Subscribe to our Newsletter Subscribe to our Magazine
Canadian-drugs-cost

The year 2014 will be an important one for Canadians. For one, it’s the year of the next winter Olympics and an opportunity to build on the gold medal success of Vancouver 2010. But it will also be important for another reason; it is the year the federal-provincial health deal expires. The federal government has promised a comprehensive review of the Canada Health Act, and the Senate Social Affairs Committee is about to start hearings and will present a report to the federal Minister of Health immediately prior to the beginning of federal-provincial negotiations later this fall.

Many politicians and health experts publicly acknowledge that changes to the Canada Health Act are required to ensure the future financial sustainability of Canada’s health system.

But to understand where we need to go, we need to know where we are.

The Canada Health Act received royal assent on April 1, 1984. The primary objective of the act is to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers. The Canada Health Act built upon and clarified the intentions of two preceding pieces of legislation; namely, the Hospital Insurance and Diagnostic Services Act of 1957 and the Medical Care Act of 1966. The Canada Health Act establishes five criteria or national principles that provincial governments must adhere to in the design, delivery and funding of provincial health programs. These criteria will be subject to much debate in the coming months and (at a high level) are detailed as follows:

  • public administration provincial health plans must be administered on a non-profit basis by a public authority;
  • comprehensiveness – provincial health plans must insure all services that are medically necessary. This criterion defines the minimum basket of services that must be covered—most provincial plans cover additional services;
  • universality all residents must have access to public healthcare and insured services on uniform terms and conditions;
  • portability residents must be covered while temporarily absent from their province of residence or from Canada; and
  • accessibility insured persons must have reasonable and uniform access to insured health services, free of financial or other barriers.

So why the debate, and why should Canadians care?

As mentioned, the Canada Health Act was preceded by other legislation, with the Medical Care Act being the most significant. In 1961, Justice Emmitt Hall was charged with the responsibility of recommending guidelines for the establishment of a comprehensive and universal program for insuring medical services. So despite receiving royal assent in 1984, the Canada Health Act’s origins date back to work completed by Hall more than 50 years ago.

It is clear to many that Canada will struggle to meet its ongoing healthcare commitments—the cost pressures are just too significant. However, to further frame the need to change, it is insightful to look at some key differences between 1961 and today with respect to health and healthcare spending.

  • Since 1961, Canada’s population has come close to doubling (from 18.2 million to 34.5 million today), but the per capita health spending has increased more than 50 times. In the early ’60s, healthcare spending was less than $100 per person. In 2010, per capita health spending was $5,614.
  • In 1961, healthcare spending in Canada was approximately 5.5% of GDP. Today, that figure is approximately 11.7% of GDP.
  • In 1961, healthcare was approximately 57% privately funded with the remainder funded by the government. Today, approximately 70% of healthcare is funded by government with only 30% funded privately.
  • Canadians are living longer. Life expectancy at birth in 1961 ranged from 68 (male) to 79 (female) years old. In 2008, these figures had risen to 74 (male) and 83 (female).
  • Infant mortality rates, which are considered to be an indicator of population health, have dropped from 27.3 per 1,000 in 1961 to five per 1,000 today.
  • The rise in chronic disease in recent years has been staggering, with more than 70% of today’s healthcare costs related to chronic conditions. Obesity rates have more than doubled in the last 15 years, with obesity seen as a contributing factor to many chronic diseases. Unfortunately, statistics are not readily available from 1960; however, it is fairly safe to assume that obesity rates would be lower than when the Canada Health Act came into effect.

As you can see, 1961 was a very different time than today, which begs the question, had Hall known then what we know today, would the same core principles be embedded into the Medical Care Act (and now the Canada Health Act)? Just like everything else, public policy needs to adapt and change to the environment within which it operates, and certainly within the health area the changes have been significant. The Canada Health Act needs to be updated to reflect the realities of 2012 (and beyond) and not the realities of 1961.

As a proud Canadian, I believe our commitment to universal healthcare defines us as a nation and sets us apart. All citizens should be interested in and passionate about the discussions about to take place. Employers (and insurers) in particular should develop a perspective on this topic given the unique relationship between publicly funded health programs and employer benefits plans. The cost pressures are not unique to government, with the private sector unable or perhaps unwilling to accept a larger role in the funding of the health of Canadians. However, abdicating the responsibility to government to fix the problem is not the solution. It is a shared responsibility, and, increasingly, the answer lies in greater collaboration between all players involved in protecting the health of Canadians.

The Canada Health Act belongs to all of us. In anticipation of 2014, we should develop a reasoned perspective on what changes—if any—are required to see us through the next 50 years. And as individuals or as employers, we should share this perspective with public policy officials to ensure that our interests are considered in the review of this nation-defining piece of legislation.

Brian Lindenberg is a senior partner with Mercer, in Calgary, and is Mercer Canada's innovation leader. He has more than 30 years of experience in the employee benefits field.

These are the views of the author and not necessarily that of Benefits Canada.

© Copyright 2014 Rogers Publishing Ltd. Originally published on benefitscanada.com

Smallbizadvisor

Check out this one-stop resource for advisors in the small group benefits and retirement markets.

See all comments Recent Comments

Wayne:

One of the determining factors related to health care costs that needs to be addressed is lifestyles. We have more foods available than at any time in history, but for the most part they are of the quick prep, unhealthy varieties. Anything canned is not a wise choice! The increase in the instances of Diabetes is a good example of bad food choices. Prepared and canned foods are loaded with preservatives, salt, and sugar; all contributors to obesity and other related health problems. Our governments MUST begin spending more on health education than ever before. We have access to more seasonal foods than ever before, and if prepared properly are far more healthy choices.
We are going to have to begin with diet and exercise, as the majority of governments in Canada today are determined to revert to user pay, private clinics, thereby increasing health care costs even more. Taxes, evenly and appropriately levied, is the best solution to health care costs, but unfortunately the wealthy are determined to become wealthier at the common mans expense, and therefore will use strong lobbies to maintain the tax levels of today.

Thursday, March 08 at 6:45 pm | Reply

Add a comment

Have your say on this topic! Comments that are thought to be disrespectful or offensive may be removed by our Benefits Canada admins. Thanks!

* These fields are required.
Field required
Field required
Field required