Question

Canada: How did the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act of 1977 change the federal government's relationship to the provinces in the financing of health care?

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Answer 1

Evolution of federal support for health and social programs

The federal government has used transfers to support provincial and territorial governments in providing health care, post-secondary education, social assistance and social services, and programs for children. In the 1950s and 1960s, the federal government encouraged development of nation-wide hospital, medical care, social, and post-secondary education programs. The costs of these programs were for the most part shared equally between the federal government and the provinces and territories. Federal legislation and related agreements outlined program objectives and standards, and stipulated which types of expenses were eligible to be covered. Provincial and territorial governments provided detailed documentation of their expenditures to the federal government.

By 1977, health care and post-secondary education programs were well established. To allow provinces greater flexibility in allocating funding and to reduce the administrative burden, federal transfer support shifted away from cost sharing to block funding. In 1996, two existing support programs, Established Programs Financing (a block transfer supporting health and post-secondary education) and the Canada Assistance Plan (the last major cost-sharing program supporting social programs), were merged into the Canada Health and Social Transfer program, which supported broad federal spending priorities, including health care and social programs.

The Canada Health Transfer. This is a federal transfer provided to each province and territory to support health care. Funding is provided through both cash payments and tax transfers. The requirement attached to this transfer is that provinces and territories meet the conditions in the Canada Health Act. These conditions include the five criteria that apply to health services (public administration, comprehensiveness, universality, portability, and accessibility), provisions relating to extra-billing and user charges, and conditions related to the provision of information and recognition of federal financial contributions. Health Canada is responsible for monitoring compliance with these conditions.

In the 2006–07 fiscal year provided additional support of approximately $20 billion, including $12.6 billion through the Canada Health Transfer and $7.8 billion through the Canada Social Transfer.

The Diagnostic/Medical Equipment Fund. Announced as part of the 2003 First Ministers' Accord on Health Care Renewal, this fund was in support of specialized staff training and equipment to improve access to publicly funded diagnostic services. The federal government put $1.5 billion into this trust, to be drawn down by the end of the 2005–06 fiscal year.