Canada?s federal government sends cash transfers to the provinces to help pay for health care. Under the current arrangement regarding cash transfers, the federal government has committed to increasing its cash transfers for health care by 6 percent annually in addition to the provision of targeted transfers, such as those for health reform and waiting list reduction. Recently, the federal government announced that it would continue the 6 per cent annual increase to 2016-17, despite expecting to run planned budget deficits (spending exceeding revenues) until 2014-15. After that, it will change to a rate of increase matching either the nominal rate of economic growth or 3 percent, whichever is greater.

This continued commitment to growing federal cash transfers to the provinces raises the important question of whether or not marked increases in such transfers have previously been effective at improving Canada?s health care system. To answer this question, this Alert examines the evidence. The first section outlines federal transfers to the provinces for health. The second examines a series of health care performance indicators in 1997 and 2004, and compares them with current performance to determine if any changes have occurred. The final section provides recommendations.

Assistance Program (CAP), which helped finance social assistance programs in the provinces, and replaced them with the Canada Health and Social Transfer (CHST). The CHST was a block grant intended to help the provinces pay for health care, post-secondary education, and social assistance. Replacing EPF and CAP with CHST ensured that the provinces continued to receive financial resources from Ottawa, but gave the provinces greater flexibility over their spending priorities. In 2004-05, the CHST was split into two separate transfers: the Canada Health Transfer (CHT) and the Canada Social Transfer (CST). The former is dedicated to health care while the latter helps fund both post-secondary education and social assistance.