Ontario Budget 2000 Our Health Care Commitment
General enquiries regarding policy in the
2000 Ontario Budget – Our Health Care Commitment
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© Queen's Printer for Ontario, 2000
ISBN 0-7778-9560-9
Le document Budget de l'Ontario 2000 – Notre engagement en matière de santé est disponible en français.
ONTARIO'S HEALTH CARE COMMITMENT
In 1995, the Ontario Government made a commitment to protect health care operating spending at $17.4 billion. That commitment was exceeded. In fact, health care spending in 1995-96 was $17.6 billion and has increased every year since then.
The Government made a further commitment in 1999 to increase health care operating spending by 20 per cent, to $22.7 billion, by the year 2003-04. The 2000 Ontario Budget puts Ontario on track to meet this commitment a full two years ahead of the Government's promise. Health base operating spending will reach a new high of $22.0 billion in 2000-01.
Since the mid-1990s, the Government has recognized that the Ontario health system needed to change. The system was built for the 1970s and served Ontarians well in the past. However, it was not equipped to deal with the new demands that changing times have placed on the system. These new demands include extraordinary advances in technology and pharmacology, along with an aging and growing population. The Government is acting to ensure that health services are in place to meet the needs of everyone in the province, today and tomorrow.
The overall goal is to ensure that the health care system is integrated, provided as close to home as possible and accessible to all Ontario residents.
While the Ontario Government is keeping its commitments to the health care system, the federal government has cut its commitment significantly. In 2000-01, base federal cash transfers to Ontario under the Canada Health and Social Transfer (CHST) will be $1.7 billion less than they were in 1994-951 . Not only has Ontario made up for the federal reduction but it has also increased spending by $4.4 billion for a total of $6.1 billion.
In 1999-00, for every dollar spent by the Ontario Government on health care, federal cash transfers for health accounted for 11 cents. Today, with higher Ontario health care spending, the federal share is down even further to just 10 cents.
Despite the fact that Ontario has undertaken major reforms of the health care system with minimal federal assistance, there is still more to be done. The Ontario Government would welcome the cooperation of the federal government. In this regard, a federal commitment to provide adequate, sustainable, long-term health care funding is a vital first step. As a signal of a new spirit of cooperation, the federal government should, at the very least, restore immediately the $4.2 billion it has cut since 1994-95 in permanent annual CHST funding to provinces and provide an appropriate escalator to ensure adequate funding in the future.
2000-01 HEALTH OPERATING SPENDING
Apart from the reforms currently under way, Ontario's health base operating spending for 2000-01 will reach a record high of $22.0 billion. This investment in health care is used to provide funds for public hospitals, long-term care and community care, and fund the services of more than 20,000 physicians. It will also pay for two million people to receive needed medicines.
Ontario hospitals will receive $7.7 billion in 2000-01 in operating funding, an increase of four per cent from the 1999-00 level. This funding will pay for diverse hospital-based programs such as dialysis and treatments for cardiac and cancer patients.
In addition, the Province will spend $3.1 billion on long-term care programs. Over $1 billion of this money is provided to 43 community care access centres. These centres fund about 200 agencies to provide in-home nursing, therapy and homemaking services to help people remain at home for as long as possible.
The Province will pay $5.9 billion in 2000-01 to physicians, optometrists, chiropractors, physiotherapists and other practitioners who provide health care services to Ontarians. Another $1.5 billion will be provided for Ontario's drug programs. In addition to providing services to seniors, another 100,000 Ontarians (who need new and expensive drugs to treat serious illnesses such as cancer, HIV and cystic fibrosis) also receive assistance with needed medications.
The remaining health allocation supports other health care programs including mental health, public health and emergency health services.
New Provincial Measures to Support Health Care
The following new measures contained in the 2000 Ontario Budget will support health research, improve access to medical services, implement better care practices, and prevent illness. The total base operating spending on health care is increasing by $1.4 billion this year.
Research
- An endowment of $500 million will be provided to the Ontario Innovation Trust,
intended for research infrastructure such as laboratories and high-technology
equipment for Ontario hospitals, colleges and universities. The Trust supports basic
research in many fields, including health sciences and cancer research.
- The Government will provide $30 million annually to develop a comprehensive
plan to prevent stroke and to rehabilitate its victims. The ultimate goal of this
initiative will be to significantly increase access to new life-saving therapies and
reduce deaths and damages from strokes.
- To further support a safe blood-supply system, the Province will provide
$21 million over three years for projects supporting blood conservation and
bloodless surgery techniques. This support for state-of-the-art surgical techniques
also will help to draw and retain the most talented specialists in Ontario and will
complement the Premier's Strategy on Organ and Tissue Donation.
Improving Access to Health Care Services
- Additional funding will be provided over four years to enhance medical services
and provide better care for patients. This includes $100 million to expand Ontario's
primary care system; $110 million to enhance patient care; $180 million to create a
System Management Fund; $150 million to provide new information systems to
support the transition to primary care networks; and $75 million to transfer doctors
in the academic health science centres to alternative payment plans.
- The Government will provide $45 million annually, at maturity, to expand the
provincial toll-free telephone health service, which gives callers access to
experienced triage nurses who provide health care advice, information and referral.
Started in Northern Ontario in 1999-00 as Direct Health, a 1-800 telecare service will
be available 24 hours a day, seven days a week in the Greater Toronto Area by the
winter of 2000 and eventually to all communities across the province. This will help
ensure that people have timely access to the most appropriate health services.
- The Government appointed Dr. Robert McKendry to assess and provide
recommendations on physician shortages in Ontario. The Province will be providing
$11 million annually to implement the recommendations to increase the number of
spaces for medical students.
- The Province will provide $4 million for free tuition to medical students willing to
relocate and practise in an under-serviced area, such as parts of Northern and rural
Ontario, or under-serviced specialties such as obstetrics, for five years following
graduation. In addition, the Province will invest in capital equipment necessary to
allow the Michener Institute program for MRI technologists to double its enrolment.
Implementing Better Care Practices
- The Government is committed to the introduction of a Patient's Bill of Rights,
Hospital Report Cards and patient satisfaction surveys as part of an effort to
increase accountability to health care users. This will include tying hospital funding
to service performance and publicly reporting the results. Annual funding of
$10 million will be directed to implement these initiatives.
- In keeping with the Government's policy of zero tolerance for health care fraud,
$6 million annually will be invested in strengthening the detection, investigation
and prosecution of individuals defrauding the health care system. This will help
ensure the future viability and sustainability of Ontario's health care system.
- The Government also will provide $1 million for four regional pilot projects to test effective delivery of rehabilitation services.
Staying Healthy
- A two-year, $10 million Health Integration Program will be established to foster
innovative and locally sponsored projects to better link health services for people
in their own community.
- In addition, the Province will fund physician, laboratory and radiology services for the diagnosis and treatment of tuberculosis for persons not covered by OHIP or other medical insurance plans, including recent immigrants.
Investing in Child Health and Development
- $4 million annually will be provided to develop strategic directions addressing
asthma prevention, education, clinical guidelines, treatment and control.
- An additional $4 million over two years will be provided to accelerate the expansion
of the Electronic Child Health Network (eCHN), which links hospitals, health care
professionals and other organizations, bringing the Province's total contribution to
the project to $11 million.
- The provincial eating disorder treatment program will be increased at an annual
cost of $7 million, to stem the growing problem of eating disorders. The expansion
will provide treatment services to an additional 5,000 children and adolescents, to
bring the total served to 7,000.
- A new infant hearing screening program will be implemented at an annual cost of
$7 million, focusing on early intervention and treatment of newborn/infant hearing
deficiencies.
- An additional $6 million annually will be provided to extend the Pre-school Speech
and Language program to include children over five years of age, but not yet
attending school.
- $6 million in annual funding will provide education and training for Level II
neonatal unit to hospital staff, with the initial phase focusing on training in GTA
hospitals.
- Through the Ministry of Health and Long-Term Care, the Government is delivering
on its promise by proposing to extend funding for the medical requirements of
special needs students to include students in all denominational schools. This will
eliminate unfair barriers for special needs children seeking a faith-based education.
FEDERAL CUTS TO HEALTH CARE FUNDING
Between 1994-95 and 1998-99, the federal government cut annual base CHST cash transfers to provinces by $6.2 billion.
In 1999 the federal budget announced a partial restoration of these cuts. A one-time CHST Supplement was combined with an increase to base CHST transfers. The net result is that only $2.5 billion of the original $6.2 billion cut to annual base CHST cash transfers to provinces will be restored over the next three years. This year, the federal government will still transfer $1.7 billion less in base CHST cash to Ontario than it did in 1994-95.
The 2000 federal budget did not announce an increase to base funding for health care. Instead, a one-time, $2.5 billion CHST Supplement will be spread out over four years. This federal funding will disappear after 2003-04; the health care needs of Ontarians will not.
The federal government can afford to restore CHST transfers that it cut. Based on the latest economic data and consensus economic forecast, 2000-01 federal revenues are expected to be higher and federal expenditures should be lower than projected in the 2000 federal budget. Combined with the $1 billion unallocated prudence factor, the federal government has the flexibility to restore fully CHST cash transfers this year.
Ten Per Cent Is Not a Solution
In the past, the federal government had offered to contribute 50 per cent of Provincial spending on hospitals and physicians. By 1994-95, federal cash transfers supported only 16 per cent of Ontario health care spending. After 1994-95, the federal contribution continued to decline. Even after the partial restoration of 1999-00, federal cash transfers for health account for just 10 cents of every dollar the Ontario Government spends on health care.2
In an attempted rebuttal to these simple facts, the federal government claims that it provides over $30 billion to provinces through the CHST. To make this claim, the federal government takes credit for some corporate income tax (CIT) and personal income tax (PIT) revenues that provinces have been collecting since 1977.3 Independent experts disagree with the federal perspective:
- Tom Kent (a key advisor to the federal Liberal government in the mid-1960s) has
called it a "misrepresentation" for the federal government to claim tax points as part
of its contribution to health care.4
- Robin Boadway (Professor of Economics, Queen's University) wrote that it is "the
ultimate in dishonesty" to include tax points in the federal contribution to health
care.5
- Paul Boothe (former Professor of Economics, University of Alberta) wrote that "[i]t
is bizarre for the federal government to claim that it is ‘giving' the provinces (or
more precisely, allowing them to collect for themselves) this tax revenue each
year."6
ONTARIO'S SPENDING INCREASES VASTLY EXCEED PARTIAL FEDERAL FUNDING RESTORATION
Starting in 1999-00, the federal government began only a partial restoration of CHST funding that it cut between 1994-95 and 1998-99.
The Ontario Government is keeping its promise to ensure that all the restored CHST funding is invested in health care. In fact, Ontario total base health care spending increases are greater than the combination of one-time CHST Supplements and base CHST cash increases announced in the 1999 and 2000 federal budgets.
One-Time Federal Funding Is Not a Solution
The following table shows federal one-time cash transfers to Ontario. But one-time funding for health care is inadequate. The health care needs of Ontarians are not temporary or one-time. Governments cannot plan health care spending on one-time funding that will expire. Hospitals do not go out of existence after one year. Doctors do not stop seeing patients or prescribing needed medications.
| 1999-00 | 2000-01 | |
|---|---|---|
| PSAB Basis | ||
| Ontario One-Time Spending | 1,290 | - |
| Federal One-Time Funding | 755 | 757 |
| Difference | 535 | (757) |
| Cash Basis | ||
| Ontario One-Time Spending | 1,290 | - |
| Federal One-Time Funding | 1,323 | 952 |
| Difference | (33) | (952) |
Source: Ontario Ministry of Finance
Note: On a PSAB basis, the one-time CHST Supplements are reported according to the
intended federal draw-down schedules outlined in the 1999 and 2000 federal budgets. The
one-time CHST Supplements, on a cash basis, are reported according to when Ontario
withdraws funds from the CHST Trust Account.
Increases to Ontario's Base Health Spending Vastly Exceed Increases to Base Federal Funding
A government's real commitment to a sustainable health care system is measured by its sustained contribution. Thus, the appropriate comparison is base, or ongoing, federal funding with base Provincial health care spending.
The following table shows that increases in Ontario total base health care spending exceed increases in federal base CHST funding.
| Changes since 1998-99 | ||
|---|---|---|
| 1999-00 | 2000-01 | |
| Ontario Total Base Health Spending Increases | 1,957 | 3,296 |
| Federal Base Funding Increases | 190 | 552 |
| Difference | 1,767 | 2,744 |
Source: Ontario Ministry of Finance
Note: Increases in federal base CHST transfers and Ontario total base health spending are
equivalent on a cash basis and PSAB basis.
In 2000-01, Ontario will increase its total base health care spending by $3.3 billion from 1998-99 levels. Over those two years, federal base CHST funding will increase by only $552 million.
- The $552 million increase in federal base CHST funding includes the impact of the
change in the CHST allocation formula, of $173 million, and Ontario's share of the
$1.0 billion increase in base CHST cash announced in the 1999 federal budget, of
$379 million.
The result is that Ontario's total base spending increases will be $2.7 billion greater than the increases in base CHST funding.
Between 1999-00 and 2000-01, Ontario has increased total base health care spending by $1.3 billion. This compares to a year-over-year increase in base CHST cash transfers of only $362 million.
Over time, Ontario total base health spending will continue to grow to meet the health care needs of Ontarians.
| Actual 1994-95 |
Actual 1998-99* |
Interim 1999-00** |
Plan 2000-01 |
|
|---|---|---|---|---|
| Base Operating | 17,599 | 18,868 | 20,600 | 21,988 |
| Capital Expenditures | 249 | 187 | 340 | 291 |
| Total | 17,848 | 19,055 | 20,940 | 22,279 |
| Less: Local Services Realignment (LSR) Land Ambulance Reimbursements |
0 | (166) | (94) | (94) |
| Total Base Excluding LSR Ambulance Reimbursements |
17,848 | 18,889 | 20,846 | 22,185 |
| Increase in Base Operating since 1994-95 | 3,001 | 4,389 | ||
| Increase in Base Total since 1998-99 | 1,957 | 3,296 |
* 1998-99 excludes $50 million in health care restructuring and $639 million in
major one-time operating costs including $120 million start-up for Canadian Blood Services,
$200 million to compensate persons who contracted Hepatitis C through the blood system prior
to 1986 or after 1990, $229 million one-time assistance to hospitals and $90 million in Ministry
and Broader Public Sector Year 2000 computer system changes.
** 1999-00 Interim excludes $1,290 million in major one-time costs including one-time operating costs
of $175 million to hospitals for program and service restructuring, $111 million for Ministry and
Broader Public Sector Year 2000 computer system changes; and major one-time capital costs of
$1,004 million for HSRC capital grants.
Source: Ontario Ministry of Finance.
HEALTH CARE FUNDING COMMITMENTS
Ontario is committed to the principles of the Canada Health Act. The Government is upholding those principles by increasing funding and restructuring the health care system. On the other hand, lack of adequate federal funding threatens those principles. Therefore, it is crucial that, at the very least, the federal government act now to fully restore funding for health care through the CHST. The CHST, as a block grant, provides the flexibility that each province requires to meet the diverse needs of its residents in the most efficient manner.
Ontario, along with other provinces, has called on the federal government to restore immediately and fully the CHST funding it cut and to provide an appropriate escalator to ensure adequate and sustainable funding in the future. This would signal a new spirit of cooperation and would facilitate the important health care reforms already under way.
In the future, Ontario expects the federal government to become true partners in the health care system for the benefit of Ontarians and all Canadians.
References:
- In 1996-97, the federal government replaced the Canada Assistance Plan and Established Programs
Financing with the CHST, a block fund to support health care and other social programs. At the same
time, the federal government cut funding to the new transfer significantly.
- The 2000 federal budget did not provide an increase in base CHST cash funding. It announced a
one-time, $2.5 billion cash Supplement to be drawn down over four years: $1 billion in 2000-01; and
$500 million for the next three years. The health care needs of Ontarians are not temporary.
Governments cannot plan health care spending on temporary funding that will expire
in four years.
- Under the 1977 tax point transfer, the federal government reduced its PIT and CIT rates, while
provincial governments raised their personal income taxes by the same amount.
- Tom Kent, "Medicare, How to Keep It and Improve It, Especially for Children,"
Caledon Institute of Social Policy, 1997.
- Robin Boadway, "The Implications of the Budget for Fiscal Federalism," John
Deutsch Institute for the Study of Economic Policy, 1995.
- Paul Boothe, "Federal Budgeting in the 1990s: The End of Fiscal Federalism," John
Deutsch Institute for the Study of Economic Policy, 1992.