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By Bacchus Barua
and Nadeem Esmail
The Fraser Institute

What makes healthcare in our country uniquely Canadian? It’s certainly not the goal to ensure universal access to care regardless of ability to pay. That goal is shared by at least 28 other high-income countries around the world.

It’s certainly not that our universal healthcare system is the best in the world. While Canada ranks among the top spenders in international comparisons, it ranks poorly on a number of important indicators of performance, including the availability of physicians, hospital beds, diagnostic medical technology and wait times.

Bacchus Barua

Bacchus Barua

No, we’re unique because of the way we do universal healthcare. Or rather, what Ottawa prevents or discourages doctors, patients, entrepreneurs, provincial policy-makers and politicians from doing. Unlike more successful universal healthcare systems, Canada has very little private-sector activity in the financing and delivery of physician and hospital care. And we have no patient cost-sharing or user fees.

Why? Largely because of the Canada Health Act (CHA), which governs federal transfers to the provinces for healthcare.

Some Canadians revere the CHA as the guardian of our universal healthcare system, enshrining our right to medical treatment and protecting us from the perils of private involvement. In reality, however, the CHA is a vaguely-defined financial tool that empowers the federal government to prevent provincial governments from tailoring healthcare policy to better serve their residents.

Nadeem Esmail

Nadeem Esmail

Consider how healthcare systems in Australia, Sweden, Switzerland, France, Germany and the Netherlands operate. All their citizens have access to care regardless of ability to pay, just like Canadians. But wait times are much shorter, with far greater access to physicians and hospitals, all for about the same amount we spend. In each of these countries, patients share in the cost of healthcare services, have access to private for-profit hospitals within the universal system, and have a private parallel alternative to the government system, if they wish to use it.

But in Canada, the CHA explicitly prohibits cost-sharing with the threat of withholding part or all of the federal money for healthcare.

In fact, perhaps surprisingly to many Canadians, the CHA says provinces may allow private parallel care and insurance, and employ private providers (hospitals, surgical clinics, etc.) in the delivery of universally accessible services, like Australia (where 39 percent of hospitals are private for-profit) and Germany (where 43 percent of hospitals are private for-profit).

And yet no province has chosen to go down this path. Indeed, only one percent of Canadian hospitals are private for-profit. And Canadians generally don’t have a privately-funded alternative to the government system. Even worse, provincial governments actually enforce laws to crack down on private clinics that treat patients who were failed by the public system.

Why? Because if they don’t, Ottawa can withhold funds by selectively interpreting and enforcing the CHA, which recently happened in British Columbia. This glaring lack of clarity allows the federal government to intervene in provincial decision-making, perhaps for political purposes.

Consequently, due to the CHA and its interpretations, we’ve seen decades of policy paralysis, with provinces constantly under threat of penalty for exploring policy options that may run afoul of the federal government’s wishes.

Provinces wanting to emulate health policy leaders such as Australia or Sweden, who understand the private sector is not a threat but rather an important partner in a high-performing universal system, must weigh the benefits of reform against the risk of Ottawa’s response and reduction in transfers. Only provinces that toe the federal line are assured of their federal transfers.

The real losers here, though, are Canadians who need healthcare. They’re stuck waiting in some of the longest queues for medically-necessary care in the developed world, queues that are longer than they’ve ever been. They’re stuck with poorer access to physicians, hospitals and medical technologies compared to patients in other developed countries, without the option to seek care outside the government system, an option commonplace in other countries. This despite our remarkably high healthcare costs.

The CHA is a problem. Our healthcare system is clearly failing in many ways and there’s little the provinces can do about it, lest they be penalized by whoever rules in Ottawa – now or in the future.

Bacchus Barua and Nadeem Esmail are economists at the Fraser Institute.

ottawa healthcare cha

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