Fiscal federalism, Medicare, and the Lalonde report

The development and afterlife of the Lalonde Report in Canada is re-examined along with the majority and minority narratives of its policy context and ultimate impact. The main purpose of this inquiry is to produce a deeper understanding of the Lalonde Report.

This historical analysis relies on primary sources, many of which have never been accessed before. These sources include summaries of cabinet discussions at the time prepared by the Privy Council Office, memorandums and reports generated by officials within the Department of Health and Welfare during the development of the Lalonde Report, and federal-provincial discussions of the Lalonde Report in the months following its release.

Three factors came together to produce the Lalonde Report, only one of which directly addressed the policy of public health in Canada; the other two have largely been ignored in the secondary literature. This lacuna has resulted in a misleading understanding of the policy context of the day, which was heavily focused on meeting Quebec's demands for greater autonomy in social policy, including health, as well as reducing federal fiscal exposure by replacing shared-cost Medicare transfer regime with a permanent tax transfer to the provinces.

This history explains why the Lalonde Report had such limited impact in Canada. The extensive time and energy absorbed by this shift in Medicare financing meant that both federal and provincial governments paid little attention to developing pan-Canadian strategies, interventions, and programs, based on the insights provided in the Lalonde Report.