The British North America Act of 1867 assigns taxation authority mainly in the federal government sphere, while management of Canada’s healthcare systems remains under the provincial and territorial governments’ purview. The inevitable result of such an arrangement is the constant bargaining among government levels about the fiscal, social, and moral equity of healthcare delivery. Since the federal government has minimal powers to enact legislation to control provincial health services, the federal government’s primary vehicle to manage healthcare services is providing conditional funding to the provinces and territories. If a province or territory does not abide by the conditions set out by the federal government, the federal government has the authority to withhold segments of these payments. This article will provide an overview of Canada’s healthcare system by examining Canada’s history of fiscal federalism and intergovernmental relations.
Canada’s healthcare system is a collection of plans administered by the ten provinces and three territories. Each plan differs from the others in some respects but is similarly structured to meet federal funding conditions. These conditions are outlined in the Canada Health Act, 1984, the legislation that guides healthcare service in Canada.[1]
The development of Canada’s healthcare system has been an incremental process, marked by an evolutionary change in response to social, economic and technological growth.[2] However, despite being in a state of continual evolution, the intergovernmental tug-of-war between the federal and provincial governments on the financing of Canada’s publicly funded healthcare system has remained constant. Since the first attempts to introduce national health insurance in 1935 under Prime Minister R. B. Bennett, numerous facets of healthcare delivery and financing have been negotiated through the lens of fiscal federalism, the division of government functions and financial obligations amongst various levels of government.[3]
The Division of Responsibilities
The fundamental legislation outlining Canadian federal and provincial government responsibilities, the British North America Act of 1867 (BNA Act), gives little attention to health matters.
The Act gives the federal government the responsibility of establishing and maintaining marine hospitals, caring for Indigenous peoples, and managing quarantine.[4] At the time of enactment, the government regularly imposed quarantines to prevent outbreaks of tuberculosis, influenza and cholera, which remains the case today during the COVID-19 pandemic.
The Act gives the provinces the responsibility to establish and manage hospitals, asylums, charities, and charitable institutions. Many of the provincial responsibilities regarding health care, including public health and broader social welfare issues, were assumed by default since they are not clearly outlined in the BNA Act as federal responsibilities.[5]
The present division of healthcare responsibilities leaves the federal government responsible for healthcare of Indigenous communities on reserve, the armed forces, federal prisoners, and veterans. The federal government is also responsible for paying for temporary health insurance for federally sponsored refugees under the Interim Federal Health Program.[6]
Health Canada, originally called the Department of Health when it was first created in 1919, is the federal ministry charged with overseeing the federal government’s healthcare-related responsibilities. Before 1919, the Department of Agriculture managed federal government health concerns.[7]
The Development of Hospitals
Canada’s first hospital was established by an order of Augustinian nuns who worked as nursing sisters. The hospital, the Hôtel-Dieu de Québec, opened in Quebec City in 1639. Due to a lack of government funding, all of Canada’s early hospitals were charitable institutions that relied on financial support from wealthy citizens and well-established organizations.[8] However, this kind of support was limited and unreliable, prompting government intervention. When the Toronto General Hospital closed from 1867 to 1870 due to a lack of sufficient funding, the Ontario government intervened by passing legislation providing yearly grants to hospitals and other charities.[9] This policy decision laid the groundwork for the present-day provincial government funding of hospitals.
Early Attempts at Creating a Public Healthcare System
There were numerous efforts by successive federal governments to introduce a publicly funded healthcare system. The first notable attempt was part of the Liberal Party election campaign in 1919 after World War I. Once in power, however, the Liberal Party was unsuccessful in their negotiations for joint funding with the provinces and territories, so the plan was not executed.[10]
Public pressure for a national health program mounted during the Great Depression of the 1930s. Prime Minister R.B. Bennett’s government pledged to address the social issues of minimum wage, unemployment, and public health insurance like President Franklin D. Roosevelt’s administration in the United States.[11] In 1935, the federal government proposed the Employment and Social Insurance Act on the advice of the Royal Commission on Industrial Relations. However, the Act was declared unconstitutional by the Supreme Court of Canada and the Judicial Committee Privy Council of the United Kingdom because it violated the division of powers between the federal and provincial governments as outlined in the BNA Act.[12]
However, this setback did not deter successive federal governments from securing gains in funding and overseeing social programs. In 1940, under Prime Minister William Lyon Mackenzie King, the provincial and federal governments agreed to amend the BNA Act to create a national unemployment insurance program.[13] The federal government’s child benefit program followed in 1944. [14]These programs ushered in a new era of government-funded social programs like public health insurance.[15]
At the end of World War II, the Canadian middle class became more aware of the impacts of not having access to appropriate healthcare. At that time, the upper classes could afford adequate care, and the lower classes could access charitable institutions and their associated hospitals.[16] Additionally, during this era significant strides in medical science and technology shifted healthcare focus from the home to the hospital, mainly when complex medical procedures were involved. This shift created the need for a more scientific and organized approach to healthcare. Various social and political movements lobbied the federal government to intervene and finance a stable and equitable healthcare system to promote medical discoveries and treatment options.[17]
Early Federal Investments in Healthcare
The National Health Grants Program of 1948 marked the federal government’s first foray into the provincial and territorial jurisdiction over healthcare. This program granted the provinces and territories $30 million to improve and modernize hospitals, provide training for healthcare providers, and fund research in the fields of public health and cancer treatment.[18] This level of federal funding resulted in a marked increase in the building of hospitals across the country.
In 1957 the cornerstone of Canada’s publicly funded health insurance system was established. The federal government passed legislation that provided financial incentives for provincial and territorial governments to develop universal hospital insurance. The Hospital Insurance and Diagnostic Services Act provided a fifty-fifty cost-sharing arrangement between the federal government and the provinces and territories for hospital-related services.[19] This legislation’s limitation was that it only provided medical treatment and diagnostic services in hospital settings.[20]
Key Reports and Legislation
The Hall Report (1960) – Royal Commission on Health Services
A Royal Commission was created to investigate the state of healthcare in Canada and determine how to best address Canadians’ healthcare-related needs due to the narrow scope of medical treatment provided for in the Hospital Insurance and Diagnostic Services Act, 1957. Justice Emmett Hall headed the Royal Commission on Health Services and was the author of the Commission’s final report, known as the Hall Report (1960). This report made numerous recommendations for the future trajectory of Canada’s health insurance and health services. It recommended: [21]
The Medical Care Act (1968)
As a result of the Hall Report, the federal Medical Care Act was passed in 1968 and accepted by all provinces and territories by 1972.[22] The Act allowed all provinces and territories to administer the plan as they saw fit, as long as the provinces adhered to the criteria of universality, portability, comprehensive coverage, and public administration. However, at this time, the plan only provided coverage to in-hospital care and physician services at a doctor’s office.[23]
The Established Programs Financing Act (1977)
The fifty-fifty cost-sharing funding formula enshrined in the Hospital Insurance and Diagnostic Services Act (1957) and the Medical Care Act (1968) was sustainable when the federal government incurred budget surpluses. However, the significant budget deficits of the 1970s, combined with the soaring costs of physician and hospital care, forced the federal government to make spending cuts to hospitals and delist services.[24] Ultimately the federal government replaced the fifty-fifty cost-sharing formula with a block transfer of cash and tax points. With the transfer of tax points, the federal government reduced its tax rates, and the provincial and territorial governments raised their tax rates by an equivalent amount. [25] The Established Programs Financing Act (1977) resulted in an immediate reduction in the federal contribution to healthcare and a more significant interprovincial variation in funding.[26]
The Established Programs Financing Act’s objective was to mitigate the high costs of hospital services. This was achieved by shifting the locus of healthcare to the community by transferring more funding for care in nursing homes, ambulatory healthcare, residential care and home care, and reducing the federal government’s overall funding contribution to the provinces and territories.[27] However, doctors responded negatively to the Act and began billing patients over and above the negotiated fee schedule. This practice was called extra-billing, and it contravened the Medical Care Act (1968).[28]
These extra-billing practices spurred public outrage and claims that the extra fees inhibited fair and equal healthcare access. As a result, Justice Emmett Hall was asked to lead another review of the healthcare sector. In 1980, Hall’s findings were released in Canada’s National-Provincial Health Program for the 1980s. The report concluded that the extra billing practice violated the Medical Care Act (1968) and limited public healthcare access.[29]
The Canada Health Act (1984)
With the federal government’s renewed focus on federal-provincial finances and spending, a Parliamentary Task Force on Federal-Provincial Fiscal Arrangements was created. This task force provided an all-party review of the federal government’s funding of Canada’s publicly funded healthcare system. The Task Force published a report in 1981 that strongly endorsed its continued funding. This report, Preserving Universal Medicare: A Government of Canada Position Paper, refuted claims made by the provinces and the Canadian Medical Association that the public healthcare system was underfunded. The report’s final recommendation was to create revised legislation to consolidate and clarify the principles upon which the public healthcare system was founded.[30]
The conclusion of Justice Hall’s 1980 report, combined with the Parliamentary Task Force’s findings on Federal-Provincial Arrangements, led to the Canada Health Act (1984). This Act would replace the Hospital Insurance and Diagnostic Services Act (1957) and the Medical Care Act (1968). It also prohibited extra-billing and user fees for listed services.[31]
The Canada Health Act is still in place today and remains Canada’s guiding legislation on the healthcare system. The Act’s primary objective is to provide equal, prepaid, and accessible healthcare to Canadians. It achieves this by requiring provinces and territories to abide by five implementation criteria for the provision of healthcare to receive federal government funding.[32]
These criteria include:
| Public Administration | Requires each provincial and territorial health insurance plan to be managed by a public authority on a non-profit basis |
| Comprehensive Coverage | Ensures that eligible persons with a medical need have access to prepaid, medically necessary services provided by hospitals and physicians |
| Universality | Ensures that all eligible residents of a province or territory are equally entitled to all available health services that are insured under the respective health insurance plans |
| Portability | Protects all Canadians moving from one province or territory to another by providing coverage for insured health services by their province of origin during the designated waiting time in their new province or territory |
| Accessibility | Ensures that eligible individuals in a province or territory have reasonable access to all insured health services on uniform terms and conditions |
What makes the Canada Health Act (1984) different from the Medical Care Act (1968) is the accessibility clause, which was a remedial effort to protect against the practice of extra billing. [33]
In 1939, the Government of Saskatchewan introduced the Municipal Medical and Hospital Services Act, permitting municipalities to charge either a land tax or a personal tax to finance hospital and medical services.[34] In 1947, under Premier Tommy Douglas, the Hospital Insurance Act was passed in Saskatchewan.[35] This Act provided residents of Saskatchewan with hospital care in exchange for a modest insurance premium payment.[36] This was Canada’s first province-wide, universal hospital care plan. By 1950, both Alberta and British Columbia had similar plans.[37] While creating these provincial healthcare programs was a social and political breakthrough for Canada, the scope of coverage for these insurance plans was limited, only covering care provided in a hospital.[38]
Between 1960 and 1962, Premier Tommy Douglas and his successor Premier Woodrow Lloyd worked to pass the Saskatchewan Medical Care Insurance Act to provide Saskatchewan residents with comprehensive, publicly-funded medical care, in addition to hospital insurance.[39] This Act faced significant opposition from Saskatchewan doctors. On the day the Act came into force, the doctors launched a province-wide strike that lasted 23 days. As a result of this strike, the provincial government amended the Act to appease the province’s doctors. One significant revision allowed for doctors to practice outside of the provincial plan should they choose to. However, within a few years, most doctors found it easier to operate within the provincial plan’s bounds.[40]
With the introduction of a universal physician services insurance plan in Saskatchewan, most of the other provinces and territories adopted similar plans over the next six years.[41]
Scholars, politicians, medical professionals and citizens continue to work to ensure adequate access to medical care across Canada. However, unmet health care needs remain prevalent in Canada’s universal healthcare system.[42] Unmet health care needs are the “difference between healthcare services deemed necessary to address a particular health problem and the actual services received.”[43] From a health policy perspective, unmet healthcare needs can arise from health system-related features, like long waiting times and the cost of care. Women, Indigenous peoples, those who live in rural areas, youth, and people in poorer health have been identified as population groups with significant unmet healthcare needs in Canada.[44] Three areas of issue contributing to unmet healthcare needs of these population groups include long wait times for elective care, inaccessibility of services outside of the publicly funded healthcare system, and the health disparities between Indigenous peoples and the non-Indigenous peoples.[45]
Scholars Ian Allan and Dr. Mehdi Ammi, from Carleton University’s School of Public Policy and Administration, have attributed these groups’ unmet medical needs to Canada’s federated healthcare system with a fragmented governance and accountability structure.[46] Due to the division of responsibilities between government levels in the BNA Act, continued collaboration between the federal government, provincial governments, policymakers, and healthcare practitioners will be needed to address current and future stresses that face the Canadian healthcare system.[47]
As the British North America Act did not specifically mention healthcare, Canada does not have a national healthcare system. Instead, the healthcare system is comprised of thirteen decentralized provincial and territorial systems with variations in coverage between the regions.[48] The federal government sought to correct these variations by passing the Canada Health Act, 1984, which legislated the principles of public administration, universality, comprehensiveness, portability, and accessibility into healthcare delivery, and imposed financial penalties on provinces that did not adhere to these principles. Since then, these five conditions have formed the basis for the federal funding of Canada’s provincial and territorial healthcare system, and ultimately the model of healthcare delivery in the country.
[1] Allan S. Detsky, and C. David Naylor, “Canada’s Health Care System — Reform Delayed,” New England Journal of Medicine 349, no. 8 (2003): 804. https://doi.org/10.1056/NEJMhpr035304
[2] Valerie D. Thompson, Health and Health Care Delivery in Canada (Toronto, ON: Elsevier, 2020), 1.
[3] D.M.L. Farr, “Judicial Committee of the Privy Council,” The Canadian Encyclopedia, May 1, 2020, https://www.thecanadianencyclopedia.ca/en/article/judicial-committee-of-the-privy-council.
[4] Thompson, Health and Health Care Delivery, 1.
[5] Kristin Burnett et al., “Indigenous Peoples, Settler Colonialism, and Access to Health Care in Rural and Northern Ontario,” Health & Place 66 (2020): 102445, https://doi.org/10.1016/j.healthplace.2020.102445
[6]Thompson, Health and Health Care Delivery, 2.
[7] Thompson, Health and Health Care Delivery, 2.
[8] Thompson, Health and Health Care Delivery, 7.
[9] Jean-Claude Martin, “Hospital,” The Canadian Encyclopedia, February 7, 2006, https://www.thecanadianencyclopedia.ca/en/article/hospital.
[10]Thompson, Health, 11.
[11] John R. English, “Bennett’s New Deal,” The Canadian Encyclopedia, January 20, 2021, https://www.thecanadianencyclopedia.ca/en/article/bennetts-new-deal
[12] The Judicial Committee of the Privy Council was the final court of appeal in Canada until 1949 when the Supreme Court of Canada fully assumed this responsibility. Farr, “Judicial Committee of the Privy Council.”
[13] Thompson, Health and Health Care Delivery, 12.
[14] Joseph W. Willard, “Family Allowances in Canada,” International Labour Review, 75 no.3, 1957, https://labordoc.ilo.org/permalink/41ILO_INST/1jaulmn/alma992483673402676
[15] Thompson, Health and Health Care Delivery, 12.
[16] Thompson, Health and Health Care Delivery, 13.
[17] Thompson, Health and Health Care Delivery, 13.
[18] Thompson, Health and Health Care Delivery, 12.
[19] Government of Canada, “Canada’s Health Care System,” Canada.ca, September 17, 2019, https://www.canada.ca/en/health-canada/services/health-care-system/reports-publications/health-care-system/canada.html
[20] Brian Hutchison et al., “Primary Health Care in Canada: Systems in Motion,” Milbank Quarterly 89, no. 2 (2011): 257, https://doi.org/10.1111/j.1468-0009.2011.00628.x
[21] Thompson, Health and Health Care Delivery, 15.
[22] Thompson, Health and Health Care Delivery, 14.
[23] Danielle Martin et al., “Canada’s Universal Health-Care System: Achieving Its Potential,” The Lancet 391, no. 10131 (2018):1720, https://doi.org/10.1016/s0140-6736(18)30181-8
[24] Government of Canada, “Canada’s Health Care System.”
[25]Government of Canada, “Canada’s Health Care System.”
[26] Detsky and Naylor, “Canada’s Health Care System,” 804.
[27] Thompson, Health and Health Care Delivery, 16.
[28] Martin et al., “Canada’s Universal Health-Care System,” 1720.
[29] Thompson, Health and Health Care Delivery, 15.
[30] Canadian Museum of History, “1978-1988: The Federal Context,” Making Medicare: The History of Health Care in Canada, 1914-2007, April 21, 2010, https://www.historymuseum.ca/cmc/exhibitions/hist/medicare/medic-7h07e.html
[31] Hutchison et al., “Primary Health Care in Canada,” 257.
[32] Thompson, Health and Health Care Delivery, 15.
[33] John K. Iglehart, “Canada’s Health Care System,” New England Journal of Medicine 315, no. 12 (1986):779, https://doi.org/10.1056/nejm198609183151238.
[34] John A. Boan, “Medicare,” The Encyclopedia of Saskatchewan, University of Regina, 2006, https://esask.uregina.ca/entry/medicare.jsp
[35] Gregory P. Marchildon and Klaartje Schrijvers, “Physician Resistance and the Forging of Public Healthcare: A Comparative Analysis of the Doctors’ Strikes in Canada and Belgium in the 1960s,” Medical History 55, no. 2 (2011): 206, https://doi.org/10.1017/s0025727300005767.
[36] Thompson, Health and Health Care Delivery, 13
[37] Government of Canada, “Canada’s Health Care System.”
[38] Canadian Museum of History, “1958-1969: Conflict and Compromise,” Making Medicare: The History of Health Care in Canada, 1914-2007, April 21, 2010, https://www.historymuseum.ca/cmc/exhibitions/hist/medicare/medic-5h06e.html
[39] Thompson, Health and Health Care Delivery, 13.
[40] Marchildon and Schrijvers, “Physician Resistance and the Forging of Public Healthcare,” 205.
[41] Government of Canada, “Canada’s Health Care System.”
[42] Ian Allan and Mehdi Ammi, “Evolution of the Determinants of Unmet Health Care Needs in a Universal Health Care System: Canada, 2001–2014,” Health Economics, Policy and Law (2020): 1. https://doi.org/10.1017/s1744133120000250.
[43] Allan and Ammi, “Evolution of the Determinants of Unmet Health Care Needs,” 1.
[44] Allan and Ammi, “Evolution of the Determinants of Unmet Health Care Needs,” 19.
[45] Martin et al., “Canada’s Universal Health-Care System,” 1729.
[46] Allan and Ammi, “Evolution of the Determinants of Unmet Health Care Needs,” 20.
[47] Mireille Paquet, and Robert Schertzer, “COVID-19 as a Complex Intergovernmental Problem,” Canadian Journal of Political Science 53, no. 2 (2020): 343, doi:10.1017/S0008423920000281