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Can Flaherty Save Healthcare?

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As the Federal government tries to move away from automatic annual increases of 6 per cent to federal health transfer payments to provinces, Finance Minister Jim Flaherty is finding opposition to changing the status quo. Flaherty has proposed replacing the 6 per cent increases with a formula that ties future increases to nominal GDP growth, to ensure future healthcare funding is sustainable.

While Ontario Health Minister Deb Matthews, Nova Scotia's Premier Darrell Dexter, and others cited the federal government's need to fund it's "responsibilities," it became clear the memory of the great Tommy Douglas was not top of mind.

The founder of Canada's universal healthcare system also served as Premier of Saskatchewan for 17 years and delivered balanced or surplus budgets throughout that time period, while expanding his province's social safety net.

What Tommy Douglas recognized, and has been lost on Canadian premiers who have followed, is that government must live within its means and can't allow government debt to balloon in the pursuit of providing services to citizens.

It does not take inspired leadership to increase spending year after year at rates higher than revenue growth in defense of social programs. Leadership is finding creative solutions to improve frontline delivery, while curtailing cost increases, or recognizing that current service delivery models are valuable enough to tax sufficiently to pay for them.

Ontario Premier Dalton McGuinty's expensive eight year deficit-financed delivery of social programs has recently resulted in Moody's downgrading Ontario's debt to "negative." While Ontario attempts to tame its deficit, the Premier has stated neither healthcare or education spending will be subject to cuts, putting 68 per cent of budgetary expenses off limits. That's over 76 per cent if you include the interest payments on Ontario's debt that represent eight per cent of the budget alone.

In reality, it isn't the refusal for governments to rely on deficit spending to provide services we can no longer afford that imperils our social programs, but the refusal to even discuss opportunities to increase government revenue to support the programs we all hold dear in the absence of cuts.

Challenging economic times and our looming demographic time bomb give our leaders the perfect opportunity to begin having an honest conversation about how best to make the social services Canadians rely on sustainable. Tommy Douglas never mortgaged a generation's future to pay for the services of the day, and neither should Canada's current premiers.

Jim Flaherty's plan for sustainable healthcare funding based on the government's revenue, not a rigid formula, is one approach and places him in closer company with Tommy Douglas than those who are opposing the shift.

The other obvious approach that no politician is flogging at present would be raising taxes to protect the programs they refuse to cut. If neither decreasing spending or increasing revenue is acceptable, our social programs are doomed to become structurally unsustainable with time, something no one wants to see happen.

Many would agree Canada's healthcare system is worth preserving and while it may be easy to attack Jim Flaherty for suggesting one approach, until someone stands up with another approach to address the core problem, it remains the only constructive effort to address the status quo.

Around the Web

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Jim Flaherty on health care, in his own words | Warren Kinsella