Federal-Provincial Healthcare Funding: A 10-Year Booster Shot

DBRS Morningstar published a commentary on the February 7, 2023, meeting of Canada's Premiers with the Prime Minister to further discussions on a new healthcare funding arrangement.

Key highlights include:
-- Incremental healthcare funding of $46.2 billion over 10 years helps to address a material fiscal pressure for provinces and territories.
-- Funding includes immediate increases to the Canada Health Transfer and additional funding for shared health priorities pending bilateral agreements.
-- While mildly credit positive for Canadian provinces, this is tempered by a slowing global growth outlook and persistently high inflation.

“While the new funding is unlikely to have an immediate impact on any credit ratings, it is nonetheless mildly credit positive for Canadian provinces, as this funding helps to address a material fiscal pressure in advance of upcoming spring budgets,” says Travis Shaw, Senior Vice President, DBRS Morningstar. “To the extent that increased healthcare funding allows provinces to improve their fiscal sustainability and minimize debt growth, it may contribute to some positive rating actions, although this is tempered by a slowing global growth outlook and persistently high inflation that is contributing to ongoing cost pressures.”