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February 19, 2003
Excerpt from CLC's Analysis of the 2003 Federal Budget

Key Priorities: What We Wanted and What We Got
Health Care

The 2003-04 federal Budget acknowledges that Canadians want and expect improved access to health services from the publicly-funded system, including services such as primary care,
diagnostic services, home care, palliative care, and catastrophic drug coverage. They also
expect increased transparency and accountability, and reforms which will make Medicare
sustainable over the longer term. The government makes a commitment to ensuring that
Canadians have access to ‘universal, quality care — care that is based on need, not on the ability to pay.’ - p. 66

1The federal government arrives at its $34.8 billion by doing a double counting of sorts. It’s
like keeping the wage grid flat; adding a bonus to the grid each year, and double counting previous years increases in the total increase for each successive year. For example: in Year 1, assume a wage of $1,000. In Year 2, add $100 for a total wage of $1,100. In Year 3, add $100, but count last year’s increase and this year’s increase and call it a $200 increase in that year. In Year 4, add $100, but include the increase in Year 2 and 3, for a total increase of $300 in Year 4. The employer would say the worker received increases of $100, $200, and $300 in each year, for a total increase over three years of $600. The worker would say they received an increase of $300 over the three years.

Does the Budget meet this goal?

The Budget plan states that the federal government will increase health spending by $34.8
billion over the next five years. However, those figures include increases for all three
programs currently under the CHST — health, education, and social assistance.
The CLC’s preliminary analysis indicates that the actual increase in federal spending for
health care only over the next five years is $30 .5 billion. Of that, $25 billion is in the form
of transfer payments to provincial and territorial governments for health services covered
under the Canada Health Act. The federal government will spend an additional $5.4 billion
on other health initiatives. About $4 billion of the $34.8 billion total will be transferred to
the provinces for higher education, and social assistance and social services.
Overall, federal transfers to provinces for health care will increase from $12.2 billion in 2002-
03 to $18.8 billion in 2007-08. This is a 54% increase over that time or an average of 9% per

The Budget continues the process of adding one-shot increases to the healthcare spending
floor each year instead of increasing the base funding each year and adding on to that. At the
end of the five-year period, federal funding could drop back to the base floor.1
The Budget begins the process of reinvesting public tax dollars into public health care.
However, it falls short of what is needed to return the federal share of health spending to
25% of the cost of publicly insured health services. The maximum share reached is 20% of
provincial health costs.

The Budget will increase federal transfers to the provinces for health services covered by
provincial public health plans. Over the next three years, federal transfer payments to the
provinces will increase by roughly $12.5 billion. This is $2.5 billion less than recommended
by the Romanow Commission. The CLC believed that even Romanow’s recommendation
was too little in the immediate term.

A Health Reform Fund provides money for provinces to undertake primary care reform; to
expand public health plans to cover short-term, acute home care; and, to create reasonable
access to catastrophic drug coverage by 2005-06. This is a start to expanding the range of
health services falling under the umbrella of the public health care system. However, only $6
billion of the $16 billion Health Reform Fund is allocated over the next three years. The
remaining $10 billion is allocated in the last two years.

However, like the First Ministers Accord, the Budget does not deal with the threat of forprofit
health care. It is certain that in some provinces, a share of public tax dollars will flow
through provincial governments to the owners and investors of for-profit health care
corporations. The issue of for-profit health care is central to the survival of Medicare. While
public payment for health services will expand, so will the for-profit delivery of those

There is little in the way of conditions attached to the increases in federal funding. As a
result, this Budget does not meet the expectations of Canadians for meaningful accountability
and transparency. The goals and objectives of the Health Reform Fund as stated in the
Budget are narrow and vague. There appears to be no intention of setting even minimal
standards for reform in the areas of primary care and home care, making it difficult, if not
impossible, to ensure some level of national standards of care across the country.

The Budget provides $205 million for governance initiatives. Part of this funding will go
towards the creation of a Health Council. No detail is given as to the scope, structure or
mandate of such a council, but it is reaffirmed that this council would report through federalprovincial ministers of health which limits and weakens its capacity to be a truly meaningful accountability mechanism. The Budget places what appears to be minimal reporting requirements on the provinces for the expenditure of federal funds.

The Budget commits the federal government to establishing an ‘Employment Insurance
Compassionate Family Care Leave Benefit as of January 4, 2004.’ Individuals who meet
‘eligibility requirements for EI special benefits and have served a two-week waiting period’
will be entitled to a six-week compassionate care leave to care for a gravely ill or dying
parent, child or spouse. The Canada Labour Code will be changed to reflect availability of
this new leave.

The Budget continues to ignore the pressing need for health services in northern and remote
areas of Canada. No specific funding is allocated. The Budget does not address the issue of the health and economic needs of Aboriginal Peoples in Canada or their right to be a full partner in determining the solutions to these problems. The Budget allocates $1.3 billion in increased funding for Aboriginal Health over five years.