The federal government announced it has failed to reach a deal with the provinces and territories on the future of health care funding.

That may seem like background noise to most Canadians, but the health funding formula has the power to affect everything from how long we wait for surgeries to how much tax we will pay in the future.

Here are five things to know about health care funding in Canada 鈥� and why the two sides are

What鈥檚 being negotiated?

The provinces are constitutionally responsible for delivering health care but the federal government provides about one-quarter of the money, through the Canada Health Transfer (CHT).

Ottawa writes these cheques as a way to force the provinces to adhere to the Canada Health Act, which is the 1985 law ensuring access to universal health care no matter where Canadians live. If provinces don鈥檛 enforce the law, they theoretically might not get the money.

And it鈥檚 a lot of money. The provinces now spend between 30 per cent (Quebec) and 46 per cent (New Brunswick) of their budgets on health care, according to the

What do the negotiations mean for average Canadians?

Since 2004, the CHT has grown at a rate of six per cent annually, which is much higher than inflation. To afford an increase above inflation, the federal government must either raise new revenues -- through tax increases or by taking on debt 鈥� or cut spending in other areas.

The federal Conservative government under Stephen Harper said they wanted to force provinces to put a lid on costs and announced in 2011 that they would cut the annual rate of increase to equal the rate of economic growth or three per cent, whichever is higher, starting 2016-17.

If that change goes ahead, provinces say they will need to ration health care even more at a time when Provinces could, of course, choose instead to raise taxes or take on more debt.

What has Ottawa offered?

The federal government offered provinces and territories a 3.5 per cent annual increase over the next five years, instead of the annual three per cent the Conservatives had proposed.

On top of that, Ottawa has dangled $11-billion over 10 years earmarked specifically for home care and mental health care -- two priorities the Liberals identified in the 2015 election campaign.

Health minister Jane Philpott, who is a physician, she believes that the problems with Canada鈥檚 health care system can be solved with innovation and not just by spending more money. She points to research that shows Britain and Australia get better health-care outcomes than Canada鈥檚 provinces while spending less per capita.

How much do we spend on health care?

Health care spending is expected to cost between $5,822 per person in Quebec and $7,256 in Newfoundland and Labrador in 2016, according to

About 70 per cent of that spending is publicly funded while the rest is covered by things like out-of-pocket fees and private workplace drug plans.

How does our spending compare internationally?

CIHI reports that Canada鈥檚 per capita health care spending -- at $5,543 -- was among the highest in the 35 countries of OECD in 2014, exceeding the spending in France ($5,384), Australia and ($5,187) and the United Kingdom ($4,896).

However, Canadians did pay less per capita than those in the United States ($11,126), Sweden ($6,245), Germany ($6,311) and the Netherlands ($6,505).