Universal Healthcare - Part I - Distinctly Canadian?

Happy Canada Day! Two days ago was Canada's 150th birthday (its sesquicentennial). While the indigenous peoples of Canada inhabited the land for far longer than that and while Prime Minister Trudeau acknowledged that one of Canada's greatest failings has been breaking our commitments to indigenous Canadians, we still have much to celebrate. I celebrated our incredible good fortune to live in a country that has peace, order, and good governance, as described in this Globe and Mail editorial.

Universal healthcare: distinctly Canadian?
When asked, "What makes you proud to be Canadian?" many people answer, "Universal healthcare". Growing up, I didn't think much of this, but now that many developed countries have universal healthcare, it strikes me as odd that we still cling to the notion that it is distinctly Canadian.

Before we proceed, let's define medicare, universal healthcare, and single-payer systems. Medicare means government funding for healthcare (for example, many seniors have access to government funded health services once they turn 65). Universal healthcare means a system where all citizens of a nation have access to government funded healthcare regardless of age or circumstance. Finally, single-payer healthcare refers to the state paying for basic medical services (funded entirely by taxation), whereas in a multi-payer system there are separate insurance companies.

Universal healthcare around the world
The aftermath of World War II saw the creation of welfare states where government plays an important role in providing for the essential needs of its people if the individual cannot do so by themselves. Such measures include healthcare, education, minimum wage, legal aid, welfare, and unemployment benefits.

While there were early steps by some countries to implement medicare for certain groups of people, such as labourers, true universal healthcare did not arrive until the late 1940's or 1950's. Perhaps the first universal healthcare was the United Kingdom's National Health Service in 1948. Then came Sweden (1955), Iceland (1956), Norway (1956), and Denmark (1961). Only then did Canada get a version of universal healthcare, which began in Saskatchewan in 1962, but did not become national until 1972.

Universal healthcare arrives in Canada
A few years ago, the Canadian Broadcasting Corporation's (CBC) aired a TV show called The Greatest CanadianUnsurprisingly, Tommy Douglas, the founder of universal healthcare in Canada, won.

Tommy Douglas was elected to the Canadian House of Commons in 1935 for the precursor party to today's National Democratic Party (NDP). He then left federal politics and became the Premier of Saskatchewan, where he introduced North America's first single-payer healthcare system.

In order to understand why Canada did not start with universal healthcare across the country, it's important to know that healthcare generally (but not exclusively) falls under the provincial jurisdiction under section 92 of the Constitution Act, 1867. This meant that as Premier, Tommy Douglas had the power to enact legislation requiring the government rather than the people pay for healthcare. The federal government could not and cannot do this.

The introduction of medicare resulted in the 1962 Saskatchewan doctors' strike. Doctors feared the loss of their professional independence (particularly in medical decision making) and loss of income. Sadly, the protest included claims that the Premier would bring in foreign doctors and racist imagery was used to scare the public. Many citizens supported the physicians' strike.

That same year, Prime Minister John Diefenbaker appointed Justice Emmett Hall (a Supreme Court Justice from Saskatchewan) to conduct a public inquiry into the national health system. In 1964, the Royal Commission on Health Services (also known as the Hall Report) recommended the Saskatchewan model be adopted across the country.

In response, Prime Minister Lester B. Pearson passed the Medical Care Act of 1968, which was finally implemented in 1972. Canada had universal healthcare, but by that time so did at least eight other countries: Britain, Sweden, Iceland, Norway, Denmark, Finland, Japan, the Soviet Union, and Italy. Others, like France, had almost all of their citizens covered by healthcare plans.

Canada's changing universal healthcare
Prior to the adoption of universal healthcare, fewer than 40% of Canadians had health insurance coverage. Where there was coverage, it was incomplete (there were gaps) and subject to caps due to different insurance schemes. Moreover, patients with similar illnesses paid differing amounts depending on who their physician was. Most importantly, the type and quality of care people received depended on their ability to pay (and occasionally whether they had an interesting disease and could rely on charity medicine). Entire families could be financially ruined due to illness.

What many people find surprising about Canada's universal healthcare system is that it is simply a cost-sharing arrangement between the federal and provincial / territorial governments. Shortly before Canada established universal healthcare, the federal government enacted the Hospital Insurance and Diagnostic Services Act (1957). This provided for cost-sharing of hospital expenses between the provincial governments (who had the responsibility to pay for the services) and the federal government (which had the ability to raise taxes and could afford to pay for the services).

Medical Care Act (1972)
When the federal Medical Care Act was implemented in 1972, it provided for 50/50 cost-sharing with no cap. While this was a good first step, both the federal and provincial governments were not satisfied with the arrangement. The provinces were concerned with potential infringement on provincial power to decide healthcare issues, as well the fact that the federal government could decide to unilaterally withdraw from funding in the future. The cost-sharing arrangement incorporated inefficiencies and disincentives rather than promoting curbing of inefficiencies and the federal government was not satisfied with the open-ended nature of the arrangement. Specifically, that the provinces could spend “50-cent dollars”, which encouraged provincial spending knowing that regardless of what the money went towards, half of it would be covered by the federal government.

Established Program Financing (1977)
The result was that in 1977 the regime was changed to block transfers made up of tax points and cash. It was called the Established Program Financing (EPF). Under that system, the federal government provided a fixed amount of money regardless of the provincial expenditure. Built in were escalators so that as the province grew, so too would the federal contribution. This system ended after the 1980's (which saw dramatic rises in inflation) when the federal government unilaterally froze the transfer amount to the 1989/1990 level, with increases only to account for rising population levels. The result was a staggering reduction in federal contributions, just as the provinces feared.

In 1984 the Canada Health Act was passed, which is what most Canadians think of whey they speak of universal healthcare. It says that if a province / territory enacts a health insurance program that meets five criteria, the federal government will provide transfer payments. The provincial health insurance program must be:

  1. Publically administered (operated on a non-profit basis by a public authority);
  2. Comprehensive (must cover all insured health services provided by hospitals and medical practitioners);
  3. Universal (all insured persons must be covered by the same terms and conditions);
  4. Portable (insured persons who move from one province to another must continue to be covered by the home province during the minimum waiting period imposed by the new province, maximum 3 months); and
  5. Accessible (must provide reasonable access to insured serviced and provide for reasonable compensation for services rendered by health professionals).
At the same time that the provinces saw increased health costs, physicians felt that they weren't being well compensated for their services and were "extra-billing" patients (meaning that they were billing patients fees in excess of those covered by the provincial health plans and that patients had to pay this excess out of their own pocket). Justice Hall again chaired a committee to examine healthcare and recommended to the federal government that the practice extra-billing cease otherwise it would spell the end of Canda's universal healthcare.

To that end, the Canada Health Act expressly limits the provinces' ability to permit extra-billing. In order to qualify for full federal contributions, no extra-billing by physicians or user fees by hospitals can occur. If it does, the Act requires the federal government to reduce the federal transfer accordingly. This directly contributed to the Ontario doctors' strike of 1987.

By 1986 the federal contribution to healthcare had been reduced by millions of dollars to account for the extra-billing and user fees that were permitted under provincial plans. As a result, Ontario passed the Health Care Accessibility Act that year, which banned extra-billing and doctors went on strike.

Canada Health & Social Transfer (CHST)
In 1995, the transfer system was called the Canada Health and Social Transfer (CHST). It rolled the federal transfers for health costs, social assistance, welfare, and post-secondary education into one transfer. Around this time, the federal government attempted to impose national standards regarding healthcare. This upset the provinces because they were expected to adhere to a national standard in a jurisdiction that was predominantly theirs, while the federal government was steadily reducing its contribution.

The provinces that had fewer resources and money (the "have-not" provinces) had difficulty maintaining the same standard and started to de-list previously insured services. Also, the federal government had no idea how much money was being spent on healthcare services as all of the money was being rolled into one large transfer, which included social assistance and education.

This resulted in the Canada Health Transfer in 2004, which unbundled healthcare from other transfers.

In short, Canada's universal healthcare is simply a combination of cost-sharing plus provincial and territorial single-payer health insurance plans.

The future of universal healthcare in Canada
For some time now, Canada has been the only developed country that does not include out-of-hospital prescription medication in its universal healthcare. Our system developed this way from a time when medications were a shadow of what they are now. Today, entire cancer regimes are given in medication form outside of the hospital setting. This means that without additional insurance some people cannot afford to pay for their cancer treatments, which directly contradicts the founding principles of universal healthcare in Canada.

Recently, Ontario decided to enact a version of pharmacare: a fully comprehensive plan for everyone under age 25. This is reminiscent of how Tommy Douglas started Canada toward universal healthcare, by doing it in his home province of Saskatchewan.


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