Summary: The Canadian Health Care System

The Canadian health care system, unofficially known as Medicare, is financed along sectoral lines. Certain sectors, which include all “medically necessary” hospital and physician services, are financed entirely through a single payer, publicly funded, universal insurance program (Lewis et al., 2001). Conversely, private financing—either through private insurance or out-of-pocket payments made by the individual—is permitted in supplementary sectors such as drugs, dental services, cosmetic surgery, home care, and long-term care (Steinbrook, 2006). This division of financing therefore prohibits the coverage of hospital and physician services using private financing. This forecloses the emergence of a parallel “two-tier” model of health care financing

for these core services, wherein a separate, privately financed sector exists alongside the publicly-funded system for a given range of services (Tuohy et al., 2004). This has consequently placed significant pressure on the public system to meet the health care needs of Canadians (Steinbrook, 2006). Inevitably, an endless number of debates on the sustainability of Canada’s health care system and how health care should be paid for and delivered have been initiated. In order to establish an understanding of the complexity of these debates, a contrast must be made between the arguments made for and against a parallel public and private system of financing health care, as well as their advocating proponents. The basis of this comparison can then be used to assess the legitimacy of the outcome in Chaoulli versus Quebec, a recent case that has intensified these ideological arguments.
The main arguments proposed that support a “two-tier” model of health care financing are rooted in the issues of sustainability. Current health care spending in Canada is occurring at an unsustainable rate that is outpacing growth in program spending by the government. There has been a conspicuous trend of increasing health expenditures as a proportion of total program spending by governments. In Ontario, health care expenditures accounted for 30% of total program spending in 1981, but by 2005 this value increased to 45%. This trend is expected to continue, and it has been estimated that by 2025 the share will increase to 55% (MOF, 2010). Thus, it will become increasingly more and more difficult to maintain other social welfare programs in Canada. Indeed, this process has crowded out other programs from the budget, compromising Canada’s economic competitiveness (Stuart and Adams, 2007). These costs have served as key area of focus by pro-reformers, who promote increased privatization of service delivery as a beneficial means to control this spending (Steinbrook, 2006). Further economic criticisms have been promoted through attacks on the system as being at times underserviced.
Supporters of a “two-tier” model of health care financing also direct their arguments towards acknowledging the limits of the legislations defining Canadian Medicare.

The principle of “public payment, private practice” for “medically-necessary” hospital and physician services have been instituted by the Medical Care Act, creating policy legacies that reinforce institutional barriers to change (Abelson et al., 2004). However, passive privatization is occurring in Canada due to new technologies, with life-saving innovations such as drugs and genetic therapies emerging as the future of health care therapy (Flood et al., 2006). Yet, these innovations fall outside the scope of core services that receive public coverage, serving as an example of the limits to the principles underlying health care in Canada. Ironically, these non-core services are taking up an increasing proportion of provincial health care budgets (Ballinger et al., 2001). Thus, unless Canadians are prepared to broaden the definition of “medically necessary” to be more inclusive, they must be prepared to look at alternative options to funding these services, such as “two-tier” or for-profit delivery

options.
A significant argument supporting a “two-tier” model and that relates to the limits of legislation is issues with quality of care. The Canada Health Act (CHA) has enshrined a constitutional division of power that has created a highly contentious relationship between different levels of government, often creating issues in the quality of health care. These issues were no more readily apparent than in the period of retrenchment to social services in the 1990s, when the federal government decreased its cash transfers to the provincial governments to shore up its budgetary deficit (Iglehart, 2000). These reforms were particularly obtrusive to health care, as they translated into a shortage of physicians and increased waiting lists (Angell, 2008). Access issues have been traditionally viewed as the ultimate problem of the system (Detsky and Naylor, 2003). Supporters of a “two-tier” model have utilized these events to propel their arguments, recommending increased experimentation with the delivery of health care to include parallel private insurance, especially when the public health system cannot meet the access demands of Canadians (Detsky and Naylor, 2003). Support for a “two-tier” model of health care financing has centered on issues surrounding the economic sustainability of the Canada’s health care system and quality of care; issues rooted in the limits of legislation defining the principles of this system. Yet, despite these issues, Canada’s publicly-funded universal health care program continues to persist, and it is therefore imperative to outline why this is indeed the case.
A significant argument made against a “two-tier” model of health care financing is popular sentiment in Canadian Medicare. Historically, Canadians have been proud of their health care system, viewing access to “medically necessary” services as a “right of citizenship” that should be based on need, not ability to pay (Romanow, 2002). In essence, principles of solidarity are the very reason dictating the Canadian view that is strongly opposed to changes in Canada’s universal, single-tiered health care system. Although these views are primarily responsible for maintaining the structure of Canada’s health care system, it is also important to address specific issues related to economic feasibility of the system as well as access issues.
Arguments proposed on the unsustainable rate of health care spending are not endemic to Canada as they are occurring in every country in all parts of the world, regardless of their public/private configuration.

Applying Australia as a specific example, it can be rationalized that the introduction of a parallel public and private system in Canada could be economically miscalculated. Australia’s health care system incorporates both parallel public/private and co-payment models in an attempt to balances public financing with out-of-pocket payments and private insurance (Tuohy et al., 2004). Historically, private insurance has been declining in Australia for a variety of reasons. In the late 1990s, the Australian government attempted to address these various reasons to increase the private insurance market through unprecedented levels—over $2 billion per year-of public subsidy. These efforts were successful in reversing the decline, but only occurred through a highly debatable use of public funds (Tuohy et al., 2004). Thus, Australians were paying taxes to support both systems, creating a highly unstable system marked by economic uncertainty that could similarly plague a “two-tier” system in

Canada.
Another important argument against a “two-tier” model of financing is the diversion of resources to the private system. This diversion, including physicians and other assets, will compromise the public system (Flood, 2007). The loss of physicians to the private system will not improve wait times, but will only reshuffle them, drawing limited resources from the public system to improve access for only a small number of people (Besley et al., 1999). This is compounded by the vested interests of for-profit organizations, who skim off profitable patients and services from the market, while at the same time avoiding patients with complex and pre-existing conditions, leaving them to the public system (Angell, 2008). Together these phenomena would reduce the quality of the public system, contradicting the universality component of Canadian Medicare. Through these arguments mad