Finance Minister Jim Flaherty announced new health spending investments totaling $178 billion over the next five years, which maintains the current spending increase of six per cent annually.
Flaherty also made the surprising move to lay out a spending plan that sketches out spending until 2024, which could avoid the type of political drama that played out during provincial-federal health accord discussions in 2004.
"We want to put the issue of funding behind us to allow us all to focus on the real issue -- how to improve the system so the provinces and territories can ensure timely access to health care when needed," Flaherty said after a meeting with provincial ministers.
But Flaherty tempered that announcement by saying the six-per-cent rise could be cut to match nominal GDP growth, which is about four per cent.
Still, under the current scheme, Ottawa's health spending would rise from $30 billion in 2013-14 to $38 billion five years later.
But with the current plan set to expire in two years, provincial health ministers said Flaherty simply laid it out as a fait accompli.
"It's no present at all," said Ontario Finance Minister Dwight Duncan. "It's a lump of coal."
Duncan added that he and other provincial ministers were shocked by Flaherty's unilateral approach to the spending, which lays out 12 years instead of the usual 10.
"He put the document in front of us and said this is how it's going to be."
That opinion was shared by Manitoba's Stan Struthers, who said that he did not "want to stand back quietly" and accept the deal.
"I'm open to any discussion on any angle in terms of the whole ball of wax of transfers -- equalization, health, social transfers. I'm open to speaking with the minister on any of that. We didn't have that today. This was very unilateral."
CTV's Ottawa Bureau Chief Robert Fife said the changes come as Canada confronts rising health costs which are widely seen as unsustainable.
"Former Bank of Canada governor David Dodge says the status quo simply isn't working anymore -- we need fundamental reform of how Medicare is delivered to Canadians. And Canadians are going to have to pay more whether in the form of higher taxes or user fees or perhaps through health savings plans."
In his year-end interview with CTV News Anchor and Chief Editor Lisa LaFlamme, Prime Minister Stephen Harper said that Canadians are going to have to make difficult choices.
"We all understand that the rate of health care system can't be sustained and will have to be tackled, so that we keep a system that Canadians value, Canadians depend on, but, can manage in a way that is affordable and will continue to be available for future generations."
Earlier, Flaherty said tying the increases to economic growth is the "best predictor" of government revenues.
"We have to be realistic," Flaherty told reporters Sunday night, ahead of Monday's meeting. "You can't have a fiscal plan that takes us in the direction of, quite frankly, some of the countries in southern Europe that have gotten into a lot of trouble."
Despite the potential for shrinking health spending, Flaherty stressed that there would be a "floor" that makes certain spending won't dip below three per cent.
However, B.C. Finance Minister Kevin Falcon said he was pleased with the plan, noting "from B.C.'s perspective, we think certainty is good thing."
But federal Liberal Leader Bob Rae said tying the federal government's contribution to health care costs to economic growth makes no sense. He said an aging population, new technologies and a demand for higher levels of service are driving increases in cost -- not the economy.
Atlantic premiers have also criticized the idea of tying health transfers to growth, saying that would leave them with half of what they currently receive.
Officials from four provinces told The Canadian Press that they are united in insisting the new transfer agreement should continue with the current six-per-cent escalator.
With reports from The Canadian Press
