Health care and the ‘Common Pool’ Federalism in Canada

Health care and the ‘Common Pool’ Federalism in Canada

Canadian federal system is often praised as a ‘laboratory of change’ capable of producing gradually a high quality policy innovation. In the same time, the system is described as extremely decentralized. This paper challenges both claims by concentrating on the case study of health care policy which is usually taken as an ultimate success story of Canadian federalism. By using the model of ‘common pool’ federalism, the paper argues that Canadian system is characterized by a systematic mismatch between who makes the taxing and who makes the spending decisions, which leads to a paradoxical situation in which the new programs are relatively easy to ‘federalize’, whereas it is very difficult to scale them back or reform, once they are entrenched. Combination of spending decentralization and taxing centralization blurs the lines of accountability allowing both orders of government to profit from increased spending and protect-ing them from blame if the program fails to deliver. The case study of health care system provides the evidence for this theory.