The Canadian health care system: An overview

The Canadian health care system: An overview

Sot. Sri. Med. Vol. 18. No. 3, pp. 191-197. Printed in Great Britain THE CANADIAN Department 1984 0277.9536/84$3.00 Pergamon HEALTH CARE SYSTEM...

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Sot. Sri. Med. Vol. 18. No. 3, pp. 191-197. Printed in Great Britain








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EUGENE VAYDA and RAISA B. DEBER of Health Administration, Community Health Division, Faculty of Medicine, University of Toronto, Toronto, Ontario, Canada M5S IA8

Abstract-Although health care is a provincial responsibility in Canada, universal hospital insurance was fully adopted by 1961; universal medical insurance followed IO years later. Each province enacted universal insurance after the federal government offered to pay 50% of provincial hospital and medical care costs. Hospital insurance had wide public and provider support but universal medical care insurance was opposed by organized medicine. The federal government soon realized that it had no control over total expenditures and no mechanisms for controlling costs. In 1977 it enacted Bill C-37 which limited total federal contributions and made those contributions independent of provincial health care expenditures so that increased costs had to be met by the provinces. Since private health care insurance for universal benefits is prohibited by the federal terms of reference for health insurance, the provinces must raise the money by taxes and (in some provinces) premiums. Although prohibited by the terms of reference of the universal program, some provinces have adopted hospital user fees and are allowing their physicians to bill patients in excess of provincial fee schedules. The 1980s have seen increased confrontations between the federal and provincial governments and between the provinces and their providers. The issues are cost containment and control of the system. The provinces have two broad options. The first is more private funding through private insurance and user fees. The proposed new Canada Health Act will probably prohibit such charges. A second option involves greater control and management of the system by the provinces; this has already occured in Quebec. Greater control is vigorously opposed by physicians and hospitals. The Canadian solution to health insurance problems in the past has been moderation. Extreme moves in either direction would represent a break with tradition, but they may prove to be unavoidable.

Although the current Canadian health care system is distinctive, it contains elements recognizable to students of health care in the United States and the United Kingdom. At its core is a government-run insurance plan, which uses public funds to pay for a private system. Medical care services are provided primarily by physicians trained in the North American style; indeed, Canadian and U.S. medical schools are accredited by a common body. Patients have free choice of physicians, who in turn are paid by the provincial plans on a fee-for-service basis. Public hospitals receive most of their budgets directly from government. Although national health insurance is among the most popular government programs, in recent years. the declining economy and increasing health care costs have produced pressure for cost containment, similar to that which has occurred in virtually every other developed country. Since nearly three-quarters of the public expenditures for health care in Canada are for institutional and physician services, these sectors of the health care system have come under increasing government scrutiny. The institutional sector is particularly vulnerable because it alone accounts for over half of the government paid health care expenditures, with an annual rate of increase above inflation. Canada is the largest country in the Western Hemisphere and the second largest in the world, but it is sparsely populated. In 1976, its population was only 23 million; the population density of 2.5 persons per km’ is one of the lowest in the world. However, over 75”, of the population is found in urban centres within 1500 km of the United States (US) border. Two vast northern territories are virtually unpopu-

lated, with densities of 0.04 persons per km2 or less [I]. Canada was founded as a partnership between English and French cultures but there has since been sizeable immigration, particularly from Europe, Asia and the Caribbean. Cultural differences are supported and encouraged by government. The political system is modelled on British parliamentary tradition, with considerable power resting with the executive (Cabinet). However, Canada is a loose confederation of its 10 provinces and two territories. The British North America (BNA) Act of 1867, which established Canada, set up an organizational structure for the new nation, and divided powers between the provincial governments and the new national (federal) government in Ottawa. The Act assigned all matters of national concern, plus those activities likely to be costly, to the federal government, -which had the broadest tax base; Ottawa was given jurisdiction over such items as railways, canals, coinage and, in the health field, quarantine, marine hospitals and health services for native peoples and the armed forces. The provinces were given authority for those local concerns which were, at that time, thought unlikely to be costlyincluding roads, education and “the Establishment, Maintenance and Management of Hospitals, Asylums, Charities, and Eleemosynary Institutions in and for the Province, other than Marine Hospitals”. Municipal governments have only such powers as are delegated to them by the provinces. The resulting imbalance between fiscal resources and constitutional responsibilities has made ‘federal-provincial relations’ the primary concern of Canadian politics. Issues have tended to be ‘resolved’ 191



at endless conferences between the relevant federal and provincial Ministers and bureaucrats. Provincial legislatures, generally, have had little choice but to ratify the resulting agreements. These interactions have been described as ‘federal provincial diplomacy’, much like the relationships between the heads of sovereign states [2]. Health care has been seen as a natural extension of ‘hospitals’ and as such an undisputedly provincial responsibility. Thus, it must be recognized that Canada has never had ‘a national health care system’; it has 10 provincial health care systems, plus two in the northern territories (where the federal government plays a more direct role). However, the disparities in provincial wealth soon involved the federal government in financing health services; Ottawa could therefore exert an influence on health policy despite its lack of constitutional authority. The Canadian political culture has traditionally been deferential to authority and accepting of government activity and intervention in the economy and public programs. With the exception of physicians, there is virtually no dispute about the ‘right’ of government to intervene in health care, as long as the public believes that the government will ensure the maintenance of a good universal health care system [3,4]. The primarily French-speaking province of Quebec has a more planned and state-controlled system than do the other provinces. Quebec’s recent organizational and policy changes have as yet had little effect on the other provinces. HEALTH



Although universal health insurance was first proposed in 1919, it was not enacted until much later. Local governments, industries and voluntary agencies instead developed a variety of prepayment plans in the 1920s and 193Os, which inevitably left some services not covered and some people not insured. Following the depression of the 1930s and the second World War, the federal and provincial governments turned their attentions towards domestic matters. A Federal-Provincial Conference convened in 1945 to consider programmes of social reform proposed universal health insurance with federalprovincial cost sharing. The Conference also produced a model draft health care bill for the provinces, indirectly modelled on the United Kingdom National Health System proposals. The bill provided for patient registration with family physicians in health regions; these physicians would be responsible for their patient ‘lists’ and paid on a capitation basis. They would also be paid additional sums to provide preventive services as medical health officers. Services would be provided, wherever possible, in health centres. The plan would have been administered in each province under the direction of a commission representing both consumers and the professions. Although the 1945 proposals were viewed favourably by the public and key professional groups, including the Canadian Medical Association, they failed to be enacted because they were viewed as federal incursions into provincial jurisdiction [5]. Nonetheless hospital facilities were perceived to be insufficient in number, inadequate and outdated, and



government action was seen to be necessary. In lieu of a full health insurance programme, the federal government made grants for planning and hospital construction available to the provinces. This marked the first acceptance of the concept of federalprovincial cost sharing for health services. a principle which has been the foundation of all subsequent health policy in Canada [5]. Hospitals and hospital care in Canada had previously been financed by municipal governments. religious groups, voluntary insurance programmes and patient payments. As facilities were built and modernized with government help, this funding base became increasingly inadequate, particularly in the hospital sector. By 1955, five provinces had enacted universal hospital insurance plans to stabilize their hospital funding. These plans although politically popular, proved expensive. The five provinces soon pressed the federal government to honour its 1945 hospital insurance cost-sharing offer by enacting nation-wide universal hospital insurance. Financial incentives in the ensuing Hospital insurance and Diagnostic Services Act induced all provinces to adopt universal hospital insurance by 1961. Under the Act, services were insured and eligible for 50”” federal cost sharing only when provided in hospitals: there were no incentives to use less expensive sites. (Proposals to cover home care, for example, were not adopted.) Moreover, although universal hospital insurance in Canada provided payment to hospitals, it did not mandate an organizational framework to increase efficiency or prevent duplication of services. As a result, hospital based patterns of practice, paid for by the provinces with ‘50 cent dollars’, were solidified, leading to some of the current financial problems. Hospital construction continued; between 196 1 and 1971 the number of hospital beds in Canada increased twice as rapidly as the population (33 vs 18%). Bed occupancy, which tends to correlate with bed availability, remained at about 800/, [6]. Thus, per capita utilization was also increasing. With hospital expenditures covered, public pressure grew to insure medical care costs. By this time, however, the concept of medical care insurance was opposed by powerful providers, including the Canadian Medical Association and the private insurance companies. Using a common Canadian technique for coping with difficult political problems by deferring immediate decisions while gathering more data, the federal government, in 1961, set up a Royal Commission headed by a Supreme Court Judge (the ‘Hall Commission’) [7] to study health services in Canada. While it was deliberating, the province of Saskatchewan enacted universal medical care insurance. That programme survived a 21-day doctors’ strike to become both popular and successful. In 1964, the Hall Commission delivered its lengthy report. Among its many recommendations was one that the federal government cost-share a universal medical insurance programme based on the Saskatchewan model. The resulting Medical Care Act of 1968 incorporated some of Hail’s recommendations; however, it did not include his suggested reorganization of medical services delivery. A decade later, Hall was again asked to study (in less depth) the existing health care

The Canadian health care system

system. As will be noted, he used the opportunity to repeat many of his previous recommendations. The Medical Care Act, like the previous Hospital Insurance and Diagnostic Services Act, removed financial barriers, but entrenched the most expensive means of delivery this time services; federal-provincial cost-sharing was allowed for those services provided by physicians. Although other health professionals are allowed to bill the provincial insurance plans in some provinces, for the most part, such services are still not incorporated into the system. Because the federal government had no direct jurisdiction in health care, both the hospital and medical care insurance programmes were cooperative and voluntary. To qualify for federal-provincial cost sharing, the provincial programmes had only to meet certain terms of reference: (1) Universal coverage on uniform terms and conditions “that does not impede, or preclude, either directly or indirectly whether by charges made to insured persons or otherwise, reasonable access to insured services by insured persons” (95% of the population, without exclusions, had to be covered within two years of provincial adoption of the plan); (2) Portability of benefits from province to province; (3) Insurance for all medically necessary services; (4) A publicly administered non-profit programme. Not only did federal-provincial cost sharing stimulate the provinces to adopt health insurance programmes, it also serves as a means of income redistribution between the wealthier and poorer provinces. The 507: federal share was distributed as follows: each province was paid 25% of the per capita costs it incurred for hospital in-patient services plus 25% of the national average per capita cost; this sum was then multiplied by the province’s population. For medical insurance, each province received 50% of the average national per capita medical care expenditure multiplied by its population. As a result, the wealthier provinces that spent more received less than 50% of their costs. The differentials were especially apparent for medical care cost sharing, which was entirely based on national rates. In 1973-1974, the central province of Ontario received 49.4% of its hospital costs and 44X$ of its medical care costs from federal contributions; at the other end of the spectrum, the poor Atlantic province of Newfoundland received 57.64; of its hospital and 81.5% of its medical care costs from the federal government [8]. It was soon evident that the federal government had no control over the total amounts expended by the provinces and received no political credit for its contributions. After initial unilateral attempts by the federal government to .limit its contributions without otherwise altering the programme, the federal and provincial governments settled on a new fiscal formula in 1977. Bill C-37 (Federal-Provincial Fiscal Arrangements and Established Programs Financing Act) reduced the direct federal contribution for health care to 25”, of total 1975-1976 expenditures and tied any subsequent increases in federal payments to the growth of the gross national product (GNP) after 1975. To compensate. federal income and cor-


porate taxes were decreased in order to create ‘tax room’ for the provinces, which could (and did) increase their tax rates to balance the federal reductions without increasing total taxation levels [9]. Additional revenues required to meet any cost increases in excess of growth in the GNP would be primarily the responsibility of the provinces rather than, as in previous years, a responsibility shared with the federal government. Cost control was thereby shifted to the provinces, where both the constitutional authority for health care and the management of health care services rest. Similar treatment was given to post-secondary education, another expensive and formerly open-ended cost-shared programme under provincial jurisdiction. Bill C-37 retained the four requirements for provincial health insurance programmes. However, the federal contributions for health care and postsecondary education were no longer earmarked, but became part of general provincial revenues. Both health and post-secondary education now had to compete for dollars with other provincially-funded programmes. Some federal ability to ‘steer’ provincial programmes continued because the original terms of reference were retained and a series of additional per capita grants tied to specific programmes were adopted, (e.g. grants to try to reduce the hospital focus by developing potentially less costly services like home care and extended care) Nonetheless the overall federal steering effect was reduced. Since reporting requirements were eased, it was also difficult for the federal government to monitor compliance with its terms of reference. Recently, the federal government has announced its intention to alter the agreements to further reduce its financial commitments while increasing its ability to set health policy. As a result of Bill C-37, the provices now have greater flexibility and fewer reporting requirements, but greater fiscal responsibility. Although Bill C-37 accentuated differences among provinces as the federal role decreased, essential similarities across the provincial plans remain. For example, virtually every Canadian has comprehensive medical and hospital insurance. Most hospitals are paid by provincial governments on the basis of negotiated budgets. Physicians are paid fee-for-service on the basis of provincially negotiated fee schedules. Although the details vary from province to province, all physicians have the choice of ‘opting in’ or ‘opting out’ of the provincial plan. For opted in services, the physician accepts the negotiated fee as full payment and is paid directly by the provincial government; the patient pays nothing and receives no bill. In all provinces except Quebec, an opted out physician may bill the patient above the provincial fee schedule (‘extra billing’). The plan still pays its portion, either to the patient or the physician and the patient pays the remainder, if any, of the fee. Opting in is attractive to physicians, given a reasonable fee schedule, since it eliminates bad debts and reduces administrative costs. Presently, the number of opted out physicians varies from a low of < 1% in Quebec (where the plan does not reimburse either patient or physician when the physician is opted out) to about 15% in Ontario. Opting out has been employed primarily by specialists, by groups of physicians in a



few geographical areas in which most doctors decided to ‘opt out’ and by those physicians philosophically opposed to ‘socialized medicine’. Some provinces, like Ontario, have not actively discouraged the continuation of opting out, as this practice enabled dissatisfied physicians to receive additional money without the necessity of raising provincially-paid fee schedules. Conversely, opting out is strongly opposed by the federal government, and by the social democratic NDP party, as a potential threat to the universal access guaranteed by the terms of reference. Most advocates of opting out, however, recognize that a fine balance has to be maintained so that too much opting out does not occur and tip the balance of the system [lO-121. Taxes and premiums collected by federal and provincial governments finance the publicly funded health care system. Although public administration was mandated from the outset of universal hospital insurance, the medical insurance plans allowed for a brief transition period during which private health insurance companies continued to operate. However, private health insurance now plays almost no part in the universal plan, covering only supplemental benefits (such as semi-private accommodation and other amenities). By regulation, private insurance cannot pay the ‘extra billing’ charges payable to opted out physicians; this policy has succeeded, as intended, in discouraging opting out. Services by other professional groups are financed in a number of ways. Hospital-based workers are usually paid through the government-funded hospital budgets. The decision about which other kinds of health practitioners can bill the provincial insurance plans varies across Canada; in some provinces, for example, chiropractors can bill directly with dollar limitations. Most usually, outpatient non-physician professional services are covered to some extent if ordered by a physician (e.g. physiotherapy), while other services are excluded from the plan altogether (e.g. dentistry). Initially, most provinces administered the programmes with quasi-public medical care and/or hospital commissions. In recent years, most of these provincial hospital and medical care commissions have been eliminated and their functions assumed by the provincial ministries of health. Outside of the formal health care plans, patient self-help groups are becoming increasingly active, while other healthrelated activities fall under the jurisdiction of other ministries such as community services, social services, labour or housing. HEALTH



In 1965 the total cost of all health care services in Canada was $3.3 billion, in 1970, $6 billion and in 1975 more than $1 I billion. Of the total health care expenditures in 1975, 54% went to institutional care and 16% to physician services [13]. Health care costs now make up 10% of federal expenditures and 30% of Ontario spending, sums that must be raised by taxes or premiums. The magnitude of these expenditures and the rate of their increase have captured the attention of politicians.



Following the introduction of hospital insurance. health expenditures in Canada rose, both in absolute terms and as a percentage of gross national product (GNP). The proportion of GNP devoted to health care rose from 5.5% in 1960 to 7.3”” in 1971 and actual expenditures from 2 billion to 7 billion dollars (250% increase). [14, 151.The introduction of medical care insurance had less effect. Between 1971 and 1975 expenditures rose again (from 7 billion to almost 12 billion) but the percent of GNP spent on health care remained constant at about 7”& and remained at about that level until the late 1970s. (Unpublished data indicate that currently it has reached 8”,.) However, because of government insurance, public sector funding of health care rose from 43 to 75”, of costs; actual government spending thus increased from about $1 billion in 1960. to $5 billion ‘in 1971. $9 billion in 1975 [13], and 13 billion in 1978-1979. The size of total health care expenditures became more visible once governments started paying almost all the bills. In the period before universal hospital and medical care insurance the private sector had covered some hospital and physician care. At present over 90’?, of the cost of hospital and physician services are paid by the public sector. Private payments are now limited primarily to nursing homes (40”; of costs), dental care (90% of costs) and drugs and prostheses (75”; of costs) [ 131. Hospital use and its attendant costs were particularly vulnerable to examination in Canada because. compared to many countries and particularly to the United States (US), Canada had high bed to population and bed use to population ratios. For example, in Ontario 8.9% of the population age 65 and over was in an institution on any one day, a higher utilization rate than in the US or the United Kingdom (UK) [16]. While a small portion of the higher Canadian bed use could be explained by its remote and isolated North, which was served by many small hospitals, some was a reflection of increased bed supply. By 1971, Canada had 23% more hospital beds proportionally than the US and used 309; more hospital days per capita [6]. The rising proportion of elderly threatens to impose potentially unmanageable costs if changes are not made in the system of health care delivery. FEDERAL




Concern regarding the above-inflation increases in health care expenditures was reflected in a number of government planning reports, which identified rising expenditures and stressed the need for greater efficiency and the provision of less expensive forms of health services delivery. Their goal was not necessarily to cut costs, but rather to contain their rate of increase. They were influenced by a strong body of expert opinion calling for improving the efficiency and containing the costs of the health care system through such measures as shifting from inpatient to outpatient care, reducing the number of hospital beds, and promoting paramedical workers and community health (and social service) centres. This emphasis was further justified by the work of lllich [17], Fuchs [ 181and McKeown [ 191,which challenged both

The Canadian health care system the efficacy and the marginal benefits of further increases in health care expenditures in developed countries. At the national level a 1969 Task Force on the Costs of Health Services [20] concluded that increased costs could only be dealt with by reduced standards of care, increased taxes, premiums and/or deterrent fees, or more efficient operation of the system. In 1972, the Report of the Community Health Centre Project (Hastings Report) [21] recommended the large-scale development of community health centres by the provinces as well as reorganization and integration of all health services and reductions in the number of hospital beds. The Lalonde Report of the Federal Department of National Health and Welfare [22], in what some have termed primarily a government justification for reduced spending for personal health care services [23,24], stressed the importance of health promotion, lifestyle modification and greater individual responsibility for health instead of increased provision of medical services. Many provincial governments conducted or commissioned their own studies, all of which reached similar conclusions. The Manitoba White Paper on Health in 1972 [25] suggested regionalization of health services and the establishment of community health and social services centres in order to shift from hospital to ambulatory care services. In Quebec, a four-volume Health section of the Report of the Commission of Inquiry on Health and Social Welfare (the Castonguay Report) [26] also suggested decentralization, community clinics and greater consumer input into the organization of health care services. In 1972, a Report commissioned by the recently elected New Democratic Party government of British Columbia (the Foulkes Report) [27] recommended complete reorganization of the BC health care system with regionalization and rationalization based on Community Health Resource and Health Centres and a de-emphasis on hospital use. In Ontario, the Report of the Committee on the Healing Arts in 1970 [28], the 1976 Health Report of the Ontario Economic Council 1291.and the 1974 renort of the Health Planning T&k”Force (the Musiard Renort) 1301all identified increased cost. excessive use of ho&al ‘services and the control and deployment of medical and health manpower as key issues, and included rationalization, regionalization and deinstitutionalization among their remedies. Although most of these recommendations have not been implemented, the concepts contained within the reports are now being more actively debated [31]. This largely ideologic debate about the roles and responsibilities of physicians, other providers, government and the public has been forced on the system because of the worsening economic climate in Canada and the perceived need to control cost escalation in health care and other publicly funded programmes. THE HALL



As noted, Canadian health insurance was a mix of public funding and private practice. The universal system initially paid the bills, but did not attempt to manage the programmes. Providers, particularly physicians. were (and still are) treated as private entrepreneurs who happen to operate in a publicly


funded system. Hospitals have continued under community control with independent boards of trustees. However, virtually all of their budgets are now determined and paid by provincial governments; some cost containment in the hospital sector has thus been possible and changes in hospital governance have not as yet become an issue. During the 1970s the percent of GNP spent on health care remained constant at about 7%. Although health economists hailed this as an example of successful containment, providers (both physicians and hospitals) charged that the system was underfunded and demanded that more money be devoted to health care. If not with public funds, providers favoured the injection of private money through user charges (and private insurance). Opting out and extra billing by physicians increased and negotiations between provincial governments and their doctors became more acrimonious. Confrontation increased and in many provinces work stoppages and rotating strikes took place. Hospital budgets which had been calculated on a line by line basis were converted, in most provinces, to global budgets and the annual rates of increase were frequently less than the rate of inflation. Hospitals protested these ‘inadequate’ increases both privately and publicly and were not infrequently successful in obtaining additional money to cover their budgetary deficits. It was in the context of confrontation and charges of underfunding of the health care system that the Federal government in 1979 asked Justice Emmet Hall to examine the universal health insurance program his 1964 Royal Commission Report [7l had recommended. Specifically he was asked to examine two charges that the total federal contribution plus the ‘tax room’ was resulting in fewer health care dollars for the provinces; and that, since these monies were no longer earmarked for health care, the provinces were diverting them to other programmes. He was also asked to examine extra billing and the adversarial relationship which had developed between provincial governments and their physicians. Hall concluded that both of the charges were false: the federal contributions plus ‘tax room’ were actually producing more money than the earlier cost sharing formula would have, and the provinces were not diverting these dollars from health care. Both federal and provincial health care spending was actually increasing [32]. In his review of extra billing, Hall felt that physicians should not be allowed to opt out or extra bill. Instead he recommended that they should be ‘adequately paid’ and that differences between provincial governments and physicians should be settled by compulsory binding arbitration [32]. His recommendations regarding physicians were weakened because Hall did not suggest a mechanism for determining ‘adequate’ compensation. As well, neither provincial governments nor physicians have accepted arbitration, although in some provinces intemes and residents are covered under such contracts. Govemments are reluctant to entrust settlements (and potential tax increases) to an arbitrator’s decision; physicians feel that their ‘hard line’ negotiations have been so successful that nothing further would be gained by arbitration. In only one province, Manitoba, has the



medical association demanded arbitration, and the government of Manitoba has countered by offering to accept arbitration only if the physicians give up extra billing. As of this writing, the medical association has refused and negotiations in Manitoba remain deadlocked. In 1981 a federal parliamentary task force was set up on federal-provincial fiscal arrangements, and took an even stronger stand against user charges and opting out [33] than Hall had done. THE PROPOSED




The 1979 Hall review was commissioned by a minority Progressive Conservative Party government. It reported to a majority Liberal Party government which had been elected during Hall’s deliberations. The newly elected government, facing continuing and worsening financial problems, is drafting a new Canada Health Act [34]. The government has indicated its intention to reduce its contributions to health, as well as to other cost shared programmes, and to shift even more of the financial burden to the provinces. The federal government also wants greater recognition of its contributions. In considering opting out and user charges, the draft bill re-emphasizes “delivery of insured services without financial barriers” and reiterates that “supplemental insurance for user charges would be considered as a violation of the necessary program conditions”. However, the draft version vacillates between banning user charges and developing mechanisms to control them. Although one clause states that “No user charges for insured services rendered by medical practitioners would be permitted”, other sections of the draft bill propose limitations on user charges, rather than their elimination, and list terms of reference for the administration and monitoring of user charges. The strongest proposed limitation, which would virtually ban the practice is “the dollar value of user charges for insured physicians and hospital inpatient and outpatient services would be deducted from the federal cash contribution”. The provinces, in turn, have indicated that they would consider challenging the constitutional authority of the Government of Canada to proceed with a Canada Health Act based on current federal proposals. At this writing negotiations proceed; most recently the Minister of National Health and Welfare has proposed a ban on optingout In 1983 Canada faces several potential confrontations, one between the federal and provincial governments and a second between the provinces and their providers. The federal government is not only refusing to put more money into the system, but actually proposes reducing its contributions. At the same time it favours the elimination of user charges, or the imposition of penalties for user charges; either alternative would increase financial liability at the provincial level. Providers are demanding more money, which they will accept from provincial gov-

ernments or from the private sector. Supplemental private insurance for insured benefits continues to be prohibited. When coupled with growing provincial deficits, the provincial publicly funded health care programmes are moving toward potentially untenable financial positions.


At least two scenarios are possible. One would place the health sector under greater government control; the government would then take a major role in the management of the system, the control of resources and the employment of physicians. The second scenario would shift responsibility for health care away from government into the private sector. Greater control implies increasing confrontation with providers and the need for tough and consistent stances by the provinces. It is also more likely to maintain the integrity of the publicly funded universal system. Less control may be superficially more attractive. It implies a diminished provincial role (and budgetary responsibility) as private funding increases. However, this policy will lead to greater total costs for health care and possibly to a two class hospital and medical care system. It may also lead to direct confrontation with the federal government. Either scenario implies possible collisions. The issues are basically ideologic and, after 22 years, they can no longer be avoided, particularly as the percent of GNP spent on health increases, and if the economic climate fails to improve. At one extreme is the system in the UK where.costs have been controlled, but physicians are essentially government employees, paid by salary or capitation, not on a fee for service basis, and groups of hospitals are directed by Regional Authorities rather than community boards. At the other extreme is the more costly, essentially free enterprise system in the United States with means testing, accessibility limited by patients’ finances and government funding only for the needy. Until now Canada has used public funds to pay for a private system. It has avoided the issues of reorganization, and management and control of the system as a whole. Now it appears that the fundamental issues and ideologic differences will have to be considered directly. Australia, in confronting similar issues, moved (possibly temporarily) to a more private system [35], but the popularity of the present universal system in Canada-particularly in contrast to the U.S. model-makes the Australian solution less likely here. The Canadian solution to most problems has typically been moderation. Extreme moves in either direction would thus represent an unlikely break with tradition, but they may prove to be unavoidable. REFERENCES

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