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by
Colleen M. Flood
University of Toronto
Sujit Choudhry
University of Toronto
Strengthening the Foundations:
Modernizing the Canada Health Act
DISCUSSION PAPER NO.13
August 2002
The views expressed herein are solely those of the authors and do not
necessarily reflect those of the Commission on the Future of Health Care in
Canada.
iii
Contents
Highlights v
Executive Summary vi
Acknowledgments ix
I. Introduction and Overview 1
II. Assessing the CHA: Does It Satisfy the Values and
Needs of Contemporary Society? 3
1. Universality 3
Recommendations 4
2. Portability 4
Recommendation 5
3. Public Administration 5
Recommendations 7
4. Comprehensiveness 8
Recommendations 12
5. Accessibility, Extra-billing and User Charges 12
Recommendations 16
III. Enforcement of the CHA 17
1. Introduction 17
2. Why Is the CHA Not Enforced More Vigorously? 17
IV. Institutional Oversight 20
1. Introduction 20
2. Provincial Processes to Specify Accessibility,
Comprehensiveness, and Public Administration 21
3. Medicare Commission 22
4. Procedures for Settling Disputes 23
V. Expanding the Envelope of Publicly Insured Services 25
1. Overview 25
2. A Federal-Provincial Shared-Cost Statute 25
3. Direct Federal Pharmacare and Home Care Programs 26
4. Conclusion 28
iv
VI. Summary of Recommendations 29
VII. Conclusion 32
Notes 33
Bibliography 34
v
Highlights
• The Canada Health Act (CHA) has served Canadians extremely well but needs to be updated
to serve the needs of Canadians into the 21st century.
• The CHA should maintain the prohibitions on extra-billing and user charges. These are the
key mechanisms ensuring equity in Medicare. There is no evidence that a greater role for
private financing would improve either efficiency or equity in Medicare.
• The CHA appropriately prevents experimentation with private financing but neither impedes
nor encourages reform or innovation in the delivery of health care. We think the CHA should
be reformed to actively encourage innovation and evidence-based reform in the delivery of
care.
• Universality is a fundamental principle, and should be maintained.
• The criterion of non-profit public administration should be amended to “public governance
and democratic accountability” to emphasize the importance of good governance and
accountability of decision makers at all levels in Medicare.
• The federal government should monitor the growth of health care delivery by for-profit firms
but acknowledge that the CHA does not presently preclude their participation, provided
services are fully publicly funded.
• The CHA should require provinces to establish transparent and democratic processes to
determine on an ongoing basis which services and goods should be publicly funded.
• If Medicare does not respond to Canadians’ concerns regarding timeliness of treatment,
support for it will be undermined and pressure for privately financed options will increase.
The CHA should be amended to include a guarantee of timely access to meet Canadians’
concerns about waiting lists and times.
• A non-partisan and expert Medicare Commission should be jointly appointed by the federal
and provincial governments to reward provinces that meet objective performance indicators
or that undertake reform that the Commission has identified as worthwhile.
• A permanent dispute settlement machinery should be created to deal with disputes over the
interpretation of the program criteria in the CHA.
• Separate legislation is required to provide for national standards for insuring prescription
drugs and home care. This legislation will likely have to take the form of a new shared-cost
statute similar to the CHA, but with national standards for access rather than an outright
prohibition on user charges.
vi
Executive Summary
The Canada Health Act (CHA) has served Canadians extremely well since 1984. However, to
continue to realize the values that lie behind the Act, some changes are needed.
In this paper, we propose significant reforms to the CHA. Three goals drive our
recommendations: first, how to modernize the criteria of the CHA and expand its scope to better
reflect the needs of contemporary society; second, how to give content to the criteria in the Act,
cast as they are in very general terms; and, finally, how to overhaul federal-provincial relations
in the health care sector.
A. Modernizing the Criteria: With regard to the five criteria, we recommend the following:
Universality: The criterion of universality is a fundamental principle and should be
maintained for hospital and physician services and expanded specifically into diagnostic
services. Through separate legislation there should also be universal coverage for prescription
drugs and home care. The criterion of universality does not necessitate funding from general tax
revenues but, rather, that funding is progressive (i.e., based on ability to pay). New national
programs for home care and prescription drugs could be funded, for example, by compulsory
social insurance.
Portability: Out-of-country coverage is not core to Medicare. The criterion of portability
should be amended so that provinces are not in breach of the CHA if they do not pay for out-of-
country treatment.
Public Administration: The criterion of public administration should be recast as “public
governance and democratic accountability” to emphasize the importance of good governance and
accountability of decision makers at all levels in Medicare. The federal government should
monitor the growth of health care delivery by for-profit firms but acknowledge that the CHA
does not preclude their participation, provided services are fully publicly funded.
Comprehensiveness: The CHA should require provinces to establish transparent and
democratic processes to determine on an ongoing basis which services and goods should or
should not be publicly funded. It should also require that provinces give priority to publicly
funding services of proven effectiveness. As well, the scope of services protected by the CHA
should be expanded to include all medically necessary diagnostic services. Consideration should
be given to requiring provinces to integrate funding for all publicly funded health care services
(whether protected by the CHA or not) and held by the appropriate level of decision maker.
Accessibility: If Medicare does not respond to Canadians’ concerns regarding timeliness of
treatment, support for it will be undermined and pressure for privately financed options will
increase. The criterion of accessibility in the CHA should be changed to read “reasonable access
in a reasonable time frame, given the nature of the health need,” in order to incorporate a
guarantee of timely access. The CHA should require the provinces to account for the processes
they have in place to ensure that all residents of the province have access to health care goods
and services in a reasonable time frame.
vii
B. Extra-billing and User Charges: To prevent the emergence of two-tier health care and queue
jumping, the prohibition on extra-billing should remain in place. Extra-billing would allow
wealthier Canadians to queue-jump. There is no evidence from any country that allowing extra-
billing will reduce waiting lists in public hospitals. On the contrary, countries like New Zealand
and the United Kingdom that allow extra-billing and queue jumping have longer waiting lists in
their public hospitals. Evidence shows that user charges for hospital and physician services may
deter both unnecessary and necessary use of care. Thus the prohibition on user charges should
remain in place unless a province could establish that a proposed regime of user charges would
not deter Canadians from seeking the care they need, but only unnecessary care.
The CHA appropriately prevents experimentation with private financing through the
prohibitions on user charges and extra-billing but neither impedes nor encourages reform or
innovation in the delivery of health care. We think the CHA should be reformed to actively
encourage innovation and evidence-based reform in the delivery of care.
C. Processes for Giving Content to the Criteria of the Act: Currently, the five criteria in the
CHA are statements of the values that Canadians want to see reflected in provincial insurance
systems across the country. There is, however, no substantive definition provided for crucial
phrases such as “medically necessary” and “reasonable access.” This is understandable, given
that these kinds of requirements must vary over time and between provinces. To give real content
to the values articulated in the CHA, the CHA should require provinces to demonstrate the
processes they have in place to define and comply with the criteria on an annual basis. We
believe that this approach would shift the focus of federal-provincial relations away from
disputes over enforcement and pervasive acrimony toward a partnership between the federal and
provincial governments. By shifting toward a system that focuses primarily on accountability for
processes, we recognize that a one-size-fits-all approach may be appropriate to the values the
system strives for, but not the various means of realizing those values.
D. Overhauling Federal-Provincial Relations in Health Care: Federal-provincial relations in
health care are in desperate need of repair. To this end, Medicare requires the creation of two sets
of joint federal-provincial institutions to govern it. First, we propose the establishment of a
jointly appointed, non-partisan and expert Medicare Commission to work with the provinces to
establish processes to better satisfy the criteria of comprehensiveness, accessibility, and public
governance and accountability. The Commission would reward provinces that meet objective
performance indicators or that undertake those reforms the Commission identifies as worthwhile.
To effect real change in the system, the Commission would have to receive a significant sum of
federal funds above and beyond existing transfer payments. Second, we propose the creation of
permanent procedures under the Social Union Framework Agreement to deal with disputes over
the interpretation of the CHA. Disputes would be heard by specialist panels. Moreover, in
addition to being triggered by government complaints, the machinery could also be invoked
directly by citizens.
E. National Programs for Prescription Drugs and Home Care: Separate legislation is required
to provide for national standards for insuring prescription drugs and home care. This legislation
will likely have to take the form of a new shared-cost statute similar to the CHA, but with
viii
national standards for access rather than an outright prohibition on user charges. We believe that
some user charges may be appropriate in a national home care system as home care straddles the
medical care and social services sector, e.g., homemaking services may appropriately attract a
user fee. In the case of prescription drugs, it is vital that Canadians not be deterred from
obtaining necessary prescription drugs because of fees. But, for example, the imposition of a user
charge upon a brand name drug as opposed to a generic drug would seem acceptable.
ix
Acknowledgments
We would like to thank Pat Baranek, Michael Decter, Bob Rae, and Terry Sullivan for their
comments on earlier drafts of this paper; two anonymous reviewers for their comments; Monique
Bégin, Charlyn Black, Dale McMurchy and Carolyn Tuohy for the various discussions we had
over our proposals; Susan Zimmerman for her research assistance work; and Margaret Williams
for her proofreading and editorial comments. All opinions, errors, and omissions remain the
authors’.
Strengthening the Foundations: Modernizing the Canada Health Act
- 1 -
I. Introduction and Overview
The Canada Health Act1 (CHA) states that its purpose is to “establish criteria and conditions in
respect of insured health services and extended health care services provided under provincial
law that must be met before a full cash contribution may be made” (CHA 1985, sec. 4). But to
view the CHA as simply a dry and dusty spending statute, whereby the federal government
transfers funds to provinces that comply with certain conditions, belies the importance of the
CHA in the hearts and minds of Canadians. For most Canadians, the CHA has become a
document of near constitutional status, emblematic of Canadian values and a guarantee for all
Canadians of the security of health insurance. The link between the CHA and Canadian identity
is reinforced by the sharp contrast between the universal scope of Canada’s Medicare program
and the partial scope of health insurance in the United States (Naylor 1999, p. 24), where
16.3 percent of the population (OECD 2001, Table 146) is left without the day-to-day security of
even the most basic health insurance coverage (Reed and Tu 2002).
In this paper, we explore how to modernize the CHA so that the values Canadians cherish in
the distribution of health care will continue to be realized in the 21st century. We propose a
number of significant reforms to the CHA. Our vision is ambitious, and the reforms proposed are
sweeping in nature. We have two caveats for readers. First, we do not have space in this paper to
work through in detail each proposed reform, or the mechanisms for their implementation, the
latter being particularly critical. Second, we wish to stress that none of our proposals detract
from a publicly funded health care system in which all Canadians are assured of access to the
care they need. But notwithstanding our commitment to this fundamental principle, we do think
that the means whereby this principle is achieved require change, which in turn, requires
amendments to the CHA itself. The need for reform is particularly pressing because the
prospects for enforcing the Act in its current form have been greatly diminished by federal-
provincial conflict over the stability and level of financing. The CHA needs to be strengthened so
it becomes a beacon for innovative reform and continual improvement as opposed to a lightning
rod for dissent.
In the first half of the paper, we discuss the five criteria of the CHA (public administration,
comprehensiveness, universality, portability, and accessibility) and whether or not these criteria
satisfy the values and needs of contemporary Canada. We make several recommendations for
clarifying and embellishing the five criteria. We also discuss the CHA’s explicit prohibitions on
extra-billing and user charges. As well, we discuss the enforcement of the CHA to date. Our
most important recommendation arises from the difficulty that the federal government has had in
enforcing compliance with the five criteria, some of which are described in very broad terms
(e.g., what does it mean to require that provincial insurance plans be “comprehensive”?). We
argue that accountability should focus primarily on the processes that provincial governments
have in place to meet the five criteria. Different provinces will employ different means to
achieve the values represented by the five criteria.
We also discuss the extent to which the CHA restricts the potential for innovative health care
reform. We conclude that the CHA does not impede reform of the delivery of health care but
does exclude experimentation with private financing. Moreover, we note that there is no
Strengthening the Foundations: Modernizing the Canada Health Act
- 2 -
evidence that increased private financing would solve any of the problems that Medicare is
currently experiencing.
Although we consider our recommendations regarding the five criteria to be critical, our most
sweeping ones fall in the second half of the paper. These recommendations pertain to enforcing
the CHA and respond to the dysfunctional relationship that has developed between the federal
and provincial governments over the governance of health care. We propose the creation of a
permanent, independent tribunal for resolving disputes as well as an independent, national
commission that would reward provinces for engaging in innovative reform.
We also recommend creating separate legislation to provide national standards for insuring
pharmacare and home care and discuss a number of constitutional methods for moving forward
to create those standards. In particular, we recommend creating a new shared-cost statute similar
to the CHA.
Strengthening the Foundations: Modernizing the Canada Health Act
- 3 -
II. Assessing the CHA: Does It Satisfy the Values and
Needs of Contemporary Society?
The CHA ensures full public funding for a range of hospital and medical services. The Act does
so by requiring provinces to cover “insured health services,” which it defines as all “medically
necessary” hospital services, “medically required” physician services, and surgical-dental
services that need to be performed in a hospital. To obtain federal funding contributions, each
provincial insurance plan must meet five criteria: public administration, comprehensiveness,
universality, portability, and accessibility. The CHA also expressly prohibits extra-billing and
user charges for insured health services, and requires the federal government to withhold one
dollar of federal funds for every dollar paid if provinces allow these practices. The five criteria
and prohibitions do not apply to “extended health care services.”2
For Canadians, these criteria and prohibitions have evolved into the touchstones of a just and
fair health care system. We discuss below the relative importance of each and consider the extent
to which they need to be clarified or amended to reflect contemporary needs. We first discuss
universality, portability, and public administration – perhaps the least controversial of the five
criteria. We then move on to (and spend considerably more time on) the far more difficult
criteria of comprehensiveness and accessibility, the prohibitions against extra-billing and user
charges, and problems of enforcement.
1. Universality
The criterion of “universality,” under section 9 of the Act, requires a provincial plan to entitle
100 percent of qualified provincial residents to receive “medically necessary” hospital services
and “medically required” physician services on uniform terms and conditions. Universality is a
fundamental value that ensures a national plan for all Canadians. That said, the Canadian model
(a universal plan funded by general taxation revenues) is not the only model that can provide the
security of health insurance to all citizens. The Netherlands, for example, manages to achieve
near universal coverage through compulsory social insurance for the poorer 65 percent of the
population, while leaving the remaining 35 percent to purchase private insurance. Social
insurance is funded progressively (i.e., according to people’s means) by employer and employee
contributions, which are a percentage of annual income. And through extensive regulation, the
Dutch manage to ensure functional equivalence between the coverage provided by social and
private insurance (Flood 2000a, Chap. 3). However, the Dutch system is not clearly so much
more efficient than the Canadian one that we should abandon our principle of universality when
it comes to core services such as hospitals and physicians. Nor is it clear that reforming the
Canadian system along the lines of the Dutch system (with its mixture of private and social
insurance) is feasible, given the historical development of Canada’s health care system. Canada
has neither a long history of sickness funds and social insurance nor a commitment to what the
Dutch call “social solidarity,” a value that enables them to harness both the private and quasi-
public sphere in pursuit of the public interest. Thus we would recommend that a modernized
CHA retain its core commitment to universal coverage for hospital and physician services.
Strengthening the Foundations: Modernizing the Canada Health Act
- 4 -
A commitment to universality, however, does not necessarily mean a commitment to funding
universal coverage from general taxation revenues. Indeed, the CHA does not require this,
although most provinces have opted to fund health insurance in this way. International
experience demonstrates that it is possible to achieve universal coverage through a variety of
means – public financing through general taxation revenues, social insurance (i.e., funding
through compulsory premiums), and the regulation of private insurance. Within Canada, the
provinces are already experimenting with different mechanisms for providing universal coverage
for services and goods outside the rubric of the CHA. For example, Quebec has put in place a
pharmacare plan that ensures coverage for all citizens by regulating private insurance schemes
and requiring contributions by employers and employees as a fixed percentage of annual income.
We think there could be future benefits if Canada were to experiment with different methods of
achieving universal coverage. Below we argue for new federal legislation that would provide
national standards for the insurance of pharmacare and home care. Like the CHA, such
legislation would not require health care to be funded from general taxation revenues. But unlike
the CHA, it should explicitly permit provincial insurance plans to be funded progressively
through employer and employee contributions, as long as coverage is universal. Indeed, there
may be a significant benefit to moving to premiums, because separating funds for health care
from general taxation revenues would assist in ensuring the stability of funding. It would also
reduce the tension between the drive to increase public spending on health and the desire to cut
taxation rates. Moreover, as private insurers already have a significant presence in the market for
insuring prescription drugs and, increasingly, home care services, requiring them by law to
achieve universal access is unlikely to raise the expropriation provisions under NAFTA, whereas
nationalizing them clearly would (Epps and Flood 2002).
Recommendations
1. The criterion of universality be maintained for hospital and physician services.
2. As we develop national standards for insurance programs covering pharmacare and home
care, that there be a requirement for universality and for progressive funding, but not
necessarily from general taxation revenues.
2. Portability
Section 11 of the CHA requires a province’s plan to insure all residents within three months
of arrival in the province. In terms of interprovincial portability, plans must pay for the cost of
services used by residents who travel to other Canadian provinces at the rate approved by the
plan of the province in which the services are provided or by agreement otherwise. In terms of
Canadians visiting foreign countries, provincial plans must reimburse at least the amount that
would have been paid for similar services rendered in the province. Sections 11(2) and (3)
provide that the portability criterion is not contravened by a requirement that a patient obtain
consent from the provincial plan before receiving non-emergency care when in another province
or country.
Strengthening the Foundations: Modernizing the Canada Health Act
- 5 -
Quebec breaches the portability criterion by refusing to compensate for health care services
that its residents receive in other provinces. Five other provinces breach the requirement that
they reimburse the cost of services provided outside of Canada at a rate similar to the one paid
for services rendered in the province (Canada Office of the Auditor General 1999, Chap. 29).
Eliminating the requirement for out-of-country coverage would not offend, in our opinion, the
core principle of fairness that underlies the CHA, as it is reasonable to assume that Canadians
who can afford to travel to foreign jurisdictions can also afford to purchase travel insurance.
Moreover, we think the coverage currently provided is likely to cover only a small percentage of
the total costs incurred by cross-border travelers, for example, to the United States. The existence
of even some coverage by provincial plans may provide a false sense of security to Canadian
travelers and deter them from purchasing full private travel insurance. Other countries such as
the United Kingdom, New Zealand, and Australia, do not provide out-of-country coverage for
emergency services unless they have negotiated reciprocal agreements with the country in
question and are able to ensure that their citizens are fully covered for the costs.3 For these
reasons, we believe the requirement for provinces to insure out-of-country treatments should be
deleted from the portability requirement. Of course, the elimination of this requirement from the
CHA would not prevent any province from electing to provide out-of-country coverage as an
additional benefit for its citizens.
Recommendation
The criterion of portability be amended to eliminate the requirement that provinces pay for
out-of-country treatment.
3. Public Administration
The CHA has become an icon of Canadian values, yet its actual content is poorly understood.
This is most true of the requirement of “public administration.” This criterion requires that the
plan be “administered and operated on a non-profit basis by a public authority appointed or
designated by the government of the province” (CHA 1985, sec. 8(1)(a)). Notably, it does not
require that all providers be either non-profit or public. Thus the public administration criterion
does not prevent a province from contracting out the delivery of publicly funded services to
private, for-profit providers. In fact, for-profit providers such as physicians have long been
central to the system. To be sure, some have argued that allowing physicians to operate on a for-
profit basis is significantly different from contracting out to for-profit firms responsible to
shareholders (Evans et al. 2000). However, there is nothing in the CHA to prevent private, for-
profit providers from participating in the publicly funded system, whether they are physicians or
firms. Moreover, we would submit, the participation of private, for-profit firms (e.g., for-profit
hospitals or laboratories) does not contravene the underlying values of the CHA, provided the
services delivered are fully publicly funded.
Notwithstanding the permissibility of contracting out to private, for-profit entities under the
CHA, interest groups continue to oppose these sorts of reforms by arguing that they contravene
the Act. These objections attract support because no crisp distinction is made in public discourse
Strengthening the Foundations: Modernizing the Canada Health Act
- 6 -
between financing (which the CHA appropriately safeguards as public) and delivery (which has
historically always been a mixture of public, not-for-profit and private, for-profit providers). The
unspoken concern behind the opposition to private, for-profit firms may be that by condoning the
participation of for-profit providers, we are on a slippery slope toward more private financing in
the system. We do not doubt there would be significant regulatory challenges if there were a
significant increase in the number of private, for-profit firms operating in the health care sector,
particularly in acute care. Also, given the evidence that for-profit hospitals in the United States
are associated with higher mortality rates than not-for-profit hospitals, most provinces are
unlikely to facilitate the introduction of a large for-profit hospital sector (Devereaux et al. 2002).
However, a strong commitment to full public funding, along with rigorous enforcement of the
prohibitions on extra-billing and user charges, should be sufficient to keep a check on for-profit
firms trying to circumvent the restrictions of public financing or trying to create de facto a two-
tier system. If we are not correct in this prediction, then the CHA may have to be revisited. For
the time being, there seems to be sufficient evidence both for and against for-profit provision in
different spheres that this matter is best left to each province’s discretion.
We also question whether “public administration” is as fundamental to Canadian values as
“public governance.” The Act currently allows provinces to “designate any agency to receive ...
any amounts payable... and to carry out on its behalf any responsibility in connection with the
receipt or payment of accounts rendered for insured health services” (CHA 1985, sec. 8(2)(a) and
(b)). The public administration criterion, as it is currently configured, implies a passive insurance
model, where governments simply administer and process claims made by physicians and
hospitals for services provided. The assumption underlying this language is that all care
prescribed and provided by physicians must be “medically necessary” and therefore should be
publicly funded. This kind of language is at odds with the contemporary practice of health care
systems. In response to ever-increasing costs in health care, insurers around the globe, whether
public or private, increasingly use a variety of techniques (sometimes called managed care) to try
to influence the allocation decisions made by physicians (Flood 2000a). Thus to speak of public
administration belies the significant governance role that provincial governments need to take in
managing and regulating their respective health care systems. Also, the criterion of public
administration, as it is presently worded, could be interpreted as reducing the flexibility that
provinces need to experiment with different management models. Should provinces be prevented
from contracting with private, for-profit organizations to manage publicly funded health
insurance plans? Would it contravene the criterion of public administration if provinces were to
devolve budgets to groups of doctors (who are private, for-profit providers) and require those
groups to manage these funds? Although we do not think the current wording of the CHA would
prevent this kind of managerial innovation, ongoing disputes over these kinds of questions could
be avoided if the criterion of public administration were updated by amending it to “public
governance.”
There are other reasons to prefer the word “governance” over “administration.” When we
speak of governance, we begin to get to the heart of what has been lacking in the Canadian
system and what is required to ensure sustainability. In our opinion, the most significant problem
is a failure to commit to strong governance and accountability for decision making (Choudhry
2000; Flood 2000a, Chap. 4; Institute for Research in Public Policy 2000; and Flood 2000b).
Here, we do not mean accountability solely for dollars spent, but accountability to citizens for
Strengthening the Foundations: Modernizing the Canada Health Act
- 7 -
how the system is governed and for the delivery of timely and high-quality health care. We are
thinking of democratic accountability: how to ensure that the State, and decision makers
empowered by it, take responsibility for the decisions they make, and are accountable in a fair
and more direct and timely manner than is possible through elections every four or five years.
This could take a variety of forms and will differ from province to province. For example,
provinces might choose to devolve and decentralize decision making closer to affected
communities, make consultation mandatory, elect regional health authorities, ask citizens to
choose primary care groups, establish patients’ bills of rights, or create patient ombudspersons
(Flood 2000a, Chap. 4; Institute for Research in Public Policy 2000; and Flood 2000b). The
federal government could take a lead here by amending the CHA to include a richer definition of
public administration, namely “public governance and democratic accountability.” Some might
argue that our logic is circular here, for if “public administration” is not clear, then neither is
“public governance and accountability.” However, as we discuss below, the primary mechanism
for enforcing public governance and democratic accountability should be asking the provinces to
account for the processes they have instituted to improve public governance and democratic
accountability. Thus the provinces themselves will flesh out the meaning of the criterion through
governing their respective plans. They will, in effect, bind themselves through this process.
To further the accountability of federal and provincial governments, we also recommend that
the federal government be held to account for the total sums transferred to the provinces for
health, and the provinces for the spending of all federal transfers. To facilitate this, it is vital that
health care transfers be decoupled from transfers for social assistance and post-secondary
education under the Canada Health and Social Transfer (CHST). In its stead, there should be a
separate federal transfer, which we would call the “Canada Health Transfer.” Whatever benefits
there are from the flexibility of consolidating federal funds are overwhelmed, in our view, by the
loss of accountability for expenditures on health.
Recommendations
1. The federal government monitor the growth of health care delivery by for-profit firms but
acknowledge that the CHA does not preclude their participation, provided services are fully
publicly funded.
2. The criterion of public administration be recast as “public governance and democratic
accountability.”
3. The CHA require provinces to account for the processes they have in place to further improve
public governance and democratic accountability within their systems.
4. Federal transfers for health be separated from other transfers to ensure clear lines of
accountability on the part of federal and provincial governments.
Strengthening the Foundations: Modernizing the Canada Health Act
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4. Comprehensiveness
If a health insurance plan fails to cover what society considers necessary care, it will
ultimately lose legitimacy in the eyes of the public. Failure to ensure comprehensive coverage
will also diminish the incentive of wealthy Canadians to support the plan politically and their
wish to remain in it (Hirschman 1970; Flood 2000a). We approach the difficult issue of
comprehensiveness in the following stages:
(a) How provinces determine which hospital and physician services are publicly funded;
(b) The accountability of provinces for their processes to decide which hospital and
physician services are publicly funded;
(c) What the CHA could do to make effective health care services the priority for public
funding;
(d) How the CHA fails to cover important health care services such as prescription drugs and
home care; and
(e) How to ensure the integration of funding and delivery of care for a broader range of
services than those protected by the CHA.
(a) How Provinces Determine Which Hospital and Physician Services Are Publicly Funded
Which hospital and physician services are publicly funded turns on the interpretation of the
phrases “medically necessary” and “medically required.” However, these key phrases are not
defined in the CHA and have also not been defined operationally in provincial legislation
(Canada Royal Commission on New Reproductive Technologies 1993, p. 80). In practice,
provincial governments and medical associations negotiate which services are to be publicly
funded in the process of determining the fees that physicians will receive in exchange for
providing services. This method attributes a great deal of power to physicians and reflects the
accord reached between physicians and governments at the time the foundations of Medicare
were established, i.e., that physicians would accept public insurance provided that public insurers
did not interfere with their clinical autonomy (Tuohy 1999). The decision process has been
primarily a one-way highway, with new services being added to the list that is publicly funded
and few removed. More recently, there has been some movement in the opposite direction.
Increasingly, provincial governments are “delisting” certain services on the ground they are not
“medically necessary” or “medically required.” As with the decision to publicly fund a service,
the decision to delist is made jointly by provincial governments and medical associations. In
Ontario, for example, a “Physician Services Committee,” composed of representatives of the
Ministry of Health and Long-Term Care and the Ontario Medical Association makes delisting
decisions.
Strengthening the Foundations: Modernizing the Canada Health Act
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(b) Accountability of Provincial Decision Making Regarding What Services to Publicly Fund
Presently both the process of deciding which services to fund and the process of delisting
rely on provincial governments to represent public values and on physicians to apply technical
expertise.4 However, there are strong arguments that this is an impossible task because, at
present, the process for determining what is “medically necessary” is too intimately connected to
the process for determining compensation rates for physicians.
Should we amend the CHA to include a substantive definition of “medically necessary”? The
difficulty is that what goods and services are “medically necessary” change over time as
technology, resources, and values change (Caulfield 1996). Rather than trying to nail down a
definition, which will inevitably be superceded, it is more important to develop better processes
for determining what is or is not “medically necessary.”
A recent report commissioned by the Premier of Alberta (the Mazankowski report) has called
for the establishment of a permanent, expert, and independent panel to determine which services
are or are not medically necessary and, therefore, publicly funded (Klein 2001). If implemented
and made truly transparent, this initiative would be a significant improvement over the existing
system where these decisions are made behind closed doors by provincial governments and
medical associations. We advocate that the CHA be amended to require all provinces to establish
transparent, democratic, and accountable processes to determine on an ongoing basis what
should be covered in the public system.5
An important issue is whether or not the decision-making process for determining what is
“medically necessary” could be used as a method to whittle away the core of publicly funded
services. Except for services such as cosmetic surgery and infertility treatments, the custom has
been to publicly fund in full hospital and physician services if “medically necessary.” Moreover,
it has traditionally been thought that services that are not “medically necessary” and hence not
publicly funded would not be provided by the private sector, because there would be no demand
for medically unnecessary services. However, while services may not be beneficial enough to
warrant public funding, there is increasing recognition that patients may still benefit from them
enough to wish to buy them. This kind of approach raises concerns about creating a two-tier
system, an issue we discuss further under extra-billing. It also raises potential conflicts of interest
for physicians who work in both the public and private systems and, who, at least in the absence
of sophisticated regulation, would have a financial incentive to shift patients into a privately
financed system for their services. This is particularly a concern if, as the Alberta government is
planning, the intention is to encourage supplementary private insurance to help provide coverage
for services that are not “medically necessary” but still considered sufficiently beneficial.
Concerns that the process of deciding what is “medically necessary” is being used to whittle
away at the scope of publicly funded services suggests we may need to redouble our efforts to
find a substantive definition of “medically necessary.” On balance, however, we think that by
requiring provinces to establish transparent, democratic, and accountable processes, the core of
Medicare will be protected. With such processes in place, the experience both domestically and
internationally is that there is no political will to significantly reduce the range of publicly
funded hospital and physician services (Flood, Stabile and Tuohy 2002; Jacobs, Marmor and
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Oberlander 1999). Once the prospect of rationing services is made explicit and transparent,
citizens will not be prepared to exclude patients from getting the health care services they need.
Also, at the limit, the federal government can claim that a province is delisting services that are
medically necessary and withhold federal transfers. As we argue below, the reasonableness of
the federal government’s interpretation could be reviewed by an independent dispute resolution
tribunal.
(c) What the CHA Could Do to Make Effective Health Care Services the Priority for Public Funding
Whatever process is used to determine which services are publicly funded, it must be
noticeably generous in its inclusion from the start. Why is this? On average, we may conclude
that a certain kind of procedure or test is not “medically necessary” for a population. However, it
will always be the case that for certain patients in certain circumstances a particular kind of
procedure or test will be by far the most cost-effective and appropriate treatment. Thus being too
utilitarian in our calculations will lead both to inequity and frustration with the system on the part
of physicians and their patients.
On the other hand, our present system, which gives physicians complete control over
allocating public funding to a very broad range of services, results in the provision of some
services for which there is little or no evidence of effectiveness. Estimates of the cost of
inappropriate use generated by physicians vary but are sometimes as large as 30 to 40 percent of
the cost of all services (Stoddart et al. 1993, p. 6). For ordinary Canadians, this may be hard to
understand given the difficulties many have in accessing care, but variations in the number of
health services supplied in communities without different health needs support this contention
(Roos and Roos 1994; Canada National Forum on Health 1997, p. 20). For example, there are
significant variations in the number of hysterectomies performed in Ontario, with no underlying
objective clinical reason why there should be such wide variations, and with no apparent
difference in patient outcomes (Coutts 1998). The goal of the publicly funded system should be
to encourage the delivery of health care for which there is evidence of effectiveness. While the
CHA states this goal implicitly by requiring provinces to determine what is “medically
necessary,” it needs to be more explicit so that the process is disentangled from the one to
determine remuneration for physicians.
(d) The CHA’s Failure to Cover Prescription Drugs and Home Care
The CHA does not protect what have become very important health care services:
prescription drugs, medical equipment, or diagnostic services used outside of hospitals;
ambulance services; dental care; and home care services. By giving primacy to “medically
necessary” hospital services and “medically required” physician services, the Act skews public
financing toward those services. The systemic impact is that hospital and physician services
receive high rates of public funding (91.1 percent and just under 99.0 percent, respectively),
while prescription drugs, for example, are funded at a rate of just 36 percent (Canadian Institute
for Health Information 2001). Canada may seem to be a model for ensuring fair access to
physician and hospital services, but, among developed OECD countries, it stands in the odd
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company of Mexico, the United States, and Turkey in not ensuring universal access to
prescription drugs (Jacobzone 2000; Willison et al. 2001).
The principles of the CHA, laid down in the 1950s and 1960s, have served Canadians
extremely well over the decades. Now, however, advances in technology and changes in
demographics have revealed the system’s inflexibility. There is now less need for health care
services to be delivered in hospitals and much greater need for prescription drugs and home care
services outside the hospital, neither of which is consistently publicly funded. The core value that
lies behind the criterion of comprehensiveness is that people should have access to needed
services. Most Canadians would probably agree that it is more important for people with diabetes
to get insulin than an annual general checkup, but the CHA does not currently reflect that value
because it requires full public funding of the latter (if medically required) but not the former.
Moreover, those people who have private insurance for prescription drugs are more likely (all
other things being equal) to use more publicly funded physician services (Stabile 2001).
To ensure that Canada’s health care system is comprehensive, we believe it is essential to
create national standards for insuring prescriptions drugs and home care. The most feasible way
to do so, in our opinion, is to create companion legislation to the CHA, which would be enforced
through conditional federal transfers. This companion legislation would allow provinces more
flexibility to experiment with the mix of public and private financing (including user charges)
than the CHA allows. At the same time, companion legislation (which we might call the “Canada
Pharmacare and Home Care Act”) would have to contain minimum standards regarding access
e.g., the income level below which user charges are unacceptable. We discuss our reasoning
more fully below.
In addition to promulgating companion legislation to provide national standards for insuring
prescription drugs and home care, we would like to amend the CHA to cover all medically
necessary diagnostic services such as magnetic resonance imaging (MRI) and genetic testing
that, with advances in technology, need not be delivered within hospital walls or under the
supervision of a physician. Clearly, if a two-tier system developed for diagnostic services, then
people who could afford to purchase diagnostic services in the private sector would also be able
to gain quicker access to publicly funded hospital and physician services that require the prior
use of diagnostic tests.
(e) Integration of Funding
Part of the problem in not providing full public funding for prescription drugs and home care
services is that this results in different sources of funding for health care services, which leads to
separate standards in delivering care and opportunities for cost-shifting (e.g., cash-strapped
decision makers in the public system will, if feasible, shift costs to others). The funding and
delivery of the full range of health care goods and services (hospital, physician, drugs, diagnostic
services, home and community care) must be integrated into budgets held by appropriate
decision-making bodies (regional health authorities, hospitals, and primary care teams). The
CHA may only require 100 percent of “medically necessary” hospital and “medically required”
physician services to be publicly funded, but it does not preclude provincial governments from
Strengthening the Foundations: Modernizing the Canada Health Act
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integrating this spending with other public funding for programs such as prescription drugs and
home care. For example, experiments with integration through regionalization cannot be
completed until funding for physicians and prescription drugs are included in these regional
budgets (Lomas 1999). In our opinion, the CHA could help break the lock of physicians opposed
to regional authorities holding budgets for physician services. This could be done by requiring
the provinces to integrate funding for publicly funded health care services (whether covered by
the CHA or not) and ensure that such funding is held by the appropriate level of decision maker.
Recommendations
1. The CHA require provinces to establish transparent, democratic and accountable processes
for determining which services and goods should be covered by Medicare.
2. The CHA stipulate that, in general, provinces give priority to publicly funding services of
proven effectiveness.
3. Companion legislation to the CHA should provide national standards for public insurance of
prescription drugs and home care. It is imperative that companion legislation provide for
access standards, e.g., maximum income levels below which user charges may not be
imposed. This proposal is discussed more fully in the second part of the paper.
4. The CHA be amended to provide protection for all medically necessary diagnostic services,
wherever provided.
5. The CHA should require provinces to integrate all public funding for health care services
(whether covered by the CHA or not) and ensure that such funding is held by the appropriate
level of decision maker.
5. Accessibility, Extra-billing and User Charges
Accessibility is a fundamental component of any insurance program, as having insurance
coverage is an empty right without access to services. Section 12 requires provinces to ensure
that Canadians have “reasonable access” to services that physicians are paid “reasonable
compensation” for services “rendered,” and that hospitals are paid for “the costs of insured
health services.” In addition to section 12, sections 18 and 19 ensure access to health care on the
basis of need and not the ability to pay by prohibiting extra-billing and user charges.
(a) Do the Provisions of the CHA Prevent Innovative Health Care Reform?
We first address whether the accessibility criterion and the prohibitions on extra-billing and
user charges prevent innovation in health care reform. The CHA appropriately prevents
experimentation with private financing through the prohibitions on user charges and extra-billing
but it neither impedes nor encourages reform or innovation in the delivery of health care. We
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think the CHA should be reformed to actively encourage innovation and evidence-based reform
in the delivery of care.
One of the most consistent criticisms of the Canadian system is its reliance on physicians
who work in solo and are paid on a fee-for-service basis. Report after report has spoken of the
need for “primary care reform” that would require physicians to work in teams with other health
care providers such as nurses to provide continuous primary care.6 These reports also
recommend changing the way doctors are paid to eliminate the financial incentive in the existing
system to focus on the quantity rather than the quality of care. The language in section 12 –
“reasonable compensation” for services “rendered” by physicians – implies indemnity insurance
(where all costs incurred are covered without question), with physicians reimbursed on a fee-for-
service model. However, it is important to note that while the CHA assumes a certain model of
insurance and payment, it does not require it. Thus there is flexibility within the CHA for
provinces to employ different payment mechanisms. The CHA has certainly not prevented every
province in Canada, over the course of the 1990s, from experimenting with different payment
arrangements in primary care (Hutchinson, Abelson and Lavis 2001, p. 121). The slow rate of
progress in this regard is not attributable to the CHA but to other factors, such as lack of political
will, lack of accountability for good governance and management, and resistance on the part of
some in the medical profession.
As we discuss further below under extra-billing and user charges, the most important sections
of the CHA are those that prohibit private financing for necessary medical and hospital services.
There is, however, no prohibition in the CHA to prevent health care reform in the delivery of
health care services.
(b) “Reasonable Access”
As with the term “medically necessary,” the CHA does not define what “reasonable access”
is. There are no explicit statements about what “reasonable access” means, such as guidelines for
ratios of patients to physicians or distance from hospitals. What is “reasonable” depends, of
course, on a number of factors, including the resources available to society, societal values, the
type of health care need, and changes in technology. As these factors change over time, it is
fruitless to attempt to provide a substantive definition of “reasonable access” within the CHA. As
with comprehensiveness, the path forward is for the CHA to require provinces to account for the
processes that they have in place to ensure that all residents of the province have reasonable
access to health care goods and services.
(c) No Specific Commitment to “Timely” Treatment
There is no explicit requirement in the CHA for Canadians to have access to “timely” care,
although this could be inferred from the term “reasonable access.” Timeliness of care and
concerns about waiting lists have received considerable media attention. Growing waiting times
impose greater private costs on Canadian patients in terms of days off work, lost productivity,
and so on. As these costs are not covered by the public purse, there may not be sufficient
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incentives within the existing system to control them. That being said, compared to other
countries like the United Kingdom and New Zealand (which allow extra-billing and a two-tier
system), Canada has a significantly smaller proportion of its population on waiting lists (Tuohy,
Flood and Stabile 2001) and, on average, patients have to wait for a much shorter time for
treatment. For example, one study compared waiting times for coronary bypass between New
Zealand in 1994-95 and Ontario in the same period, and found that the New Zealand mean and
median waiting times (232 and 106 days, respectively) were significantly longer than the
Canadian mean and median (34 and 17 days, respectively) (Jackson, Doogue and Elliot 1999). It
is also unclear how serious the waiting list and time problems truly are in Canada (O’Brien
1998). Nonetheless, the existing data, as flawed as they may be, do suggest that waiting times are
increasing (Walker and Wilson 2001). Perhaps more importantly, Canadians themselves are
convinced that they have to wait longer for care – a 2001 survey found that 52 percent of
Canadians thought that waiting times were either slightly or much longer than they had been five
years before (PriceWaterhouseCoopers 2001). Canadians are accustomed to speedy and efficient
service in all other spheres of life; they can be expected to demand it in health care as well. As
Michael Decter writes, “[i]n every walk of life the consumer’s desire for speed has brought about
a transformation, be it fast food or fast entertainment” (2000, p. 7). If Medicare does not respond
to Canadians’ concerns regarding timeliness of treatment, support for it will be undermined and
pressure for privately financed options will increase.
In our opinion, accessibility means little unless we speak of access to timely care. The CHA
criterion of accessibility should be broadened to read something like “reasonable access in a
reasonable time frame, given the nature of the health need.” Again, the meaning of “reasonable
time frame” cannot and should not be rigidly defined in the CHA. Instead, the CHA should
require the provinces to account for the processes they have in place to determine what is
“reasonable.”
(d) Extra-billing and User Charges
In addition to the criterion of “accessibility” provided for in section 12, the CHA also seeks
to ensure accessibility through sections 18 and 19 of the Act. Respectively, these sections require
provincial plans to prohibit “extra-billing” and “user charges” to qualify for federal
contributions. A “user charge” is a charge made to a patient that the patient must pay out of his
or her own pocket to cover a portion or the entire price of health services. So, for example, if
patients were required to pay $10 every time they consulted a physician, this would amount to a
user charge. “Extra-billing” is a concept closely related to user charges where a physician (or any
other health care provider) supplements his or her income by billing the patient or the patient’s
private insurance company for publicly insured health services in addition to receiving sums
from the government (Flood 1999).
i. Extra-billing and a Two-tier System
Sections 18 and 19 of the CHA are largely what make Canada unique in how it allocates
health care and reflects a communitarian ideal (we are all in this together) (Flood 2000a,
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Chap. 2). In many countries, physicians and hospitals are free to bill patients covered by public
insurance plans for amounts above and beyond those laid down in the government fee schedule.
Moreover, they are also free to provide services on an entirely private basis that are covered by
the public system but for which there may be lengthy waiting lists. This capacity allows a two-
tier system to flourish, in which physicians are allowed to work in the public sector and to top up
their incomes by working in the privately financed sector. In countries such as the United
Kingdom and New Zealand, some people have supplementary private insurance that provides
coverage for (a) extra-billing in connection with publicly insured services and/or (b) purchasing
private health care services that are also available in the public system but for which there are
queues.
In Canada, provinces have taken a variety of regulatory approaches, all designed with a view
to creating strong disincentives against (if not outright prohibiting) a private system that requires
cross-subsidization from the public system (Flood and Archibald 2001). In all provinces,
physicians can opt out of the public system and operate wholly in the private sector – but they
cannot work in both. The result is that private markets for health care in Canada only distribute
services that receive no public funding at all, such as cosmetic surgery and in vitro fertilization.
Unlike in the United Kingdom, Australia or New Zealand, people in Canada do not have the
choice of buying a service such as a hip operation from the private system just to jump the
waiting list in the public system.
There is ongoing debate about the equity and efficiency of extra-billing and whether or not a
two-tier system should be allowed to operate in Canada. After reviewing the international
evidence, Tuohy, Flood and Stabile recently concluded that a two-tier system would reduce
equity. They saw no evidence that a parallel private system would reduce pressure on the public
system by, for example, reducing waiting lists (Tuohy, Flood and Stabile 2001). In fact,
countries with two-tier systems such as the United Kingdom and New Zealand recorded much
longer waiting lists and timelines than Canada. There was also no evidence that increased private
financing would relieve any of the other problems that beset the Canadian health care system and
others around the globe.
ii. User Charges
In any debate addressing the validity of user fees, it is important to establish what the goal is.
Is the goal:
1. to act as a brake on use of services and reduce overall health care spending; or
2. to generate additional private funds for health care?
If the goal is the latter, the experience in the United States amply demonstrates that more
private financing does not result in a better system per se, measured either by equity or
efficiency.
The imposition of user charges on patients does not take account of the fact that it is
primarily physicians who make recommendations to patients about what care is needed and that
patients rely on their physicians’ advice. If this assumption is generally true, then user charges
Strengthening the Foundations: Modernizing the Canada Health Act
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may not result in more appropriate use of services. If a patient faced with a user fee attempted to
self-diagnose, he or she might believe – mistakenly – that the condition is not serious and not
seek appropriate treatment, which could result in a crisis and greater costs later on. Also, if the
goal is to decrease spending by reducing use, user charges will not be effective if private
insurance completely covers the cost of the user charge.7 Finally, total health spending will not
decline if physicians in a fee-for-service system respond to a decline in demand by simply
providing more services to those patients who can afford them or who have private insurance
(Epp et al. 2000; Rice and Morrison 1994; Stoddart et al. 1993; Flood 1996, p. 1-3; Hutton 1989;
and Deber 2000a and b).
From an equity and fairness perspective, user charges are obviously of concern, as they are
contrary to the core principle that access to needed health care services should be distributed on
the basis of need and not the ability to pay. A regime of user charges could satisfy this principle
only if generous safety nets were constructed so that people on low incomes were not deterred
from seeking the care they need; otherwise, there would be concern about the adverse impact on
the health of low-income people (Tamblyn et al. 2001). Any province that wanted to impose a
system of user charges would have the heavy burden of demonstrating that the charges would not
prevent people from receiving the care they really need.
Recommendations
1. The criterion of access in the CHA be changed to “reasonable access in a reasonable time
frame, given the nature of the health need.”
2. The CHA require the provinces to account for the processes that they have in place to ensure
that all residents of the province have reasonable access to health care goods and services in a
reasonable time frame.
3. The prohibition on extra-billing remain in place.
4. The prohibition on user charges remain in place.
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III. Enforcement of the CHA
1. Introduction
The federal government can enforce the terms of the CHA by withholding federal funding from
the provinces. There are two enforcement tracks. The discretionary enforcement track applies to
the five criteria, and provides that the federal government may (but need not) deduct monies
from provincial transfer payments for violations of the criteria (CHA 1985, sec. 14-15). Even if
the federal government decides to make a deduction, the amount is that which “... the Governor
General considers to be appropriate, having regard to the gravity of the default” (CHA 1985,
sec. 15(1)(a)). The mandatory enforcement track applies to the specific bans on extra-billing and
user fees, and provides, pursuant to section 20, the Minister of Health must deduct, on a dollar-
for-dollar basis, the amounts paid as extra-billing or user charges for services that should be
freely available.
Enforcement efforts have been checkered (Choudhry 1996; 2000; Flood 1999). The
discretionary enforcement track has never been used despite the Auditor General’s finding in
1999 that there were several cases of ongoing non-compliance with the five criteria of the CHA
(Canada Office of the Auditor General 1999, Chap. 29, paras 29.45-29.49). For example, Quebec
remains in breach of the portability requirement because it refused to reimburse patients for care
received in other provinces at the amount that the other province would normally pay. Another
study, relying on media reports and Hansard, suggests that many alleged violations of the CHA
have not prompted a public response by the federal government (Choudhry 2000). Despite this,
the federal government has not exercised its right to impose financial penalties.
In contrast, under the mandatory enforcement track, approximately $245 million were
withheld from the cash contributions to seven provinces between 1984 and 1987. As provided
for in the CHA, this money was returned to the provinces once they had eliminated the user
charges. From 1992 to 1995, $2 million were deducted from transfer payments to one province
that permitted extra-billing. Pursuant to the federal policy on private clinics (Marleau 1995), a
total of approximately $6 million have been withheld since November 1995 from four provinces
where patients were charged a “facility fee” for medically necessary services. One province is
still not in compliance and is being penalized in the amount of $4,780 per month. Pursuant to
section 20(6), the federal government could withhold additional sums beyond the amount of the
facility fees; however, to date it has not chosen to do so (Canada Office of the Auditor General
1999, Chap. 29, paras 29.45-29.49).
2. Why Is the CHA Not Enforced More Vigorously?
Why is the CHA not enforced more vigorously? Why, for example, does the federal
government refrain from using its discretionary powers to impose heavier financial penalties in
the case of extra-billing or user charges, where deductions on a dollar-for-dollar basis do not
result in provinces moving quickly to eradicate these activities? Also, why has the federal
government never penalized a province financially for failing to comply with the CHA’s five
criteria?
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(a) Lack of Deductions Does Not Necessarily Mean Lack of Enforcement
The fact that few deductions are being made does not necessarily mean that the CHA is not
being enforced through alternative means. The Auditor General notes that the federal
government tries to resolve issues of non-compliance through political negotiation rather than
penalizing the provinces through financial sanctions. Over the last five years, six cases of non-
compliance have been resolved using this approach. However, the Auditor General was
concerned about delay in resolution, as four cases had taken between 14 and 48 months to be
resolved, and two cases had continued for as long as five years without penalty (Canada Office
of the Auditor General 1999, Chap. 29, para. 29.46). In sum, there is a lack of transparency here,
making it extremely difficult to draw a definitive conclusion regarding the extent of federal
enforcement activity.
(b) Inherent Difficulty of Enforcing Criteria
Although the federal government has withheld funding where provinces have allowed extra-
billing or user charges, it has never withheld funds under its discretionary powers for breach of
one of the five criteria. This is likely due in part to the difficulty in determining whether any of
these criteria have been substantively breached. Whether or not a province has complied with the
criteria of comprehensiveness or accessibility, for example, is easily debatable. As discussed
earlier, these criteria are couched in general terms and their definitions are circular –
comprehensiveness, for example, means that all insured services must be insured. This definition
begs the question of what, at a minimum, must be covered. We advocate that the primary
approach to the CHA should not be one of enforcing criteria as goals in themselves but of asking
provincial governments to account for the processes they have in place to achieve these goals.
(c) Reductions in Federal Contributions in the 1990s
It is widely thought that the federal government’s ability to enforce compliance with the
CHA’s criteria has been seriously diminished by reductions in federal cash transfers (Choudhry
2000). At the inception of Medicare, the federal government contributed 50 percent of all costs.
The provincial and territorial ministers of health report that the federal share of provincial health
costs was, on average, 10.2 percent in 1998-99, although one-time federal transfers in 1999-2000
and 2000-01 brought the federal cash contribution up to 13.8 percent (Provincial and Territorial
Ministers of Health 2000, p. 19). The federal government argues that its contribution is actually
significantly higher than this – approximately 30 percent – if tax point transfers are taken into
account.
Apart from the quantity of the federal contribution, another significant concern for the
provinces has been to ensure the stability of federal funding in provincial insurance plans.8 Rapid
reductions in federal funding undoubtedly caused significant hardships for the operation of
provincial insurance plans in the early to mid 1990s, because, of course, funding reductions are
not mirrored by reductions in health care needs or patient and provider expectations.
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The turmoil over funding, and the resulting tense and bitter federal-provincial relations that
have ensued, must to some extent have had an impact on the willingness and capacity of the
federal government to impose its own vision of Medicare upon the provinces. Increasingly, a
number of provinces are saying that the federal government has failed to show leadership in
health care issues, and that, in the absence of significant financial contributions, it can no longer
count itself a significant player in charting the future direction of Medicare in Canada. This state
of affairs is completely unsatisfactory, and it is imperative to rebuild and restore a functional
relationship between the federal and provincial governments.
Sophisticated governance is fundamental to solving many of the challenges that Canada’s
health care system faces. The present situation is characterised by blame, cost shifting, and
“sterile, childish bickering” (Institute for Research in Public Policy 2000). Governance in health
care is in a state of paralysis, as both provincial and federal governments find it more politically
expedient to blame each other for Canadians’ concerns about Medicare than do something about
it. How unsatisfying and difficult the health portfolio has become is arguably reflected in the
high turnover of health ministers. The Canadian Institute for Health Information reports that
since 1990, 75 health ministers have served at the federal, provincial or territorial levels across
the country with an average median term varying from a low of 13 months in the Northwest
Territories to 41.5 months in Alberta (Canadian Institute for Health Information 2001, p. 54).
We now turn to proposing new methods of institutional oversight that could revitalize
federal-provincial relations.
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IV. Institutional Oversight
1. Introduction
The allocation of institutional responsibility for the oversight of national standards lies at the
heart of the federal-provincial conflict over the future of Medicare. Currently, the responsibility
lies exclusively with the federal government. The advantage of the current arrangement is that
final responsibility for enforcement lies with the federal cabinet, which, in theory, can impose a
significant financial sanction to elicit corrective action on the part of a province. The federal
cabinet also has discretion to fine-tune the sanction and tailor it to political realities. However, as
we noted earlier, the federal government has never used its discretionary power to withhold
funds for the breach of any of the five criteria.
Even though the federal government’s powers of enforcement lie largely unused, the
provinces oppose the vesting of this responsibility with the federal government, for a variety of
reasons:
• Unilateral federal enforcement is out of keeping with the quasi-contractual nature of
conditional grants.
• The enforcement of standards has been selective, uneven, and political, and has stymied
innovation in health care reform.
• Provinces enjoy a comparative institutional advantage over the federal government in
contextualizing the meaning of national standards in light of each province’s needs and
capacities.
• Federal enforcement has lost legitimacy following reductions to transfers in the early 1990s,
which have arguably made it more difficult for provinces to satisfy national standards.
Whatever the merit of the arguments, most observers would agree that the unilateral
reduction of federal transfers in 1995 poisoned the well of federal-provincial goodwill that is
required to ensure the successful governance of Medicare. In our view, breaking the present
impasse requires (a) reconceptualizing national standards, and (b) redesigning the institutions
that oversee them. In brief, we propose that:
• with respect to the criteria of accessibility and comprehensiveness, and the suggested
criterion of public governance and accountability, the emphasis be on encouraging provinces
to establish transparent and democratic processes to specify provincial goals for these
criteria, rather than laying down a common standard for all of Canada;
• the establishment of a national Medicare Commission, the members of which would be
appointed by the provincial and federal governments, with the mandate of providing both
intellectual capital and federal financial support for provincial initiatives to redesign health
care delivery that have the goal of better meeting the criteria of the CHA; and
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• the establishment of a permanent and publicly transparent procedure to settle disputes
(including citizen complaints) over the interpretation of national standards in the CHA under
the Social Union Framework Agreement.
2. Provincial Processes to Specify Accessibility,
Comprehensiveness, and Public Administration
Although the CHA provides for a single set of national standards that all provincial health
insurance plans must satisfy, the reality on the provincial ground is different. There is variation
across provinces in the extent to which services are accessible, and to a lesser but growing
extent, in the range of services that provincial health insurance plans cover. Inter-provincial
variation reflects, in part, the fact that the criteria of comprehensiveness and accessibility are
open-ended and have not been specified either by the federal government or the courts. The
decision not to mandate a specific set of services or standards for accessibility in the CHA
reflects the reality that provinces have access to better information regarding the health care
needs and institutional capacities of their own systems, and that these needs and capacities differ
from province to province.
However, this rationale for federal deference to the provinces still requires provinces to
grapple with the national standards of comprehensiveness and accessibility. The fact that
national standards can be satisfied by a variety of means (or provincial health insurance plans),
should not render the standards devoid of content. Rather, the emphasis should be on the
provinces establishing democratic processes to specify provincial goals for these criteria. The
federal government could ask the provincial governments to demonstrate the processes they have
in place to specify and comply with these five criteria – in particular, the criteria of
comprehensiveness and accessibility, and the suggested criterion of public governance and
accountability – on an annual basis.
The CHA should be amended to require provincial governments to engage their respective
citizens in processes to fulfill the five criteria. This is the best way to ensure that the criteria are
viewed by the provinces and by the citizens of Canada as fair and the best way to give them
substantive content. This kind of provincial undertaking could spark an important public debate
within each province over what citizens can reasonably expect of their health care systems
(Daniels 2000). In this way, one of the democratic benefits of a federal system – the potential for
meaningful citizen participation through decentralized decision making – is realized.
Reconceptualizing national standards as we propose would have many benefits. It would
shift the focus of federal-provincial relations away from disputes over enforcement toward a
partnership between governments. It would recognize that the application of the five criteria of
the CHA might lead to different results in different communities. The latter, of course, might be
viewed as a disadvantage, as it could lead to an increase in interprovincial variation. This
variation would undermine the “citizenship” rationale of national standards. However, as
discussed above, this variability could also be a strength, as a one-size-fits-all approach is
appropriate to the goals the system should strive for but not the various means of achieving those
goals.
Strengthening the Foundations: Modernizing the Canada Health Act
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3. Medicare Commission
A second component of reforming the structure of federal-provincial relations in Medicare
concerns the institutions that govern it (Choudhry 2000). At present, to the extent that we can
speak of a national Medicare system, it is governed exclusively by the federal or provincial
governments. As a consequence, Medicare has fallen prey to politics and has become one of the
principal arenas for federal-provincial conflict. To be sure, it would be both impossible and
undesirable, from the point of view of democratic accountability, for elected governments to
extricate themselves from the business of governing Medicare. However, there is a real need for
a non-partisan national body, protected from day-to-day politics, and with a longer-term view
than is possible for elected government. This national body should ensure that additional federal
funding in health care is used to promote reform in accordance with the five criteria of the CHA.
What we propose is the creation of a Medicare Commission. The Commission would be an
expert, independent body. Its members would be appointed by provincial and federal
governments and its funding secured from the federal government. We address the function,
funding, and membership of this body in turn.
Function: The role of this Medicare Commission would be:
• to determine specific performance indicators to help provinces achieve the national standards
set out in the CHA. For example, the Commission might issue performance metrics for
“reasonable access” that are tailored to particular contexts of treatment (e.g., specialist
services, primary care, emergency services);
• to publish (in conjunction with the Canadian Institute for Health Information) annual reports
on the performance of provincial health insurance systems according to these performance
indicators and how provinces are measuring up to their own identified goals;
• to identify programs that constitutes “best practices,” by drawing on both research and
experiences in Canada and abroad. If followed, these practices would yield improvements
according to standard performance indicators (e.g., best practice standards in primary care
and best practice models in primary care reform);
• to provide financial assistance to those provinces that undertake to implement the processes
or programs identified by the Commission; and
• to work with provinces to establish processes to better satisfy the criteria of public
governance and democratic accountability, accessibility, and comprehensiveness
(e.g., processes that best incorporate technical evidence and public values in determining
which hospital and physicians services should be publicly funded).
Funding: The Commission’s funding would have to be stable and guaranteed. There would have
to be a fixed percentage of funding for health care, inflation, and population, adjusted each year.
The funding would be separate from federal transfers for health care and would consist, instead,
Strengthening the Foundations: Modernizing the Canada Health Act
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of new federal money that would pull together all one-off payment initiatives the federal
government has currently undertaken in primary care and other areas. To ensure its legitimacy
and credibility, it is crucial that the Commission receive a significant sum of federal funds.
Membership and Terms of Office: The Commission would have to have both expertise and
independence, the latter being achieved through security of tenure and financial security. To
ensure that the provincial governments recognize the legitimacy of the Commission, the
Commission would need to be appointed jointly by the provincial and federal governments. One
possible method of composition would be for each province to appoint one commissioner and the
federal government to appoint five, for a total of fifteen. Commissioners would serve full time.
They could not be federal or provincial civil servants, consult independently or hold private
sector employment. Moreover, to be effective, the Commission must be non-partisan and, to the
extent possible, non-politicized. The commissioners would select a chief commissioner from
among them. All decisions would require a two-thirds majority, meaning that federal
commissioners would require support from a majority of provincial commissioners for any
decision. An expert staff of health service researchers would assist the Commission. Finally, the
Commission would make its reports publicly available, including specific findings on the
compliance of provincial health care plans with national standards.
4. Procedures for Settling Disputes
Disputes will, unfortunately, continue to arise over provincial compliance with the CHA,
although, we would argue, with less frequency and with less bitterness should the reforms we
propose be implemented. Nonetheless, we think it important to establish procedures under the
Social Union Framework Agreement (SUFA) for settling disputes (Choudhry 2000). The need
for procedures was evident during the dispute over Alberta’s Bill 11, which ultimately turned on
competing interpretations of the CHA. The need for procedures has become all the more pressing
given the stated desire of some provinces to experiment with public-private partnerships and to
delist services that are currently insured.
Article 6 of SUFA establishes a general framework for creating procedures to settle disputes.
Within this framework, negotiations should be premised on joint fact-finding, which may be
conducted by a third party and would be made public if one party so requests. In addition,
negotiations may be accompanied by mediation; again, mediation reports would be made public
if one party so requests. Also according to SUFA, mechanisms for dispute resolution must
respect a list of general principles. They must be “simple, timely, efficient, effective and
transparent;” allow for the possibility of non-adversarial solutions; be appropriate for the specific
sectors in which the disputes arise; and provide for the expert assistance of third parties.
The federal and provincial ministers of health on 24 April 2001 announced the establishment
of a dispute settlement mechanism for disagreements regarding the interpretation of the CHA.
The full details of the proposal have not been released to the public. A Government of Alberta
News Release explains that if the federal government and a provincial government are in a
dispute over the interpretation of the CHA, then either party may refer the matter to a third-party
panel. “The panel will be composed of one representative appointed by the federal government,
Strengthening the Foundations: Modernizing the Canada Health Act
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one representative appointed by the province or territory and a chairperson agreed to by each
government. It will have the ability to provide non-binding advice and recommendations. To
ensure an open process, the panel’s final report will be made public” (Government of Alberta
News Release).
This initiative on the part of the federal and provincial governments is an important step
toward facilitating good governance of Medicare. Our reservations are that it is not clear from
this proposal whether or not the panels that are constituted will be permanent or ad hoc. We
think the creation of one permanent national panel is by far the best way to build up expertise
and consistency regarding interpretation of the CHA. We also would argue that citizens should
be able to invoke the process, as federal and provincial governments may lack the incentive to
enforce the law.9 If a Medicare Commission were created, the regime for settling disputes could
be tied to the Commission’s work. For example, the Commission might produce fact-finding
reports that could serve as the basis for mediations or negotiations and be introduced as evidence
in hearings. Finally, we would note that any dispute resolution mechanism will remain a hollow
protection unless and until the federal government takes a stronger role in enforcing the criteria
of the CHA.
Strengthening the Foundations: Modernizing the Canada Health Act
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V. Expanding the Envelope of Publicly Insured Services
1. Overview
As discussed earlier, there is a need for the creation of national insurance programs for
pharmacare and home care, with national standards. These standards need not, however, be the
same criteria or standards as those presently in the CHA. In particular, it may be appropriate to
levy user charges on people who can afford to pay for certain aspects of home care that bridge
the divide between medical and social services (housekeeping services, for example). The
prospect of user charges and extra-billing for these services does not raise concerns of the
magnitude as are raised in the case of medically necessary physician and hospital services. There
is also not the same level of concern about human resources (particularly physicians’ labour)
being siphoned off by patients willing to pay amounts above and beyond those covered by public
health insurance. Moreover, some provinces may wish to follow Quebec’s model of managed
care in providing for provincial drug plans that cover all citizens and regulate the operation of
private insurers as opposed to nationalizing the insurance function. In the eyes of some, this may
be seen to be in breach of the public administration criterion as presently configured. Thus, in
our opinion, it would be appropriate to provide for national standards for pharmacare and home
care by way of separate legislation.
Under our proposal, the federal government would have two policy instruments available to
create and implement national standards for prescription drugs and home care:
1. A new federal-provincial shared-cost statute (the “Canada Pharmacare and Home Care Act”);
2. Federally created and administered prescription drugs and home care programs (via the
federal Crown’s contracting power).
2. A Federal-Provincial Shared-Cost Statute
The most obvious solution is to create a new shared-cost statute whereby the federal
government would make transfers to the provincial governments in exchange for upholding
certain national standards for insuring prescription drugs and home care programs. Because these
programs would be created through separate legislation, there would be no need to amend the
CHA. The funding arrangements for this new shared-cost statute would be identical to those
under the CHA – block funding – and could be incorporated into the new “Canada Health
Transfer” that we propose above. The national standards of public administration,
comprehensiveness, universality, portability, and accessibility would also still apply, subject to
the clarifications and changes discussed earlier. However, we do not think the specific bans on
extra-billing and user fees should be included in this new act; at least in the short term. The
legislation would, however, have to specify, at a minimum, national standards regarding the
income level below which user charges are unacceptable (that takes into account interprovincial
variations in the cost of living). Ideally we think it should also provide that care which if not
provided in the home or community would result in the patient being hospitalized be provided
free of any user charge.
Strengthening the Foundations: Modernizing the Canada Health Act
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There are disadvantages to this option. First, it would require a significant new federal
funding commitment. Second, given the experience surrounding the introduction of the CHST,
provinces may be reluctant to launch new public programs without a long-term funding
commitment from the federal government or increases in federal cash transfers for CHA-covered
programs. Even if the federal government were willing to make such commitments, short of
constitutional amendment, a federal government with a majority in Parliament is always free to
alter the level of its financial contributions. This option would become more attractive, though, if
combined with both the proposals for a Medicare Commission and procedures for settling
disputes. Those institutions would restrict federal power (albeit not with respect to levels of
funding) and could be viewed accordingly as a quid pro quo for new provincial responsibilities.
3. Direct Federal Pharmacare and Home Care Programs
If the federal government possesses the resources but the provinces are unwilling to enter
into new shared-cost arrangements for insuring pharmacare and home care, a second option
would be for the federal government to create and administer such programs directly. For
example, the provinces may be willing to hand over responsibility for the prescription drug
budget, given the increasing proportion of total health care costs absorbed by drugs (Canadian
Institute for Health Information, 2001). For this very reason, however, the federal government
may also be reluctant to take on board such a program, as it would require a significant new
funding commitment.
Should direct federal programs be politically viable, the next question is the legal means by
which such programs could be created? While the text of the Constitution is silent on jurisdiction
over social insurance, the courts have stated that publicly operated insurance schemes that seek
to safeguard persons against the risk of illness lie outside federal jurisdiction. Consequently,
direct federal regulation of health insurance has been thought to be unconstitutional. This line of
analysis seems to preclude the creation of federal insurance programs for prescription drugs and
home care without making a constitutional amendment similar to the one that transferred
jurisdiction over employment insurance from the provinces to the federal government in 1951. It
is exceedingly unlikely that the Constitution could be reopened for such a narrow amendment,
given the broad range of unresolved issues the federation already faces and the rise of “mega-
constitutional” politics during the Canada Round in the early 1990s.
There is reason, however, to question the thinking behind this premise. A good constitutional
argument can be made that Parliament holds the right to legislate health insurance as part of its
jurisdiction over the peace, order, and good government of Canada (Choudhry 2002; contra see
Jackman 1996, p. 6; 2000). In the current political climate, however, such a frontal challenge to
provincial jurisdiction would exact enormous political costs, and its constitutionality would
likely be challenged in the courts.
An alternative would be for the federal government to use its contractual power (Choudhry
2002). This power is not mentioned by name in the Constitution. Its source is the common law
rule that the Crown (including the federal Crown) possesses all the powers and privileges of a
Strengthening the Foundations: Modernizing the Canada Health Act
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private individual. Like a private person, the Crown can enter into contracts and, under those
contracts, acquire and dispose of its property, including its money. The federal Crown can enter
into contracts with individuals or institutions such as corporations or hospitals. Those contracts
may contain terms that provide for federal payments to the contracting party in exchange for
compliance with certain conditions. When exercising this power, the federal Crown is not
constrained by the division of powers. This means that it can enter into contracts in areas outside
of federal jurisdiction. Moreover, Parliament has the jurisdiction to legislate with respect to
contracts made by the federal Crown, such as laying down the conditions that attach to those
payments.
Contracting power has considerable advantages over its spending power (the federal Crown’s
central policy instrument in health care). The principal limitation of spending power is that
conditions are not legally enforceable against the recipient in court. The federal Crown’s only
remedy for non-compliance is to withhold funds. In contrast, once entered into, contracts are
legally binding and enforceable in court. However, contracts share one major limitation of
conditional grants – unlike legislation, contracts cannot impose legal obligations without the
agreement of both contracting parties.
Although federal housing policy through the Canada Mortgage and Housing Corporation
uses contracts, federal health policy does not, but it could. The federal government’s contractual
jurisdiction could be used in a variety of ways. We sketch out here, in rudimentary fashion, two
examples involving pharmaceuticals. The details of any such initiatives would obviously need to
be more fully fleshed out than is possible here.
In the first case, the federal government could set itself up as a provider of pharmaceutical
insurance, operating in a manner nearly identical to that of a private insurer. A private
pharmaceutical insurer enters into contracts to regulate its relationships with a variety of parties –
beneficiaries (who pay premiums in exchange for receiving coverage) and providers such as
pharmacies (who agree to provide pharmaceuticals for a fee set out in a schedule and bill
insurance companies directly). If it wished to do so, the federal Crown could enter into a similar
set of contractual relationships with beneficiaries and providers. If its terms of coverage were
sufficiently attractive, the federal drug plan could coexist or compete with private plans and
replace them in the marketplace. As a variation, the federal Crown could contract directly with
pharmaceutical companies over its fee schedule, using its purchasing power to contain costs.
In the second case, the federal government could facilitate not only access to prescription
drugs but also cost-effective prescribing by physicians. The central contractual relationship
would be between the federal Crown and group practices of primary care physicians. The
contracts would provide for a fixed, per capita payment to the group practice (altered for case-
mix). In exchange, the group practice would agree to manage this budget and pay for
pharmaceuticals out of it. Because it would be at risk for pharmaceutical expenditures, the group
practice would have the incentive to contain costs.
Strengthening the Foundations: Modernizing the Canada Health Act
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4. Conclusion
The two options on the table for expanding program coverage – a new shared-cost statute or
the creation of federally governed programs – each have advantages and disadvantages from the
vantage points of federal-provincial relations and democratic accountability. At this point in
time, we would recommend the former option – a new shared-cost statute, modeled on the CHA,
but with modifications regarding extra-billing and user fees – as part of the overall package of
proposals outlined in this paper. Provinces would more likely accept this package if it adhered to
the shared-cost model in the CHA and did not introduce direct federal programs into the mix.
Strengthening the Foundations: Modernizing the Canada Health Act
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VI. Summary of Recommendations
Three goals drive our recommendations: first, how to modernize the criteria of the CHA and
expand its scope to better reflect the needs of contemporary society; second, how to give content
to the criteria in the Act, cast as they are in very general terms; and, finally, how to overhaul
federal-provincial relations in the health care sector.
A. Modernizing the Criteria: With regard to the five criteria, we recommend the following:
Universality: The criterion of universality is a fundamental principle and should be
maintained for hospital and physician services and expanded specifically into diagnostic
services. Through separate legislation there should also be universal coverage for prescription
drugs and home care. The criterion of universality does not necessitate funding from general tax
revenues but, rather, that funding is progressive (i.e., based on ability to pay). New national
programs for home care and prescription drugs could be funded, for example, by compulsory
social insurance.
Portability: Out-of-country coverage is not core to Medicare. The criterion of portability
should be amended so that provinces are not in breach of the CHA if they do not pay for out-of-
country treatment.
Public Administration: The criterion of public administration should be recast as “public
governance and democratic accountability” to emphasize the importance of good governance and
accountability of decision makers at all levels in Medicare. The federal government should
monitor the growth of health care delivery by for-profit firms but acknowledge that the CHA
does not preclude their participation, provided services are fully publicly funded.
Comprehensiveness: The CHA should require provinces to establish transparent and
democratic processes to determine on an ongoing basis which services and goods should or
should not be publicly funded. It should also require that provinces give priority to publicly
funding services of proven effectiveness. As well, the scope of services protected by the CHA
should be expanded to include all medically necessary diagnostic services (e.g., MRIs).
Consideration should be given to requiring provinces to integrate funding for all publicly funded
health care services (whether protected by the CHA or not) and held by the appropriate level of
decision maker.
Accessibility: If Medicare does not respond to Canadians’ concerns regarding timeliness of
treatment, support for it will be undermined and pressure for privately financed options will
increase. The criterion of accessibility in the CHA should be changed to read “reasonable access
in a reasonable time frame, given the nature of the health need,” in order to incorporate a
guarantee of timely access. The CHA should require the provinces to account for the processes
they have in place to ensure that all residents of the province have reasonable access to health
care goods and services in a reasonable time frame.
Strengthening the Foundations: Modernizing the Canada Health Act
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B. Extra-billing and User Charges: To prevent the emergence of two-tier health care and queue
jumping, the prohibition on extra-billing should remain in place. Extra-billing would allow
wealthier Canadians to queue-jump. There is no evidence from any country that allowing extra-
billing will reduce waiting lists in public hospitals. On the contrary, countries like New Zealand
and the United Kingdom that allow extra-billing and queue jumping have longer waiting lists and
times in their public hospitals. Evidence shows that user charges for hospital and physician
services may deter both unnecessary and necessary use of care. Thus the prohibition on user
charges should remain in place unless a province could establish that a proposed regime of user
charges would not deter Canadians from seeking the care they need but only unnecessary care.
The CHA appropriately prevents experimentation with private financing through the
prohibitions on user charges and extra-billing but neither impedes nor encourages reform or
innovation in the delivery of health care. We think the CHA should be reformed to actively
encourage innovation and evidence-based reform in the delivery of care.
C. Processes for Giving Content to the Criteria of the Act: Currently, the five criteria in the
CHA are statements of the values that Canadians want to see reflected in provincial insurance
systems across the country. There is, however, no substantive definition provided for crucial
phrases such as “medically necessary” and “reasonable access.” This is understandable, given
that these kinds of requirements must vary over time and between provinces. To give real content
to the values articulated in the CHA, the CHA should require provinces to demonstrate the
processes they have in place to define and comply with the criteria on an annual basis. We
believe that this approach would shift the focus of federal-provincial relations away from
disputes over enforcement and pervasive acrimony toward a partnership between the federal and
provincial governments. By shifting toward a system that focuses primarily on accountability for
processes, we recognize that a one-size-fits-all approach is appropriate to the values the system
strives for but not the various means of realizing those values.
D. Overhauling Federal-Provincial Relations in Health Care: Federal-provincial relations in
health care are in desperate need of repair. To this end, Medicare requires the creation of two sets
of joint federal-provincial institutions to govern it. First, we propose the establishment of a
jointly appointed, non-partisan and expert Medicare Commission to work with the provinces to
establish processes to better satisfy the criteria of comprehensiveness, accessibility, and public
governance and accountability. The Commission would reward provinces that meet objective
performance indicators or that implement those reforms the Commission identifies as
worthwhile. To effect real change in the system, the Commission would have to receive a
significant sum of federal funds above and beyond existing transfer payments. Second, we
propose the creation of permanent procedures under the Social Union Framework Agreement to
deal with disputes over the interpretation of the CHA. Disputes would be heard by specialist
panels. Moreover, in addition to being triggered by government complaints, the machinery could
also be invoked directly by citizens.
E. National Programs for Prescription Drugs and Home Care: Separate legislation is required
to provide for national standards for insuring prescription drugs and home care. This legislation
will likely have to take the form of a new shared-cost statute similar to the CHA, but with
national standards for access rather than an outright prohibition on user charges. We believe that
Strengthening the Foundations: Modernizing the Canada Health Act
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some user charges may be appropriate in a national home care system as home care straddles the
medical care and social services sector, e.g., homemaking services may appropriately attract a
user fee. In the case of prescription drugs, it is vital that Canadians not be deterred from
obtaining necessary prescription drugs because of fees. But, for example, the imposition of a user
charge upon a brand name drug as opposed to a generic drug would seem acceptable.
Strengthening the Foundations: Modernizing the Canada Health Act
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VII. Conclusion
The Canada Health Act has served Canadians extremely well since 1984. However, to continue
to realize the values that lie behind the Act, some changes are necessary. Instead of regarding the
CHA as a quasi-constitutional document that should be altered with great reluctance, the statute
should be regarded as a delivery vehicle for public health care policy that from time to time must
be adapted to changing circumstances. In other words, the Act is a means, not an end in itself. At
this critical juncture, to view it in any other way would be dangerous because it would make the
CHA an obstacle to necessary change in the structure and governance of Medicare as opposed to
a facilitator of those changes. Underlying and uniting the specific reforms we propose, is a
broader call for dramatic change in the mindset that governs the legal and governance framework
for Medicare. For Medicare to survive into the 21st century, it must be both effective and
legitimate. And to be both of these things, it must be flexible and adaptable. Canadians deserve
no less.
Strengthening the Foundations: Modernizing the Canada Health Act
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Notes
1 R.S.C. 1985, c. C-6 [hereinafter “CHA”].
2 “Extended health care services” are defined as nursing home intermediate care, adult residential care,
home care, and ambulatory health care services. To obtain a federal contribution for extended health
care services, the provinces need only comply with section 13. This section requires provinces to
provide information to the federal government and formally recognize the latter’s contributions in
promotional material and public documents.
3 Thus, for example, the Australian government has reciprocal agreements with eight countries: the
United Kingdom, New Zealand, Finland, Italy, Ireland, Malta, the Netherlands and Sweden. In these
countries, Australians are provided with urgent or emergency medical treatment. See
http://www.hic.gov.au/yourhealth/services_for_travellers/tofa.htm.
4 We are grateful to Carolyn Tuohy for this point.
5 Any process to decide which services to include is a complex one that must incorporate societal values
in achieving different kinds of health states, technical evidence about the efficacy of different means
of achieving these states, and economic evidence of the cost of those, given the value as a society we
put on achieving different health care outcomes and responding to different needs.
6 In 2000, provincially appointed committees in Quebec (the Clair Commission) and Saskatchewan (the
Fyke Commission) reported, both calling for primary care reform (see Quebec, Ministry of Health,
Commission on Medicare. 2001. Emerging Solutions: Report and Recommendations. Quebec:
Commission on Medicare, available at http://www.cessss.gouv.qc.ca/pdf/en/01-109-01a.pdf);
Saskatchewan, Department of Health, The Commission on Medicare. 2001. Caring for Medicare:
Sustaining a Quality System. Regina: Commission on Medicare, available at
http://www.legassembly.sk.ca/hcc). In 2001, a provincially-appointed committee in Alberta (the
Mazankowski Commission) required a raft of controversial reforms, but included among these reforms
is yet a further call for primary care reform – see on-line: http://www.premiersadvisory.com.
7 Thus any province that imposed user charges should prohibit private insurance coverage if the goal is
truly to control total health care costs and utilization. This is what Australia does for physician
services.
8 There have been several initiatives designed to meet the need for security in terms of the amount of
federal funding. In 1996, following the recommendations of the National Forum on Health, the federal
government further amended the Federal-Provincial Fiscal Arrangements Act to provide a floor of
$11 billion per year for the cash component of the CHST, and in 1997-98, this floor was increased to
$12.5 billion.
9 To guard against frivolous and vexatious complaints, and ensure that novel issues reach panels, a
screening body such as a permanent secretariat would need to investigate complaints. It is also
important to ensure that this process would not be captured by health care providers and used as a
means to resolve disputes over compensation and working conditions.
Strengthening the Foundations: Modernizing the Canada Health Act
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