Madam Speaker, I am pleased to rise today to participate in this important discussion about the Canada health transfer, or CHT, and funding for health care.
Our government is committed to improving the health care system so that it can meet the needs of Canadians today and in the future. Our system must adapt if it wants to provide better health care and better results at an affordable cost given the aging population, the increase in rates of chronic disease and the financial pressure resulting from new drugs and new technologies.
From the beginning of the global coronavirus pandemic, our government has been proactive, shown leadership and worked with the provinces and territories to support their efforts to deal with this crisis. More specifically, our government invested more than $19 billion to help the provinces and territories safely restart their economies. This amount includes $500 million to guarantee that health care systems will be ready to face future waves of the virus; $740 million for vulnerable Canadians, including those in long-term care and palliative care facilities, and those who receive home care, and risk having more serious cases of COVID-19; and $500 million to support and protect people struggling with mental health, addiction or homelessness.
Our government also supports virtual care services and online screening to relieve emergency services and promote physical distancing. We have invested $240 million in creating virtual care and mental health care tools in order to support the provinces and territories in this work. This investment is in addition to the $500 million from the COVID-19 response fund, which was distributed earlier this year to the provinces and territories in order to help them respond to critical needs in the health care systems and to support mitigation efforts.
This funding was provided as an ad hoc complement to the Canada health transfer, which is the primary federal funding mechanism for supporting Canada's health care system. It allows for the provision of predictable, long-term funding to the provinces and territories. In 2020-21, our government will provide nearly $42 billion in cash assistance to the provinces and the territories through the CHT. This represents on average more than 23% of planned health spending by the provincial and territorial governments. In 2020-21, the Province of Quebec will receive $9.4 billion from the CHT.
The CHT will increase each year based on economic growth, with a minimum increase of 3% per year. Over the next five years, funding for the CHT to the provinces and territories should reach more than $200 billion. These funds are allocated to the provinces and territories on an equal per capita basis, which guarantees the comparable treatment of all Canadians, regardless of where they live.
The Canada Health Act sets out the criteria and conditions the provinces and territories must meet to receive their full contribution through the CHT. With the exception of its link to the Canada Health Act, the CHT is unconditional, and gives provinces and territories the leeway to decide how best to distribute the funds in order to meet their residents’ and communities’ health care needs.
I would like to take a little time to talk about the history and evolution of the CHT. The current flexible block funding approach to the CHT differs substantially from the cost-sharing program that existed when the public health insurance plan was introduced. Before 1977, the federal government matched eligible provincial and territorial spending on doctors and hospitals at a rate of 50%. However, expenses for these items constituted only about three-quarters of the provinces’ and territories’ total health care expenses.
In other words, the cost-sharing arrangement in place before 1977 did not cover other health care expenses such as pharmaceuticals, home care, mental health services and related health care services that were beginning to represent a growing share of the provinces’ and territories’ health care expenses. As we know, these health care expenditure components increased over the years. The share of spending for doctors and hospitals decreased, and now represents less than 60% of the provinces’ and territories’ health care expenses.
Even during the first period of the cost-sharing program for eligible expenses, federal transfers never really represented 50% of spending for doctors and hospitals. They represented less than 37% of the provinces’ and territories’ total health care expenses. As the health care system evolved, all of the parties involved agreed that a more flexible funding system was required to help the provinces and territories meet their own health care priorities and not only to help foot the bill for doctors and hospitals.
When the established programs financing, or EPF, was introduced in 1977, the federal, provincial and territorial governments agreed to replace the earlier equal cost-sharing program with a more flexible block- or cash-funding approach. This meant that, instead of the federal government equalizing the provinces’ and territories’ spending on doctors and hospitals, the provinces and territories received a cash transfer that they could spend on a broader range of health care priorities.
More importantly, in our context, the EPF program included a stipulation that the federal government was to permanently transfer tax room or tax points to the provinces and territories. This transfer of tax points meant that the federal government permanently reduced its tax rates, while the provinces and territories increased theirs by the same amount, which had no net impact on the taxpayer's tab. More specifically, 13.5 percentage points of the federal personal income tax and one percentage point of the federal corporate income tax were transferred to the provinces and territories. Instead of the federal government collecting taxes and transferring them to the provinces and territories, the provinces and territories could now collect these taxes themselves and spend them as they saw fit.
In 1977-78, the value of the transfer of tax points was equivalent to approximately 22% of the provinces' and territories' spending for doctors and hospitals, the public health insurance plan, while the health transfer represented 33%, for a total of 55%. The cash transfer represented almost 25% of the provinces' and territories' total health care spending. Until recently, this threshold, which is the reference point for the federal cash contribution, was long recognized by the provinces and territories themselves.
As I mentioned, the CHT now represents more than 23% of the provinces' and territories' health care spending. But the federal government's contribution to health care in provinces and territories is not limited to the CHT. Much of the funding related to the COVID-19 pandemic, including the funds from the safe restart agreement, which are intended specifically for health care, will be transferred directly to the provinces and territories.
In addition to the extraordinary measures the government implemented to help the provinces, the territories and all Canadians deal with the coronavirus pandemic, the federal government has also provided significant and ongoing support for health care. These investments were made during the previous Parliament when, in August 2017, all the provinces and territories agreed on $11 billion in federal funding over 10 years to improve home care and mental health services. This new funding alone increased the federal contribution to provincial and territorial health spending by nearly 25%. The government also provides considerable direct health care funding as part of its health promotion and protection responsibility, which includes regulation. It supports public health, research and national health organizations, and delivers health care services to specific groups, such as indigenous populations. In addition to direct federal spending and provincial and territorial transfers, the government also helps individuals and companies via the tax system.
Let me close with the following.
In conclusion, our health system needs improvement in some areas. However, experience shows us that we cannot improve things just by injecting more cash. Canada spends more on health than most other countries, yet we are not getting the results Canadians need and deserve.