Brian Lee CrowleyMore money has failed to cure Canada’s ailing health care system. The federal government needs to get out of the way and allow the provinces to provide a local solution to ballooning health care costs.

This column is based on the latest entry in MLI's series of publications offering policy ideas for the new federal government, titled "From A Mandate For Change To A Plan To Govern".

By Brian Lee Crowley and Sean Speer, Dec. 18, 2015

Next week’s meeting of Canada’s finance ministers is the opening salvo in the negotiation of a new health accord between the federal government and the provinces and territories. These early discussions should be a window into the much-anticipated meeting of health ministers in January.

The need for health care reform is well-documented.

One of the outstanding questions is how the Trudeau government exercises “federal leadership” to spur health care reform, as it promised during the election campaign. There’s a tendency to equate leadership with more federal funding with additional strings attached, but in fact the opposite is more likely to produce results.

The need for health care reform is well-documented. Canada’s system is not only one of the most expensive in the world, it’s also one of the worst performing according to a number of indicators, such as wait times and access to medical doctors and new technology. As a former NDP finance minister from Saskatchewan has written: “The current health care system created in the 1960s … is expensive and has mediocre outcomes and long waiting lists.”

Sean SpeerTotal health care spending in Canada is now $6,105 per person and represents more than 10% of GDP. Canada’s system is now the second most expensive among developed countries that provide universal access.

If spending were the key determinant of a good system, Canada would be a world leader. But we’re not: instead Canada is an expensive underperformer. So what can we do about it? And what’s the federal government’s role?

The new minister of health recently acknowledged that “money isn’t necessarily where the problem is” and what’s needed is “system reform.” What does a reformed system look like? There are many useful models for reform to draw from. Several countries, such as Australia, France, Germany, the Netherlands, Sweden, and Switzerland, ensure universal access at a lower cost with better results. We can look to their experiences and choose the right fit for Canada while maintaining and even strengthening universality.

Of the previous federal-provincial health accord (2004-2014), the same NDP finance minister has said: “why would you make a tough decision if somebody is going to give you more money to keep the status quo? .... The money didn’t go to change.” Reform occurs when the provinces and territories are given the flexibility to experiment and the incentives to do so. And here’s where the new health minister can draw from the playbook of the last Liberal government in Ottawa.

If spending were the key determinant of a good system, Canada would be a world leader. But we’re not

The experience of welfare reform in the 1990s is illustrative. The Chrétien Liberals reduced transfer payments to the provinces for social services in exchange for fewer strings attached, including repealing a previous prohibition on work requirements for welfare recipients. This newfound flexibility was the catalyst for welfare reform by provincial governments across the political spectrum.

The results were striking. Welfare dependency rates were reduced by more than half and have generally remained there ever since. Employment went up as previous recipients shifted to paid work. Provincial spending on welfare was reduced. And it was all made possible by federal leadership that was smarter, not more bossy or expensive. It’s a powerful example of leveraging federalism to encourage provincial experimentation and ultimately reform.

The new federal finance minister can draw upon the welfare reform experience as a way to catalyse similar reforms to our health care system and leverage Canadian federalism to produce better results for taxpayers and patients. But it begins with a clear understanding of what real federal leadership entails—and it isn’t more money.

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute and Sean Speer is a senior fellow at MLI.