Cigars and coffee: How the deal came together

Back-channel talks helped end premiers’ impasse with Ottawa

The political stalemate over health-care spending in Canada began to ease one warm August day on a New Brunswick cottage porch 20 minutes north of Shediac.

It ended six months later in chilly downtown Ottawa, as the premiers weighed a 10-year, $46.2-billion proposal by Prime Minister Justin Trudeau that fell short of provincial demands but was still described as “a step in the right direction.”

In the long-running saga of federal-provincial tensions over healthcare spending — a political blame game that has spread over the past three decades — it finally signals a détente that could lead to better health services for Canadians.

This is the inside story of how the tense federal-provincial dynamic ebbed and flowed in the past six months to finally reach that turning point, based on conversations with federal and provincial officials, many of whom spoke confidentially in order to discuss private conversations.

In August, Premier Doug Ford drove to the Gulf of St. Lawrence at the invitation of federal Intergovernmental Affairs Minister Dominic LeBlanc to visit his family cottage in Grande-Digue.

Ford had been in New Brunswick to rally the Maritime premiers to get behind his push for introducing more private delivery of publicly funded health services, arguing that the provinces shared similar challenges.

“It’s the same common issues that we see across the country,” he said after meeting with fellow Progressive Conservative premiers of New Brunswick, Nova Scotia and Prince Edward Island.

“When someone walks into an emergency room, be it in Halifax or Moncton, anywhere across this country … they don’t want to be sitting there for 10 to 12 hours,” said Ford, who has been under fire over emergency room closures due to staffing shortages in Ontario.

But Ford’s most significant meeting was the sit-down on the porch with LeBlanc.

They puffed on cigars and discussed how four years of the premiers’ increasingly strident demands that Ottawa dramatically hike its share of health spending from 22 per cent to 35 per cent — with a minimum guaranteed five per cent increase every year — had gone nowhere.

And they talked about why and how that could possibly shift.

LeBlanc underscored that the Trudeau government was never going to meet the premiers’ demand for an additional $28 billion a year with no strings attached — a message he had conveyed before. But there was a shift in his tone.

From Ford’s perspective, it was the first time a top federal official had made clear that Ottawa didn’t want to run the health system, but genuinely wanted to understand how to bring provinces on board with reforms.

Post-pandemic, the health-care system was clearly straining and, as one federal official would later say, “Everyone needed a win.”

Ford, who had emerged as an unlikely Conservative ally of Trudeau’s Liberal government during the COVID-19 pandemic, made clear the conversation had to involve all of the premiers.

After being stranded by Air Canada flight delays for so long that he considered renting a car to drive the 1,500 kilometres back to Toronto, Ford flew home convinced Ottawa was willing to give the “flexibility” the provinces wanted to spend health-care dollars according to their respective needs.

Other back-channel conversations unfolded as well.

Newfoundland and Labrador Premier Andrew Furey, the only Liberal premier and a longtime friend of LeBlanc and Trudeau, talked to the other Atlantic premiers, to Ford, and to Saskatchewan’s Scott Moe over the fall and winter about Ottawa’s so-called conditions.

Furey insisted they were all not that far apart when it came to “shared priorities.” An orthopedic surgeon, he also brought a health professional’s perspective that many premiers and the federal officials welcomed.

However, in Alberta, where Danielle Smith had replaced Jason Kenney as premier, there were new political tensions emerging, as she positioned herself for a May election in direct opposition to the Trudeau government. Still, there was optimism last fall. Ahead of a critical November meeting of federal and provincial health ministers in Vancouver, Ottawa thought there might be an agreement on dedicating new federal cash to building a national data collection system and expanding the use of common health indicators — measures that show how well a health-care system is performing.

But as a federal cabinet minister later said privately, while provincial health ministers might have agreed, the premiers publicly stuck to a different line: they would not accept “strings attached” to federal health-care dollars.

The Vancouver meeting ended in shambles, to the dismay of the federal and Ontario governments, a senior Ford official later acknowledged.

The next month saw an even more troubling display of how deeply many premiers were dug in on the refusal to accept that Ottawa would impose “conditions.”

The 13 premiers and territorial leaders held a virtual news conference on Dec. 9 as they unveiled another letter demanding Trudeau meet with them. Their written salvo insisted they didn’t have to be accountable to the federal government, and that they were already implementing reforms.

“I am an accountant,” Quebec Premier François Legault said, adding that he understood the math and rejected federal government arguments that its share of healthcare spending already was about a third and not the 22 per cent that provinces claimed.

But by then, hospitals across Canada were being hit hard by a postpandemic wave of respiratory viruses, and the arrival of many more patients whose care had been delayed by COVID-19.

Emergency rooms were swamped. The dearth of family doctors in many provinces was clear. And the blowback from Canadians to what appeared to be whinging by premiers was swift. Public opinion began to shift as heartbreaking stories emerged.

Dr. Alika Lafontaine, president of the Canadian Medical Association, said it was a critical turning point for all political leaders: Canadians wanted change and results.

Federal and provincial officials agree privately with that assessment. One federal source said key federal-provincial conversations shifted almost as quickly.

On Dec. 22, Legault sat down in a Montreal café with Trudeau and privately indicated he would be “open” to collecting and sharing health data with Ottawa.

It was an important signal — albeit behind closed doors — from a premier who jealously guards Quebec’s right to spend money any way it sees fit in its areas of responsibility, and always rejects any notion of federal “strings” or “conditions” as interference.

Another key break in the national health logjam came last month.

To the surprise of some of his fellow premiers, Ford went public on Jan.11with his willingness to accept federal government strings tied to any new health-care funding.

“Everyone has to be accountable. I always say there’s one taxpayer, no matter if it’s municipal, federal or provincial. So that’s the least of our issues,” Ford said.

“Do we want a little bit of flexibility? Yeah — and I think they’re willing to do that.”

Behind the scenes, that triggered a new round of consultations. Gone was the talk of federal “conditions” and provinces’ demands, replaced by language that said Ottawa and provinces had “shared priorities.” And things began to move fast.

Legault publicly expressed his own “openness” to sharing data with Ottawa, shrugging off his prior objections.

Suddenly, an agreement on increased federal spending seemed within reach.

It would include $17 billion in additional funding for the Canada Health Transfer, and a guaranteed increase of five per cent annually for five years, along with $25 billion for family health care, mental health and addictions, hiring more doctors and nurses, eliminating surgical and diagnostic backlogs, and instituting national standardized health information and digital tools.

In total, there was $46.2 billion in new funding — an annual tally of around $4.6 billion, well below the $28 billion a year the premiers had demanded.

While the provincial leaders said it was a “disappointing” amount, there was no drama or histrionics.

Nobody stormed out. Nobody slammed Trudeau.

And Ford welcomed the new funding. He said it may not transform the health-care system, but called it a “down payment” and the start of an overdue conversation about how to better deliver health care.