Backgrounder 2004 Federal/Provincial Health Care Agreement - OHA Analysis

The Prime Minister announced last September $41 billion over the next 10 years in new federal funding in support of the action plan on health "A 10-Year Plan to Strengthen Health Care". The funding will be used to strengthen ongoing federal health support provided through the Canada Health Transfer (CHT).

Funding Announced
The CHT investments were stated as:

A total of $3 billion will be invested over this year and next, providing $1 billion in 2004/05 and $2 billion in 2005/06 through a supplement to the CHT for provinces and territories, closing the short-term "Romanow gap".
The new CHT level will also reflect an additional $500 million in 2005/06, which will help deepen progress on home care services and catastrophic drug coverage.
A new CHT base at $19 billion will be established in 2005/06 exceeding that recommended in the Romanow Report.
An escalator of six per cent will be applied to the new CHT effective 2006/07 to provide predictable growth in federal support.

Other investments announced were:

To reduce wait times, the Government will invest $4.5 billion over the next six years, beginning in 2004/05, in the Wait Times Reduction Fund. In 2010/11, $250 million ongoing will be added to the CHT base primarily for health human resources.
The Government will also invest a further $500 million in Medical Equipment (in 2004/05).
The Government is also providing $700 million over five years to improve the health of Aboriginal people through a series of new federal commitments.

OHA’s Analysis (Changes from the 2004 Ontario Budget)
For 2004/05, federal investments include:

$1 billion to help close the short-term "Romanow gap". This money is not new as it has been promised for some time by the Prime Minister. However, it is new for Ontario as it was not included in the 2004 Ontario Budget and on page 16, the province made an important commitment saying, "when additional funds are available from the federal government, further investments will be made to continue the transformation of the sector and to support key health priorities." We believe that hospital services are key priority for patients.
$500 million in medical equipment. The Ontario portion ($194 million) is in addition to the $193 million announced in the 2004 Ontario Budget.
$625 million for the Wait Times Reduction Fund will augment existing provincial strategies around wait times. Further information on the Fund can be found at the end of the bulletin. The Ontario portion is $242 million for 2004/05.

For 2005/06, federal investments include:

$2 billion to help close the short-term "Romanow gap". This money is not new as it has been promised for some time by the Prime Minister. However, it is new for Ontario as it was not included in the 2004 Ontario Budget in the "Medium-Term Plan and Fiscal Outlook "on page 10.
Again $625 million for the Wait Times Reduction Fund ($242 million for Ontario).
An additional $500 million to be included in the CHT base for progress on home care services and catastrophic drug coverage.

Further information on wait times fund
"The Wait Times Reduction Fund will augment existing provincial and territorial investments and assist jurisdictions in their diverse initiatives to reduce wait times. This Fund will primarily be used for jurisdictional priorities such as training and hiring more health professionals, clearing backlogs, building capacity for regional centres of excellence, expanding appropriate ambulatory and community care programs and/or tools to manage wait times.

First Ministers agree to collect and provide meaningful information to Canadians on progress made in reducing wait times, as follows:

Each jurisdiction agrees to establish comparable indicators of access to health care professionals, diagnostic and treatment procedures with a report to their citizens to be developed by all jurisdictions by December 31, 2005.
Evidence-based benchmarks for medically acceptable wait times starting with cancer, heart, diagnostic imaging procedures, joint replacements, and sight restoration will be established by December 31, 2005 through a process to be developed by Federal, Provincial and Territorial Ministers of Health.
Multi-year targets to achieve priority benchmarks will be established by each jurisdiction by December 31, 2007.
Provinces and territories will report annually to their citizens on their progress in meeting their multi-year wait time targets.
The Canadian Institute for Health Information will report on progress on wait times across jurisdictions."

Federal/Provincial Funding for 2004/05 to 2007/08
The Government of Canada provides significant financial support to provincial and territorial governments on an ongoing basis to assist them in the provision of programs and services. Transfers help ensure that all Canadians receive reasonably comparable levels of public services, wherever they live. They support important provincial programs: health care, post-secondary education, social assistance and social services, as well as early childhood development and early learning and child care.

The Prime Minister announced last September $41 billion over the next 10 years of new federal funding in support of the action plan on health "A 10-Year Plan to Strengthen Health Care".

Below is OHA’s analysis of funding to be transferred to the provinces and Ontario for the next few years. Please note that 2004/05 is listed twice in the chart. This allows the reader to compare the expected allocation before and after the September 2004 First Ministers’ Meeting.

Total Federal Cash Transfers for Health Programs
In millions of $s

Ontario’s Portion of Cash Transfers for Health Programs
In millions of $s

Details on the First Ministers’ agreement can be accessed at http://www.scics.gc.ca/cinfo04/800042005_e.pdf.

Please do not hesitate to contact Lou Reidel, Director, Policy and Research at lreidel@oha.com or 416-205-1320 or Anthony Dale, Director of Public Affairs at 416-205-1348 if you have any questions or comments.