Manitoba Department of Finance Submission to the Commission on

							Manitoba Department of Finance
        Presentation to the Commission
     on the Future of Health Care in Canada

               Greg Selinger
            Minister of Finance
         Winnipeg - March 6, 2002
                   Overview
• Sustainability of health care must be considered
  in the context of the Canadian federation itself
  and the fiscal arrangements that underpin it
• The fiscal imbalance existing between the two
  orders of government is addressed mainly
  through the CHST mechanism
• Sustainability of health and other programs
  hinges on achieving an effective balance
 Spending/Financing Developments
• Health care’s share of provincial budgets
  increased over the 1990s
• Key factors:
   – provincial decision to reinvest in Health Care in
     response to public concerns that access and quality
     was deteriorating
   – federal cuts in CHST - crowding out other areas
     Net Change in Program Spending by Source of Funding, 1994/95 to 1997/98
                                  ($ billions)
5
                                            Change in Provincial Own-Source Spending
4                                           Change in Federal CHST cash Funding
                                            Net Change in Spending
3

2

1

0

-1

-2

-3

-4
                 Health Care                           Other Programs
                Crowding-Out
• Health Care demands have been met at the
  expense of other needs -- education, justice,
  social services, infrastructure and economic
  development
• Not a viable long-term solution since these form
  the base upon which we maintain and afford our
  health care system
      Health as a Share of Manitoba's Budget, Baseline Projection to 2020/21
55%




50%




45%




40%




35%




30%
  1990/91      1995/96     2000/01      2005/06     2010/11      2015/16       2020/21
       Not just a Long-term Issue
• Sustainability has a more immediate dimension
• Provinces are facing a large and immediate cash
  crunch as well as difficult choices, while …
• The December Fiscal Monitor points to $10 b
  surplus for the federal government in 2001/02
• Health as a percentage of GDP is expected to
  set new high water marks over the medium term
               Health Expenditure as a Percentage of GDP, by Component
12
            Private Sector                                  Forecast
            Other Public
10
            Net Provincial
            Federal Cash

 8



 6



 4



 2



 0
     1981                  1986   1991      1996        2001p          2006f
                      CHST
• Federal funding for provincial social programs
  has been eroded since the inception of EPF
  through a series of unilateral federal changes to
  the funding formula
• CHST cash as a share of provincial social
  program funding averaged about 18% in the first
  half of the 1990’s, fell to 11% by 1998/99
• The current level of 14% is forecast to fall to 13%
                Federal Cash Transfers as a Share of Total Provincial/Territorial
                       Government Spending on Major Social Programs
25%



20%



15%



10%



5%



0%
      1985/86            1990/91            1995/96            2000/01              2005/06f
                        CHST
• Manitoba favours a durable CHST-based solution to
  the problem of funding health care
• Options like the recent proliferation of federal “tied-
  funding” schemes should be avoided since
   – ongoing provincial funding commitments are not
     matched by federal government,
   – they discriminate against provinces with lower fiscal
     capacity, and
   – they fail to reflect provincial priorities.
           CHST and Federalism
• Need to adopt a more cooperative than unilateral
  model to restore confidence in partnership
• Current CHST funding levels are arbitrary
   – not based on actual costs
   – not based on ability to pay (revenue capacity)
   – not based on a negotiated or agreed to “share”
• Federal/provincial cooperation and decision-
  making to sustain CPP is a better model
                 Conclusion
• The task we face is not just to balance our own
  books, but to do it in a way that does not
  compromise our long-term economic potential
  and the provision of important public services
• Our single-payer publicly administered health
  care system confers a cost advantage that must
  be preserved
                 Conclusion
• There is probably enough fiscal capacity in
  government - writ large - to manage the cost
  pressures over the next decade, if we plan well
• The challenge is federal government needs to
  become more fully engaged in funding health
  care through the CHST to address both the
  immediate cost pressures and the larger ones
  that loom in the coming decades