Yukon Premier Darrell Pasloski is discussing the future of Canada’s health-care system with his provincial and territorial counterparts in Victoria this week.
It’s the first time premiers have met since Jim Flaherty, the federal Finance minister, surprised them in December with a new plan to curb the growth of health transfers from Ottawa.
The premiers are expected to use this meeting of the Council of the Federation to craft a response. It began Sunday and ends on Tuesday.
Health transfers have increased by six per cent annually in recent years. But starting in 2016, Flaherty wants to peg any future increases to growth of the economy and inflation, with a floor of at least three per cent.
Premiers from the western provinces have cheered the lack of strings attached to the plan while eastern premiers have warned the federal government needs to play a stronger role in maintaining a national health-care system.
Pasloski has characterized Flaherty’s plan as being merely a “proposal.” Others have described it as a take-it-or-leave-it offer.
Other than direct health transfers, the Yukon also receives a special top-up fund, currently worth $8 million annually, to help offset the extra cost of providing health care in the territory. Pasloski has lobbied Ottawa to continue paying this money, but hasn’t received any guarantees.
Provinces and territories will be left with a big financial shortfall under the new health transfer plan, according to a recent report by the Parliamentary Budget Officer. It anticipates health transfers to grow at an average of 3.9 per cent from 2017 to 2024, while provincial health spending grows by 5.1 per cent.
The result would be a big funding gap: $49 billion in 2011-12 if the new scheme were in place by then and set to grow over time.
That would leave territorial and provincial governments with two options: raise revenues by hiking taxes or levying fees, such as health premiums, or offering fewer health services.
On the bright side, the new health plan would allow Ottawa to balance its budget and escape the structural deficit it’s currently in, according to the report.
Nearly one-third of the Yukon government’s expenses are eaten up by the Department of Health and Social Services. In provinces such as B.C. and Ontario, health departments consume nearly half of government budgets.
The Yukon’s health expenses have grown by nearly 50 per cent over the past five years. And, as the territory’s population ages, these costs are only expected to grow.
Contact John Thompson at johnt@yukon-news.com