ECON 440 Lecture Notes - Lecture 8: Health Care In Canada, Canada Health Transfer, Canada Health Act
13 Jun 2018
School
Department
Course
Professor
Canada: closer to universal, single payer, public
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US: closer to partial coverage, private, multi-payer
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The Canadian vs. US Healthcare System
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And, in the US, you can make the argument that there are single payers
▪
The Canadian system isn't technically single-payer only (there are multi-payers)
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In terms of financing care/ healthcare services, both are closer to the middle
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Both, however, fall close to the middle of the spectrum (Universal ------ Multi-Payer)
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Overview
Some key dates
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Federal and Provincial
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Public and Private
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Financing - how do we collect dollars from taxpayers and bring that money into the healthcare system?
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Funding - how money goes from the health insurer to those that provide the services
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Public and Private
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Delivery
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Roles of a health care system
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Outline
Some individuals had private insurance through their employer, or they bought HI
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If people needed healthcare, they would pay what/if they could
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Physicians engaged in price discrimination
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Around the 1940s, there was a push to create a public service for hospital insurers
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Pre-WWII: no real healthcare "system"
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1957 - 61: all provinces and territories covered under Federal cost-sharing program for hospital services
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Hospital insurance came first; physician insurance second
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1947: first publicly funded universal hospital insurance in SK
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1966 - 72: Federal Medical Care Act introduces Fed-provincial cost-sharing program for outpatient MD
services
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1961: first publicly funded insurance for MD services in SK
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The federal government, in theory, should be able to withhold transfer if the P/Ts aren't following
the criteria
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Sets out the criteria that P/T must follow in order to continue to receive federal transfers
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Prohibits user fees and balance billing
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1984: Canada Health Act
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Timeline - Major Events
Their claim: government-controlled health care would interfere with the doctor-patient relationship and
limit physicians' ability to use their best judgement
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On 1 July 1962, when the Act came into force 90% of the province's physicians went on strike
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The private insurers at the time were opposed to this public program, as they didn't want competition
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Premier Tommy Douglas' proposal to expand medicare was opposed by Liberal party politicians private health
insurers, and the SK College of Physicians and Surgeons
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i.e., the Government wouldn't tell them how to run their practice/ how much they had to work
per day
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While there may be demand-side pressure, it's not coming from the government (very "laissez-
faire"
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Generous payment to physicians and no major organizational changes
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Allow physicians to practice outside the public insurance plans (i.e., opt outside of the public system)
Canadian Medicare's "founding bargain" in the face of opposition
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Physician Opposition and Accommodation
Lecture 8 - Canadian Health Care System
Wednesday, January 31, 2018
2:00 PM
ECON 440 Page 1
If they do opt out, they must do so 100%; either in (have access to the whole market of 97% of
Canadians with public insurance) or out
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Allow physicians to practice outside the public insurance plans (i.e., opt outside of the public system)
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Public administration (13+ "systems)
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Comprehensiveness - must cover all things medically necessary (hospital or physician services)
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Universality - everyone with eligibility criteria is covered
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Portability - though the HC systems are separate, when we travel around Canada we need to be
able to take our coverage from one province and receive coverage in another
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Has to be reasonable and on uniform conditions (allows for unequal access based on
geographic location)
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No cost-sharing: there can be no financial barriers to the services that are covered under
"medically necessary" clause (has been interpreted as no user fees for anybody)
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Accessibility
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Laying out the core values on which the system is based
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Specifying the terms and conditions that provincial governments must comply with to receive transfer
from the federal government
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Governs the Canadian health care system by:
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The Canada Health Act (1984)
Give $X to be spent on Y
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Highest degree of government control
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"Targeted" funding - money that can only be spent for a particular purpose (government specified)
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Canada Health Transfer
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P/Ts prefer this type of funding
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"General revenues" - accompanied by strong suggestions, but the provinces exert control over spending
priorities
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Least government control
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"Tax points" - the federal government agrees to reduce its own tax rate, leaving provincial governments free
to increase their own rates without affecting the taxpayers' "bottom line"
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The running of the system is left to the provinces
▪
Our HC system is ultimately financed by the federal and provincial governments (with some private
funding)
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Who has control? Who has the money? Who has the final say?
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This causes "federalist tensions"
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Descending order of control
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Federal Transfers to Provinces
Changes over time in the amount, composition, and target of federal funds
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i.e., at the end of the year, the province takes their bill to the government, and the government
reimburses them X amount
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The more provinces spend, the more the federal government has to pay in reimbursements
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1950's cost-based reimbursement for hospital and outpatient services
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Hospital Insurance and Diagnostic Services Act (HIDS), Medical Care Act (MCA)
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Now, the federal government wants control; rather than paying a percentage of the costs, they'll
pay a static amount adjusted for inflation over time
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1977 - no cost-based reimbursement
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Base payment with escalator, cash and tax transfers
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Established Programs Financing Act (EPF)
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1984, enforcement of extra-billing and user charges
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Canada Health Act
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1995 - 97, block grant with no spending priorities dictated by the Feds
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Canada Health and Social Transfer (CHST)
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Tried to give the provinces some predictability in order to budget and plan for what was coming
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2000 - 04, new funding, some targeted, predictable funding growth (6% per year)
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Accord on Health Care Renewal and the Canada Health Transfer (CHT)
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Federal Transfers Related to Health Care
ECON 440 Page 2
Tried to give the provinces some predictability in order to budget and plan for what was coming
▪
Provinces were unhappy with this as it represented a substantial cut to their funds; tried to
negotiate with the federal government
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2011, max 3% or rate of GDP growth (scheduled for April 2017)
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Trudeau government: promised to renegotiate the escalator decision made by the Harper government
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Harper government reduces cost escalator
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The provinces disliked this offer, though - believed the federal government shouldn't have as
much control over them
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Government offered 3.5% escalator and $8 billion over 10 years for home care and mental health
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Trudeau campaign had promised a renegotiation of the CHT
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Some saw this as a passive transfer, and that the federal government wasn't doing enough to push
the P/Ts to improve their systems
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Reflection of federal government flexing some of its bargaining power
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All P/T eventually agreed* to bilateral agreements, beginning with the smaller jurisdictions
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The federal government is responsible for the Canadian healthcare system and having some
degree of similarity across space
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Local flexibility vs. pan-Canadian priorities
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The provinces always want more cost-sharing, the federal government always wants to reduce
financial risk
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"Adequate" cost-sharing vs. financial risk
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Provincial opposition to "meddling" vs accountability
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Dollar amounts and percentages reflect bargaining power, but form of transfers and constraints reflect classic
Federalist tensions
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In 2017
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How is Health Spending Distributed?
Absolute costs for hospitals, physicians, and Rx are all increases (with costs for hospitals and Rx
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Spending is largest on hospital care, followed by Rx, then physicians, other professionals, institutions
health spending, public health, administration, and capital
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ECON 440 Page 3
Document Summary
Both, however, fall close to the middle of the spectrum (universal ------ multi-payer) The canadian system isn"t technically single-payer only (there are multi-payers) And, in the us, you can make the argument that there are single payers. In terms of financing care/ healthcare services, both are closer to the middle. Funding - how money goes from the health insurer to those that provide the services. If people needed healthcare, they would pay what/if they could. Some individuals had private insurance through their employer, or they bought hi. Around the 1940s, there was a push to create a public service for hospital insurers. 1947: first publicly funded universal hospital insurance in sk. 1957 - 61: all provinces and territories covered under federal cost-sharing program for hospital services. 1961: first publicly funded insurance for md services in sk. 1966 - 72: federal medical care act introduces fed-provincial cost-sharing program for outpatient md services.
