The Health of Canadians The Federal Role
Volume Six: Recommendations for Reform
PART VIII: THE CANADA HEALTH ACT
The Canada Health Act
In Volume One, the Committee traced the evolution of the nation-wide principles of the Canadian health care system. We stressed the fact that although the delivery of health care is primarily within provincial/territorial jurisdiction, it does not mean that national interests are absent. For its part, the federal government established national principles and contributed to meeting the cost of health care, first through cost-sharing (from 1966 to 1977) and subsequently by block-funding.
These national principles are currently set out in the Canada Health Act (the Act), which was unanimously enacted by Parliament in April 1984. The five national principles of the Act are:
· The principle of universality, which means that public health care insurance must be provided to all Canadians;
· The principle of comprehensiveness, which means that medically necessary hospital and doctor services are covered by public health care insurance;
· The principle of accessibility, which means that financial or other barriers to the provision of publicly funded health services are discouraged, so that health services are available to all Canadians when they need them;
· The principle of portability, which means that all Canadians are covered under public health care insurance, even when they travel within Canada and internationally or move from one province to another;
· The principle of public administration, which requires provincial and territorial health care insurance plans to be managed by a public agency on a not-for-profit basis. (This principle says nothing about the ownership structure of a health service delivery institution.)
As explained in Volume One, the Committee considers the first four principles of the Canada Health Act to be patient-oriented. The fifth principle – that of public administration – is of a completely different character. It is not patient-focussed but “is rather the means of achieving the end to which the other four principles are directed.” The public administration condition of the Canada Health Act is the basis for the single insurer/funder model that the Committee endorsed in Volume Five under Principle One.
Altogether, the five principles of the Canada Health Act flow from two overarching objectives for federal health care policy – objectives that the Committee strongly supports as the primary federal health care objectives. As indicated in Volume Four, these two objectives are:
· To ensure that every Canadian has timely access to all medically necessary health services regardless of his or her ability to pay for those services.
· To ensure that no Canadian suffers undue financial hardship as a result of having to pay health care bills.Each recommendation made in this report with respect to 1) restructuring of the hospital and doctor system, 2) establishment of a national health care guarantee, 3) improvement of the health care infrastructure, and 4) enhancement of federal funding for health care, is designed to make progress toward achieving these two overarching public policy objectives in ways that are consistent with the principles of the Canada Health Act. Adopted together, these recommendations will ensure the long-term sustainability of Canadian Medicare.
The Committee’s recommendations relating to the expansion of public health care coverage are also intended to preserve the primary objectives of federal health care policy, although we recognize that some of the program characteristics proposed for such expansion do not comply with the Canada Health Act. This is particularly true with respect to the out-of-pocket payment provisions up to an annual cap/maximum of 3% of family income proposed for catastrophic prescription drug coverage.
The principle of universality of the Canada Health Act requires that all residents of a province or territory be entitled, on uniform terms and conditions, to the publicly funded health services covered by provincial/territorial plans. Universality is often considered by Canadians as a fundamental value that ensures national health care insurance for everyone wherever they live in the country.
Universality does not dictate a particular source of funding for the health care insurance plan. As a matter of fact, the provinces/territories can and do fund their universal plans as they wish, through premiums, dedicated or general taxation. By contrast, universal health care coverage in both Germany and the Netherlands is provided through a system of dedicated payroll taxes.
Moreover, universality is not necessarily achieved only through public funding. For example, universal coverage for health services is guaranteed by both Sickness Funds (public plans) and private insurers in Germany and the Netherlands. Similarly, the Quebec Pharmacare program provides universal coverage through a combination of public and private insurance.
The principle of universality is one the Committee holds dear. It ensures that access to publicly funded health services is available to everyone, everywhere, and that no one is discriminated against on the basis of such factors as income, age, and health status. We believe that universal insurance coverage and the access it provides to the publicly funded hospital and doctor system has served Canadians extremely well. Accordingly, it should be preserved.
Health services that must be covered under the Canada Health Act are determined on the basis of the “medical necessity” concept under the principle of comprehensiveness. All medically necessary health services provided by hospitals and doctors must be covered under provincial/territorial health care insurance plans.
The determination of what services ought to be considered “medically necessary” is a difficult task. Most Canadians would agree that life-saving cardiac procedures are medically necessary. Most Canadians would also agree that most cosmetic surgery procedures do not meet that criterion. The difficulty comes with those services that lie between these two extremes.
Deciding what health services are to be insured and excluded has always been part of the way Canadian Medicare has functioned. These decisions are made in each province/territory by the government after negotiation with the medical profession. That is why there are differences in what is covered publicly in different provinces/territories. For example, as reviewed in Volume One, the removal of warts is no longer covered in Nova Scotia, New Brunswick, Ontario, Manitoba, Alberta, Saskatchewan and British Columbia, but remains publicly insured in Newfoundland, Quebec and Prince Edward Island. Similarly, stomach stapling is covered in most provinces, but it is not insured in New Brunswick, Nova Scotia or the Yukon, where patients (or their private supplementary health care insurance) must pay for this procedure.
The Committee was told repeatedly that the current process for determining what is and what is not covered under provincial/territorial health care insurance plans is conducted in secret by governments, acting with the provincial/territorial medical associations, with no public input. It is not an open and transparent process. For example, the Canadian Healthcare Association pointed that:
The Committee shares the view of the Canadian Healthcare Association and many other witnesses that transparency requires that the process of deciding what is, and what is not, to be publicly insured should be much more open than it has been historically and is now.
Unilateral pronouncements from governments of the delisting of services are certainly not in the best interest of Canadians.
(…) Any discussions or decisions regarding the “basket of services” must be evidence based and involve an open and transparent process that meaningfully involves all stakeholders.
For this reason, the Committee enunciated Principle Four in Volume Five, which states that the determination of what should be covered under public health care insurance should be done through an open and transparent process. This principle also reflects the views expressed in the report of the Clair Commission in Quebec and the Mazankoski report in Alberta, both of which recommended that consideration should be given to reviewing the principle of comprehensiveness of the Canada Health Act. Both recommended the establishment of a permanent committee, made up of citizens, ethicists, health care providers and scientists, to review and make decisions on the range of services that should be covered publicly. Such a review would set the boundaries between publicly insured and privately funded health services; it would also lead to evidence-based (as opposed to the current negotiated process) decision making with respect to what services should be covered under public health care insurance.
The Committee believes strongly that the permanent committee charged with revising the set of publicly funded health services should be broad-based in membership and not be composed entirely of experts. We believe that input from those who would be directly affected by the committee’s decisions – namely, citizens – is essential if the process is to be truly open and is to have public credibility and acceptability.
The Committee also believes that there should be national standards to define those services covered publicly in each province/territory. This would bring more uniformity to public health care coverage across the country. Therefore, the Committee recommends that:
The federal government, in collaboration with the provinces and territories, establish a permanent committee – the Committee on Public Health Care Insurance Coverage – made up of citizens, ethicists, health care providers and scientists.
The Committee on Public Health Care Insurance Coverage be given the mandate to review and make recommendations on the set of services that should be covered under public health care insurance.
The Committee on Public Health Care Insurance Coverage report its findings and recommendations to the National Health Care Council.
As its first task, the Committee on Public Health Care Insurance Coverage be charged with developing national standards upon which decisions for public health care coverage will be made.
It must be recognized that revising the comprehensive basket of publicly insured health services is not intended to reduce costs. It is intended to improve both transparency and evidence-based decisions with respect to comprehensiveness of publicly funded health services. The purpose of such a review is to use clinical, evidence-based, research to ensure that publicly insured health services are those that are most clinically effective in preventing disease, restoring and maintaining health, and alleviating pain and suffering.
Another important critique raised with respect to the principle of comprehensiveness of the Canada Health Act relates to its limited scope of coverage. In Volume One, the Committee stated that the Canada Health Act is very limited: it is centred on medically necessary health services provided by hospitals and doctors. Moreover, the Act applies to a shrinking range because fewer services are provided now in hospitals. Thanks to new knowledge and technologies, many more health services can be provided safely and effectively on an ambulatory basis or at home. Hospitals stays are shorter; drug therapy often enables people to avoid hospital-based care altogether.
As shown in Volume Three, there is a sharp contrast between Canada and other OECD countries in terms of the scope of its public health care coverage. Many countries with a similar share of public spending in total health care expenditures provide coverage that is much broader than Canada’s, encompassing such items as prescription drugs (Australia, Germany, Sweden, the United Kingdom), home care (Germany, Sweden), and long-term care (Germany, the Netherlands).
As described elsewhere in this report, when services and prescription drugs are provided outside hospitals, they fall outside the ambit of the Canada Health Act. As a result, these services are not usually provided cost-free to the patients, nor are they necessarily provided in accordance with the principles of accessibility, comprehensiveness and universality. Moreover, testimony received by the Committee suggests that, more and more often, individual Canadians bear heavy financial burdens as a result of incurring very high out-of-pocket expenditures to obtain these services.
Based on the evidence it gathered throughout its hearings, and as set out in Chapters Seven, Eight and Nine of this report, the Committee has come to the conclusion that there is a need to expand public health care insurance coverage to encompass three new applications: catastrophic prescription drug costs, post-hospital home care costs, and palliative home care costs.
The Committee acknowledges that national parameters will have to be developed for both post-hospital home care and palliative care delivered out-of-hospital. This would be consistent with the original intent of the national health care insurance program. The Committee on Public Health Care Insurance Coverage could play a major role in this area. Therefore, the Committee recommends that:
The Committee on Public Health Care Insurance Coverage be charged with determining the national parameters applicable to post-hospital home care and palliative care delivered in the home.
The principle of accessibility in the Canada Health Act stipulates that Canadians should have “reasonable access” to insured hospital and doctor services. However, the Act does not provide a clear definition as to what constitutes reasonable access. Although originally the primary concern was to eliminate financial barriers, lately the concern over access to health care has been associated primarily with the problem of waiting times. There is no doubt that a major problem of the current health care system is one of timely access. As stated earlier, it is the view of the Committee that “timely access” describes more accurately what Canadians expect from the publicly funded health care system than “reasonable access.”The Committee believes that, since governments have the responsibility of providing funding sufficient to ensure an adequate supply of the essential services of hospitals and doctors, this responsibility carries with it the obligation to ensure reasonable standards of access. This is the essence of a patient-oriented system and of the health care “contract” between Canadians and their governments. It is the view of the Committee that a maximum waiting time guarantee for publicly insured health services would meet this obligation. For this reason, we have, in Chapter Six, recommended establishment of a National Health Care Guarantee.
How (and where) does a National Health Care Guarantee fit in the context of the Canada Health Act? There are a number of possibilities:
1. The health care guarantee could be added as a sixth principle to the Act. As such, provincial and territorial governments that failed to comply with the National Health Care Guarantee would be subject to the financial penalties currently present in the Canada Health Act.
2. The health care guarantee could be appended to the Canada Health Act or expressed in the preamble of the Act. This excludes the possibility of enforcement or penalty by the federal government.
3. The National Health Care Guarantee could be introduced in new legislation, similar to the Canada Health Act, but subject to different principles, different enforcement mechanisms and different penalties.
The Committee has concluded that the National Health Care Guarantee would be most effective if implemented through legislation distinct from the Canada Health Act. A new Act giving effect to the National Health Care Guarantee would ensure that the definition of timely access to needed hospital and doctor services is set uniformly across the country and that the federal government plays a major role in this guarantee. Therefore, the Committee recommends that:
The federal government enact new legislation establishing the National Health Care Guarantee. The new legislation should include a definition of the concept of “timely access” that will relate to such a guarantee.
Another important provision of the Canada Health Act relating to the accessibility criterion is that insured people have uniform access to hospital and doctor services without any financial barrier. It is for this reason that user charges and extra-billing are not permitted for services covered under the Canada Health Act.
Requiring some financial contribution from patients for the expanded set of publicly insured services is not consistent with the Canada Health Act. Therefore, it is not possible simply to add “catastrophic prescription drugs” to the current list of medically required services set out in the Canada Health Act.
For all these reasons, the Committee believes that the expansion of public coverage to include catastrophic prescription drugs, post-hospital home care and palliative care in the home must be authorized through new federal legislation, and not under the Canada Health Act (see Section 17.6 below).
The portability criterion of the Canada Health Act requires that the provinces and territories extend medically necessary hospital and physician coverage to their residents during temporary absences (business or vacation) from the province or territory. This allows individuals to travel away from their home province or territory and yet retain their public health care insurance coverage. This portability requirement applies to emergency health services: residents must seek prior approval from their home province health care insurance plan for non-emergency (elective) health services provided out-of-province.
The principle of portability also applies when residents move from one province or territory to another: they must retain their coverage for insured health services by the “home” province during a minimum waiting period in the “host” province that does not exceed three months. After the waiting period, the new province or territory of residence assumes the responsibility for public health care coverage.
Canadians are also entitled to portable public health care insurance coverage when they are temporarily out of the country. Most provinces, however, limit the reimbursement of the cost of emergency health services obtained outside Canada under their public health care insurance. For this reason, Canadians are strongly encouraged to purchase supplementary private health care insurance when they travel in another country.
Within Canada, the portability provision of the Canada Health Act is generally implemented through bilateral reciprocal billing agreements among the provinces and territories for hospital and physician services. These agreements are interprovincial, not federal, and signing them is not a requirement of the Canada Health Act. The rates prescribed within these agreements are those of the host province (apart from Quebec, which pays home-province rates), and the agreements are meant to ensure that Canadian residents travelling in another province/territory, for the most part, will not face any user charges at the point of service for medically required hospital and physician services.
Reciprocal billing is a convenient administrative arrangement. However, it is but one method of satisfying the portability criterion of the Act. A requirement for patients to pay “up front” and seek reimbursement from their home province or territory also satisfies the portability criterion of the Act as long as access to a medically necessary insured service is not denied based on the patient’s inability to pay.
Overall, the principle of portability under the Canada Health Act provides Canadians with peace of mind when they travel within Canada or when they move from one province/territory to another. Perhaps more important, the principle of portability is closely linked to that of universality and it certainly encourages uniformity in public health care coverage.
The public administration criterion of the Canada Health Act relates to the administration of provincial/territorial health care insurance plans for medically necessary health services. It stipulates that provincial/territorial health care insurance plans must be administered by a public agency on a not-for-profit basis. The principle of public administration was underlined in Volume Five under Principle One, which states that there should be a single funder/insurer – the government – for hospital and doctor services covered under the Canada Health Act.
In Volume Five, we explained that a compelling argument for the retention of a single public funder or insurer for the hospital and doctor system is that Canadians support it strongly. The Committee agrees that this central element of our system must be maintained, provided that the system meets appropriate standards for high-quality services delivered in a timely manner.
Many witnesses told the Committee that giving primary financial responsibility to a single funder provides the Canadian health care system with a more efficient administration of health care insurance than is possible under a multi-funder system. They also testified that Canada’s publicly financed single insurer system for medically necessary health services eliminates costs associated with the marketing of competitive health care insurance policies, billing for and collecting premiums, and evaluating insurance risks.
Another strong argument in favour of public health care insurance is the fact that very few Canadians can afford not to be covered. It therefore makes sense to have everyone covered by a single plan. A single insurer system providing universal coverage also means that no one will deny themselves needed health care because they have what they feel to be a more pressing use for their money (perhaps for food, shelter, clothing, etc.). Nor will anyone be denied necessary care due to their inability to pay.
Yet another important advantage relates to the principle of risk sharing. The more who share the risk (all Canadians), the lower the cost of insuring against all risks.
The Committee also heard that a single insurer makes a lot of economic sense for Canadian industry and is an important element of Canadian competitiveness. This point was put eloquently by Paul Darby, Director of Economic Forecasting and Analysis, Conference Board of Canada, when he stated:
(…) our largely single payer system has significant efficiency advantages, in general, and that these in turn help improve our industrial competitiveness. We should not lose these advantages.
A single funder model implies that there will not be, within Canada, a parallel, private insurance sector that competes with public insurance for the funding of hospital and doctor services under the Canada Health Act, at least in those hospitals and with those doctors that care for publicly insured patients.
Up to now, the single insurer model has discouraged the growth of a second tier of health care that many claim would pose a significant threat to Canada’s publicly funded health care system. We point out, however, that parallel public and private health care systems exist in most other industrialized countries.
As noted in Volume One, it is equally important to understand clearly what the public administration principle of the Canada Health Act does not mean. This principle refers to the administration of health care insurance coverage; it does not deal with the delivery of publicly insured health services. The Act does not prevent provinces and territories from allowing private (for-profit and not-for-profit) health care providers, whether individual or institutional, to deliver, and be reimbursed for, provincially insured health services, so long as extra-billing or user charges are not involved. This is, in fact, what Canadian Medicare has been from the start – a national health care insurance program based primarily on the private (both for-profit and not-for-profit) delivery of publicly insured hospital and doctor services.
While the Committee is convinced that the principle of public administration must be maintained for the hospital and doctor system, it would be very difficult in our view to extend it to the broader range of health services recommended in this report. This is particularly true with respect to the expansion of public coverage against catastrophic prescription drug costs.
The principle of public administration of the Canada Health Act be maintained for publicly insured hospital and doctor services. That is, there should be a single insurer – the government – for publicly insured hospital and doctor services delivered by either public or private health care providers and institutions.
The federal government, through Health Canada, clarify the meaning of the concept of public administration under the Canada Health Act so as to recognize explicitly that this principle applies to the administration of public health care insurance, not to the delivery of publicly insured health services.
Prescription drug coverage is currently provided by many insurers, ranging from governments to private insurance companies. In fact, the private drug insurance industry is already well established in Canada and it appears to be functioning well. The Committee believes, and has recommended in Chapter Seven, that the expansion of coverage to include catastrophic prescription drug costs should be based on a partnership between the public and the private sectors to ensure universal coverage for catastrophic drug costs.
The Committee has no hesitation in saying that in-depth reform of the publicly funded hospital and doctor system can take place within the five national principles of the Canada Health Act. We believe that the Act has served Canadians relatively well in terms of providing universal and uniform coverage for hospital and doctor services. We feel that the four patient-oriented principles of the Act should be maintained for hospital and doctor services, while the principle of public administration should be clarified.
However, the Committee believes that Canadian Medicare and the Canada Health Act must be supplemented by two new pieces of legislation. First, as explained in Section 17.3, new federal legislation must be enacted to implement the National Health Care Guarantee. This legislated health care guarantee will improve access to the set of hospital and doctor services that are currently insured under the Canada Health Act. Second, the Committee’s proposal to expand public coverage also requires the enactment of new legislation:
· Coverage for catastrophic prescription drug costs requires the financial participation of both public plans and private insurers (collaboration that is not consistent with the principle of public administration of the Canada Health Act).
· Coverage for catastrophic prescription drug costs requires that individuals make a financial contribution to cover part of the cost of the insured service (this is not consistent with the first-dollar coverage contained under the principle of accessibility of the Act).
· Coverage for catastrophic prescription drugs, post-hospital home care for a period of three months and palliative home care costs will be funded through a federal funding mechanism that is distinct from the current CHST (the principles of the Canada Health Act relate to the CHST only).
· The Committee believes strongly that additional federal funding provided for the expansion of public coverage must be based on specific conditions related to transparency and accountability (these principles are totally absent from the Canada Health Act).
The federal government enact new legislation instituting health care coverage for catastrophic prescription drugs, post-hospital home care and some palliative care in the home. This new legislation should explicitly spell out conditions relating to transparency of decision making and accountability.