Canadian Healthcare System

Since 1971 all Canadian citizens, regardless of income, employment or health, have enjoyed access to basic health care, whether it’s provided in a hospital, home or clinic. Canada provides this coverage at a fraction of what the United States pays in health care costs. Americans spend 14 percent of their GDP on health care expenditures; Canadians only 9 percent. Yet despite its high cost, the U.S. system fails to insure more than 44 million of its citizens. Some analysts predict that figure will grow to 60 million by 2008.

Canada’s system is a unique blend of local and provincial control with federal enforcement and funding. Today there is no “Canadian” health care system, but rather ten separate and distinct provincial health care plans, each designed to meet its population’s unique resources and needs.

Befitting its decentralized framework, Canada’s system was created not by federal decree but by provincial innovation. In 1946, spearheaded by colorful premier Tommy Douglass, Saskatchewan introduced the country’s first universal hospital insurance scheme. By 1961 all provinces had adopted a similar plan. A year later Saskatchewan had expanded its plan to include care provided outside of hospitals, and in 1966 the federal government passed the Medical Care Act of 1966.

Under the terms of medicare, as the Medical Care Act is referred to in Canada, provincial governments must meet five requirements to receive federal funds to help finance their programs: portability, public administration, universality, comprehensiveness and accessibility. Medical fees are determined through negotiations between doctors (represented by their provincial medical associations) and provincial governments. The bill also prevents patients from paying doctors directly– the government is the single payer.

The key to the Canadian system is that there is only one insurer– the government. Doctors generally work on a fee-for-service basis, as they do in the U.S., but instead of sending the bill to one of hundreds of insurance companies, they send it to their provincial government. This single payer or public administration requirement is what makes the Canadian system so much more efficient than the U.S. HMO system, both because of its very nature– it’s nonprofit– and because the single payer system boasts enormous administrative efficiencies over multiple-payer systems.

Facingbudget crunches and a rising deficit, the Canadian government for the past two decades has been reducing the amount of the federal contribution to provincial health care. Initially set at fifty percent, the federal contribution has dwindled to a little more than 20 percent on average. Cost cutting has led to concerns about longer waiting times, lack of hospital beds and overall quality of care. Provinces are aggressively experimenting with ways to maintain a high standard of care while reducing costs. Among the proposed remedies are to increase the private provision of care and to further devolve health care authority to local boards. The jury is still out on these and other reforms.

But despite problems in Canadian health care, the principles enshrined in the Medical Care Act remain sacred to Canadians. As one doctor puts it, “Today a politician in Canada is more likely to get away with canceling Christmas than he is with canceling Canada’s health insurance program.”

More Information:

  • The Canada Health Act was passed in 1984, largely to end the unpopular practice of “extra billing.” The legislation also combined the hospital and medical insurance bills into one comprehensive piece of legislation, and set out definitions for the five principles governing the provision of universal health care in Canada.
  • The Canadian Cure – by Daniel Kraker, The New Rules, Winter 2001. This article explores how Canada’s provinces established a health care system founded on equity, public administration and decentralized control. Fifty years later, all Canadians are covered and the plan still costs less per capita (and a smaller percentage of the GDP) than U.S. citizens pay.
  • The Commission on the Future of Health Care in Canada – have issued their final report Building on Values: The Future of Health Care in Canada, November 2002
  • Health Canada Online – comprehensive information on Health Issues in Canada