Prime Minister Mark Carney has promised to rein in government spending, but has made clear that cuts to federal health-care transfers would not be part of that program. Conservative Leader Pierre Poilievre, who has pledged to honour Prime Minister Trudeau’s increased transfer commitments to the provinces, share’s Carney’s view.
The sad reality is that Canadians will lose with either leader. Ottawa’s outsized role in health care is part of the problem, and reducing that role by reforming cash transfers to the provinces is both part of the solution for health care and one way to help rein in federal overspending.
Consider for a moment the sad state of health care in Canada. In 2022 (the latest year of available data), among high-income universal health-care countries, Canada spent the fourth-highest share of its economy on health care (after adjusting for population age differences between countries). For that world-class level of spending, Canada ranked 28th in the availability of physicians, 25th in hospital beds, 27th in MRI scanners and 28th in CT scanners. And we ranked dead last on wait times for non-emergency surgeries.
This abysmal performance has been consistent since at least the early 2000s with Canada regularly posting top-ranked spending alongside bottom-ranked performance.
If our policymakers want to pave a path towards a high-performing universal health-care system, they should follow the examples of other universal health-care countries that provide more timely universal access to quality care such as Germany, Switzerland, Australia and the Netherlands. These countries all follow the same blueprint, which includes patient cost-sharing for physician and hospital services (with protections for vulnerable populations including low-income individuals), private competition in the delivery of universally accessible services where money follows patients to hospitals and surgical clinics, and allowing private purchases of care.
What’s preventing these reforms?
In a word, Ottawa. The large and expanding federal cash transfers to the provinces (some $55 billion in 2025/26), that both Carney and Poilievre will protect, prevent provinces from innovating and experimenting with more successful health-care policies. Why? Because to receive federal transfers, provinces must abide by the terms and conditions of the Canada Health Act (CHA), which prescribes often vaguely defined federal preferences for health policy and explicitly disallows certain reforms such as cost-sharing (where patients pay fees for some services, with protections for low-income people).
Canadians would be far better off if our next federal government learned from the welfare reforms of the 1990s, which reduced federal transfers and allowed provinces more flexibility with policymaking. The resulting period of provincial policy innovation reduced welfare dependency and government spending on social assistance (i.e. savings for taxpayers). Put simply, when Ottawa stepped back and allowed the provinces to vary policy to their unique circumstances, Canadians got improved outcomes for fewer dollars.
We need that same approach for health care today, and it begins with the federal government rethinking its role in provincial health-care policymaking. A good first step would be either holding cash transfers for health care constant (in nominal terms), reducing them, or eliminating them entirely with a concordant reduction in federal taxes. By reducing (or eliminating) the pool of cash connected to the strings of the CHA, provinces would have greater freedom to pursue policies they consider to be in the best interests of their residents without federal intervention. After more than 40 years, a cleanup of the CHA—removing ambiguity, and minimizing uncertainty and the potential for politically motivated interpretations—is also well overdue.
If our next federal government, of any stripe, wants Canadians to finally have access to the world-class health-care system we already pay for, it should allow the provinces to choose their own set of universal health-care policies. This begins by reducing the money Ottawa sends to the provinces, and cutting the strings attached.
Nadeem Esmail is a senior fellow at the Fraser Institute.