A large part of our healthcare system costs are for staffing; doctors nurses, technicians etc. In part 3% is the feds saying to the provinces "we want you to negotiate wages that come in within inflation, or 3% whichever is greater. Without such pressure the province's are free to politically freer to  buy their way out of labor disputes (including with doctors who like to pretend they are not, effectively, unionized). And the feds are offering to direct more money to mental health and homecare which is where a lot of growth in spending is going to come from. And most of the province's are still ignoring the vastly expanding role of drugs in a complete healthcare system. Finally, the province's are not faced with burgeoning debt over this issue. If it really costs that much, they are faced with selling tax increases and or cutting back on lower priority spending. The feds are right to take the hard line. The province's are not really bringing anything creative to the table.