Canada Health Transfer (CHT)

The Canada Health Transfer (CHT) is how the federal government provides health care funding to the provinces and territories as outlined in the Canada Health Act. It is the largest federal transfer to the provinces and territories.

If the provinces fulfill the Canada Health Act’s:

• Criteria
  • Public Administration
  • Comprehensiveness
  • Universality
  • Portability
  • Accessibility
• Conditions
  • Information
  • Recognition

And ensure there is no extra-billing and user charges for insured health services, they are entitled to their full Canada Health Transfer.

Health Canada produces an Annual Report on the extent to which provincial and territorial health care insurance plans have satisfied the criteria and the conditions for payment under the Act.

Health and social transfers funding 1993-2021

All provinces and territories receive an equal per capita basis share of the CHT.

More: Federal transfers to provinces and territories – Government of Canada

Federal/provincial healthcare funding split history

The provincial government is primarily responsible for funding and delivery healthcare (78% of all funding), while the federal government provides the rest (22%) via the Canada Health Transfer.

While this may look like a significant reduction in federal support of healthcare, it doesn’t take into account the tax point transfers given to provinces and territories in 1977. The federal government decreased the federal income tax rate to allow for an equivalent increase in provincial income tax rates, thereby giving the provinces “tax points.”

They were 13.5% of federal personal income tax and 1% of federal corporate income tax, valued at $25 billion in 2022-23.

The federal government argues that these tax transfers, along with funding for things like mental health services, home care and long-term care, bring their share up to as much as 38.5%.

Do CHT funds have to be spent on healthcare?

The funds are provided to the provinces for the purposes of:

(a) maintaining the national criteria and conditions in the Canada Health Act, including those respecting public administration, comprehensiveness, universality, portability and accessibility, and the provisions relating to extra-billing and user charges; and

(b) contributing to providing the best possible health care system for Canadians and to making information about the health care system available to Canadians.

Federal-Provincial Fiscal Arrangements Act, Canada Health Transfer, Canada Social Transfer and Wait Times Reduction Transfer

However, despite being the largest major transfer of federal funds to provinces and territories, much of the money from the CHT does not necessarily have to be spent on health care. Of the $46.2B in new funding announced in 2023, only 58% has strings attached, the rest can be spent on whatever the provinces want.

A position paper jointly authored by all of the provinces and territories in 2021 suggests that the provinces’ position coming into the negotiations was a plan to spend zero dollars of the increased federal transfers on higher health care spending. They actually wouldn’t change any operational funding in any department if they got extra federal funding. According to the model they outlined, the provinces and territories would use the extra federal health care money to pay down their deficits—although all of the big provinces now have cumulative surpluses projected for the future.

David Macdonald, The Monitor on Increasing The Canada Health Transfer will Help Make Provinces and Territories More Financially
Sustainable Over The Long Term (2021)

It’s a dirty little secret that the Canada health transfer, the money that goes from the federal government to the provinces, doesn’t actually have to be spent on health care. The money flows from Ottawa into the general revenues of the provinces and territories, and they can spend the money as they like. It’s a sad day when the federal budget that just came out promises to—and I’m quoting here—“Ensure that new federal investments are used in addition to provincial spending, and that provinces and territories do not divert away health care funding of their own”. How can the federal government ensure transparency that the money is actually going to be used for health care and not be diverted away, as the budget says?

The Canadian Health Coalition is very concerned that billions will be spent on publicly insured services in private, for-profit clinics—putting Canadians at risk of user fees and extra billing—and be wasted on profit-taking by inefficient private providers. Health Minister Duclos’ own annual report on the Canada Health Act cited eight provinces violating the act. They withheld $82 million with respect to patient charges levied during 2020 and 2021 for medically necessary services that should be accessible to patients at no cost. We know that’s probably just the tip of the iceberg.

Furthermore, data uncovered by the public interest group in Quebec called IRIS revealed that the cost of a carpal tunnel surgery averaged $908 in the private sector compared to $495 in the public sector. The list goes on. A short colonoscopy costs $739 in the private sector compared to $290 in a public institution. This is our health care money, yet the federal government has been silent on this matter. In fact, remarks by the Prime Minister about Ontario’s privatization plans reported widely in the media were very worrisome.

Steven Staples, National Directory of Policy and Advocacy, Canadian Health Coalition to the Finance Committee

More money alone won’t fix it: Steven Lewis

Everyone agrees something needs to be improved. The question is whether the money is going to improve it a lot and there are some historical reasons to suggest money alone won’t.

Ottawa added “enormous amounts of money” to federal health transfers between 2000 and 2004.

We still find ourselves with five to six million Canadians without a medical home or a regular source of primary care.

If you don’t invest it in change as opposed to temporarily patching the crack, we will find ourselves in the same boat five years from now.

Is this primarily a money or capacity problem, or are we doing something fundamentally wrong with how we organize health care?

Steven Lewis, health policy analyst and adjunct professor at Simon Fraser University to CBC

Timeline

March 19, 2024 – Federal government and Quebec agree in principle to $900M CHT increase

There will be no accountability or conditions imposed on Quebec on the use of the funding, which had been a sticking point in negotiations.

February 9, 2024 – Federal government and Ontario come to 3-year $3.1B primary care agreement

• Add hundreds of new family physicians and nurse practitioners, as well as thousands of new nurses and personal support workers
• Enrollment in health care education programs will be expanded by over 700 spots – including over 70 in Northern Ontario
• Make it easier for Canadian and internationally trained doctors and health professionals to practise in Ontario
• Add five new Youth Wellness Hubs to the 22 that have opened since 2020

February 23, 2023 – Governments of Canada and Ontario reach bilateral agreement in principle for $8.413B over 10 years for the 4 shared healthcare priorities outlined in the Common Statement of Principles on Shared Health Priorities:

• expanding access to family health services, including in rural and remote areas;
• supporting our health workers and reducing backlogs;
• improving access to quality mental health and substance use services; and
• modernizing the health care system with standardized health data and digital tools.

February 7, 2023 – Federal government announced a $46.2B increase in the Canada Health Transfer over the next 10 years. $25B of which was allocated to making individual tailored bilateral agreements with the provinces and territories.

It included:

• A one-time, immediate and unconditional $2-billion top-up to the Canada Health Transfer (CHT) to address the pressure on emergency and operating rooms, as well as pediatric hospitals
• 10-year federal funding commitment via the Canada Health Transfer, including a 5% annual increase from 2023-24 to 2027-28
• Bilateral agreements with each province or territory with a 10-year funding commitment of $25 billion.

The federal government was already planning an increase of $149.9 billion in federal transfers over the next decade. Including the latest deal, this would result in a total increase of $196.1 billion.

In order to secure the increased CHT funding outlined in the agreement, provinces and territories must commit to: 

• Improving health care information collection and reporting; 
• developing and using comparable performance indicators via the Canadian Institute for Health Information (CIHI); and 
• adopting common standards and policies on health data.  

Statistics

• More than 70% of health care spending is publicly funded through general tax revenues.
• Canada spends over $300 billion annually on health care.
• 13% of Canada’s GDP, the second highest among OECD countries.
• 30-40% of provincial and territorial budgets is spent on healthcare.
• In 2020-21, Ontario was 9th out of 10 provinces in provincial health-care spending per person.

Other federal healthcare investments

• $1.7 billion over five years to support hourly wage increases for personal support workers (PSWs) and related professionals and to recruit and retain healthcare workers; 
• $150 million over five years for the Territorial Health Investment Fund to strengthen service delivery; and  
• $2 billion over 10 years for Indigenous health. 

Sources

• Working Together Bilateral Agreements – Government of Canada
• Canada Health Act Annual Reports – Health Canada
• Taking the pulse: A snapshot of Canadian health care – CIHI (2023)
• History of Health and Social Transfers – Government of Canada
• Canada Health Act
• Canada’s Healthcare System
• Canada Health Transfer – Wikipedia