Policy Update: Federal Budget Signals Lower Increases to Health Transfers, End of Key Funding Deals
The latest Canadian federal budget signals a new fiscal stance regarding provincial health-care funding, indicating that provinces should expect lower annual increases in the Canada Health Transfer (CHT) and the non-renewal of several major bilateral funding agreements.
According to economists, this budget sends a clear message that there is limited scope for provincial premiers to negotiate for additional federal health-care dollars in the coming years, despite calls from provincial governments for higher increases.
Key Health Funding Projections
The federal budget outlines a more contained future for the primary funding mechanism for provincial health care:
Canada Health Transfer (CHT): The CHT is projected to be $54.7 billion in 2025-26. It is set to grow by five percent per year until 2028.
The Escalator Lowered: After 2028, the CHT escalator—the guaranteed annual increase—is set at a minimum of three percent annually, based on a rolling three-year average of nominal GDP growth. This reduction signals a tightening of future federal contributions to provincial health budgets.
Declining Federal Share: Analysis from the Canadian Union of Public Employees suggests that this planned growth rate means the overall federal share of provincial and territorial health budgets will actually decrease over the next five years.
Expiration of Bilateral Deals
The budget also highlights that billions of dollars earmarked for specific health initiatives are set to expire without explicit plans for renewal:
Expiring Agreements: Deals totaling $2.5 billion per year for bilateral agreements with provinces and territories, and $1.2 billion directed toward home care, mental health, and addictions, are set to expire in 2027. A $600 million transfer for long-term care expires in 2028.
Uncertain Renewal: Health advocacy groups note that there is currently no indication these substantial deals will be renewed, forcing provinces to absorb those costs or let the programs lapse.
Context for the Dental Sector
While the budget may signal a broader pullback in general health funding negotiations, the government is committed to its established programs. The budget protects existing health transfers and includes a $5-billion Health Infrastructure Fund for upgrading hospitals and urgent care centers.
Crucially, funding for the Canadian Dental Care Plan (CDCP) remains a core component of the government's current plan, with dedicated investments to continue the phased rollout of the program to millions of uninsured Canadians. However, the wider fiscal restraint on provincial health funding could indirectly pressure provincial budgets that support other health services.
Original Article Details
Original Title: Federal Budget Signals Lower Increases to Health Transfers, End of Key Funding Deals
Source: Oral Health Group (Content via The Canadian Press)
Author: Sarah Ritchie
Publication Date: November 11, 2025