The Political and Economic Sustainability of Health Care in Canad ...

Stephen Harper, a former Reform and Canadian Alliance Party MP from Alberta, has advocated an approach to federal provincial relations in health care termed collaborative federalism, with “little or no hierarchy,” or open federalism (Vongdouangchanh 2007)—that is, a policy of minimal oversight of provincial organization and delivery of services in the area of health care (Bickerton 2010). One commentator elaborating on open federalism noted that within this concept provinces should not continue to receive “fiscal or monetary bailouts [from the national government] (which assure that the provinces will face ‘hard’ budget constraints)” (Courchene 2006, 51).

The problem inherent in this arrangement is that provinces tend to engage in competitive lowering of tax rates, thereby decreasing the funds available for social and health care spending—as illustrated by Quebec’s using equalization funds to cut provincial taxes (Mendes 2008). In this situation, provincial and territorial governments will be tempted to control costs by shifting more of the health care sector to private—and often commercial—enterprises. Such competition relieves immediate pressure on provincial and territorial budgets, but it does not restrain overall health care costs—within or outside of medicare. Thus, Mendes argued, cash transfers from the federal government “are the only potential carrot and stick available … to encourage nation-wide social development and promote equity between the provinces” (245). He warned that “the attempt to build firewalls” against federal authority by turning over federal revenue authority directly to the provinces through the use of tax points “might not only permanently hobble the [federal] spending power, but undermine one of the very foundations of federalism itself” (245).

Privatization and Health Care Reform:
Some General Observations

Provinces have dealt in a variety of ways with the political pressure for more privatization as a mechanism for increasing the supply of services,