Canada imposes "sustainable" health funding formula

Mon Dec 19, 2011 6:00pm EST
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By Keith Norbury

VICTORIA, British Columbia (Reuters) - Canadian Finance Minister Jim Flaherty imposed what he called a fiscally sustainable formula for increasing federal transfers to the provinces for health care, one that will eventually increase spending by less than the current 6 percent a year.

Flaherty angered several provincial finance ministers in setting the new funding formula unilaterally, but he said it was necessary to provide certainty and sustainability.

The Canadian government will increase healthcare transfers by 6 percent through 2016 and then only at the same rate as nominal growth in gross domestic product, forecast at about 4.5 percent in coming years. Flaherty guaranteed a minimum funding increase of 3 percent a year.

"Our landmark investment means healthcare funding will continue to grow at record levels and in a fiscally sustainable manner," Flaherty said after meeting with provincial finance ministers.

"This investment will help ensure our healthcare system is there when Canadian families need it."

Flaherty's announcement came as a surprise to the provincial ministers. Though Ottawa had floated its ideas last week, the current funding levels do not expire till 2016, and no one had expected a new arrangement to be announced now.

Ontario Finance Minister Dwight Duncan, flanked by five other ministers, said he and his colleagues were caught off guard.

"The federal government has moved unilaterally ... and we think this is most regrettable," Duncan said, adding that it would mean less health service in Ontario. "It's not a present at all. It's a lump of coal."   Continued...