Health Care Economics
Canadian System Built on Sharing Costs, Power
Psychiatric News
Volume 38 Number 19 page 25-25

The Canadian Health System is a product of more than five decades of evolution.

The province of Saskatchewan in 1947 established public universal hospital insurance. Ten years later, Canada’s federal government passed legislation to share funding of those services. By 1961, all 10 provinces provided universal access to hospital services. After Saskatchewan took the lead in providing insurance for physicians’ services in 1962, the federal government began providing support. By 1972 all provinces offered those services through public insurance plans.

A 1979 study found that a two-tier system of care was developing because physicians were allowed to charge patients fees in excess of what they were paid by the government and because hospitals could charge user fees. The Canada Health Act (CHA) of 1982 added provisions discouraging those charges by mandating deductions from the federal payment when these charges occurred.

The CHA, through its publicly funded Medicare program, covers these services:

Insured hospital services, which include medically necessary inpatient and outpatient services, nursing services, diagnostic procedures, drugs administered in hospitals, and dental-surgical services performed in hospitals.

Insured physician services, which are defined as "medically required services rendered by medical practitioners." The meaning of that phrase is determined at the province level, with guidance from the CHA.

Extended health care services such as nursing home intermediate care, adult residential care, and health aspects of home care.

All provinces cover outpatient mental health services provided by psychiatrists and inpatient psychiatric care. They do not cover mental health services by psychologists and social workers. The federal government does not mandate coverage of psychiatric services, but the provinces have elected to cover them.

Medicare does not provide coverage for outpatient prescription drugs, but provinces typically provide drug coverage for elderly, disabled, and low-income residents.

Funds for the program come from the federal government and the provinces. To receive federal funds, each province must submit an annual report that demonstrates that it meets five principles: comprehensiveness, universality, portability, accessibility, and public administration. The principles are intended to ensure that all essential services are covered, everyone is covered on the same terms and can receive care in any province, and that health care is administered by a nonprofit public agency. Provinces can cover services beyond those mandated by the CHA.

Physicians and other persons delivering health care services bill the provincial government. Physicians elect representatives who negotiate annually with provincial government representatives about rates, which vary among the provinces. Each province establishes global budgets for hospitals.

Information about the Canadian health system is posted on the Web at www.hc-sc.gc.ca/english/care.

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