Sean SpeerMLI Munk Senior Fellow Sean Speer, writing in the Montreal Gazette, argues that we cannot maintain the status quo on Canada's expensive and underperforming health care system.

By Sean Speer, Sept. 28, 2016

The Canadian health-care system’s resistance to reform has diverged from the evidence for several years. But that may be changing.

A confluence of factors — including the new court challenge of the single-payer health system in British Columbia, the Quebec government’s ongoing reforms including the recent announcement of the elimination of auxiliary fees, and federal-provincial negotiations on a health accord — has put health-care reform on the top of the national agenda.

The case for reform is well known. Canada’s health-care system isn’t only increasingly fiscally unsustainable, it’s performing poorly across a range of indicators including wait times, access to medical technologies and supply of doctors.

Yet what’s less widely known is the extent to which the Canada Health Act is causing Canada’s health-care system to fall short of the principle of universality.

The Act sets out the expectations that the provinces and territories must meet to receive the Canada Health Transfer. Failure to comply can cause them to see their transfer payments clawed back. It thus, for all intents and purposes, establishes the basic parameters of the Medicare system, including how universality ought to apply and what services must be subject to public insurance.

The Canada Health Act’s conception of “medically necessary services” is the crux of the issue. By narrowly defining these services along acute-care lines representing roughly 45 per cent of total health-care spending and imposing it on the provinces and territories with the threat of clawbacks, Ottawa has inadvertently created a two-tier system.

It has frozen in time a conception of Canada’s health-care system that essentially ignores away more than half of present-day health-care spending. We have universal coverage for all Canadians for roughly one-half of the system and uneven coverage based mostly on employer-provided insurance or out-of-pocket spending for the other half, including drugs, dental, vision and long-term care.

This means that a significant proportion of health-care spending is neither part of our commitment to universality nor subject to public insurance largely irrespective of one’s means or circumstances.

The result is that less affluent households, unattached individuals and senior couples spend a disproportionate share of their disposable income on health care. And it’s rising.

Quebec is an outlier to the extent that it has a public drug plan for those without private insurance. But a series of reports, including by the province’s health and welfare commissioner, has shown that the plan is facing financial challenges and providing inadequate coverage.

It doesn’t have to be this way. Most other jurisdictions with universal coverage are able to extend public health dollars across a wider range of services by involving different forms of patient cost-sharing such as co-insurance, co-payments or deductibles.

The introduction of means-tested patient cost-sharing for hospital and physician services would not only improve the system’s sustainability, but also target public resources for those who need help.

The goal should be to expand public coverage across a wider range of services for low- and middle-income Canadians by making coverage less generous for high-income earners, although there should be caps or exemptions for those with chronic conditions.

This just makes sense in a world of scarce public resources and changing health-care priorities. The result would be a fairer, more universal and affordable health-care system, including a strengthened public drug plan in Quebec.

But the first step must be to repeal the sections of the Canada Health Act that prohibit extra billing and user fees. Ottawa’s recent pressure on the Quebec government to eliminate auxiliary fees is evidence of these provisions in action.

It may be counter-intuitive, but the prohibition on user fees is no longer helping to protect the Act’s universal aspirations. Increasingly, it’s come to undermine this noble goal and contributed to a two-tier system.

The window for health-care reform is opening. Modernizing the Canada Health Act to better achieve the principle of universality should be a top priority.

Sean Speer is a Munk senior fellow at the Ottawa-based Macdonald-Laurier Institute.

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