Federal Health Funding Outpaces Provincial Spending Over Two Decades

An extensive analysis of health funding over the past 20 years reveals that federal health transfers have increased at a rate surpassing that of provincial budgets, contradicting claims by provincial premiers of lagging federal contributions.
In 2023, federal health transfers reached $47.1 billion, representing a significant 212 percent increase from $15.1 billion in 2005. Comparatively, total healthcare spending by all 10 provinces escalated from $86.2 billion to $221.9 billion during the same period, marking a 158 percent increase. These findings, derived from data collected by The Canadian Press and Humber College StoryLab, challenge the prevailing narrative of insufficient federal health funding.
This comprehensive review of healthcare financing began tracking annual expenditures following the 2004 federal-provincial health accord initiated by former Liberal Prime Minister Paul Martin. Since then, the analysis highlights a fiscal trajectory that has seen federal contributions not only keeping pace but often exceeding provincial spending increases.
The debate over health funding has been particularly intense in recent years, exacerbated by the healthcare system’s strain during the COVID-19 pandemic. This period saw emergency room closures and significant service backlogs due to a shortage of health workers, prompting provincial leaders to call for increased federal funding. Former Manitoba Premier Heather Stefanson noted at the end of 2022 that although health spending was once evenly split, the federal share had purportedly dwindled over time.
This claim, however, is refuted by the data. Since the 2004 accord, federal transfers have consistently grown at a marginally faster rate than provincial health spending. For instance, in 2005-06 alone, federal health transfers surged by 39 percent, while provincial health expenditure grew by just 6 percent. This resulted in the federal share of total health spending increasing to 20.7 percent from 17.5 percent.
The landscape of health funding has undergone multiple transformations since the initial vision in 1959, which imagined equal cost-sharing between Ottawa and the provincial governments, long before most provinces had established medicare systems. Subsequent shifts in the 1970s and later adjustments have continually redefined this financial relationship.
During the peak of the COVID-19 crisis, federal health spending notably increased due to specific pandemic-related transfers. However, these additional funds ceased in the 2022-23 fiscal year, stabilizing the federal contribution to provincial spending at just over 21 percent.
Health Minister Mark Holland, in a recent interview, emphasized the necessity of transparency in health financing. Holland advocated for clearer communication about health expenditures to move discussions beyond dollar figures to more substantial issues of healthcare delivery and improvement. “I think anything that provides transparency and allows us to get to talking about the material, consequential things that we have to be doing, as opposed to debating over dollar values, is helpful,” Holland stated.
Despite these discussions, recent health agreements have urged provinces to enhance their collection of national health data, although they do not specifically mandate tracking the nuances of federal versus provincial contributions.
One clear trend is the growing per capita health spending in Canada, which has outpaced population growth sixfold. In 2023, health transfers amounted to $1,115 per person, up from $427 in 2005, with these figures not adjusted for inflation. Among the provinces, there is a stark disparity in per capita spending growth, with Newfoundland’s budget increasing 19 times faster than its population growth, while spending in Nova Scotia and Alberta grew less than twice as fast.
This data not only informs the ongoing debate over health funding but also underscores the complexities of managing a national health care system amidst varying provincial needs and fiscal capacities. As Chestermere residents and Canadians at large consider the future of their healthcare, understanding the dynamics of federal and provincial funding becomes crucial in shaping informed discussions and policies.