The Health of Canadians – The Federal Role

Interim Report

Volume Four – Issues and Options

The Standing Senate Committee on Social Affairs, Science and Technology

Chair: The Honourable Michael J.L. Kirby
Deputy Chair: The Honourable Marjory LeBreton

September 2001





Chapters 1, 2 and 6 
Chapters 3 and 4
Chapter 5
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14

Chapter One:


Chapter Two:

Summary of Main Findings and Observations from Phases One, Two and Three 

2.1 Main Findings and Observations from Phase One 
2.2 Main Findings and Observations from Phase Two
2.3 Main Findings and Observations from Phase Three 

Chapter Three:

The Role of the Federal Government: An Overview

3.1 The Transfer of Funds for the Provision of Health Services Administered by Other Jurisdictions: The Financing Role
3.2 Funding Innovative Health Research and the Evaluation of Pilot Projects: The Research and Evaluation Role
3.3 Support for the Health Care Infrastructure and the Health Infostructure: The Infrastructure
3.4 Health Protection, Health and Wellness Promotion and Disease Prevention: The Population Health Role
3.5 The Direct Provision of Health Services to Specific Population Groups: The Service Delivery Role

Chapter Four:

The Role of the Federal Government: Objectives and Constraints

4.1 Objectives for the Financing Role of the Federal Government 
4.2 Objectives of the Research and Evaluation Role for the Federal Government 
4.3 Objectives of the Infrastructure Role for the Federal Government
4.4 Objectives for the Population Health Role of the Federal Government
4.5 Objectives for the Service Delivery Role of the Federal Government
4.6 Constraints on the Role of the Federal Government

Chapter Five:

A 21st Century Context for Health Care Policy

5.1 Reforming Primary Care: A Step Toward a 21st Century Structure
5.2 Health Care: Different from Other Goods and Services

Chapter Six:

Observations on Choosing Among Options

6.1 The Need to be Financially Realistic in Choosing Options
6.2 The Desirability of a Non-Ideological Debate
6.3 The Value of Understanding the Experience of Other Countries

Chapter Seven:

The Canada Health Act, Timely Access to Treatment, and Fairness

7.1 Introduction
7.2 Do Canadians Have a Right to Health Care?
7.3 To What Extent, if any, is Private Health Care Provision and Private Health Care Insurance Permissible under the Canada Health Act?
7.4 Timely Access and Waiting Times
7.5 How Can "Timely Access" to Health Care Be Ensured?

7.5.1 "Care Guarantee" 
7.5.2 Patient’s Bill of Rights

Chapter Eight:

Issues and Options for the Financing Role

8.1 Introduction
8.2 What Changes Can be Made to the Way Health Care is Delivered that Could Have an
Impact on the Level of Funding Required?

8.2.1 Improving Efficiency and Effectiveness
8.2.2 Reforming Primary Care
8.2.3 Regionalization of Health Services
8.2.4 Contracting Private For-Profit Health Care Facilities
8.2.5 Devoting More Resources to Health Promotion, Disease Prevention and Population

8.3 What Should be the Form of Federal Funding for Health Care?

8.3.1 Return to Cost-Sharing Arrangements
8.3.2 Retain Current Block Funding
8.3.3 Improved CHST Block Funding
8.3.4 Medical Savings Accounts (MSAs)
8.3.5 Convert all CHST Cash Transfers into Tax Point Transfers

8.4 How Should Government Raise Revenue for the Purpose of Health Care?

8.4.1 Spend More of Existing Tax Dollars on Health Care
8.4.2 Increase General Revenue (through income tax or sales taxes) and Devote the Additional Revenue to Health Care
8.4.3 User Charges
8.4.4 Income Tax on Health Care
8.4.5 Annual Health Care Premiums
8.4.6 Private Health Care Insurance is Allowed to Compete with Public Coverage

8.5 The Impact of Financing Options on Behavioural Change
8.6 Two-Tier Health Care
8.7 What Services Should be Covered and Who Should be Covered Under Public Health Care Insurance?

8.7.1 De-Listing Some Services
8.7.2 Expanding Coverage

8.8 Prescription Drugs: Reducing Their Cost

8.8.1 A National Drug Formulary
8.8.2 Requiring the Use of the Lowest Cost Therapeutically Effective Drug
8.8.3 The Advertising of Prescription Drugs

8.9 Prescription Drugs: Expanding Coverage

8.9.1 A National Pharmacare Initiative
8.9.2 A Comprehensive Public Program
8.9.3 A Comprehensive Public/Private Initiative
8.9.4 Public/Private Initiative to Protect Against High Drug Expenses
8.9.5 Tax Initiative to Protect against High Drug Expenses

8.10 Home Care

8.10.1 A National Home Care Program
8.10.2 Tax Credit and Tax Deduction to Home Care Consumers
8.10.3 Creating a Dedicated Insurance Fund to Cover the Need for Home Care
8.10.4 Specific Measures aimed at Informal Caregivers

8.11 Summary

Chapter Nine:

Issues and Options for the Research and Evaluation Role

9.1 Innovative Health Research

9.1.1 Increasing the Federal Share of Health Research Funding
9.1.2 Sustaining the Transfer of Knowledge
9.1.3 Reducing Regional Disparities
9.1.4 A National Human Research Ethics Oversight Body

9.2 Financing and Evaluation of Innovative Pilot Projects

9.2.1 Federal Investment in the Evaluation of Pilot Projects Aimed at Improving Health Care Delivery
9.2.2 Reducing Regional Disparities in the Funding of Pilot Projects

Chapter Ten:

Issues and Options for the Infrastructure Role: Technology and Information Systems

10.1 Health Care Technology

10.1.1 Funding the Acquisition and Upgrading of Health Care Technology
10.1.2 Investing More in Health Care Technology Assessment

10.2 Health Information Systems

10.2.1 Deployment of a Pan-Canadian Health Infostructure
10.2.2 Investing in Telehealth in Rural and Remote Communities
10.2.3 Ensuring Confidentiality and Privacy of Personal Health Information

10.3 Accountability and Quality

10.3.1 An Annual Report on the Health Status of Canadians and on the State of the
Health Care System
10.3.2 A National Health Care Quality Council
10.3.3 Ensuring Greater Government Accountability

Chapter Eleven:

Issues and Options for the Infrastructure Role: Health Human Resources

11.1 Introduction
11.2 The Need for a National Human Resources Strategy
11.3 Towards a Spectrum Approach
11.4 Primary Care Reform and Human Resources
11.5 Incentives for Individuals
11.6 Recruitment, Training, Retention

11.6.1 Financing
11.6.2 Research
11.6.3 Dealing with the ‘Brain Drain’

11.7 Physicians

11.7.1 Training
11.7.2 Geographic Maldistribution

11.8 Nurses.
11.9 Other Health Care Professionals
11.10 Summary

Chapter Twelve:

Issues and Options for the Population Health Role

12.1 Trends in Diseases
12.2 Some Disturbing Trends
12.3 Determinants of Health: Some Evidence
12.4 The Role of the Federal Government

12.4.1 Health Promotion and Disease Prevention
12.4.2 Population Health Strategies
12.4.3 Research

Chapter Thirteen:

Issues and Options for the Service Delivery Role: Aboriginal Health

13.1 Health and Socio-Economic Profile of Canada’s Aboriginal Population
13.2 Health Service Delivery to Aboriginal Canadians

13.2.1 A National Action Plan on Aboriginal Health Services

13.3 Ensuring Adequate Access to Culturally Appropriate Health Services

13.3.1 Aboriginal Health Care Providers
13.3.2 Telehealth
13.3.3 Culturally Appropriate Health Services

13.4 Population Health

13.4.1 A Population Health Strategy for Aboriginal Canadians
13.4.2 Federal Accountability for Programs aimed at Aboriginal Health

13.5 Aboriginal Health Research
13.6 Involvement of Aboriginal Communities

Chapter Fourteen:



Extract from the Journals of the Senate of March 1, 2001:

Resuming debate on the motion of the Honourable Senator LeBreton, seconded by the Honourable Senator Kinsella:

That the Standing Senate Committee on Social Affairs, Science and Technology be authorized to examine and report upon the state of the health care system in Canada. In particular, the Committee shall be authorized to examine:

  1. The fundamental principles on which Canada's publicly funded health care system is based;
  2. The historical development of Canada's health care system;
  3. Health care systems in foreign jurisdictions;
  4. The pressures on and constraints of Canada's health care system; and
  5. The role of the federal government in Canada's health care system;

That the papers and evidence received and taken on the subject and the work accomplished during the Second Session of the Thirty-sixth Parliament be referred to the Committee;

That the Committee submit its final report no later than June 30, 2002; and

That the Committee be permitted, notwithstanding usual practices, to deposit any report with the Clerk of the Senate, if the Senate is not then sitting; and that the report be deemed to have been tabled in the Chamber.

After debate,

The question being put on the motion, it was adopted.


Paul C. Bélisle
Clerk of the Senate


The following Senators have participated in the study on the state of the health care system of the Standing Senate Committee on Social Affairs, Science and Technology:

The Honourable Michael J. L. Kirby, Chair of the Committee
The Honourable Marjory LeBreton, Deputy Chair of the Committee


The Honourable Senators:

Catherine S. Callbeck
Joan Cook
Jane Cordy
Joyce Fairbairn, P.C.
Alasdair B. Graham, P.C.
Wilbert Keon
Yves Morin
Lucie Pépin
Douglas Roche
Brenda Robertson

Ex-officio members of the Committee:

The Honourable Senators: Sharon Carstairs P.C. (or Fernand Robichaud, P.C.) and John Lynch-Staunton (or Noel A. Kinsella)

Other Senators who have participated from time to time on this study:

The Honourable Senators Banks, Beaudoin, Cohen*, DeWare*, Ferretti Barth, Grafstein, Hubley, Joyal P.C., Milne, Losier-Cool, Rompkey, and Tunney


*retired from the Senate


Chapters 1, 2 and 6

Summary of Main Findings and Observations from Phases One, Two and Three
Observations on Choosing Among Options

The purpose of this paper is to outline the role of the federal government in the major issues facing Canada’s health care system and to present a set of potential policy options for addressing each of these issues. In developing the set of options, the Committee has tried to be factual and non-ideological. We have deliberately not foreclosed discussion of any option a priori.

The Committee’s objective in writing this paper is to launch a public debate. We believe that Canadian citizens, health care stakeholders, and federal and provincial policy makers need to become engaged in a national debate on the changes which must be made to our nation’s health care system if it is to be sustainable in the long-term. We also believe that such a debate needs to include options which are often rejected out-of-hand by various individuals, organizations, political parties and segments of Canadian society.

While this paper does not reiterate information that is contained in other reports which the Committee has previously released, or which the Committee will be releasing shortly, Chapter 2 does highlight a number of conclusions that the Committee has drawn from its hearings. These conclusions are useful background information, but they do not indicate the Committee’s position on the issues raised in this report. The Committee’s recommendations on the issues will be contained in our fifth and final report, which will be released very early in 2002, following a set of public hearings this fall across the country.


Chapters 3 and 4

The Role of the Federal Government: An Overview
The Role of the Federal Government: Objectives and Constraints

In order to consider the merits of an option for addressing a public policy issue, one must have a clear statement of the objective of the public policy. Only once an objective has been clearly articulated can one understand the impact a particular option will have on achieving the stated objective and hence whether the option should be adopted or rejected. Therefore, the Committee began its work by articulating, in Chapter 3, five distinct roles for the federal government in health and health care. Then, in Chapter 4, we list the specific objectives that we believe should be the focus of public policies related to each of these five roles. These roles, and their associated objectives, are as follows:


  1. FINANCING ROLE: the transfer of funds for the provision of health services administered by other jurisdictions
  2. RESEARCH AND EVALUATION ROLE: funding innovative health research and evaluation of innovative pilot projects
  3. INFRASTRUCTURE ROLE: support for the health care infrastructure and the health infostructure, including human resources
  4. POPULATION HEALTH ROLE: health protection, health and wellness promotion, illness prevention, and population health
  5. SERVICE DELIVERY ROLE: the direct provision of health services to specific population groups


The specific objectives related to the financing role are as follows:

the transfer of funds for the provision of health services administered by other jurisdictions

The Committee proposes that the objectives of the federal government’s financing role in health and health care should be:

  • To provide a stable level of funding that ensures the sustainability of Canada’s health care system and that fosters reform and renewal;
  • To ensure that every Canadian has timely access to all medically necessary services regardless of their 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;
  • To ensure that the four patient-oriented principles of the Canada Health Act (universality, comprehensiveness, accessibility, and portability) are applied.


With respect to the research and evaluation role, the Committee’s specific objectives for the federal government are given in the following table:

funding innovative health research and evaluation of innovative pilot projects

The Committee proposes that the following objectives should apply to the second role of the federal government:

  • To foster the development of a solid base of innovative health research in Canada that compares favourably with that of other countries;
  • To encourage the foundation of a knowledge-based health care sector by facilitating the transfer of knowledge from the research community to public policy makers, health care providers and the general public;
  • To provide appropriate financial support for joint federal/provincial/territorial initiatives that will encourage and facilitate innovation and advancement in health care delivery through evaluation of pilot projects.

The infrastructure role of the federal government involves these elements: human resource planning, health-related information systems, such as telehealth and electronic patient records, and physical infrastructure. The Committee’s objectives for this role are:

support for the health care infrastructure and the health infostructure

The Committee believes that the following five objectives should apply to the federal government’s third role :

  • To lay the foundation for evidence-based decision-making in areas that affect both wellness and the delivery of health care, while ensuring the protection of privacy, confidentiality and security of personal health information;
  • To monitor the health of the population and the state of the health care system and to report these findings to Canadian stakeholders;
  • To develop, in collaboration with the provinces and territories, an appropriate structure and process to ensure greater accountability in the system;
  • To assist provinces and territories in financing needed health care infrastructure, such as new medical technologies and the costs related to their ongoing operation;
  • To co-ordinate, in collaboration with the provinces and territories, the planning of human resources in health care.


The population health role of the federal government focuses on illness prevention rather than treating people once they are sick. The objectives proposed for this role are:


The Committee proposes that the following objectives should apply to the federal government’s population health role:

  • With respect to health protection: to strengthen our national capacity to identify and reduce risk factors which can cause injury, illness, and disease, and to reduce the economic burden of disease in Canada;
  • With respect to health promotion and disease prevention: to develop, implement and assess programs and policies whose specific objective is to encourage Canadians to live a healthier lifestyle;
  • With respect to wellness: to encourage population health strategies by studying and discussing the health outcomes of the full range of determinants of health, encompassing social, environmental, cultural and economic factors.

The federal government delivers health services to more Canadians than do five provincial governments (the Atlantic provinces and Saskatchewan). Thus, the federal government is a major player in service delivery. As such, its objectives should be, in regard to Aboriginal health:



The Committee proposes that the following objectives should apply to the federal government’s service delivery role:

  • To take a leadership role in ensuring inter-jurisdictional co-ordination of health care delivery to all Aboriginal peoples;
  • To ensure adequate access to culturally appropriate health services;
  • To implement and sustain population health strategies specifically designed for Aboriginal peoples.


Chapter 5

A 21st Century Context for Health Care Policy

Before examining the policy issues related to each of the five federal government roles, it is useful to step back and review the health care industry in the context of what other 21st century service sector industries look like. When we do this, we note that none of the major characteristics of a modern service industry exist in the health care sector. This observation clearly points to the need for a major organizational overhaul in the delivery of health services, even if other issues, such as rising costs, were not also driving change. A modern service sector industry has three main characteristics:

1. The development of larger organizational units that allow for economies of scale, along with the ability to provide customers with 7/24 service;

2. The emergence of specialized organizational units that focus on delivering a limited range of higher quality services more efficiently than units that provide a wider range of services;

3. A strong focus on consumers who are more demanding than ever before: they want both timely and high-quality service.

The primary care sector is structured like a 19th century cottage industry rather than a 21st century service industry, consisting as it does largely of individual physician practices which are not clustered together into group practices, making 7/24 service is impossible.

Specialization of the health care industry into service units delivering a narrow range of services has generally not occurred. There are, of course, some exceptions, such as laser eye clinics, and a very few specialized hospitals have emerged, such as the Shouldice Hospital in the Toronto area that only performs hernia operations. The major delivery system in the health care sector in Canada remains the unspecialized general hospital. While these will always be needed, it is important to investigate the benefits of making specialized delivery units a larger part of a modernized health service delivery system.

Little has been done in terms of the third characteristic of a 21st century service sector industry – a strong focus on timely and high-quality customer service. In fact, long waits for certain kinds of treatment is the complaint most often voiced by Canadians with regard to the health care system. This is clearly not timely service.

The Committee believes that many of the difficulties facing the health care sector can be successfully resolved only if the industry is prepared to transform itself into a 21st century service industry, instead of remaining an industry mired in a 19th century structure.

The first and essential step in organizational change must be primary care reform. This has been recognized by the Sinclair Commission in Ontario, the Clair Commission in Quebec and the Fyke Commission in Saskatchewan. It is also why the federal government agreed to contribute $800 million to primary care reform following the federal, provincial and territorial agreement of September 2000. Primary care reform would create larger organizational units with a strong focus on 7/24 service; it would also create a structure with two of the three characteristics of a 21st century service organization referred to above.


Chapter 7

The Canada Health Act, Timely Access to Treatment, and Fairness

The Canada Health Act is pivotal in the health care debate in Canada, not only because it sets forth the conditions to be met by the provinces and territories in order to receive federal cash contributions under the Canada Health and Social Transfer (CHST), but also because the Act has taken on mythical proportions as the only thing which prevents the Americanisation of the Canadian health care system.

The four patient-oriented conditions or principles of universality, accessibility, comprehensiveness and portability are strongly supported by the Committee, although we recognize that the principles are not nearly as strictly adhered to as many Canadians would like. Contrary to popular belief, the fifth principle – public administration – does not mean that there should be no private sector delivery of health care. The public administration principle refers to the requirement that, for the purposes of administrative efficiency, the system should be a single payer model, with the payer being a provincial government.

With respect to the Canada Health Act, the Committee asked three questions: First, do Canadians have a right to health care, and if such a right exists, can it be found in the Charter of Rights and Freedoms? Second, to what extent, if any, are private health care provision and private health care insurance permissible under the Canada Health Act? And third, is "reasonable access" under the Canada Health Act meant to ensure that Canadians have timely access to needed health services?

First, health care is not explicitly mentioned in the Charter. Thus, such a right, if it exists, would have to be found by the courts to be implied from the interpretation of one of the Charter rights. However, because a case can be made that the Charter guarantees Canadians an implicit right to health care, experts told the Committee that they expected cases on the right to health care to arise in the next few years.

Second, the Canada Health Act does not prohibit the provision of private health care. Rather, it discourages the provinces, under threat of losing federal funds, from permitting health care providers to bill patients directly for amounts over and above what they receive for such services under provincial health care insurance plans, known as extra-billing. Similarly, in order to obtain their full CHST cash contribution, provinces and territories must not allow hospitals to impose user charges on patients for insured hospital services. The Act only dictates the terms under which federal cash transfers to the provinces will occur.

The legislation does not prevent private, for-profit health care providers and institutions from delivering and being reimbursed for provincially insured health services, so long as extra-billing and user charges are not involved. Also, health care providers and facilities may opt out of the provincial plan and bill patients directly for the full cost of services provided, without any penalty being imposed on the province under the Canada Health Act. In these cases, patients are not eligible for reimbursement under provincial plans. Moreover, the Canada Health Act effectively prevents individuals from purchasing private health care insurance to cover the cost they would incur in receiving services from a provider who had opted out of a provincial health care plan.

Overall, the Canada Health Act, along with provincial/territorial legislation, has prevented the emergence of a private health care system that would compete directly with the publicly funded one. It is simply not economically feasible for patients, physicians or health care institutions to be part of a parallel system.

This raises the following question: if access to publicly funded health services is not timely, can governments continue to discourage the provision of private health care through the prohibition of private insurance? To paraphrase Section 1 of the Charter of Rights and Freedoms: is it just and reasonable in a free and democratic society that government ration the supply of health care (through budgetary allocations to health care) and at the same time effectively prevent individuals from purchasing the service in Canada?

This issue is not just a legal matter. It is, above all, a question of fairness. Whether the current situation is fair is something the readers of this report must decide for themselves.

It is clear, however, that any option for the reform of current arrangements that involves a private sector competing effectively with the publicly funded sector would require substantial modifications to the Canada Health Act.

The third question raised at the beginning of this section is whether "reasonable access" under the Canada Health Act is meant to ensure that Canadians have timely access to needed health services. Again, the legal answer to this question is unclear.

What is clear, however, is that waiting times for tests and treatment are perceived to be a major problem by the Canadian public. The question then becomes: what can be done, if anything, to guarantee Canadians that the amount of time they have to wait for a test or procedure has a fixed upper limit; that they will never have to wait more than a specified maximum period (which may be different for different tests or procedures).

Two options for dealing with this problem are presented in Chapter 7. Section 7.5.1 describes the "care guarantee" approach which was developed in Sweden. Section 7.5.2 explains how the United Kingdom has tried to deal with long waiting lines through its Patient’s Charter. Both of these approaches use a combination of incentives and penalties to make health care facilities more productive and efficient.

These approaches also raise the question of whether the Canadian health care system should be modified to allow, or even encourage, competition between hospitals. Moreover, if competition is allowed, should patients be allowed to pay for the cost of a procedure (and be allowed to buy insurance to cover the cost of a procedure) in order to receive expedited service, as they can in most other industrialized countries? This question raises the issue of a so-called "two-tier" system.

Advocates of a single payer system invoke the "fairness" argument. They argue that health services should be provided exclusively on the basis of need, and that the introduction of a second tier of care, available only to a minority of the population with the personal resources to pay for them, goes against the principles of equity and fairness. This is the converse of the question asked earlier-- is it fair to deny people who can afford to buy health services the right to buy those services? The criticism of a "two-tier" system suggests that Canada does not have any elements of a "two-tier" system at the present time. Is this true?

People who can afford it can, and do, go out of Canada (usually to the United States) to receive the medical services they require if their only alternative is a long waiting line in Canada. There is also strong anecdotal evidence that suggests that the situation in Canada is similar to that in Australia where, in the words of one of the Australian witnesses who testified before the Committee: "access to public (health) services is usually more easily obtained by wealthier and more powerful individuals who understand how the system works and have appropriate contacts in hospital service delivery and administration". In addition, provincial Worker’s Compensation boards in most provinces manage to have faster access to treatment for their clients because, they argue, they need to ensure the client goes back to work quickly (not just, incidentally, to save the WCB money).

The Canadian health care system does not comprise "one tier", as most Canadians believe, and as most government spokespersons claim. Whether this constitutes an argument for a more open "two-tier" system is an issue for readers of this report to decide.


Chapter 8

Issues and Options for the Financing Role

The health care issue that receives the most media attention is how much money each level of government should pay to support the health care system as it is presently structured. The question, when it is posed in this way, overlooks two critical factors:

    • first, how much money can be saved through efficiency measures such as primary care reform, regionalization of health services, contracting-out to private for-profit health care facilities and devoting more resources to health promotion, disease prevention and population health measures. (These efficiency measures are explored in section 8.2.)
    • second, if new sources of financing are required, should the money come from taxpayers to government to the health care sector or should it come from individual Canadians directly to the health care sector. (A variety of options both for government funding and for payments directly from individuals are discussed in sections 8.3 and 8.4.)

There are two schools of thought on the question of whether new financing sources are needed to make the health care system sustainable. Proponents of the first school contend that operating the health care system more efficiently will save enough money that no new sources of funding will be required. This view is reflected in the recent Fyke report on health care in Saskatchewan and in reports and newspaper articles by many writers, including Dr. Michael Rachlis.

While many observers recognize that the effectiveness and efficiency of Canada’s health care system must be improved, there is no agreement on the level of savings such improvements would generate. Those who believe new funding sources are required agree that, in a $90 billion health care system, some economies are certainly possible and that every effort must be made to implement such efficiency-driven changes, but they argue that it will be difficult to implement changes to enhance efficiency and effectiveness because both the attitude and the behaviour of those with vested interests in the health care system – including patients, service providers, and drug companies – have over the years proven to be very difficult to change. In fact, if the proposed changes were as easy to put into place as proponents of the first school of thought imply, then the question is why have they not already been implemented.

The Committee believes it is important to be prudent and to develop plans and policies that will be effective, in case the savings arising from changes made to the way the system currently works are insufficient. Any other approach would be the same as putting all our eggs in one basket, and betting the future of the sustainability of the health care system on making system changes when there is not yet enough evidence to demonstrate that these changes are actually feasible, and when there is no reliable indication of the savings that can be made by such changes.

The Committee realizes that there is a significant advantage in the approach put forward by supporters of the first school of thought – it makes it possible to avoid most of the tough financing questions, as outlined in the rest of this chapter. While it is tempting to adopt their point of view, and thereby skirt the most controversial health care issues, the Committee believes that responsible public policy planning requires that the views of the second group should prevail, and that Canadians should now explore ways of raising additional funds, at the same time as efforts are being made to organize health care delivery more efficiently.

The question, then, is what new sources of funding should be used. In section 8.3, several options are outlined, most of which are variations of current, or previous, federal financing mechanisms:

    • return to cost-sharing (8.3.1), retain block funding (section 8.3.2), or improved CHST block funding (section 8.3.3), or converting all CHST cash transfers into tax point transfers (section 8.3.5)
    • medical savings accounts in which part or all of the "health portion" of the CHST is transferred into a health account for each individual Canadian (section 8.3.4)

In section 8.4, we review a variety of methods by which individuals could pay themselves a portion of the health care costs which are now paid out of public funds. Specifically, we look at the following options:

    • user charges (section 8.4.3), where a patient makes a cash payment to cover a portion of the cost of the service, at the time the service is received.
    • income tax payments on the value of health services an individual receives from the public health care system during the year (8.4.4).
    • annual health care premiums paid to the government (section 8.4.5).
    • private health care insurance premiums which compete with public health insurance so that individuals with private insurance can purchase the services they need from either public or private health care facilities (section 8.4.6).

There are three forms of user charges which are used in various industrialized countries. These are:

    • Co-insurance, the simplest form of user charge, requires the patient to pay a fixed percentage (say 5%) of the cost of services received. Thus, the higher the cost of the service, the larger the fee. Many private sector drug insurance plans operate using this method of payment.
    • Co-payment is an alternative to co-insurance. Instead of having to pay a share of costs, the patient is required to pay a flat fee per service (for example, $5) which does not necessarily bear any relation to the cost of the service. The same amount is charged, no matter what the cost of the health care provided. This form of user charge exists in many countries, such as Sweden.
    • In the "deductible" system, the patient is required to pay the total cost of services received over a given period up to a certain ceiling, called the "deductible". Above this ceiling, costs of services to the patient are covered by the insurance plan. All users must pay a standard minimum deductible, which is independent of the number of services received. Again, this form of insurance-based user charge is required in some countries.

With respect to treating the value of health services received during the year as taxable income, the option presented in Section 8.4.4 includes a cap on the increase in income tax an individual would pay in any given year.

The annual health care premium option (Section 8.4.5) could be a flat fee, or it could be linked to an individual’s income. However, in contrast to the user charges and income tax options, an annual premium would not vary according to the number of health care services received during the year.

Some of the options presented – namely user charges for publicly funded health services, medical savings accounts and private health care insurance – may raise concerns about the possible impact of two-tier health care. Three suggestions have been made as a means of avoiding the negative aspects of a two-tier health care system, while maintaining the quality of the publicly funded system:

    • all doctors would be required to work a certain number of hours in the publicly funded system, meaning that they would not be permitted to work exclusively in the privately funded system;
    • the publicly funded health care system would provide a guarantee that waiting times for various procedures would not exceed a certain period and, if the maximum time was exceeded, the government would be obliged to pay for the required treatment to be performed in the private sector system;
    • an independent body would be mandated to ensure that health care technology in the public sector was as good as in the private sector.

The Committee looks forward to receiving the views of Canadians on the issue of two-tier health care based on the assumption that the three conditions outlined above could be met.

In considering various financing options, it is important to keep in mind that each will have an impact on behaviour. Examples from several countries with a universal health care system illustrate that the way a health care system is financed can help in achieving the overarching public policy objective of delivering the best health care possible at the lowest cost.

Unfortunately, as many witnesses pointed out, the current system in Canada contains few incentives for health care providers to reduce costs or to strive for better integration (through, for example, primary care reform). Similarly, the Canadian system has no incentives for consumers of health care to use the system in a responsible manner.

User charges can be valuable in diverting demand from high cost services to those which are less expensive without diminishing access to medically necessary services. But this is only possible if a less expensive service is available and covered by insurance.

The following questions must be asked about the structure of health care financing in Canada:

    • Should the financial structure be such that all those involved in the system – health care consumers, providers, facilities administrators and so forth – have an incentive to use the system as efficiently as possible?
    • Should incentives be used to help patients understand that their perceived right to universal health care is accompanied by a responsibility to use that right reasonably and judiciously?

Responses to these questions will determine our health care financing system for the future.

Following the description of options for addressing future financing issues, the next part of Chapter 8 looks into the services that should be covered and who should be covered by public health care insurance, since these issues have a direct impact on the cost of publicly funded health care.

In section 8.8, options are put forward for reducing the cost of prescription drugs, which are the most rapidly increasing component of health care costs. These options are not mutually exclusive: all of them could be adopted:

    • a national drug formulary (section 8.8.1)
    • requiring the use of lowest cost therapeutically effective drug (section 8.8.2)
    • maintaining the current prohibition on the advertising of prescription drugs (section 8.8.3)

The establishment of a national drug formulary could lead the way to the creation of a single national buying agency – one which covers all provincial and territorial governments as well as the federal government. The buying power of such an agency would be enormous, and would likely strengthen the ability of public drug insurance plans to receive the lowest possible purchase price from the drug companies.

The need for aggressive drug cost-benefit management, particularly in terms of listing only the most cost-effective prescription drugs on formularies, is a reality that must be faced in light of limited public health care resources. In recent years, provincial drug insurance plans have begun to use their reimbursement policies to encourage doctors to make substitutions among alternative drug therapies. In some cases, a drug is simply not listed on a formulary if it is more expensive than others that are equally effective in treating particular medical conditions. In other cases, a drug benefit plan (for example, the Ontario Drug Benefit Plan) will only pay for a more expensive drug on special authorization in a case where it is chosen over a less expensive alternative because of one, but not all, its indications. British Columbia’s reference-based pricing policy has been used for this same purpose: the province only reimburses up to the price of a reference drug in a particular therapeutic category, unless the physician demonstrates a specific need for the more expensive product and it is approved, in advance, by the drug plan.

The difficult policy questions are: to what extent should governments adopt a program of mandatory therapeutic substitution to the lowest priced therapeutically equivalent drug? And how aggressively should such a substitution policy be followed?

A third issue related to prescription drug costs is whether pharmaceutical companies should be allowed to advertise prescription drugs. Currently, Health Canada bans direct advertising to consumers and limits the advertising of prescription drugs to health care providers. Direct-to-consumer advertising of prescription drugs is not permitted in most industrialized countries. In the United States, where the advertising of prescription drugs is allowed (the industry spends hundreds of millions of dollars a year on advertising in the U.S.), studies have shown that a very significant proportion of prescriptions are issued by physicians, particularly family practitioners, to patients who ask for a specific drug because they have seen it advertised. This is hardly surprising since the purpose of advertising is to increase demand. It has been suggested that in order to avoid an increase in demand for prescription drugs in Canada, the federal government should maintain its current ban on prescription drug advertising.

In section 8.9, a range of options are presented for expanding coverage for publicly funded prescription drugs. The options presented range from various forms of a national Pharmacare program (section 8.9.1 through 8.9.3) to a program targeted at protecting Canadians against catastrophic drug costs. Two ways of funding such a program are presented. One is a public/private sector insurance program (section 8.9.4) and the other is a tax-based program (section 8.9.5). Focussing on a targeted catastrophic program is based on evidence which shows that this is where there is the biggest gap in coverage of "medically necessary" drug therapy. Also, such programs fill the traditional role of government in Canada, in that they provide a safety net in case a catastrophic event occurs.

Some 3% of the Canadian population have no insurance coverage at all for prescription drugs. The Committee learned that most of these people are working age adults. Qualitative data also suggests those in this group may be unskilled, low-paid employees, part-time workers, seasonal employees, or the short-term unemployed. In the event of illness, these individuals are not sheltered from catastrophic drug costs, or high prescription drug costs.

Low-income families, particularly in jurisdictions that do not have public drug insurance plans for the general public, are often in a difficult position. Although their income may be too high for them to qualify for social assistance, they generally do not have regular employment or group insurance. Drug costs can place them in a financial situation in which their income after drug costs is less than that of someone on social assistance.

Moreover, in the four Atlantic provinces, there is no generally available public program to limit exposure of individuals and families to high prescription drug costs. As a matter of fact, a recent study funded by Health Canada’s Health Transition Fund found that over 25% of the population of the Maritimes are without catastrophic coverage for prescription drugs and that another 25% might be considered under-insured.

Finally, section 8.10 has a discussion of home care, the other form of care that, along with prescription drugs, is most frequently mentioned as a possible candidate for coverage expansion in the publicly funded system.

Effective home care can contribute to lower long-term costs for the health care system for a number of reasons:

    • it reduces the pressure on acute care beds by providing medical interventions in a lower-cost setting and by making use of hospital resources only when they are really needed (that is, home care is a substitute for keeping the patient in an acute-care hospital);
    • it reduces demand for long-term beds by providing a viable choice for aging Canadians to maintain their independence and dignity in their own homes (that is, home care acts as a substitute for nursing-home care);
    • it enables palliative care patients to spend their final days in the comfort of familiar surroundings (that is, home care acts as a substitute for palliative-care institutions).

Many witnesses contended that when home care substitutes for acute care, it should be treated in the same way as acute care delivered in other settings and, accordingly, should fall under the parameters of the Canada Health Act.

With respect to home care that substitutes for long-term and palliative care, the issue was raised as to whether patients should be required to contribute a larger co-payment to help cover the cost of these services as long as they have the necessary financial resources. A larger co-payment is already required in some provinces, but not in others, and where it is required, many long-term care patients are obliged to exhaust most of their personal resources before their care is paid for by the government. This raises the question of whether individuals who have the financial resources to pay the cost of long-term care should do so, or whether their care should be paid for by the government, as is the case of those with low incomes, enabling them to leave a larger legacy to their children.

In considering the home care issue, a range of options are presented:

    • a full national home care program (section 8.10.1)
    • a tax credit and tax deduction to consumers of home care services (section 8.10.2)
    • creating a dedicated insurance fund to protect individuals against future home care costs (section 8.10.3)
    • a series of measures designed to give financial support to family members, usually women, who are providing unpaid care to a member of their family.

The following table summarises all the options presented in Chapter 8:




in Health Care

Delivery (8.2)

Improving Efficiency and Effectiveness (8.2.1)

Primary Care Reform (8.2.2)

Regionalization of Health Services (8.2.3)

Contracting Private For-Profit Facilities (8.2.4)

Promotion, Prevention and Population Health (8.2.5)


Form of Federal

Funding for

Health Care (8.3)

Cost-Sharing (8.3.1)

Current Block-Funding (8.3.2)

Improved CHST (8.3.3)

Medical Savings Accounts (8.3.4)

Tax Transfers (8.3.5)



Government Revenue

for Health Care (8.4)

Through General Revenue:

Reallocating Existing Revenue to Health Care (8.4.1)

Increased Taxation (8.4.2)

Through Direct Payments:

User Charges (8.4.3)

Income Tax on Health Care (8.4.4)

Health Care Premiums (8.4.5)

Private Health Care Insurance (8.4.6)

For Health Services Delivered both Publicly and Privately

Public Health

Care Coverage (8.7)

De-listing Services (8.7.1)

Expanding Coverage (8.7.2)

Reducing the Cost

of Prescription Drugs


National Drug Formulary (8.8.1)

Use of Lowest Cost Effective Drug (8.8.2)

Advertising of Prescription Drugs to the Public (8.8.3)

Expanding Coverage

for Prescription Drugs


National Pharmacare Initiative (8.9.1)

A Comprehensive Public Program (8.9.2)

A Comprehensive Public/Private Initiative (8.9.3)

Public/Private Initiative to Protect Against High Drug Expenses (8.9.4)

Tax Initiative to Protect Against High Drug Expenses (8.9.5)

Home Care


National Home Care Program (8.10.1)

Tax Credit and Tax Deduction (8.10.2)

Dedicated Insurance Fund for Home Care (8.10.3)

Specific Measures for Informal Caregivers (8.10.4)


Chapter 9

Issues and Options for the Research and Evaluation Role

The role of the federal government in the field of research and evaluation is twofold, as it encompasses both funding health research and financial support for the evaluation of pilot projects. Throughout the hearings, there was unanimous consent among witnesses that funding innovative research and project evaluation should in the future remain a major responsibility of the federal government.

The federal government has had a long tradition – over 40 years – in financing health research. In fact, up until 1994, the federal government was the main source of funding for health research in Canada. The Canadian Institutes of Health Research (CIHR) is currently the principal federal funding body for health research. The main concern raised by witnesses during the hearings on health research was that Canada’s expenditures were low in comparison with other industrialized countries and that the federal government should devote more funding to health research. Other issues related to the transfer of knowledge, regional disparities and ethics.

Everybody agrees that health research will be one of the major drivers of change in Canada’s health care system in the coming years (Section 9.1). The knowledge that is gained as a result of health research translates directly into better diagnosis, treatment, cure and prevention of many diseases. This, in turn, leads to reduced health care costs through:

    • reducing the cost of illness, both social and economic, through the development of new drugs, products, technologies, and advances that shorten hospital stays, speed healing, and prolong good health;
    • improving the efficiency and effectiveness of health care delivery; and,
    • curing disease.

The first option would be to raise the federal share of total spending on health research to 1% of total health care spending from its current level of approximately 0.5% (Section 9.1.1). This would mean at least doubling CIHR’s current budget to $1 billion. This would also bring the level of the federal contribution to health research more in line with that of central governments in other countries. More importantly, such federal investment would help maintain a vibrant, innovative and leading-edge health research industry.

The transfer of knowledge generated by health research would greatly enhance evidence-based decision-making with respect to health and health care to the benefits of all Canadians (9.1.2). The Committee was told that there is a need to disseminate the results of health research to health care providers and policy makers. There is also a need to establish a public awareness campaign to inform Canadians about, for example, genetic research, animal cloning, and embryo research. The proposed option is to establish an organization to disseminate the results of biomedical and clinical research. Such an organization could be created within the CIHR or within Health Canada. Another option could be to create a separate federal agency devoted to this task.

The Committee heard that there is great regional disparity in terms of health research capacity across the country (9.1.3). For example, some medical facilities and academic health centres, particularly in the Atlantic provinces and in the Prairies, are currently under-funded and unable to respond to the challenges of contributing to Canada’s success in developing a globally competitive health research. The Committee would like to hear about possible options on how the federal government can contribute to reducing provincial disparities in health research capacity.

The Committee heard that a Panel on Research Ethics was recently created by the CIHR in collaboration with SSHRC and NSERC (Section 9.1.4). This panel will govern the federal policy related to the ethical conduct of research involving human subjects. The Committee was told that while this policy has high standards, effective oversight is required to ensure compliance with those standards. Moreover, the Panel on Research Ethics will be reviewing only research funded by the CIHR, SSHRC and NSERC, and not all health research conducted in Canada. It was suggested that a national oversight body independent from the CIHR should be established to provide ethics review functions for all publicly and privately funded health research, and in particular research using human embryo or foetal tissue, including embryonic stem cell research.

In recent years, the federal government has provided funding to evaluate innovative pilot projects aimed at improving the delivery of health care (Section 9.2). An important component of these pilot projects is the requirement to provide an evaluation of outcomes, including a report on the impact of the project on health status and on health services utilization, its cost-effectiveness, improvements made in the provision of care, health systems security and privacy of personal information, and so forth. All witnesses agreed that the federal government should maintain or increase its level of funding in this field (Section 9.2.1), while addressing the issue of regional disparities (Section 9.2.2).


Chapter 10

Issues and Options for the Infrastructure Role: Technology and Information Systems

The concept of "health care infrastructure" encompasses the broad mix of resources – both physical and human – that sustain the delivery of health care. In this sense, infrastructure includes not only bricks and mortar and medical equipment and technology, but also human resources, the educational sector and the information and communication systems that support health care providers.

Although Canada ranks fifth among OECD countries in terms of total spending on health care (as a percentage of GDP), Canada is generally among the bottom third of OECD countries as regards the availability of health care technology. The "aging" of health care technology is another issue of concern.

The restricted availability of health care technology has often translated into limited access to care and longer waiting times. Timely access to diagnosis and treatment is a crucial objective and must be guaranteed in Canada’s health care system (see Chapter 7 for more details about of waiting times).

Although the federal government announced that it would invest a total of $1 billion in 2000-01 and 2001-02 to assist the provinces and territories in purchasing new diagnostic and clinical medical equipment, a number of concerns remain. First, some provinces have not applied for their share of this fund, possibly because the federal government requires matching grants. Second, there are apparently no mechanisms for ensuring accountability on the part of the provinces as to exactly where that money is going to be spent. Third, additional resources are required to operate the equipment. Estimates suggest that a $1 billion investment in new equipment necessitates an additional $700 million to cover operational costs. And fourth, this investment does not address the matter of the old equipment that needs to be upgraded. A further $1 billion investment would be required for the upgrading of existing equipment.

All this suggests that the federal government should seriously consider committing to a longer term program of financing for health care technology (section 10.1.1). Such federal funding would encompass both the acquisition of new health care technology and the operation and upgrading of existing equipment. As part of this program, provincial and territorial governments could be required to report to Canadians on how they have invested these federal funds; otherwise, the federal government has no way of knowing whether its money has been spent on the things it was intended for.

Health care technology assessment (HTA) (Section 10.1.2) provides information on safety, clinical effectiveness and economic efficiency. HTA can assist in deciding whether a new technology should be introduced and when an existing technology should be replaced. More importantly, HTA ensures that health care technologies are effective, that they are applied in the appropriate cases and under the proper conditions, and that the technology used to achieve a particular outcome is the least costly.

Not enough attention has been paid to HTA in Canada. For example, all levels of government invest less than $8 million to HTA in Canada, whereas the United Kingdom provides some $100 million to its national HTA body – the National Institute for Clinical Excellence (NICE). As a result, health care technologies are often introduced into the Canadian health care system with only superficial knowledge of their safety, effectiveness and cost.

A major weakness in our current health care system is that it still operates as a "cottage industry" (see also the discussion of the primary care sector in Chapter 5). On the one hand, the health care sector in Canada is not making use of information and communications technology as much as the other information-intensive industries are. On the other, the health care system is not integrated: physicians and other health care providers, hospitals, laboratories and pharmacies all operate as independent entities with limited access to linkages that would lead to more effective sharing of information.

Greater use of information and communications technology (Section 10.2) along with better integration of health care providers and institutions would greatly improve evidence-based decision-making by health care providers, health care managers and health care policy makers.

Many witnesses pointed to the urgency of improving our capacity to manage health information, and suggested that this be done even if it means that in the short term waiting listsbecome somewhat longer, less health care technology is purchased, and other expenditures are postponed. In the view of many witnesses, enhancing our ability to manage health information is essential to the survival of Medicare.

The use of information and communications technology in the field of health care is often referred to as "telehealth". The telehealth applications that are envisioned in Canada for the purposes of sharing information and integrating health care delivery include a system of Electronic Health Records (EHR) and an Internet-based health information system.

The key issue is to bring together all the diverse infostructures which are now being developed in isolation by various institutions and provinces. This is what the proposed Canadian Health Infostructure will do (10.2.1). It will not be a single massive structure, but a network of networks, building on the initiatives that are already in place or under development at the federal, provincial and territorial levels. This is an ambitious, expensive and long-term undertaking which will take years to realize. However, it is essential to do so if we wish to acquire reliable information on the health of Canadians, the state of our health care system, and on the efficiency and effectiveness of health services delivery and distribution.

In implementing this option, priority should be given to electronic patient records, since the electronic patient record system is the cornerstone of an efficient and responsive health care delivery system that is able to improve quality and accountability. Without this kind of infostructure, the prospects for a truly patient-oriented health care system and for enhancing efficiency in health care delivery are dim. In fact, an EHR is essential if primary health care reform is to be realized.

Telemedicine (Section 10.2.2) is one form of the telehealth applications that can greatly improve quality and timely access to care, particularly in rural and remote Canada. Accessibility to health care is one of the four patient-oriented principles of the Canada Health Act. However, rural Canadians are increasingly voicing concerns about disparities between the services available in rural and remote areas and those in urban areas.

Tele-medicine is an important component of the overall rural health policy of the federal government. In the context of rural health, telemedicine offers the following advantages: it addresses the shortage of rural health care providers and medical training; it improves rural health infrastructure; it conforms with the accessibility principle of the Canada Health Act; and it ensures more equitable development of health information systems across the country.

An important outcome of the Canadian Health Infostructure will be the generation of a massive amount of health information. It is the view of all levels of government as well as all health care stakeholders that an evidence-based health care system can provide greater accountability and ensure continuous improvement to health status and health care delivery, in addition to providing a better understanding of the determinants of health. (Section 10.3)

The federal government, along with the provinces and territories, made a clear commitment to moving toward greater accountability in the area of health care with the signing of the First Ministers’ Agreement in September 2000. A Performance Indicators Reporting Committee (PIRC), chaired by Alberta, with Newfoundland, Quebec, Ontario and Health Canada as members, is working to address issues and make recommendations on a list of indicators. Similarly, the report by the Canadian Institute for Health Information (CIHI), entitled Health Care in Canada, is a step towards a national accounting process for the health care system. One option would be to expand CIHI’s information analysis and its capacity to report annually to Canadians on the health status of the population and on the state of the health care system (Section 10.3.1).

Similar to the recommendation by the Fyke Commission in Saskatchewan, a National Health Care Quality Council (Section 10.3.2) would be an independent, evidence-based organization, at arm’s length from government. Its purpose would be to provide the most objective assessment and evaluation possible of health service delivery and it would report to both government and the general public. The Council would undertake an analysis of the performance of the health care system, develop benchmarks and standards, undertake a cost-benefit analysis of programs and services, assess trends in health status, and so on.

The performance indicators developed by the National Health Care Quality Council would lay the foundation for quality improvement and serve as a guide for resource allocation. The Council would pinpoint areas in need of support and allow the public to make better informed judgements on individual sectors and services, as well as on the overall system. This would greatly improve the prospects for optimizing the use of available public resources.

There are two aspects of government accountability (Section 10.3.3). The first involves the federal government reporting to Canadians on its policies and programs with respect to health care (public accountability). The second involves provincial/territorial reporting to the federal government on the use of federal transfer payments (government-to- government accountability).

The federal government could set a valuable example by establishing a permanent mechanism for reporting to the Canadian public on the impact of all its policies affecting health and health care. One possibility could be to create a Health Commissioner charged with this task. The initiative called "Healthy People" by the Surgeon General of the United States, with the collaboration of the US Department of Health and Human Services, could be considered as a possible model.

The second form of accountability – government-to-government – may appear problematic for those who feel that there should be no role for the federal government in establishing the accountability of provincially delivered programs. But, given the substantial amount of money the federal government contributes to the provinces/territories for health care delivery, accountability to federal taxpayers requires that the federal government understand how well, or how poorly, their contributions are being spent. The affirmation of a role for the federal government with respect to government-to-government accountability is not meant to infringe on provincial prerogatives, but rather to allow all Canadians to judge how their federal tax dollars are being spent, including those spent by the federal government in its role of provider of services to specific population groups, particularly Aboriginal Canadians.


Chapter 11

Issues and Options for the Infrastructure Role: Health Human Resources

Talk of a ‘crisis’ in health care has a good deal of plausibility in relation to human resource issues, particularly with regard to the situation facing registered nurses (RNs) in Canada.. The Canadian Nurses’ Association forecasts that by 2011 there will be a shortfall of at least 59,000 nurses in Canada, but the shortfall could be as high as 113,000 if the needs of our aging population are taken into account. There are also shortages of other health care professionals, ranging from laboratory technologists to pharmacists.

Assessing the situation with regard to physicians is more difficult. While the total number of physicians has increased, the physician-to-population ratio has, despite fluctuations, remained relatively constant over the years. Yet the aggregate numbers do not tell the whole story. Availability of physician services varies widely depending on what kind of doctor one is dealing with and where one lives.

There is unlikely to be a quick fix to the human resource problems faced by the health care sector. All national organizations representing health care providers insisted that what is needed is a country-wide, long-term, made-in-Canada, human resources strategy co-ordinated by the federal government (Section 11.2). Of course, not only do the provinces and territories have the responsibility for the delivery of health care to their populations, they are also responsible for education and training. The challenge is therefore to find a way to develop such a strategy in a manner that is acceptable to the provinces and territories.

Provincial and territorial governments may resist the involvement of the federal government in the development of such a national human resources strategy. For example, when they met in August 2001, the provincial and territorial premiers and leaders agreed to develop ongoing inter-provincial co-operation to ensure that there is an adequate supply of health care providers, without the involvement of the federal government. Nevertheless, the Committee believes that a national (as opposed to a federal) strategy involving all governments, including the federal government, is needed.

There are two other human resource issues that clearly require the attention of all governments (Section 11.3):

    • How to make the best use of the full spectrum of differently qualified health professionals, so that the full range of abilities of each type of professional is productively employed;
    • How to recruit, train and retain an adequate supply of health care professionals who can adapt to the changing health and health care needs of the Canadian population.

Today there is a largely hierarchical structure to the ‘ranking’ of health care professionals and other caregivers. Specialist doctors are generally perceived to be at the top, followed by family physicians, various categories of nurses, from those with advanced training (nurse practitioners) through to auxiliaries (licensed practical nurses). Other professionals, from pharmacists to laboratory technologists, receive less attention but are no less important to the smooth running of the system. Then there are the practitioners of various kinds of alternative medicines who continually struggle for full recognition of their contribution to the health and well-being of Canadians. And finally there is an army of informal caregivers and volunteers whose essential work often goes completely unrecognized.

We need therefore to ask explicitly whether it is time to move away from this hierarchical way of thinking and attempt to adopt a ‘spectrum’ approach to human resources. The ‘spectrum’ concept would challenge the idea that ‘specialist’ physicians are somehow ‘higher’ up the ladder by virtue of their in-depth knowledge of a particular area than their family practitioner colleagues, or that doctors, in general, are necessarily more ‘highly’ qualified than nurses. This concept is based on the assumption that each profession has its particular strengths and these all need to be properly valued and deployed.

The major obstacles to the development of a plan to deal with these issues are the existing rules, which define what the various health professions can, and cannot do (called the scope of practice rules). Primary care reform is essential if we are to rationalize the use of human health resources (Section 11.4). Primary care is the first level of care, and usually the first point of contact that people have with the health care system. Primary care supports individuals and families to make the best decisions for their health. Primary care services need to be:

    • co-ordinated
    • accessible to all consumers
    • provided by health care professionals who have the right skills to meet the needs of individuals and communities being served, and
    • accountable to local citizens through community governance.

Multidisciplinary team work must therefore be a vital part of primary care. However, the goal of this team work should not be to replace one health care provider with another, but rather to look at the unique skills each one brings to the team and to co-ordinate the deployment of these skills. Clients need to see the health care worker who is the best qualified to deal with their ailment.

The way in which health care is now delivered in Canada does not normally reflect a primary care philosophy (although Community Health Centres are an example of organizations that do deliver health services using a primary care philosophy). Health services are often not co-ordinated, nor are they being provided by the most appropriate practitioner and the knowledge and skills of many practitioners are not being fully utilized.

The implementation of a primary care strategy, as noted earlier in this report (see Chapter 5), also entails rethinking the current reliance on fee-for-service payments as the main way of remunerating physicians. A fee-for-service actively discourages physicians from promoting teamwork, as their individual salaries depend on the number of patients they see. Moreover, it encourages family physicians to refer as a matter of course many of the more complex cases to specialists since there is no incentive for them to spend more time with ‘difficult’ cases. Finally, a fee-for-service reinforces the public’s perception of the current ‘hierarchy’ within the health care system, and can only serve to accentuate demand on the part of individual patients to always consult the most ‘highly’ qualified practitioner, regardless of whether or not they are the one best-suited to meeting the patient’s needs.

The main alternatives to a fee-for-service payment are salary- and capitation-based systems, where physician services are remunerated according to the number of registered patients. Currently, some physicians with substantial teaching or administrative duties are on salary, and there have been a number of initiatives aimed at organizing group practices in various provinces that utilize forms of capitation. It is also possible to combine these forms of payment (as is done in Great Britain).

Finding alternative means of remuneration for physicians is not the only obstacle to be overcome in reforming the current system so that better use can be made of all types of human resources in the health care sector. Reform in this area necessarily challenges the current distribution of decision-making power, and is therefore likely to be resisted by those who are presently perceived to be in the most powerful position. Primary care reform would have the effect of increasing the number of people sharing the top of the hill, and means will have to be found to persuade those who are now in a dominant position to share some of their power.

Finally, it is important to consider various ways of encouraging individuals themselves to seek the most appropriate form of care (Section 11.5). Canadians have been led to believe that they must see a doctor when they could well consult a nurse or a nurse practitioner, and that a specialist is needed when a general practitioner might well be able to provide care of comparable quality. The health care delivery system needs to be organized so that it is possible for patients to consult the most appropriate health care professional, and there must be incentives that reward patients for making the best choice and consequences that penalize them when they behave in a way that is unnecessarily costly to the system.

Among the options that could be considered to accomplish this goal are user fees that would kick in if (and only if) a patient insisted on seeing a particular health care professional when it was not considered necessary at the initial point of contact between the patient and the system. Referrals that were made on the advice of a health care professional (triage nurse, general practitioner) would be free of charge, but if patients requested a further consultation of their own volition, they would be required to pay a user fee that could vary according to the type of professional consulted. These fees could be made refundable if the consultation proved necessary, so as to avoid overly discouraging those who wish to obtain a second opinion on their case. It might also be possible to guarantee shorter waiting times for consulting some categories of professionals, and to use this as an additional incentive to promote cost-conscious behaviour on the part of health care consumers.

There are four broad issues which are intertwined in the human resource planning problem:

    • What role should the federal government play in the development of a national human resources plan for all health services sector personnel?
    • What role should the federal government play in helping to implement such a plan (e.g. through infrastructure funding or financial contributions to training programs)?
    • How can individual Canadians be "trained" or given incentives which will help them to differentiate and discriminate between their true needs for health services and their desired demand?; and
    • How can those who are currently perceived to be at the top of the health care power structure be persuaded to relinquish some of their power and to change the scope of practice rules so that a more efficient use of health services personnel can be achieved (where efficient means that a patient is always seen by a health care worker who is qualified to address the patient’s needs, and who will refer the patient when necessary to a differently qualified service provider if that is what the patient genuinely requires)?

The difficulty in addressing these issues is that the first two depend critically on the assumptions one makes about the timing and the precise nature of the progress which can be made on the last two issues.


Chapter 12

Issues and Options for the Population Health Role

A good health care system is only one of numerous factors that help keep people healthy. Some experts have suggested that only 25% of the health of the population is attributable to the health care system, while 75% is dependent on factors such as biology and genetic endowment, the physical environment and socio-economic conditions.

There is broad agreement that multiple factors – called "determinants of health" – influence health status. These include such things as income and social support; education; employment and working conditions; social and physical environments; personal health practices and coping skills.

The term "population health" is used to refer to the overall state of health of a population that is brought about by all these determinants of health. The objective of a population health approach is to ward off potential health problems before they require treatment within the health care system.

One of the key attractions of a population health approach is that it widens the framework for an understanding of why health status in Canada does not extend evenly to all Canadians. A wide range of health status indicators show significant disparities among Canadians in terms of geographical location, demographic factors, socio-economic conditions, gender differences and so on.

The 20th century revolution in health care significantly altered the pattern of diseases, with the causes of mortality shifting away from infectious diseases and towards non-communicable diseases (Section 12.1). Chronic diseases, such as cancer and cardiovascular disease, are now the leading causes of death and disability in Canada, while unintentional injuries are the third most important cause of death.

A number of health trends that affect young people in Canada are of great concern. These include, for example, overweight and obesity, eating disorders, incidence of smoking, illiteracy and low levels of psychological well-being (Section 12.2).

Disease issues are complex, but many chronic and infectious diseases, and most injuries, can be prevented. However, there has been a tendency to focus on curing diseases, rather than on preventing them, largely because of a lack of political will.

According to many experts, the most powerful influence on health is socio-economic status (section 12.3). Canadians with low incomes and low levels of education are more likely to have poor health, no matter which measurement of health is used, and, as levels of income and education increase, people’s health improves on virtually all scales of measurement and in terms of all of the factors that influence health.

The federal government’s role with regard to health promotion and disease prevention is a well established one (section 12.4). Similarly, the federal government has been recognized as a leader worldwide in developing the concept of population health. It could, once again, show leadership in implementing a population health strategy for all Canadians.

Prevention efforts have to be tailored and flexible. There is no ‘one size fits all’ strategy (section 12.4.1). Comprehensive prevention and promotion strategies must therefore address the linkages between risk factors, as well as between health status and socio-economic, demographic, and environmental factors.

Strategies must also recognize the link between healthy communities and healthy citizens. Approaches that address several risk factors and that can produce multiple benefits include support for families at risk, comprehensive school health promotion programs, and comprehensive work health and safety programs.

The Committee is of the view that there are several key issues with regard to population health strategies that largely revolve around the difficulties associated with how to translate research evidence concerning the importance of these population health strategies into actual policy that can be implemented. In the first place, the multiplicity of factors that influence health outcomes means that it is exceedingly difficult to associate cause and effect, especially since the effects are often only felt many years after exposure to the cause.

Moreover, because of the diversity of the factors that influence health outcomes, it is very difficult to co-ordinate government activity in this regard. Given that the health care system itself is only responsible for a relatively small percentage of the actual determinants of health, responsibility for population health cannot reside exclusively with the various ministries of health. Yet the structure of most individual governments does not easily lend itself to inter-ministerial regulation of complex issues.

Although there are many difficulties associated with the development of an effective population health approach, the Committee believes that it is important for the federal government to continue to try to set an example by exploring innovative ways to turn good theory into sound practice that will contribute to improving health outcomes in Canada. There are two broad options the Committee would like to put on the table and to solicit comments from readers on them (section 12.4.2).

The first of these options concerns the federal responsibility for the delivery of health care services to Aboriginal Canadians (see also Chapter 13). The key idea is that in an area of clear federal responsibility it should be possible for the government to adopt an explicit population health approach that would recognize the many factors that contribute to the deplorable health outcomes that are still the norm in many Aboriginal communities.

The second option would involve an even wider federal undertaking. Because of the very broad focus required to implement population health strategies, it is essential that a way be found to break down the ministerial silos that compartmentalize responsibility for policy outcomes and to screen all policy through a population health lens. One way of doing this would be to give responsibility to a ‘Health Commissioner’ (see also Chapter 10) for monitoring and reporting on the health impact of all federal government policy.

Finally, greater research is needed (section 12.4.3), particularly in certain areas. Often, money is spent without sufficient epidemiological research to guide where it is invested. In terms of chronic disease research, there is a lack of knowledge on how to use that information in the implementation of preventive strategies. In this respect, research is needed to determine how best to share health information with both providers and individual Canadians and, in particular, how best to target that information to those in lower socio-economic groups or those with poor literacy skills.


Chapter 13

Issues and Options for the Service Delivery Role: Aboriginal Health

There are significant health and socio-economic disparities between Aboriginal peoples and the general Canadian population (Section 13.1). In the view of the Committee, the health of Aboriginal Canadians is a national disgrace. If the Aboriginal population was enjoying a state of health similar to that of the overall Canadian population, Canada would probably stand as the healthiest country in the world. We certainly need to do a better job. The federal government must take a leadership role in working to immediately redress this situation.

Health care to Canada’s Aboriginal people is delivered through a complex array of federal, provincial and Aboriginal-run programs and services (Section 13.2). Who delivers what to whom depends on a number of factors such as status under the Indian Act, place of residence (on or off-reserve), the location of one’s community (non-isolated or remote) and whether Health Canada has signed an agreement to transfer the delivery of certain health services to an Aboriginal community or organization.

During Phase Two of its study, the Committee was told that status Indians under the Indian Act are a federal responsibility. The provision of hospital and physician services, however, is a provincial or territorial responsibility. Status Indians who reside on reserves are entitled to the general health services provided by the provinces and territories such as hospitals, physician services, and other insured services covered by provincial and territorial health plans. Health Canada, however, provides direct primary care and emergency services on reserves in remote and isolated areas where no provincial services are available. Regardless of residence (on or off–reserve), status Indians receive non-insured health benefits (NIHB) funded by the federal government. These benefits include drugs, medical supplies and equipment, dental care, vision care, medical transportation, provincial health care premiums and crisis mental health counselling.

Provincial and territorial governments are responsible for delivering health services to the Inuit, but delivery of health services to Canada’s Inuit population varies with jurisdiction of residence. In 1988, the federal government transferred responsibility for health administration to the Government of the Northwest Territories. With the creation of Nunavut, the Nunavut government assumed this responsibility for the Nunavut region. The federal government provides funds to the territorial governments to deliver health programs for status Indians and the Inuit including non-insured health benefits.

Métis and non-status Indians are not eligible for federal health programs. They receive medical services from provincial and territorial governments on the same basis as other Canadians. Métis and non-status Indians are not included under the Indian Act, nor are they eligible for non-insured health benefits funded by the federal government.

Overall, jurisdictional barriers to the provision of health services to Aboriginal people exist on two levels. The first barrier arises from the division of powers between the federal and provincial governments. The consequences of having two jurisdictions involved in delivering health services include program fragmentation, difficulties co-ordinating programs and reporting mechanisms, inconsistencies, gaps, possible overlaps in programs, lack of integration, the inability to rationalize services and impediments to developing a holistic approach to health and well-being.

The second jurisdictional barrier stems from the divisions among Aboriginal peoples that arise as a result of the Indian Act. Because Métis and non-status Indians are excluded from the legislation, they are not eligible for most federal programs. In the view of witnesses, this lack of recognition leaves the Métis and non-status populations in a jurisdictional void.

The option proposed in Section 13.2.1 is for the federal government to undertake, in collaboration with the provinces, territories and Aboriginal representatives of all groups, the development of a National Action Plan on Aboriginal Health to improve inter-jurisdictional co-ordination of health care delivery. A unique contribution of the federal Minister of Health could be to facilitate such co-ordination.

Section 13.3 discusses ways of ensuring adequate access to culturally appropriate health services for Aboriginal Canadians. A long-term strategy to increase the number of Aboriginal health care providers could be established by federal, provincial and territorial governments (Section 13.3.1). As part of this strategy, the federal government could provide the necessary resources to train Aboriginal Canadians across a wide range of disciplines.

A long-term strategy should also address training, recruitment and retention issues of emerging health career categories such as home care workers, early childhood educators, diabetes prevention workers, telehealth and systems development technicians, etc.

Tele-medicine could also play an important role in improving access to health services in Aboriginal communities (Section 13.3.2). In the context of remote and isolated Aboriginal communities, telemedicine offers the following advantages: it addresses the shortage of health care providers and medical training; it improves the health care infrastructure; it enables conformity with the accessibility principle of the Canada Health Act; and it ensures a more equitable development of health information systems across all regions of the country. The Committee welcomes opinions on how adequate access to culturally appropriate health services can be best achieved for all Aboriginal Canadians (Section 13.3.3).

Aboriginal peoples of all groups do not simply define health as the absence of disease (Section 13.4). They adopt a broader view of the concept of health (they talk about "wellness") that encompasses the spiritual, physical, mental and emotional aspects of the individual. They explain that the various components of the overall state of health may be influenced by the social, cultural, physical, economical and political environments of a person. Aboriginal wellness emphasizes that solutions to health will not be effective until all factors having an impact on a problem are considered. Witnesses suggested that federal Aboriginal health policy must develop a greater focus on illness prevention, health promotion and a holistic approach to population health.

The federal government has been recognized as a leader worldwide in developing the concept of population health. Under the option discussed in Section 13.4.1, it would, once again, show leadership in implementing a population health strategy designed specifically for Aboriginal Canadians. Such a strategy should include dealing with economic conditions, environmental issues such as clean and safe drinking water, high quality and culturally appropriate health care, healthy lifestyle choices, etc. Investing in such activities will improve the health status of Aboriginal peoples and reduce the suffering and costs that result from poor health. This option would require extensive and ongoing inter-departmental collaboration. The federal Minister of Health could act as a leader.

The federal government should also set a valuable example by establishing a permanent mechanism for reporting to the Canadian public on the impact of all its policies and programs aimed at Aboriginal health. This could be the first step towards federal accountability for its overall health policy. We welcome any suggested options for an effective federal accountability mechanism with respect to Aboriginal health (Section 13.4.2).

During the hearings on Aboriginal health, witnesses pointed out the importance of undertaking research on the health of Aboriginal peoples as a means to provide useful information on how to improve health services delivery and health outcomes (Section 13.5). They welcomed the new Institute on Aboriginal Health within the CIHR and stressed that it is essential that it be provided with a sufficient level of funding. In their view, the diversity of the various groups within the Aboriginal population must be reflected in health research activities. In addition, funding should be allocated to research activities that explore various models to obtain evidence-based information on how to design and deliver programs that affect Aboriginal health.

Given the diversity of Aboriginal peoples and given their unique health and health care needs, it is essential to involve their communities in the renewal of federal policies and programs affecting Aboriginal health (Section 13.6). We heard that the most successful programs leading to healthier outcomes are those based on significant input from the members of the involved community. The Committee would like to obtain suggestions on the most appropriate process to involve Aboriginal Canadians in designing, developing, implementing and assessing federal programs and policies aimed at Aboriginal health.


Chapter 14


For Canadians, our publicly funded health care system is a key distinguishing characteristic of our country. In fact, it has achieved iconic status. It is perceived to reflect Canadian values and these are seen to stand in sharp contrast to the values of our American neighbours.

Medicare is based on the belief that Canadian society should collectively share the risks, and the consequences, of illness and injury to individual Canadians. Before Medicare, these were largely borne by the sick or injured themselves, their families, or various charitable organizations. Canadians’ attachment to a sense of collective responsibility for the provision of health care has remained largely intact despite a shift towards more individualistic values that has, in recent years, led to broader changes in society.

Health care is also seen in Canada as very much a public good, in spite of the fact that more than 30% of total health care costs are paid out of private funds. It is a public good also in the sense that Canadians look to government, both federal and provincial, to guarantee the services to which they feel entitled.

One might expect that given the importance of the health care issue in the collective psyche of Canadians, and in the political life of the country more generally, that an ongoing, thoughtful, discussion of health care issues would be the norm. Unfortunately, the opposite is true.

Faced with this situation the Committee decided from the outset that it would provide a useful public service if it could produce a report that outlined the major issues facing Canada’s health care system and presented a set of potential options for addressing them. Moreover, it envisaged this report as being factual and non-ideological. Also, the Committee strongly believes that it was essential not to foreclose discussion of any option a priori. This is what the Committee hopes it has achieved with this report.

We recognize that our set of issues is not exhaustive, and that many readers of this report will want to add to the issues list. Similarly, there are those who will feel that our set of options is not complete, and they will want to add new options of their own. We very much welcome these additions to our work. We believe that they will help to further the Committee’s objective of being a catalyst for informed public debate on health care issues.

Above all, we hope that individual Canadians – the people who most benefit from Canada’s Medicare system and the people who will be most affected by any changes that are made to it – will take the time to write to the Committee, and give us their views on which options they prefer, and why. We very much look forward to receiving the guidance of Canadians as we prepare our final report and our own set of recommendations.

Please write to:

The Standing Senate Committee on Social Affairs, Science and Technology
The Senate
Ottawa, Ontario
fax: 613-947-2104


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