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Sustainability of Canada's Health Care System

Country: 
Canada
Partner Institute: 
Canadian Policy Research Networks (CPRN), Ottawa
Survey no: 
(12) 2008
Author(s): 
Margaret MacAdam
Health Policy Issues: 
Role Private Sector
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no
Featured in half-yearly report: Health Policy Developments 12

Abstract

Canada is one of the few developed countries without an option for private payment for delivery of services covered by the public system. However, in some Provinces there has been a slow but steady progression of private delivery and the possibility for patients to pay privately for services that are also covered under the public health care system in response to concern about the sustainability of the current system. Some Provinces have adjusted legislation to sanction private payment/delivery.

Purpose of health policy or idea

One of the five principles of the Canada Health Act is that of accessibility to medically necessary services (physician and hospital care) at no extra charge to the patient. Under Canadian public governance responsibilities, the provinces are responsible for the delivery of health while the federal government helps to pay for it. The federal government typically supports from 20-25% of the total health budget in each province. Thus provincial revenues pay for the majority of health expenditures. 

Increases in health expenditures without corresponding increases in revenue can drive out the capacity to fund other provincial initiatives. Currently the provinces argue that health care is consuming from 40-50% of their total expenditures (depending on the province) and that without change, the system is unsustainable. As a result in some provinces there has been a slow but sure movement to allowing private payment of care for services that are also covered under the public health care system. It should be noted that it is legal to offer private health care if providers, such as physicians and hospitals, have completely opted out of the public system. Although the federal government is charged with monitoring adherence to the principles of the Canada Health Act, there has been little action by the federal government to curb privatization.

A number of recent developments have encouraged some provinces to allow greater private payment for services covered by the public health system. Perhaps the most important was the Supreme Court ruling in 2006 that struck down a Quebec law that prohibited people from purchasing private insurance for services already offered by the public health care system. Although the ruling has impact only in Quebec it could eventually lead to major changes in Canada's health care system. The premier of Quebec responded to the ruling by stating that the private health care system could play a larger role in Quebec but that he was committed to improving the public health care system. 

Outside of Quebec, both Alberta and British Columbia have undertaken reviews of their health care systems with the goals of reducing waste, improving care and making their systems more sustainableSustainability is clearly described by these provincial governments as allowing more revenue streams by permitting private payments for some services. 

Generally speaking health care expenditures are approaching 50% of total provincial expenditures and have risen sharply over the last 10 years. That proportion masks the fact that many governements are committed to deficit reduction and reducing taxes or at least not raising them, thus health care will consume a larger proportion of the total when total government expenditures are slowing (Health Council of Canada 2008). The Conference Board of Canada studied the issue of health care system sustainability in the context of affordability. Their analysis adds to the literature by including revenue projections based on expected economic growth. Thus future expenditures are considered in relation to future revenues. The study found that as a share of total provincial and territorial revenues, health care will increase from 31.1% in 2000 to 42.0% in 2020. The average annual growth is expected to be 5.2% of which 1.7% is attributable to demographic change (Canada's 55 plus population will increase from 22 percent to 32 percent by 2020, and the total size of the population will increase). The findings from the analysis indicate that while expenditures are expected to grow by 5.2 annually, revenue will grow by 3.6% from 2000-2010 and by 3.8 % from 2010 to 2020. Adjusting for inflation, public per capita spending on health care will increase by 58% while public per capita spending on all other public services will increase by 17% (Brimacombe, G. et al., 2001). These findings indicate that there will continue to be tension between expenditures for health care and other areas of public responsibility. At some point there may be a need to restructure the health care system to improve its sustainability in light of total government responsibilities.

Main points

Main objectives

Improve sustainability of health care system in light of rising expenditures by allowing more revenue streams, ie. permitting private payments for some services.

Type of incentives

A positive incentive in the view of some provinces is that privately paid health care could reduce the demand on the public system by improving access for those willing to pay privately for care. However increasing access will be achieved at the price of reducing equity. A negative incentive is that the federal government can fine provinces that they find to be in violation of the Canada Health Act. British Columbia, for example has paid more than $230,000 in penalties over the past four years.

Groups affected

Consumers, providers, provincial governments

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Characteristics of this policy

Degree of Innovation traditional rather traditional innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal rather fundamental fundamental
Public Visibility very low low very high
Transferability strongly system-dependent system-dependent system-neutral

Political and economic background

80% of Canadians are satisfied with their access to the health care system, a percentage higher than the satisfaction levels in most developed countries, but there are two widely publicized problems in the system. First, about 17% of Canadians do not have access to a family physician (29% in Quebec) (Canadian College of Family Physicians 2006). Second, many patients experience long wait times for certain types of care. These problems started to develop in the 1990s when the federal government drastically reduced its transfer payments to the provinces for health care. By 2002, the federal government was only covering 16% of provincial health care costs. In 2003 and 2004 important federal/provincial/territiorial meetings were held wich resulted in a Health Accord in 2003, and in 2004, an agreement for a 10-Year Plan to Strengthen Canada's Health Care. The federal government supported the Plan with a commitment of $41.3B new dollars over the ten years. Prominent among the issues to be addressed with the new money were primary care reform and reduction of wait times. 

Although new federal dollars were being made available to the provinces, the money was about half of what had been recommended in the influential Romanow Report which had led to the 2003 Health Accord. Perhaps in response to a perception of inadequate federal support, some provinces, especially British Columbia, Alberta and Quebec began to allow greater privatization of services covered by the public system. Other provinces such as Ontario have been clear that they would abide by the principles of the Canada Health Act.

Change of government

Yes but the new government supported the infusion of additional federal dollars for health care

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Origins of health policy idea

The Canada Health Act was enacted in 1984 to provide public funding for necessary health care services by the provinces as long as they ensured that the services would be covered by the five principles of the Act: universality, accessibility, portability, comprehensiveness and public administration. Under the accessibility provision all Canadians are entitled to receive necessary health care services without any additional private payment. There are no co-payments for medically necessary (physician and hospital) services in Canada. Providers can opt out of the system but few do, because most Canadians are not willing to pay privately for services that they could receive in the public system. Canadian support for its public health care system has always been high, currently it is at 80% but access/wait list problems that emerged in the 1990s lowered levels of public support and opened the door for both providers and some consumers to demand access to a private pay system. As noted above in 2006 the Supreme Court struck down a Quebec law that forbade the purchase of private health insurance for services covered in the public system.

Initiators of idea/main actors

  • Government
  • Providers

Stakeholder positions

Some provincial premiers believe that providing access to private payment for health care services will help to make their provincial systems more sustainable by bringing in additional revenue. They also believe that if consumers have a choice, they will appreciate the opportunity to acquire care outside of the public system. It must be noted that in serious cases, provincial governments cover the cost of care provided outside its jurisdiction, usually by paying for care provided in another province or in the United States.

Other premiers argue against a two tiered system, believing that a public system is more cost effective and more equitable, and that the government can respond to the current issues in a reasonable manner. These premiers, led by the current premier of Ontario, are also aware of the great popularity of the public system, and are unwilling to weaken it. Public consultations about the Canadian health care system consistently find acknowledgment of problems but great support for the continuation of a tax-funded public system. 

Some providers are eager to offer Canadians the right to choose a private option. Dr.Brian Day, the Past President of the Canadian Medical Association, which represents almost all of Canada's 68,000 physicians, is an owner of one of the largest private clinics in British Columbia and has been very vocal in advocating for the right of Canadians to choose to receive care on a private payment basis. While making clear that his position is his private belief, he expresses his support for a greater role of private payment in speeches as President of the CMA. His successor, the current President, Dr. Robert Ouellet, is a co-owner of private radiology clinics in the Montreal area. Dr Ouellet has been as clear as Dr. Day, that  the health care system needs to be reformed and that one of the reforms should be to provide Canadians with greater options for private payment for care. In October, 2008, CMA announced that Dr Ouellet is going on a fact finding mission to Europe to see how European countries use a mix of public and private payment and delivery systems. The announcement was greeted by this statement by Catherine Mayers, a Board member of the Canadian Nurses Association: "It was kind of sad that the CMA is supporting privatization when the Canada Health Act is saying no." (Priest, 2008).

Canadian Doctors for Medicare, an advocacy group of physicians who are against private payment for medically necessary services, have expressed the view that a two-tiered system will be more costly and will not address the problems of the current system. Canadian Dctors for Medicare call for reform to the current system but not  through outsourcing care to for-profit clinics and shifting costs to patients.

Actors and positions

Description of actors and their positions
Government
Some provincial governmentsvery supportivevery supportive strongly opposed
federal governmentvery supportiveneutral strongly opposed
Providers
Some providersvery supportivevery supportive strongly opposed
Canadian Doctors for Medicarevery supportivestrongly opposed strongly opposed

Influences in policy making and legislation

British Columbia has announced that it will rewrite its health care laws to add sustainability as a sixth principle to the five principles contained in the Canada Health Act (portability, universality, public administration, accessibility and comprehensiveness). Bill 33 in Quebec, passed two years ago, sanctions the operation of private clinics. Thus far, no other province has taken steps to adjust provincial legislation to broaden the conditions under which the public health care system must operate.

Actors and influence

Description of actors and their influence

Government
Some provincial governmentsvery strongvery strong none
federal governmentvery strongvery strong none
Providers
Some providersvery strongneutral none
Canadian Doctors for Medicarevery strongneutral none
Some providersSome provincial governmentsfederal governmentCanadian Doctors for Medicare

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

There has been gradual expansion of medical clinics, outpatient surgical centres and diagnostic testing services, especially in the past five years in some provinces (British Columbia, Alberta and Quebec). Expansion is greater in areas of the country with the longest waiting lists.

Monitoring and evaluation

A 2008 report by the Ontario Health Coaltion found that there are now 130 for-profit surgical/MRI/CT and physician clinics operating in Canada. The study results indicate that there were 89 possible violations of the Canada Health Act, usually by billing patients for services covered under the Canada Health Act. For example, the authors found that there are 72 surgical clinics selling services to patients. In many cases these clinics bill the public system and charge patients extra fees. Most of the clinics were in British Columbia and Quebec. The report claims that no province has adequate regulatory and enforcement mechanisms to prevent extra billing. The federal government has been taking little action to enforce provincial adherence to the Canada Health Act (Mehra, 2008).

Results of evaluation

Aside from monitoring reports of advocacy groups, there has been no federal or provincial study of the extent, type and impact of private payment for medically necessary health services.

Expected outcome

Given that some provincial governments are committed to minimizing tax burden on citizens, and in some cases are quiet advocates for private provision of health care services, it is likely that these governments will continue to allow expansion of private pay services on the margins of the publicly funded system. The public remains strongly committed to the public health care system and thus provincial governments must be careful not to alienate voters. For example, in British Columbia and Alberta, when provincial leaders have been too forceful about allowing private payments, the public response has caused them to quickly retreat in their public statements, but not necessarily in their actions, as new private clinics have been allowed to open. Increasing privatization of health care did not arise in the October 2008 federal election, where the economic situation was front and centre. However, the issue of private payments for faster access will not likely disappear in the near term. For example, the head of the Montreal health region predicted that there will be an increasing presence of specialised medical centres in the Montreal area in the coming years that will operate under the public system but also be able to charge patients for care. In Alberta, a Copeman Clinic opened in Calgary in September, part of a national expansion of Copeman Clinics. These clinics charge patients $2,900 a year for acces to "elite" primary care. A British Columbia review of their operations found no violations of provincial legislation or the Canada Health Act.  

Clearly the question of sustainability is a political one, laden as it is by values such as accessibility, equity, choice, affordability. As the report of the Health Council of Canada indicated, the future of the Canadian public health care system lies firmly in the hands of the voters.

Impact of this policy

Quality of Health Care Services marginal rather fundamental fundamental
Level of Equity system less equitable system less equitable system more equitable
Cost Efficiency very low low very high

References

Sources of Information

Brimacombe, G., P. Antunes and J. McIntyre (2001). The Future Cost of Health Care in Canada, 2000-2020: Balancing Affordability and Sustainability. The Conference Board of Canada. Ottawa. 

College of Family Physicians of Canada (2006). The College of Family Physicians of Canada Decima Research Omnibus Poll and Physician Survey. Available at www.cfpc.ca  

Davidson, A. ( 2008). "Sweet Nothings? The BC Conversation on Health." Healthcare Policy 3(4): 33-40.

Health Council of Canada (2008). Sustainability in Public Health Care: What Does it mean? A Panel Discussion Report. Available at www.healthcouncilcanada.ca

Health Edition (2008). "Private Health care Issue Arises in Quebec, Alberta." 12:37. September 26.

Health Edition (2008). "Private Clinics Violating Health Act, Report Claims." 12:39. October 10.

Mehra, N (2008). Eroding Public Medicare: Lessons and Consequences of For-Profit Health Care Across Canada. Aavailable at www.ontariohealthcoaltion.ca

Priest, L (2008). "Looking to Europe for health-care answers." The Globe and Mail, October 22, P A4.

Author/s and/or contributors to this survey

Margaret MacAdam

Suggested citation for this online article

Margaret MacAdam. "Sustainability of Canada's Health Care System". Health Policy Monitor, October 2008. Available at http://www.hpm.org/survey/ca/b12/1