INSIGHTS: Federal Budget 2019

A Budget For… Everyone and Everything?

Investing in the Middle Class

On the surface Budget 2019 seeks to reaffirm the Liberal’s narrative of being “defenders of middle-class Canadians” as they head closer to a federal election where that narrative may well be called into question. Below the surface, the Budget is an attempt to shore up support among key demographics (some of which have taken a hit in light of the SNC-Lavalin scandal), draw battle lines on certain issues, and address areas of recent criticism, especially where their priorities have been called into question. As a result, we have a Budget that attempts to speak to almost every single past Liberal voter.

The most high-profile pieces of the Budget speak directly to these goals. In addition to national pharmacare, these include, making home-ownership more affordable for first-time home buyers, job retraining through the creation of a new Canada Training Benefit, lowering interest rates on student loans, supports for low-income seniors, support for municipalities’ local infrastructure projects, increasing access to high speed internet, lowering energy costs, and advancing the reconciliation agenda with Indigenous Canadians. The budget offers no plan to return to surplus in the short term.

Health care is not left out of the mix, nor is it downplayed, demonstrating that the Liberals see this as another middle-class issue that they can champion ahead of the election.

Health Priorities

Positioned early in the Budget, pharmacare is the main health focus. This is inevitable given its more retail nature and its connection to what the Liberal’s believe to be a “middle-class issue”. Building on the release of the interim report on March 6, 2019, by the Advisory Council on the Implementation of National Pharmacare (read Santis’ analysis here), the Budget directly responds to the two key areas that were highlighted in that report: the establishment of a drug “super” agency and the creation of a national formulary. As a result, we have the creation of a “Canadian Drug Agency” that will be responsible for developing a comprehensive, evidence-based list of prescribed drugs that should be available to all Canadians. The Budget itself proposes to provide Health Canada with $35 million over the next four years to help make that happen.

Additional attention in the health sections is on rare diseases, with a staggering proposed investment of up to $1 billion over two years. Starting in 2022-23, with up to $500 million per year on-going, this funding will address the high cost of drugs for rare diseases and create a national strategy around it.

Moving Forward on Implementing National Pharmacare

While we will not see the final recommendations from the Advisory Council until later this Spring (likely May or June) and therefore do not yet know what Dr. Eric Hoskins and his council will recommend, there are some clear indications that a single-payer model is likely not going to be the path forward in the short term. Instead, the Budget sets up the initial structure for a gap-filling model and the foundations for a system that allows the government to substantially lower the cost high-priced medications.

Of note, no major up-front investment is being proposed, except for a meager $35 million to set up the agency. Secondly, most of the financial attention is pointed towards a “down the road” investment to address the high cost of drugs for rare diseases. With no commitment to begin spending on this second piece until 2022, you can bet that the Federal Government is providing themselves with some breathing room to implement a couple of key policies that are directly linked to decreasing drug costs and setting up the infrastructure for a centralized drug system. This includes the amalgamation of pan-Canadian health care organizations and strengthened regulations for the Patented Medicines Pricing Review Board (PMPRB).

For the former, direct mention is made of “building on the work of” the Canadian Agency for Drugs and Technologies in Health (CADTH) and the pan-Canadian Pharmaceutical Alliance (pCPA). These two agencies will likely be amalgamated and potentially collapsed into the new Canadian Drug Agency, potentially freeing up some necessary investment capital over the next few years. For the latter, a specific focus is drawn to the high cost of patented medicines in Canada. As a result, you can expect to see the Federal Government move to address these policies in future.

An Attempt to Make Health Care an Election Issue?

The Liberals also attempt to link many other areas of health care back to their narrative as “protectors of the middle class”. This demonstrates that they see health care as an election issue and one that they hope to run on in the lead up to October 21st. Below are the key areas that either show a middle-class focus on health, draw battle lines on certain issues or address areas of recent criticism.

Seniors Health: 

In addition to various seniors’ retirement benefits littered throughout the Budget, a key focus is placed on seniors’ health issues with the inclusion of $50 million over the next five years to the Public Health Agency of Canada for the implementation of a National Dementia Strategy.

Indigenous Health:

In addition to a significant focus on the reconciliation agenda, the Budget includes many key investments from improving access to assisted living, long-term care and mental health, to eliminating boil water advisories.

Expanding Health Tax Relief for Middle-Class Canadians:

This includes expanding health-related tax relief under the Goods and Services Tax/Harmonized Sales Tax (GST/HST) system by providing GST/HST relief for infertility treatments, multidisciplinary rehabilitation services (i.e. occupational and physiotherapy), and certain orthotic treatments, as well as a commitment to review the income tax treatment of fertility related medical expenses under the Medical Expense Tax Credit.

Mental Health and the Opioid Crisis:

This includes $25 million over five years for the development of a pan-Canadian suicide prevention service, and an additional $30.5 million over the next five years for treatment and harm reduction to address the opioid crisis.

Organ Donation and Transplantation:

This includes a commitment to provide Health Canada with $36.5 million over the next five years to develop a pan-Canadian data and performance system for organ donation and transplantation.

Canadians with Disabilities:

Key pieces here include multiple investments to address challenges for Canadians with visual impairments, as well as targeted investments for Canadians with Autism Spectrum Disorders.

Investments in Life Sciences:

Under the banner of “Support for Science, Research and Technology Organizations” the Budget outlines investments in a number of life sciences organizations including, Stem Cell Network, Brain Canada Foundation, Terry Fox Research Institute, Ovarian Cancer Canada and Genome Canada.

Prevention and Healthy Eating:

This is mainly focused on introducing a food policy for Canada and a recommitment to previously articulated priorities around healthy eating.

What Does This All Mean?

While linked to a broader middle-class narrative, many of these smaller health-related investments point to key demographics that the Liberals are trying to speak to ahead of the election (millennials, seniors and women), wedge issues and areas of contrast with certain adversarial provinces (for example some of the health care changes we’ve seen in Ontario including changes to the autism program) or areas of their agenda and identity that have recently been criticized or called into question (Indigenous Canadians and women).

Ultimately, this Budget is an attempt to use health care as an election issue and raise it as a significant piece of the Liberals broader middle-class agenda.

Read the complete Budget 2019 here and the Department of Finance’s press release here