Study suggests a historical solution to Canada’s costly healthcare system

In a new report, the Fraser Institute prescribes looking at 1990s Canadian welfare reforms in order to solve the current healthcare crisis

As the federal government and provinces are preparing to meet a new Health Accord this fall, friction has been building on several fronts.

One of the major points of contention is over healthcare spending: provinces want Ottawa to give them a bigger budget and more autonomy, while Ottawa wants to condition bigger allocations on concrete proposals identifying priority areas and reports on outcomes. But a report from the Digital Journal suggests an unexpected middle-ground solution.

Citing a study released by the Fraser Institute entitled Less Ottawa, More Province: How Decentralization Is Key to Health Care Reform, the article suggests that the federal government should take a page from the playbook of the Chretien administration in the 1990s, which had to address a problem plaguing Canada’s healthcare system at the time.

"Escalating costs defined the welfare system of the 1990s as well as today's Canadian healthcare system, which is plagued by long wait times and consistently underperforms relative to other countries with universal access," explained Bacchus Barua, senior economist for healthcare studies at the Fraser Institute.

In 1994, 3.1 million Canadians – representing more than 10% of the population at the time – were on welfare, which was more than double the number observed in 1975.

The federal government, led by then Prime Minister Jean Chretien, rolled out a deficit restructuring plan in 1995. One of the actions it took as part of that plan was to reduce federal welfare transfers to the provinces – but it also voided the conditions attached to the funding. While the purse strings were tightened, the puppet strings were cut.

The move resulted in independent innovation and savings initiatives among the provinces. By 2010, the number of Canadians availing of welfare plummeted to less than 5%. Similarly, the share of welfare in total provincial program spending dropped to 4% by 2009, down from 7% in 1994.

"The welfare reforms of the 1990s are a great example that policymakers should follow for health care,” said Ben Eisen, director of provincial prosperity studies at the Fraser Institute and a co-author of the study. “Keeping the system universally accessible, but giving provinces more autonomy and flexibility to innovate with financing and services are the keys to improving the performance of our health-care system."

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