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Home , John Turner, Marc Lalonde

POLITICAL PROCESS certain expensive treatment facil¬ THE ities, such as general hospitals, while less expensive modalities of treat¬ ment like nursing homes may not qualify. Thus there is a built-in incentive to escalate some costs. The deal was first offered at a conference in Jan. 19. This month's renewal of the offer had minor changes which would provide slightly more money. The major new feature was an offer from Mr. Turner to provide the financing by withdrawing from Health care reorganization becomes important tax fields, leaving the provinces to move in and collect vehicle for federal-provincial game most of the finances themselves. He offered to withdraw from all This month's prompt rejection by scarcely at all with the actual pro¬ taxes on alcohol and tobacco by provincial government ministers of posal. Jan. 1975 and from six points of a new federal proposal for financ¬ Health Minister personal income tax by Jan. 1977. ing health costs opens the prospect and Finance Minister By 1979 these concessions would that reform in the health care sys¬ offered a new deal under which be providing most of the federal tem may be delayed while politi¬ present medical and hospital shared- contribution toward medicare but cians wrangle over the perennial cost grants would be replaced by the Canadian government would dispute of whose hand should be a single, per-capita grant. This continue to provide cash grants to in the taxpayer's pocket. would be linked to the rise in Gross make up the total of the proposed The whole issue has been put National Product. per-capita amounts. back to the conference of First This, the ministers argued, would Estimates are that for the 1978- Ministers at the end of this month. enable provinces to operate their 79 fiscal year, Saskatchewan, for Canadian government ministers health care services in the most instance, would receive $144 mil¬ and officials had been confident flexible and economical way they lion as a federal contribution to¬ that their latest proposal would be could find. At present, for instance, ward health care. Of this, $54 mil¬ acceptable to the provinces. In fact, provinces can get federal money to lion would come from the six points the argument that developed dealt pay half the operating cost for of income tax, $73 million is the

Lalonde offer aims at more flexibility in health services The latest offer made by the Canadian government to For the first percentage point of difference, the extra the provinces for sharing the costs of health care was federal contribution will be 0.75% of the previous contained in a letter from the Minister of National year's contribution. For the second percentage point Health and Welfare, Marc Lalonde, dated April 18, it will be 0.50% and for the third percentage point 1973* The offer is not dependent on the manner in it will be 0.25%. This is described as a risk-sharing which the funds are transferred. That is, the provinces payment Any risk-sharing payment made by the are free to accept the proposal independently of federal government would be repeated in following whether they accept the paraliel proposal that certain years as follows: 75% of it the next year, 50% of it tax fields should be vacated by the Canadian govern¬ the following year and 25% of it the third year. ment and occupied instead by the provinces. . If a province changes from a needs test to an insured or universal coverage basis for any health or Mr. Lalonde a proposed three-part plan; health-related service (nursing homes are a prime . Per capita payments to provinces for medical care example) the Canadian government will guarantee no programs should be the same as in 1972/73, adjusted loss will result in respect of payments under the for growth in per capita Gross National Product. Thus, Canada Assistance Act. if the following year per capita GNP increased by 6%, In addition to these three points, Mr. Lalonde re¬ payments would be up by 6%; in addition to this, peated the previous offer to aDocate $640 million in there would be an extra 1% in 1973/74; an extra "thrust" funds over five years to finance reorganiza¬ 0.8% in 1974/75, 0.6% in 1975/76; 0.4% in 1976/ tion of health care services. 0.2% in 1977/78. 77; Estimated federal payments, for 1974/75 to the . In any one year that the percentage of provincial provinces under the Lalonde proposals would total increase in spending on health care exceeds the per¬ $2.5 billion, plus "thrust funds" and risk-sharing pay¬ centage of increase in federal contribution, the Can¬ ment This represents approximately half of all public adian government will make an additional payment spending in Canada on the health care delivery systems.

C.M.A. JOURNAL/MAY 19, 1973/VOL. 108 1311 value of alcohol and tobacco tax So why did they reject it so The federal government could, concessions and there would be a promptly? for instance, proceed with its new direct payment of $27 million. Thus At the same time as the Turner- health financing plan by signing direct payments would fall to 19% Lalonde proposal was being put to agreements with those provinces of what Mr. Turner and Mr. La¬ the provinces, in another room of that are willing to do so. The others londe chose to call the federal con¬ the same building Secretary of State could proceed on the present basis. tribution (it could be argued that was offering an un¬ Asked by CMAJ if the govern¬ if Saskatchewan is raising extra related plan to support post-sec¬ ment would be prepared to negotiate taxes of $54 plus $73 million this ondary education. Mr. Turner later with individual provinces, Mr. Tur¬ is hardly a federal contribution). explained to CMAJ that the com¬ ner said yes, if enough of them On the same basis, direct pay¬ bined proposals offered the equiva¬ showed interest. ments would be 24% for , lent of 20.6 tax points (he stressed "This couldn't apply to the tax 19% for Manitoba, 18% for Nova this actually was on an "equalized room proposals," he explained. Scotia, 16% for P.E.I. and New basis", meaning that it wasn't just "That would be subject to accept¬ Brunswick, 15% for and simply an offer to move out; there ance of all provinces." But the gov¬ Newfoundland, 9% for Ontario and would be arrangements to siphon ernment would be willing to ne¬ 3% for . some money from the rich to the gotiate the Lalonde proposals with In addition the Turner-Lalonde poor provinces). individual provinces and pay cash. proposals offered $640 million in The provincial ministers took one Mr. Turner also stressed that the "thrust funds'* to support research look at the combination and decided government has no intention of and training in more economical that 20.6 points wasn't enough. lumping together the education and health care methods, an improved They repeated the demand for 28 health proposals. Either can be ac¬ formula to share the costs of un¬ points made earlier by Quebec. cepted independently of the other. expected increases in provincial "This would give them $10 bil¬ Asked if the government would plans, and a guarantee against loss lion over the cost of the programs come to the First Ministers' con¬ of federal contributions under the we're talking about," Mr. Turner ference with a higher cash offer, Canada Assistance Plan where such said. Mr. Lalonde replied that the barrel items as nursing homes come under "There's no way we're going to had pretty well been scraped. Al¬ medicare. start from scratch again," said Mr. though conceding that the govern¬ Mr. Turner told CMAJ that with Lalonde. ment wouldn't rule out some con- growth in the economy, the revenue So the problem goes to the con¬ cession for the sake of getting an from the extra tax fields would ference of the premiers and Mr. agreement, he said it had gone about overtake the federal share of health Trudeau for solution. Meantime Mr. as far as it could. care costs, leaving the provinces Turner threw out a few hints for with a surplus for their own use. the provinces to think about. J. G.

Provinces want funds unconditionally to run own affairs Canada's two most powerful pro¬ hospital programs are subject to Canadian government would then vincial treasurers, John White of audit by the Canadian government. find the leverage to pressure the Ontario and Medicare payments are subject to province into following federal of Quebec, both called on the Can¬ the four principles first enunciated guidelines remains unclear. at con¬ the late minister Lester adian government the by prime However Mr. Garneau also to move out of medicare ference Pearson portability, universal¬ raised the issue of continued and turn over "tax room" and enough ity, comprehensiveness public of health care costs. Mr. to enable the to run administration. Health growth provinces Although Lalonde based his case on the own Minister Lalonde's their programs. opening speech proposition that growth in Gross In January Mr. Garneau de- to the aborted conference this National manded 28 of income tax. month mentioned these Product will be faster points points, than in health care costs. This month he his de¬ there would seem some doubt growth repeated tied to GNP . Thus, mand but a little more softly. about how the central government payments could them after would be at least as adequate as Mr. White, although endorsing police turning the shared-cost this demand, conceded that On¬ over tax points. present arrange¬ tario might be willing to settle for For instance, by 1979 direct fed¬ ments. 22 or 23. eral payments to British Columbia But both Treasurer Garneau The issue, Mr. White told re- under the Turner-Lalonde propos¬ and his Quebec colleague, Social porters, was of allowing provinces al would amount to only $10 mil¬ Affairs Minister Claude Caston¬ to collect their own taxes and lion. There is even the possibility guay, told reporters they could nm their own programs and be that growth of the economy would not accept this. "The increase in accountable for them to the citizens increase the value of the tax points our health costs simply bears no of their provinces. so much that there would be no relation to the increase in GNP," At present the medicare and direct payment at all. How the said Mr. Castonguay.

1312 C.M.A. JOURNAL/MAY 19, 1973/VOL. 108