Now along comes Tom Kent, the Pearson government's chief adviser on social policy and the architect of the system of shared-cost social programs that has bedevilled federal-provincial relations ever since, to lend the provinces his unlikely support. In an acerbic commentary written for the Caledon Institute of Social Policy, the godfather of fiscal federalism sounds many of the premiers' favourite themes. Rather than divert surplus federal funds into new programs to pay for drugs and home care, he writes, Ottawa should simply put back the money it has taken out of the CHST, some $7- billion since 1993-94.

If nothing else, Kent argues, it would restore federal legitimacy as medicare's overseer. Having lured the provinces into setting up medicare and other social programs with the promise that it would share half the costs with them, he complains, the federal government then "let them down," first with the Trudeau government's elimination of the 50-50 formula for health and higher education in favour of block grants, then with the cuts imposed by later governments. The CHST now amounts to barely 15 per cent of provincial spending on the programs it covers.

In the ensuing fiscal crunch, the provinces have Kent's every sympathy. Not only were they left to cope with the political costs of closing hospitals, he writes, but the federal government persists in the illusion that it can continue to set policy over medicare, as before, by withholding funds from erring provinces. We are provided with a feeling portait of provincial health ministers, desperately short of cash, "grind[ing] their teeth in frustration as the feds grandly hint at pharmacare." The result, he predicts, will be further erosion of medicare, until and unless the federal government steps in with more money.

It all sounds perfectly frightful -- if you accept Kent's highly selective look at history. It is true that the federal government originally promised the provinces 50-50 funding. It is also true that it was a disaster. In effect, Ottawa had surrendered control of a large section of its budget to another level of government, for whom the delights of spending 50 cent dollars proved irresistible. From 1967 through 1975, federal transfers to provincial and local governments increased by 10.8 per cent per year, after inflation.

And while it may be true the provinces took most of the blame for closing hospitals in the 1990s, they also took most of the credit for opening them in earlier decades.

The only way the 50-50 regime could have been sustained would have been by involving the federal government much more closely in the operation of social programs -- far closer than was actually the case. For all the while Ottawa has been drawing down the size of its transfers, it has also been easing the conditions attached to them. In any event, if the provinces have been closing hospitals, it has next to nothing to do with federal cuts. The $7- billion cut represents a sizeable bite out of federal transfers -- but it is little more than 3 per cent of total provincial revenues.

Indeed, it is misleading even to identify federal transfers as "social," per se.

The provinces are entitled to spend the money on anything they like: it all goes into general revenues. How much of their budgets they choose to devote to medicare, then, is entirely a provincial decision. It is hard to square the provinces' stories of a federally-induced shortage of funds for medicare with the reality that most are running surpluses, and some are even cutting taxes.

And of course, the larger issue is that medicare is not short of funds, period.

Canada spends vastly more per capita on health than any nation on earth, next to the United States. That doesn't mean there aren't shortages at particular points in the system, but these expose the need for rationalization of existing spending, not an overall increase. Closing hospitals is, in fact, an integral part of this process, in which resources are shifted away from treating people once they are sick in favour of programs to prevent them from getting sick in the first place. But so is encouraging use of more cost- effective treatment, such as home care and pharmaceuticals -- as the feds propose.

It may well have been the federal cuts that finally forced the provinces to act. But if so, that's a good thing, not a bad thing. Putting more federal money back into the province's hands would likely buy the feds very little influence, and zero credit. Worse, it would encourage the provinces to go back to their old, wasteful but politically popular ways. Better for Ottawa to spend the money directly, and nudge the system towards more cost-effective methods from that end.