Canada's Health Care System

The Role of Government

The organization of Canada's health care system is largely determined by the Canadian Constitution, in which roles and responsibilities are divided between the federal, and provincial and territorial governments. The provincial and territorial governments have most of the responsibility for delivering health and other social services. The federal government is also responsible for some direct delivery of services for certain groups of people.

Publicly funded health care is financed with general revenue raised through federal, provincial and territorial taxation, such as personal and corporate taxes, sales taxes, payroll levies and other revenue. Three provinces, British Columbia, Alberta and Ontario, charge health care premiums, but non-payment of a premium does not limit access to medically necessary services.

The competitive advantage that publicly financed health care provides to Canadian business is significant. Public financing spreads the cost of providing health services equitably across the country. In addition, financing health insurance through the taxation system is cost-efficient because it does not require a separate collection process.

There is more to health than the health care system. The responsibility for public health, which includes sanitation, infectious diseases and related education, is shared between the three levels of government: federal, provincial/territorial and local or municipal; however, as noted above, these services are generally delivered at the provincial/territorial and local levels.

Undoubtedly, the most important conclusion of the [1965 Royal] Commission was that the objectives of the Canadian people could best be achieved through a universal program administered by public authority with twelve provincial or territorial health insurance funds subsidized from federal general revenues rather than by means-testing and subsidizing several millions of individual Canadians and family heads to enable them to pay voluntary plan or commercial insurance premiums.

Canada. Health, Canada's National-Provincial, 1980, p. 5

The Federal Government

The federal government's role in health includes setting and administering national principles for the system under the Canada Health Act; financial support to the provinces and territories; and several other functions, including the direct delivery of primary and supplementary services to certain groups of people; public health programs to prevent disease, and to promote health and educate the public on health implications of the choices they make; health protection (food safety and nutrition, and regulation of pharmaceuticals, medical devices, consumer products and pest management products); and funding for health research and health information activities.

The Canada Health Act establishes the principles and criteria for health insurance plans that the provinces and territories must meet in order to receive full federal cash transfers in support of health. The Canada Health Act lists five basic principles, which state that health care plans must be: available to all eligible residents of Canada; comprehensive in coverage; accessible without financial and other barriers; portable within the country and during travel abroad; and publicly administered.

The federal government provides cash and tax transfers to the provinces and territories in support of health through the Canada Health Transfer. To support the costs of publicly funded services, including health care, the federal government also provides equalization payments to less prosperous provinces and territorial financing to the territories.

Approximately 1 million people in certain groups receive primary and supplementary health care services directly from the federal government. These groups include: First Nations people living on reserves; Inuit; serving members of the Canadian Forces and the Royal Canadian Mounted Police; eligible veterans; inmates in federal penitentiaries; and refugee protection claimants.

Direct delivery of services to First Nations people and Inuit includes primary care and emergency services on remote and isolated reserves where no provincial or territorial services are readily available; communitybased health programs both on reserves and in Inuit communities; and a non-insured health benefits program (drug, dental and ancillary health services) for First Nations people and Inuit no matter where they live in Canada. In general, these services are provided by community health nurses, and at nursing stations; health centres; in-patient treatment centres; hospitals; and on-reserve headstart projects for Aboriginal children. Increasingly, both levels of government are working together to integrate the delivery of these services with the provincial and territorial systems.

The federal government is also responsible for health protection and regulation (e.g., regulation of pharmaceuticals, food and medical devices), consumer safety, and disease surveillance and prevention, and provides support for health promotion and health research. There are also federal health-related tax measures, including tax credits for medical expenses, disability, caregivers and infirm dependents; tax rebates to public institutions for health services; and deductions for private health insurance premiums for the self-employed.

The five Canada Health Act principles provide for:

Public Administration:
The provincial and territorial plans must be administered and operated on a non profit basis by a public authority accountable to the provincial or territorial government.

Comprehensiveness:
The provincial and territorial plans must insure all medically necessary services provided by hospitals, medical practitioners and dentists working within a hospital setting.

Universality:
The provincial and territorial plans must entitle all insured persons to health insurance coverage on uniform terms and conditions.

Accessibility:
The provincial and territorial plans must provide all insured persons reasonable access to medically necessary hospital and physician services without financial or other barriers.

Portability:
The provincial and territorial plans must cover all insured persons when they move to another province or territory within Canada and when they travel abroad. The provinces and territories have some limits on coverage for services provided outside Canada, and may require prior approval for nonemergency services delivered outside their jurisdiction.

The Provincial and Territorial Governments

The provinces and territories administer and deliver most of Canada's health care services, with all provincial and territorial health insurance plans expected to meet national principles set out under the Canada Health Act. Each provincial and territorial health insurance plan covers medically necessary hospital and doctors' services that are provided free of charge, without deductible amounts, co-payments or dollar limits. The provincial and territorial governments fund these services with assistance from federal cash and tax transfers.

The role of the provincial and territorial governments in health care includes administering their health insurance plans; planning, paying for and evaluating hospital care, physician care, allied health care, prescription drug care in hospitals and public health; and negotiating fee schedules for health professionals. Most provincial and territorial governments offer and fund supplementary benefits for certain groups (e.g., low-income residents and seniors) such as drugs prescribed outside hospitals, ambulance costs, and hearing, vision and dental care, that are not covered under the Canada Health Act.

Although the provinces and territories provide these additional benefits for certain groups of people, supplementary health services are largely privately financed. Individuals and families who do not qualify for this publicly funded coverage may pay these costs directly (out-of-pocket), be covered under an employment-based group insurance plan or buy private insurance. Under most provincial and territorial laws, private insurers are restricted from offering coverage that duplicates that of the publicly funded plans, but they can compete in the supplementary coverage market.

As well, each province and territory has an arm's-length workers' compensation agency, funded by employers, which provides services to workers who are injured on the job.