Prime Minister Mark Carney, centre, and Canada's premiers hold a closing press conference at the First Ministers Meetings in Charlottetown on July 23.Darren Calabrese/The Canadian Press
The premiers, as is their wont, were free with advice for the federal government at their most recent summer whingefest, notably with regard to health care transfers. You will not be surprised to learn they want them increased, though you may be surprised by how much.
In a nutshell, the premiers want them doubled, or perhaps quadrupled. Currently the federal government provides the provinces with about $55-billion annually through the Canada Health Transfer, or roughly 21 per cent of total provincial health spending ($261-billion, as of 2025-26).
Now the premiers – some of them, anyway – are demanding Ottawa raise its share to 50 per cent. “I think aspirationally, the ask is always to get back to 50/50,” Manitoba Premier Wab Kinew told reporters.
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Even assuming that increase were wholly offset by reductions in provincial spending, federal health transfers would have to rise to $130-billion to reach 50 per cent of the total – more than twice as much. If provinces maintained their own spending at current levels, federal transfers would have to rise to $206-billion – a near four-fold increase.
It is not going to happen, in other words. Nor should it. When premiers talk about “getting back to 50/50,” they mean a return to the federal-provincial cost sharing arrangement that prevailed in the 1970s. Federal cash transfers, it is true, declined after that, as a proportion of the total.
But what the premiers never mention is that the federal government compensated the provinces with transfers of tax points. In 1977, Ottawa cut its own personal and corporate income tax rates, allowing the provinces to take up the resulting tax room. Those tax points would be worth about $28-billion today, bringing the federal share up to about 32 per cent.
In addition, the feds signed a series of bilateral agreements with the provinces in 2017 and 2023, for primary care, home care, mental health and other federal priorities, worth another $5-billion annually. So we’re up to 34 per cent.
Plus, the federal government provides another $44-billion a year to the provinces in other transfers, mostly equalization and the Canada Social Transfer. The money doesn’t come with little labels attached: The provinces can spend it on anything they like. When all federal transfers are included, not just transfers “for health,” the feds are arguably already covering about 51 per cent of provincial health spending.
But leave all that aside. Even accepting their arithmetic, what the premiers are proposing is a terrible idea. Shared-cost financing of health care is the problem, not the solution.
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The resulting overlap makes it impossible to know who to hold to account for the system’s failings, encouraging politicians at each level to blame the other rather than take the tough decisions necessary to restore it to good repair. The provinces have made enough of a mess spending 79 cent dollars. What they would do with 50-cent dollars God only knows.
And yet, well, difficult as this is to say … the premiers have a point. Not the point they’re making, but a point. Health care costs are eating them alive. Including federal cash transfers, health spending consumes about 39 per cent of provincial revenues. Exclude those transfers, and the proportion rises to 49 per cent.
And it’s only going to get worse. The proportion of the population over the age of 65 is now at 19.5 per cent (it was less than half that 50 years ago). The latest Statistics Canada projections show that figure rising to 27 per cent in 2075. That’s the medium-growth scenario. In some scenarios it rises to nearly one-third.
We’ve never seen a society like this before. The cost implications alone are staggering. (As a rule of thumb, per capita consumption of health care resources doubles for every decade lived past 55.)
There’s no easy way out. Raise immigration? Absolutely. Encourage people to work later in life? For sure. Boost economic growth? Critical. Reform health care, bringing competition and cost discipline to a hidebound monopoly? Without a doubt. But even if we do all of these things and more, the provinces are going to be in trouble.
So yes, God help me, give the provinces more money. Only don’t give them cash. Give them tax points. Finish the work begun in 1977. Get the federal government out of it altogether.
The provinces (sigh) may need more money, but more than that, they need to be accountable. That means raising the money from their own taxpayers, and answering to them, not going hat in hand to Uncle Ottawa every few years. To save health care, stopping the blame game is job one.