment Wednesday. But generally, Ottawa counters that its health funding continues to rise across the country, unlike in other eras of federal penny-pinching when transfers were cut.

That line doesn’t sit well with most provinces.

“Without an increase in federal health funding and a fairer allocation taking into account the additional costs relating to the demographic weight of persons over age 65 in each province, the viability of Canada’s public health system will be weakened,” the Quebec budget documents state.

The massive redistribution of health money is a result of five years of wrangling between the federal and provincial governments over how Ottawa should distribute transfers.

In 2007, the provinces reluctantly agreed to let Ottawa distribute health funding on a pure per-capita basis. No longer would health transfers try to make up for some of the economic disparities among provinces, and each province would get health money based on population alone.

But the quid pro quo was that the equalization program would be rejigged and enriched to make up for the difference to poorer provinces.

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That never happened. Instead, in 2008, the federal government capped increases in equalization, linking them to growth in the economy.

And in December, Finance Minister Jim Flaherty announced that the equalization plan would continue that way, well past 2014. At the same time, he made a major change in the way health-care transfers would increase over the next 10 years, also tying them to growth in the economy beginning in a few years time.

All told, the provinces are now faced with a shrinking federal share of health-care funding, and a formula that is blind to regional economic disparities, says Quebec.

The complaints have been echoed by British Columbia and Ontario in the last few months.

For the first time, the calculations in Quebec’s budget show in detail, and publicly, how each province will be affected, on average.

The health and equalization arrangements conspire to favour Alberta at a time when Ontario desperately needs a boost, says Josh Hjartarson, policy director at the Mowat Centre for Policy Innovation, based at the University of Toronto.

“It’s a bit puzzling to me that Alberta – which already has a fairly substantial fiscal capacity – gets additional fiscal capacity handed to it,” Hjartarson said in an interview.

“Instead, we have a formula that’s been jerry-rigged to keep Ontario from receiving a bigger cheque so that it can deliver services on par with what’s happening elsewhere.”