canada health act

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How Canadian Health Care Differs from Other Systems

Canada has one of the most expensive universal health-care systems in the developed world. However, there is an imbalance between the value Canadians receive and the relatively high amount of money they spend on their health-care system. Of particular concern is the fact that Canada has significantly fewer physicians and acute-care beds, and also ranks poorly for the availability of important medical technologies like MRIs and CT scanners. Of course, the most spectacular failure of Canada’s health-care system is manifested in the form of wait times, which have become a defining feature of the Canadian health-care experience.

These failures have little to do with the notion of universal health care or spending. Not only does Canada rank among the top spenders on health care internationally, but provincial governments within the country have been increasing spending at unsustainable rates for years. There are several other countries around the world that share the goal of ensuring universal access to health care regardless of the patient’s ability to pay; and generally, with similar or lower health expenditures, they perform on par or better on most indicators of performance. A comparison of health policies that compares Canada’s with those in eight other high-income OECD countries with universal health care (Australia, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland and the United Kingdom) reveals significant differences.

Canada is the only country of the nine where private financing for medically necessary services is disallowed and where the private sector is for the most part shut out of delivering medically necessary treatment. The ability of outpatient and inpatient specialist physicians to practise both in publicly funded universal settings and in private settings is also severely restricted in Canada in contrast to the other countries. Canada and the United Kingdom are the only two countries among the nine where patients are not expected to share directly in the cost of medically necessary treatment. Finally, Canada is the only country in the cohort that relies almost exclusively on prospective global budgets to fund its hospitals in contrast to other countries that are increasingly moving towards payment based on some measure of activity.

Clearly, the policies that characterize Canada’s health-care system stand in stark contrast to those pursued by other—arguably more successful—universal health-care systems. These differences, coupled with evidence of how Canada’s health-care system underperforms, suggest the need for policy reform.

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Select Cost Sharing in Universal Health Care Countries

A prominent feature of Canada’s health care system is the absence of any charge for publicly insured health care services at the point of consumption. This feature is mandated by the Canada Health Act along with a prohibition on extra-billing by health care providers.

A strong argument can be made that “first-dollar” coverage leads to an inefficient overconsumption of health care services. Specifically, it encourages the consumption of health care services whose costs exceed the associated benefits of those services.

Most developed countries with universal coverage for health care services do not mandate first-dollar coverage. Rather, insurers (whether public or private) typically impose some type of cost sharing for the health care services they cover, including services that are similar to those that are covered by provincial health care plans in Canada. Exemptions from cost-sharing, or subsidies to help pay for cost sharing, are typically provided to low-income insurance subscribers, the chronically ill, and children. There are also usually caps or limits on the total out-of-pocket expenses that different groups of subscribers can incur as a result of cost sharing.

A prominent argument against cost sharing is that it will discourage the consumption of “necessary” medical services with the potential consequence of much larger future costs being imposed on the insurance system to remediate the discouraged earlier consumption.

Empirical evidence generally suggests that cost sharing at the point of consumption does lead to a reduced use of health care services at the margin; however, the evidence does not consistently establish that cost sharing results in adverse long-term health outcomes. This latter result might reflect the fact that exemptions and subsidies that are granted for specific services and for low-income and other “vulnerable” patient groups mitigate risks that cost sharing will discourage the consumption of necessary medical treatments and procedures.

New federal health minister has opportunity to serve patients—not the system

Years of adhering to the status-quo and simply pumping money into the system has done little to address the fundamental problems with Canada's health-care system.

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