How Canada's health system works - includes related article on evolution of Canadian system

How Canada's health system works

Here's an overview of how it's structured and financed, as well as the problems and changes taking place.

Like many of their Canadian compatriots, retirees Romeo and Florence DeBonis spend their winters in Florida. Last year, Romeo got hit with a bad case of flu and had to spend two and a half days in an American hospital.

"I almost died when I got the bill," his wife, Florence, says. "It was for $3,500. I thought I had to pay for it."

The DeBonises were lucky--their $3-a-day, out-of-country Blue Cross health insurance covered the bill. For any Canadian, though, just seeing a hospital bill is an unfamiliar and frightening experience.

"I have American friends who can't believe we go into hospitals and walk out without paying," Florence says.

A recent survey found that 67 percent of Canadians are "very satisfied" with their health care services, compared to 35 percent of Americans. Only 14 percent of Canadians polled said lack of money was the main reason they didn't get medical help when needed; 58 percent of Americans cited lack of money as the major obstacle to medical care.

Canada's health care system, called medicare, is a product of the nation's distinctive political culture, which combines capitalism with social responsibility--a kind of liberal conservatism or vice versa.

Medicare is often cited by Canadians as one of the reasons they don't mind paying higher taxes--they feel they are getting something valuable in return.

Medicare provides first-dollar coverage and there is no limit on what the system will pay for an individual's care during his or her lifetime. For this coverage, Canada spends an average of about $1,500 (U.S.) annually on health care for each of its 26 million citizens, for a total of $39 million. This cost works out to just over 8 and a half cents out of every dollar of Canada's gross national product, a level the country has maintained since 1978.

Canadians' life expectancy is the same as Americans'--74 years, but their infant mortality rate is better--8 deaths per 1,000 births compared to 11 deaths in the States.

How the system works

Though it's considered a national program, Canada's health care system is actually 10 different health insurance schemes. Under the division of powers in Canada's constitution, health is a provincial responsibility. The differences between the plans are generally limited to the amount doctors are paid for a service and whether the plan is partially funded by insurance premiums as well as by general taxes.

In seven provinces, residents pay for their health plan through taxes alone. The three other provinces charge an additional annual insurance premium. Ontario's maximum premium, for example, is just over $600 a year for a family of any size. If you live in one of the three provinces that charges a fee and cannot afford the premium, the province will subsidize you up to 100 percent.

To entice all the provinces into a national arrangement, Ottawa passed legislation in the early 1970s providing for federal cost sharing so that residents of the poorer provinces, such as Newfoundland, could have essentially the same standard of health care as those living in the wealthier provinces, such as Ontario.

The federal government agreed to provide up to 40 percent in direct cost sharing with the provinces and make hospital construction grants available as long as the provincial plans followed five rules.

The plans had to be comprehensive (covering all the listed essential services); be reasonably accessible to all of their citizens; provide universal coverage; be portable across the country; and be publicly managed and administered. While they all meet those conditions by and large, there are cracks in the system and the cracks are growing.

How it's financed

During the heydays of economic growth in the 1960s and '70s, the federal government used medicare as a political tool to woo voters with their own money. Programs were expanded and new ones brought on stream with every federal election.

But now, the federal share of the health pie is shrinking. From a high of 48 percent, Ottawa now contributes only 38 percent of health costs and intends to make drastic cuts by the mid-1990s, says John O'Brien-Bell, M.D., the Vancouver-based president of the Canadian Medical Association.

"The provinces are trapped between the public's unlimited expectations of a `free' system--expectations which are fueled by politicians--and a federal government intent on reducing the debt," he says. On a per capita basis, Canada's national debt is twice as high as the United States'.

With health costs already taking up an average of 30 percent of each provincial budget, the ax has to fall somewhere.

Physicians are the focus of new cost containment measures in the provinces. Average payment per doctor has jumped, from $94,500 (U.S. $80,000) in 1981-82 to $154,100 (U.S. $127,500) in 1986-87.

In British Columbia, government and doctors negotiated a $900 million ceiling on payments to physicians. As the year goes on, the B.C. government can gradually reduce how much it pays a doctor for each procedure if it appears the limit could be exceeded.

In Quebec, there is a limit on individual general practitioners' fees. Physicians can bill up to $29,757 each quarter. After that, their billing fees are cut by 75 percent. When doctors with an established practice reach their billing limit early, they often go on vacation and let a younger doctor work out of their office for a significant cut of the young doctor's billings.

Quality issues

But cutting fees is only a partial solution. Provincial health ministers across the country have stated that the cuts in federal funding could result in a deterioration in quality, in higher taxes, increased borrowing, or cut backs in other public services.

"Twenty years into medicare, we're beginning to see bed closures at hospitals, waiting lists for surgery, rationing of medical technology, and a lack of capital funding," O'Brien-Bell says. The high standards originally set by Canadian medicare are starting to fray at the edges.

O'Brien-Bell notes that the poorer regions of the country "have found it impossible to provide the quality of universal and comprehensive care that the wealthier provinces can provide."

Further, there have been media reports about patients dying while waiting three to six weeks for a cardiac bypass operation. But many health professionals ask whether these people would have died two weeks after their operation instead of two weeks before.

"Not every 80-year-old who's smoked two packs a day and weighs 200 pounds can get cardiac surgery. There are limits to what they think the system is responsible for correcting. But it also means how many kids get liver transplants," Peter Ellis, president of Toronto's Sunnybrook Hospital, says.

"Canada rations by queuing," Morton Lowe, M.D., coordinator of health sciences at the University of British Columbia, points out. "You have to wait your turn for a hip transplant even if there are three poorer people in front of you. Which I think is damn fine. In the U.S., if you're rich, you get it fast, and if you're poor, you don't get it at all. That's how they ration."

Cost constraints have also forced provincial governments to ration high-tech purchases. For example, Toronto, with a population of 3.5 million, has only two magnetic resonance imagers.

Some Americans wonder whether Canada piggy-backs on U.S. technology. "Everyone in the world piggy-backs on the U.S. Most technological advances come from Britain, Germany, and the U.S.," says London, Ontario-based Adam Linton, M.D., an executive with the Ontario Medical Association.

While Canada spends far less on medical research and development as a percentage of its GNP than the United States, Canadians have pioneered the double-lung transplant and mobile blood transfusion units, achieved major breakthroughs in nerve regeneration and neurosciences, and developed insulin, pablum, and that staple of hospitals--instant mashed potatoes.

Recently, the Canadian divisions of foreign multinational drug companies were given better patent protection for their new discoveries and in return, the drug companies pledged to invest more than $2.5 billion in research and development in Canada over the next 10 years.

Changes

The first signs of a private tier of health care are also cropping up in Canada. According to O'Brien-Bell, the Gimbel Clinic now performs 5 percent of all eye surgery in Canada. "If you're on a waiting list in your province for a cataract operation, you can fly in and have your surgery done within a week for a cost of $900," he notes.

The Shouldice Hospital in Toronto once catered solely to Americans. "Now, 7 to 8 percent of their business is from Canadians looking for a quick hernia or gallbladder operation," he says.

What's more, many Canadians who don't want to wait and who have the money travel to the United States for an immediate operation.

What's ahead for the Canadian health care system? Politicians on all levels are looking for a scapegoat as they find medicare more a millstone than a carrot. As a result, doctors are made to appear greedy, and the public, once encouraged to use the system whenever it wanted, is now labeled as profligate for following through.

Yet when Canadians talk about their health care system, it's like Americans discussing the Constitution. Canadians consider their universal health care program to be the finest thing their government--and maybe any government --has ever created.

Barry Brown is a Canadian journalist who lives in Toronto.

COPYRIGHT 1989 A Thomson Healthcare Company
COPYRIGHT 2004 Gale Group