Forty-one billion dollars is a lot of money to spend on Canada's health care system, even if it is budgeted over 10 years. Some say the new spending could push Ottawa back into deficit, something the federal government has avoided since 1997. Even with a strong economy and a surge in tax revenues, the finance minister has his work cut out for him.

But what about the provincial premiers set to receive the health care money - can they rest easy Hardly. Stack that $41-billion against the estimated $1.9-trillion in both private and government health care spending over the next decade and Ottawa's cheque becomes less significant. Break it down into yearly payments and it looks smaller still. According to Statistics Canada, the provinces and federal governments spend $90-billion a year on health care. Another $40-billion is spent privately, bringing Canada's total bill to $130-billion. Ottawa's new money represents approximately 2.2% of total annual spending on health, and an average of 3.2% of government spending.

So what are the provinces, which are tasked with administering and delivering medicare, to do With Ottawa tapped out, and health care budgets rising by 7.7% a year - double the growth rate of provincial revenues at 3.9% - they need to develop solutions that save money and provide quality health care or face voter anger come election time.

One positive aspect of the new health accord is it does not restrict premiers from putting more private medicine into the mix. And in a system that has not undergone significant changes since the Canada Health Act was passed 20 years ago, this is the ticket to reform. There is plenty of low hanging fruit to pick, and the studies, benchmarks and data are readily available.

A starting point is the World Health Organization survey that ranked our system 30th out of 196 countries. More specific analysis from the Fraser Institute, issued last May, compared the health system of 28 OECD nations - all of which guarantee universal health coverage - and found, not surprisingly, that higher government spending does not result in better health services. Yet Canada tops the list in spending, has the most restrictions on private medicine, and ranks in the middle in terms of outcomes. Sweden, meanwhile, spends less money, has more private involvement, and offers more services to its citizens. Our premiers should follow the lead of every other advanced nation and inject medicare with a healthy dose of competition.

At home there are guideposts to follow and avoid. In the last election, our political leaders draped themselves in the medicare flag and attempted to outdo one another by ratcheting up health care spending promises. No solutions here. Roy Romanow's 2002 Commission on the Future of Health Care is of no assistance either. The former New Democrat premier believes medicare can be saved if government has (1) the will to make it work, (2) remains wedded to the status quo by way of higher spending, and (3) steers clear of market-based reforms. Talk about re-arranging the Titanic's deckchairs.

A more clear-eyed analysis came from the Senate (of all places). The 2002 study on Canada's health care system from the Standing Committee on Social Affairs, Science and Technology, chaired by Senator Michael Kirby, recommended competitive reforms to fix the public system and, less wisely, higher taxes. In August, Sens. Kirby and Wilbert Keon took another shot at the status quo. In a report entitled Why Competition Is Essential in the Delivery of Publicly Funded Health Care Services they warned that Canada's health care monopoly lacks the incentives necessary to improve outputs and control costs; and reminded Canadians that competition between service-providers in other economic sectors is the best way to control costs and improve productivity. They conclude the same market discipline is needed to break up the existing medicare monopoly and ensure tax dollars are wisely spent.

There are, of course, cases where provinces are already experimenting with different health structures. In an attempt to re-direct health dollars to patients and essential services, the B.C. government has outsourced non-essential jobs, like cooks and laundry services, to the private sector and turned to private clinics to reduce waiting lines. (Bravo!) Alberta talks the reform talk, but so far has produced few results whereas Quebec has quietly moved ahead. It has some 50 private facilities, more than any other province, which patients can access. The basket case of the reform movement is Ontario. In the past year it has slapped a health tax on its citizens and announced it will use scarce resources to buy private clinics and bring them under public management.

To some extent the Canada Health Act keeps the provinces under Ottawa's thumb as it arbitrarily restricts the types of restructuring provinces can experiment in. Ultimately the law will need to be updated by replacing the principal of public administration with the principles of choice, sustainability, quality and accountability. But until that day, the premiers can still improve medicare by operating within the CHA and adopting reforms that have worked in Europe and, in a few cases, other provinces. Canadians are waiting.