Canada's Health Care System

Background

Modifications and major reforms have been made to Canada's health care system since its inception. As has been recognized in every major review of the system, the basic values of fairness and equity that are demonstrated by the willingness of Canadians to share resources and responsibility remain constant. However, coverage has been and continues to be modified as the country's population and circumstances change, and as the nature of health care itself evolves.

The Political, Economic and Social Framework

Canada's health care system is based on political, social and economic unions. In general, Canada's Constitution sets out the powers of the federal and the provincial and territorial governments. The provinces and territories form a political and economic union within this constitutional federation. Collective action by both levels of government on social policy and program development is provided for in the Social Union Framework Agreement.

Evolution of Our Health Care System

Under the Constitution Act, 1867, the provinces were responsible for establishing, maintaining and managing hospitals, asylums, charities and charitable institutions, and the federal government was given jurisdiction over marine hospitals and quarantine. The federal government was also given powers to tax and borrow, and to spend such money as long as this did not infringe on provincial powers.

The federal department of Agriculture covered federal health responsibilities from 1867 until 1919, when the department of Health was created. Over the years, as noted above, the responsibilities of both levels of government have changed.

Before "medicare," health care in Canada was for the most part privately delivered and funded. In 1947, the government of Saskatchewan introduced a province-wide, universal hospital care plan. By 1949, both British Columbia and Alberta had similar plans. The federal government passed the Hospital Insurance and Diagnostic Services Act in 1957, which offered to reimburse, or cost share, onehalf of provincial and territorial costs for specified hospital and diagnostic services. The act provided for publicly administered universal coverage for a specific set of services under uniform terms and conditions. Four years later, all the provinces and territories had agreed to provide publicly funded inpatient hospital and diagnostic services.

Saskatchewan introduced a universal, provincial medical insurance plan to provide doctors' services to all its residents in 1962. The federal government passed the Medical Care Act in 1966, which offered to reimburse, or cost share, one- half of provincial and territorial costs for medical services provided by a doctor outside hospitals. The act set out four points or criteria, universality, comprehensiveness, public administration and portability, which were governed by five essential elements that included these four points plus accessibility. Within six years, all the provinces and territories had universal physician services insurance plans.

The number of Canadians who knew life before medicare will very soon be, if it is not already, a minority. Of course, how life was before was the essential reason medicare developed ... .

Tom Kent, in Canada. Parliament, The Health ... : Interim Report, Vol. 1, 2001, p. 7

For the first 20 years, the federal government's financial contribution in support of health care was determined as a percentage (one-half) of provincial and territorial expenditure on specific insured hospital and physician services. In 1977, under the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977 (EPF), cost sharing was replaced with a block fund, in this case, a combination of cash payments and tax points. In general, a block fund is provided from one level of government to another for a specific purpose. This new funding arrangement meant that the provincial and territorial governments had the flexibility to invest health care funding according to their needs and priorities. Federal transfers for post-secondary education were included in the EPF transfer, in addition to funding for medical and hospital services.

In 1984, federal legislation, the Canada Health Act, was passed. This new legislation included the principles provided in the federal hospital and medical insurance acts, and added provisions that prohibited extra-billing and user fees for insured services. Federal legislation passed in 1995 consolidated federal cash and tax transfers in support of health care and post-secondary education with federal transfers in support of social services and social assistance into a single block funding mechanism, the Canada Health and Social Transfer (CHST), beginning in fiscal year 1996-1997.

An agreement on health reached in 2000 by the federal, provincial and territorial government leaders (or first ministers) set out key reforms in primary health care, pharmaceuticals management, health information and communications technology, and health equipment and infrastructure. At the same time, the federal government increased cash transfers in support of health.

In 2003, the first ministers agreed on the Accord on Health Care Renewal, which provided for structural change to the health care system to support access, quality and long-term sustainability. Targeted reforms included accelerated primary health care renewal; coverage for short-term acute home care and for the cost of prescribed drugs that reach high or catastrophic levels; enhanced access to diagnostic and medical equipment; and better accountability from governments.

Under the Accord, federal government cash transfers in support of health care were increased, and the CHST cash and tax transfers were split into the Canada Health Transfer for health, and the Canada Social Transfer for post-secondary education, social services and social assistance, effective April 2004.

Further reforms were announced by the first ministers in A 10-Year Plan to Strengthen Health Care in 2004. The Plan is focused on improving access to quality care and reducing wait times. Other key reforms address: health human resources; Aboriginal health; home care; primary health care; prescription drug coverage and other elements of a national pharmaceutical strategy; health care services in the North; medical equipment; prevention, promotion and public health; and enhanced reporting on progress made on these reforms. To support the Plan, the federal government increased health care cash transfers and applied an escalator as of 2006-2007 to provide predictable growth in federal funding.

For more detail on the history of our health care system, start with the resources at the end of this brochure: the Timeline, Bibliography and On-Line Resources.