Ottawa should be less involved in health care—not split costs 50/50

Recently, the premiers of Prince Edward Island, New Brunswick and Manitoba called for the federal government to return to sharing the costs of health care 50/50 with the provinces—a model the federal government abandoned in 1977. This is a bad idea for two reasons.

First, Ottawa already faces a precarious fiscal situation, and increasing health-care spending will only make things worse. And crucially, more money won’t fix Canada’s health-care woes.

All too often discussions around Canada’s health-care failings suggest the problem is a lack of funding. And if it’s a discussion among premiers, then the problem is a lack of federal funding. But when confronted with the current state of affairs in Canada, calls for a 50/50 split with Ottawa are far from a realistic or adequate solution.

In fiscal year 2025/26, the federal government provided an expected $54.7 billion to provinces through the Canada Health Transfer (CHT)—Ottawa’s primary method of supporting provincial health-care programs—which represented approximately 21 per cent of the $261.1 billion that provinces/territories spent on health care that year. As such, if Ottawa were to split health-care costs equally with the provinces, it would need to more than double current spending (or more if the provinces decided to maintain their current spending or even increase it further knowing Ottawa will match it).

However, even at the current levels of health-care transfers, the federal government is already spending outside its means. In 2025/26, Ottawa ran an estimated $66.9 billion budget deficit, and expects to run five more deficits averaging $59.1 billion per year from 2026/27 to 2030/31. All of this borrowing is expected to help grow total federal debt by an estimated $864.4 billion by 2030/31 (compared to 2024/25 levels).

The federal government has three fundamental options to raise health-care transfers to provinces: raise taxes, reduce other areas of spending, borrow the money, or some combination of the three. Again, the CHT currently represents nearly 10 per cent of total federal spending, so more than doubling federal health-care spending to reach a 50/50 split is no small matter. And even if Ottawa took the dramatic steps needed to do so—all of which would involve trade-offs and impose real costs on Canadians—more money is not the solution.

Canada already maintains one of the developed world’s most expensive universal health-care systems. Yet Canadians endure some of the worst access to health care in the developed world, including bottom-ranking availability of physicians, medical technologies and hospital beds alongside some of the longest wait lists for health care among our peer universal countries. This disconnect between spending and access is not new but has persisted since at least the turn of the century.

Rather than continually hounding Ottawa for more money, premiers should look to other more successful universal health-care systems for solutions.

For example, Australia, Germany, the Netherlands and Switzerland all deliver timelier and more accessible universal health care while spending a similar or less amount on health care than Canada. How? They employ different policy approaches from the government-centric approach in Canada. Consider a couple of key differences.

These countries take advantage of the private sector’s efficiency and patient focus in the delivery of hospital and surgical care. In fact, 39 per cent of Australian hospitals, 43 per cent of German hospitals and 51 per cent of Swiss hospitals are private. In Canada, the hospital system is a government monopoly.

Moreover, hospitals in these countries are paid on a per-patient-treated basis, which encourages hospitals to treat more patients and in a more timely fashion. Canadian hospitals generally receive an annual budget from the government to care for patients, which makes each patient a cost for the hospital—offering little incentive to treat more patients or treat them more rapidly. Alberta and Quebec are notable exceptions, as both provinces are moving towards the more successful patient-focused approach.

And patients in these countries can access private alternatives (often from doctors who also work in the government system) when the government system is unwilling or unable to meet their needs.

So what’s stopping premiers from borrowing these kinds of reforms (and others)?

One major barrier is Ottawa itself. The various rules and conditions the federal government imposes on provinces through the Canada Health Act, which must be met for provinces to receive the full amount of health-care funding from Ottawa, either discourage or disallow some of these more successful approaches to universal health care.

If provinces become even more dependent on federal funding, that would only further discourage the policy reforms required to improve the Canadian health care experience.

Premiers calling for more federal funding for health care should take a good hard look at the facts. Ottawa’s finances are already precarious and ill-suited to accommodate large amounts of new spending. And the health-care system is not suffering from a lack of money, but rather delivers remarkably poor access for a high price tag.

The solution to this problem is less federal involvement, so provinces have the freedom and incentives to reform health care and finally deliver the quality and availability of care Canadians have long paid for and deserve.