Managed Care Resources, Inc. Newsletter

June 2001 Volume 1, Issue 1

Why talk about Canada's health care system? It's simple - there are three reasons why Canada is of interest to Americans. First, many Canadians are taking their cash and making the trek south for health care. Wealthy individuals and snowbirds frustrated with the current system and tired of lengthy waiting queues are looking for alternatives. They want to secure care at an American center of excellence. Second, many American health care providers are looking to capitalize on this growing frustration by striking alliances and marketing their services in the north. The message is clear - come to my facility for your health care. Finally, who can ignore an exchange rate that gives Americans about 40% more for their health care dollar? It's an attractive selling feature for Canadians wanting to lure Americans north for select procedures.

We will be featuring articles about Canada's health care system, giving you information about issues that directly affect the American health care system. Before getting to the specifics of the current situation however, it's helpful to understand Canada's Medicare system. Much like the American system, it cannot be adequately described in a few short sentences but we can give you the basics in a few short paragraphs.

In 1984, the Canada Health Act (known simply as MEDICARE) came into effect. It was close to forty years in the making, starting in 1947 when the first province established hospital insurance. By 1961 all provinces and two territories, with federal financial assistance, had public in-hospital care. In the year that followed, one of the provinces began its quest for public coverage of physician's services outside the hospital. Ten years later in 1972, all provincial and territorial plans had been extended to include doctors' services. A national health services review in 1979 raised concerns that extra-billing by doctors and user fees levied by hospitals was creating a two-tiered system that threatened the accessibility of care for Canadians. Parliament responded by passing the Canada Health Act in 1984 to discourage hospital user charges and extra-billing by physicians. The Act provides for an automatic dollar-for-dollar penalty if any province or territory permits such charges for insured health services.

Canada's Medicare governs the insured services of just over 30 million Canadians and includes all medically necessary hospital services and medically required physician services. It also covers medical or dental services requiring a hospital for their proper performance. Other health services such as home care or long term care are at the discretion of the provincial governments.

Under the Health Care Act, the provinces and territories must meet five conditions in order to receive full cash contributions from the federal coffers. If the provinces can demonstrate compliance with the five conditions, twice-monthly payments are made based on a complex formula. The legislation also contains provisions for reducing or withholding federal cash contributions in the case of failure by a province or territory to satisfy any of the criteria.

Public Administration requires that the administration of the insurance plan of a province be carried out on a non-profit basis by a public authority.

Comprehensiveness requires that all medically necessary services provided by hospitals and doctors be insured.

Universality requires that all residents of the province be entitled to public health insurance coverage.

Portability requires that coverage be maintained when a resident moves or travels within Canada or travels outside the country (coverage outside Canada is restricted to the coverage the resident has in his/her own province).

Accessibility requires reasonable access unimpeded by financial or other barriers to medically necessary hospital and physician services for residents, and reasonable compensation for both physicians and hospitals.

Canadian health expenditures generally run around 10% of the gross domestic product. According to the Canadian Institute for Health Information based in Toronto, Canadians spent an estimated $76.6 billion dollars on health care in 1997, up from $75.5 billion the previous year. Institutional care accounts for close to 45% of the total expenditures with physician costs accounting for an additional 14%. The remaining expenditures are devoted to drugs (13%), other professionals (11%), capital (4%), and "other" (14%).

The cash flow from the federal coffers covered only about 22% of the provincial health expenditures in 1996/97- compared to 24% in 1990 and 31% in 1980. This means that the provinces have been left to pick up the slack especially in the areas of new programs such as home care and long term care. The provinces devote between 29% and 37% of their total budgets on health. However, many of the provinces experienced budget deficits and rising health care costs that led to the health care reform of the nineties. The reforms were swift and focused mainly on hospital bed closures, which placed a considerable strain in community and long-term care and for those needing elective surgeries.

In the past, public funding (tax revenues) has accounted for about 75% of the total health care expenditures of the country. In recent years however, this figure has dropped to about 72%. Other financing is available from a) private out-of-pocket payments including co-payments or deductibles, b) worker's compensation covered by provincial boards and funded through employer contributions and, c) private insurance which is generally employer-sponsored plans for services not usually covered by government programs such as dental care, prescriptions, and out-of-country services. It is believed that the growth in private funding stems in large part from employer-sponsored health plans often negotiated via union contracts.

For the Canadian citizen, there has been little need to "dip" into one's pocket for health care services. The public system has generally been accepted as good if not excellent. In fact, Canadians have always talked about the health care system with pride. However, reduced spending, hospital bed closures, and less public funding in the 21st century have Canadians concerned. Tales of a health care system gone awry are commonplace. Recent polling results indicate that health care is the number one issue for Canadians and it also indicates that they are quickly becoming frustrated and less than satisfied with the public system.

Managed Care Resources, Inc. Newsletter June 2001 Volume 1, Issue 1
Get to Know Us - Ira Rosenberg -- Operational Assessment
Is Your Web Site Ready for Accreditation? -- Canada's Medicare System

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