Health Canada and the Public Health Agency of Canada will share services and eliminate duplication to find cost savings of more than $200-million per year by 2014.
The cuts to the federal department and agency that were outlined in the budget released Thursday come as the government makes plans to reduce the increases in the amount its transfers to provinces for health care in four years' time.
Pamela Fralick, the president of the Canadian Healthcare Association, said she was disappointed with the cuts that will be made to the department. "What does this mean to people and programs?" she asked.
But Steve Outhouse, a spokesman for Health Minister Leona Aglukkaq, said there is very little in this budget that will actually affect health services to Canadians. "Overall the savings are going to come from administration and government operations," he said.
Health care promises to be a major point of contention between the government and the New Democrats. Thomas Mulcair, the new NDP Leader, has put health-care funding at the top of his agenda and spent much of an address Wednesday to his staff and MPs decrying Conservative cuts.
Finance Minister Jim Flaherty, meanwhile, says the annual hike of 6 per cent each year is unsustainable and will be replaced by increases that are tied to economic growth.
But there are other cuts to the health care budget that the government will make as it enacts its deficit reduction plan.
At the departmental level, there will be enhanced co-ordination and a consolidation of operations between Health Canada and the Public Health Agency.
Soon to be eliminated is Assisted Human Reproduction Canada which will save the government nearly $10-million a year. A Supreme Court ruling in 2010 determined that health services, including reproduction, is the jurisdiction of the provinces.
And $30-million annually will be cut from the budget of the Canadian Institutes of Health Research but $15 million will be reinvested in research funded by the agency.
The department will enhance its regional presence in the North, opening offices in Iqaluit and Yellowknife to deliver services locally rather than from Ottawa.
The budget also promises to exempt pharmacists' professional services from the GST/HST, expand the list of health-care professionals who can order medical devices without paying the GST/HST, and expand the list of such devices that an individual can buy without paying the sales tax or claim as a medical expense for income tax purposes.
But Ms. Fralick said there are huge inequities across the country in terms of how sales tax is applied to the health sector and the changed proposed by the government "are completely insufficient."