Under Budget Pressure, Canada Slowly Rethinks Health Care Model

Published May 31, 2016

In response to pressure from budget problems, Canada and its provinces are rethinking their national health care model as they seek to curb healthcare costs without demolishing the justifications for the state-funded system.

According to Devon Herrick, a senior fellow at the National Center for Policy Analysis in Dallas, Texas, the problems now facing Canada already affect other countries.

“Canada is facing the same problems as other developed countries with socialized health care systems,” Herrick said. “There are never enough resources to provide care for all who demand it, and tax hikes are unpopular. Today, Canada is forced to increasingly rely on the private sector to boost access to care.”


Cost Controls Have Failed

Health care in Canada is delivered through a publicly funded system, with a pricetag of roughly $183 billion in Canadian dollars ($174 billion U.S.) for FY 2009. A temporary spending fix to fill current funding gaps ends in 2013 and is unlikely to be extended.

Canada’s system has not restrained the rising costs of health care, such as salaries for top hospital executives and doctors and spiraling costs for new medical technologies and drugs.

One province, Ontario, recently conducted an analysis which found health care costs could eat up 70 percent of its budget by 2022. Legislation has been introduced to tie hospital executive pay to the quality of patient care, and the province is considering saving money by putting more physicians on lower salaries.

TD Bank Financial Group (Canada) recently released a report suggesting Ontario should consider other proposals to help cut costs. According to Derek Burleton, deputy chief economist for TD Bank, reforms should include scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care.

“Our quality of life and standard of living are inextricably linked to our health and well-being. One cannot overestimate the integral role Ontario’s health care system plays in serving both patients and the province,” Burleton said.


‘Raise Taxes, Ration Access’

Brett Skinner, president of the Fraser Institute, a Canadian think tank, says Canada’s national and provincial governments have been avoiding real reform.

“Canada is a federal state. The provincial governments have autonomous constitutional jurisdiction over health policy, and the national government intervenes extra-constitutionally by offering federal transfer payments to support health care systems in the Provinces, on the condition that they comply with the Canada Health Act,” Skinner said.

Skinner says the provinces generally comply to avoid losing the government funding, but he maintains they have the constitutional jurisdiction to privatize health insurance if they choose.

“Canada has not announced any formal intentions to reassess the health model it imposes on the provinces, nor are the provinces formally reassessing their provincial health models,” Skinner said. “Reform is incremental and reactionary, and continues to be characterized by a ‘pay more, get less’ approach—which translates to ‘raise taxes, ration access.'”

Tabassum Rahmani ([email protected]) writes from Dublin, California.