Canada's provinces are being granted more autonomy to reshape health care as Ottawa moves to end 50 years of using its funding power to coerce provinces to adopt national standards.
With federal funding now set, Health Minister Leona Aglukkaq sent a letter on Tuesday to her provincial and territorial counterparts urging them to focus on how to reduce escalating health costs and to "put the divisive issue of funding behind us."
The letter is a sequel to the most important change in half a century to how Ottawa and the provinces run Canada. Prime Minister Stephen Harper is inviting provinces, with some federal guidance, to do as they see fit in their own jurisdictions while inviting them to co-operate in establishing national benchmarks for delivering health services.
But the new funding formula – annual increases staying at the current level of six per cent until 2017, then tied to inflation and economic growth – has divided the country.
The West welcomes the certainty of the new model. It sees as a key victory the fact that Ottawa will allocate funds on a per capital basis rather than disproportionately favouring poorer provinces. The East calls the offer insufficient and an abuse of the federal-provincial process.
Saskatchewan Premier Brad Wall on Tuesday acknowledged frustration with the process, but said he and Western colleagues agree that health talks can't be just about money.
"I think it would be better if everybody sort of agreed, but, man, it's Canada. I don't know if there are many examples of that," he said in an interview. "Each province has to develop their own position on this. I absolutely respect that. I get that. Some of it may be more informed by the relative fiscal status of a province, for example."
Alberta Premier Alison Redford was buoyant on Tuesday.
"What we were very pleased to see was an acknowledgement for the first time that Alberta needed to be treated equally on a per capita basis. That is a tremendous success for us. It's going to make a difference in terms of our health transfer payment."
Ottawa's move has also enraged champions of the traditional approach to crafting a national strategy for delivering social services.
"This really is quite astounding and maybe unprecedented and I think potentially very dangerous to the future of medicare in Canada," said Roy Romanow, the former Saskatchewan premier who wrote a royal commission report on health care reform in 2002.
By offering money with no strings attached, Mr. Romanow said, richer provinces can experiment with new services – via public or private routes – that other provinces can't afford.
On Tuesday, New Brunswick's Conservative Premier David Alward joined other Eastern provinces in opposing the proposal, saying the approach is "totally unacceptable" and that he would work with other premiers to force Ottawa to negotiate a deal rather than impose one.
The Conservatives decided on a unilateral approach several months ago, government sources said. The goal was to provide the provinces with certainty while weaning them off annual increases in transfers that are currently three times the rate of inflation.
Mr. Harper particularly wanted to avoid getting into protracted negotiations with premiers over how much money there would be and how the funding formula would be calculated.
Officials identified three potential windows for releasing the new numbers. The first was Mr. Flaherty's November fiscal update. But cabinet had not approved the new deal then.
The second opportunity was Monday's meeting of federal and provincial finance ministers. The Conservatives also contemplated holding off until January, when the premiers meet to discuss health care, but decided to reveal their plan sooner rather than later.
Questions remain about the government's contention that health-care spending is slowing.
Background documents posted on the Finance Canada website in conjunction with the announcement of the new formula for health transfers pointed to a recent report from the Canadian Institute for Health Information to support the claim. The CIHI data showed that while increases in provincial health costs averaged more than seven per cent from 2000 to 2010, the rate of growth is projected to decline to 3.2 per cent for 2011.
Finance Canada documents said that the slower growth is because "governments are working to move health care funding to a balanced and sustainable path," but a CIHI official said the institute can't explain the one year drop, or whether it is a statistical blip.
While a lot of public attention has been given to the expected long-term increase in health care costs due to an aging population, Francine Anne Roy, the CIHI's director of health spending and strategic initiatives, points out that the institute's research has found population aging to be a "relatively modest" driver of health costs. The more pressing causes are labour, hospitals, drugs, population increases and inflation.
With a report from Oliver Moore