Standing Senate Committee on Social Affairs, Science and Technology

Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 13 - Evidence, May 4, 2000

OTTAWA, Thursday, May 4, 2000

The Standing Senate Committee on Social Affairs, Science and Technology met this day at 11:04 a.m. to examine the state of the health care system in Canada.

Senator Michael Kirby (Chairman) in the Chair.


The Chairman: Before turning to our two witnesses, we have one short item to deal with.

Senator Fairbairn: There is a desire to get the subcommittee on veterans' affairs up and running, and I should like to move that the committee be established under the chairmanship of Senator Meighen.

The Chairman: Do you have a list of members?

Senator Fairbairn: This is a five-member committee. It will include Senator Meighen, Senator Atkins, Senator Kirby, Senator Pépin and myself.

The Chairman: Is there a second for that motion?

Senator Gill: I second the motion.

The Chairman: Any comments? No? I declare the motion passed. We do not need a motion in the Senate. Thank you.

We have a panel of two witnesses this morning. First is Mr. Tom Kent, whom we describe on the material we have circulated to you as a former federal deputy minister. In fact, if we had wanted to do a long history of Mr. Kent's background we would have included everything from being the editor of the Winnipeg Free Press to having been a senior policy advisor to Mr. Pearson. He was kind enough when I took over the Institute for Research on Public Policy to agree to be the first editor of policy options and, indeed, to have shared an office and a secretary with me at Dalhousie in the late 1970s. Certainly, he is an individual who has been involved in a great many things in Canada that have been truly historical. He is here today because he was the senior policy person at the time that medicare began.

The other person on our panel is Professor Michael Bliss, who is a professor of history at the University of Toronto. Many of us have read many of the things that Mr. Bliss has written and have heard him many times on radio and television. May I say, as a free piece of advertising for him, if you have not seen his lengthy commentary piece on the politics of new Canada and old Canada that was in the paper two days ago, I would urge to you read it. It is a very insightful analysis of the current political scene.

Essentially, senators, we have before us someone who has made history and someone who has written about history. They will each begin with an opening statement and then we will be free to ask them questions on any subject, but particularly with a view to trying to understand the background of what the expectations of government were when they started the national medicare system back in the late 1960s.

Mr. Tom Kent: The subject, as I understood it, was how we came to have public health care insurance, which I shall call medicare for the sake of brevity. Certainly, some early history is now necessary for a complete study, which you are undertaking.

The number of Canadians who knew life before medicare will very soon be, if it is not already, a minority. Of course, how life was before was the essential reason medicare developed. As you all know, before that, treatment could be a financial disaster even for well-to-do people, and many poorer people just did not get care when it was needed. The aim of public policy was quite clearly and simply to change that situation to make sure that people could get care when it was needed without regard to other considerations.

I do not think there is very much for me or Mr. Bliss to say that the committee does not already know. I will therefore try to be brief, which is always difficult. I will also try to relate the history a little bit to the current issues.

I will make a point about perspective, first. There is a lot of discussion about medicare as if it were sort of abnormal, new or strange still. In fact, of course, compulsory health insurance began in Germany 117 years ago, and in a good deal of Europe it was established before the First World War. It entered the Canadian national political picture not all that much later, in 1919, when the national Liberal convention resolved that the federal government should institute, in conjunction with the provinces, an adequate system of insurance against unemployment, sickness, dependence in old age, and other disabilities. Naturally, that was to be done, insofar as was practicable, having regard to Canada's financial position.

The period between the world wars was not conducive to social development here or anywhere else. By 1945, as everyone knows, the determination to build reformed societies was strong everywhere. Wartime experience and what government can do had destroyed, for a generation, the essential proposition of laissez-faire that private is good and public is bad. They destroyed it, I say, for a generation. In Canada, that reformist mood was strong at the national political level. I think it is fair to say that if Canada were, by some strange misadventure, a unitary state, we would have had medicare very soon after 1945. As you know, the federal government did, at that time, make extensive proposals, but the provinces -- Ontario and Quebec in particular -- regarded them as political aggression and would not have anything to do with them.

I would draw a slight parallel to the situation today. If the public will could be directly expressed across Canada, the political pressure to fix the present problems of medicare would be overwhelming. As it is, the federal and provincial levels of government have different agendas. They blame each other and they posture, and as a result we face the frequent Canadian problem of how to achieve collaboration despite the politics of federalism.

After 1945, the federal government went slowly on social reforms but certainly did not give up on them. There were a number of important steps. To understand that, it is perhaps important to remember what only a minority of people do. At that time, Canadian public attitudes were much closer to those in Western Europe than they were perhaps to American or indeed British public attitudes. In fact, I recall a conversation that took place early in the 1950s with the then secretary of state for external affairs, Mr. Pearson. He said to me that in international discussions he usually felt most at home with the Scandinavians. I will not press that point too far as a policy determinant. I do think it is an important strand in understanding the public attitudes of that time.

Partly because of those attitudes, medicare moved on, and of course economic growth greatly increased the confidence of the country to do new things. Saskatchewan bravely led the way. As a result, the views of the provinces shifted and, indeed, some of the provinces helped to pressure the federal cabinet into hospital insurance in 1957. That was a partial measure towards medicare. Some people saw it as a way to head off the pressure for total medicare. Others saw it as a step on the way.

I must say that as a step on the way, it proved to have very serious disadvantages that are common in that kind of compromise. The treatment in hospital was free, while seeing the doctor at home, or in an office, was still expensive. Naturally, there was a considerable over-expansion of hospitals. We have been very slow to deal with that situation. Indeed, 40 years later we are still dealing with it, in some cases rather painfully and clumsily. I am afraid that the clear lesson of that experience has not been very well learned.

I groan, frankly, when I hear talk, in federal circles in particular, of separate financial support for home care or pharmacare or whatever is the hot button. That would make a political splash, but that sort of division of the total health care service would be disastrous. Health care of high quality can be efficiently delivered according to need, but only if there is coordinated management in the community of the comprehensive services -- the components of the whole health care system. Separate bags of money are certainly not the way to reform health care.

It has been said that in 1957 I suggested an alternative to hospital insurance as the way to medicare. I think it would have been a better compromise, but it was not taken seriously. I will not waste your time with it now.

It is important that the Liberal Party, having moved very shortly after 1957 into opposition, promptly did treat hospital insurance as a step to full medicare. That was expressed somewhat vaguely as things tended to be in the resolutions of the 1958 Liberal Party conference. However, the seed germinated and in the January 1961 national policy rally of the Liberal Party, comprehensive, universal health care was given pride of place in the policy resolutions. I would say that that was the decisive point when the die was cast for nation-wide medicare. The rally, I remind you, preceded the Saskatchewan Medical Care Insurance Act that was greeted by a doctor's strike in July 1962. I think it was also the resolution of the Liberal Party that stimulated the appointment by the then government, in the summer of 1961, after the rally, of the Hall commission, the Royal Commission on Health Services, which eventually reported three years later.

I have made a set of convention resolutions that were decisive; of course, we all know that often convention resolutions are not by any means binding on political leaders. However, in this case, the commitment to health care was made central to the formal policy statements of the signature of Mr. Pearson, which were the Liberal Party's platform for 1962 and 1963. That still left a lot to be done, of course. Mr. MacEachen struggled with a lot of opposition in order to get the Medical Care Act passed in 1966 and even more opposition within his own ranks to get it implemented in 1968. Still, I would say that from 1961 onwards, it was reasonable to be confident that medicare would come; the questions were when and in what form.

Of course, the answers turn essentially on the federal-provincial relationship. Provincial programs, as health programs must be, can add to national medicare, or whatever, only if they are the same in some of their main features, and that will not happen without a federal contribution. In the case of the Medicare Act, the amount was effectively fixed already by hospital insurance. Essentially, 50 per cent of the costs were covered by the federal government. There was no possibility of introducing the doctors' part of medicare on any lesser formula.

However, how were 50 per cent of the costs reckoned? Hospital insurance had been based on provinces signing agreements that required them to give quite detailed undertakings and be involve in a good deal of federal vetting of what they did. There were objections of principle to that as an intrusion of jurisdiction and a distortion of provincial priorities. Certainly, also very important to both provincial and federal governments, it was very tiresome to administer. Resentment was raised to a fevered pitch, not by the hospital insurance program but by another piece of legislation, the technical and vocational training programs, which were a horror of detailed federal regulations as a condition of extensive cost sharing.

The effect of that was that the whole report was not as helpful as we had hoped it would be. As you know, it made the case for complete medicare with enormous force and conviction, but it assumed that it could be done by repetition of the same kind of cost sharing as had been used for hospital insurance. That, of course, was impossible. In the federal proposal of 1965 to the provinces there had to be found a different way of securing federal participation in a scheme that, though it comprised ten provincial medicare programs, would be consistent on a nationwide basis. That formula, as you all know, was that the federal government would contribute 50 per cent to the cost of medicare programs that conformed to certain basic principles -- comprehensive, universal, portable, and publicly administered. The provinces did not have to sign agreements or submit to federal supervision. The provinces were never entirely happy with the details of that scheme, in part for very good reasons, in my view, but so far they have all gone along with what has been, up to now, fairly consistent nationwide medicare.

However, the 1966 act proved to have flaws. It did not clearly rule out charges and extra billing. That was corrected, of course, in the health act of 1984, which consolidated the hospital and medical provisions, defined the four principles more clearly, and added a fifth, accessibility -- that is to say, access not to be impeded by any charges.

I must comment on the issue of two-tier health care, which is now so frequently raised and which of course the issue of extra billing involved. This issue is sometimes a straw man. People often talk as if medicare meant that people are prevented from buying their own health care. Of course that is nonsense. People with money can and always will be able to buy what they want. That is "separate" medicine; it is not two-tier medicine. Two-tier would be quite different. It means that some facilities and personnel can provide two levels of care: one without charge to the patient, and the other, though also tax-financed probably in large part, with supplements and priorities that are privately financed.

It is that second tier that would destroy the democratic principle in health care. It would draw resources from tax-provided care, diminish its range and quality and remove the basic objective that care be provided, as far as possible, according to need and not for other considerations.

As yet, the main attack on medicare has not come from "two-tierdom," from Mr. Klein or from anyone else. It has come over a good many years from federal governments. Medicare was not built on principles for the provinces alone. It was also built on federal principles, and the crucial federal principle was its commitment to share in the costs of the provinces. That commitment has been increasingly dishonoured ever since 1977, and in 1995 it was completely tossed aside. In 1997, as you know, the form of financing was switched in part to a transfer of taxes instead of a cash transfer. That had its merits, but at the same time the opportunity was taken to decouple the total from provincial health costs and relate it instead to the GNP. Subsequently, by unilateral federal decisions, that relation was increasingly diminished, and finally, with the CHST, the Canada Health and Social Transfer, all vestige of a formula was removed. The transfer became an arbitrary sum determined entirely according to federal financial and political convention.

Political pressure has since led to some restoration of the original cuts, but there has been no restoration of the principle of federal commitment. It is said that more money will be available if and when the provinces agree to improvements in medicare and so on. That is the technique of going nowhere by insisting on putting the cart before the horse.

For better or worse, delivering health care is provincial business. There will be collaboration and there can be national consistency if there is federal financial help. However, what is significant is not so much the amount of that help but that, if there is to be the planning of efficient, comprehensive health care, it must be based on an assurance of financing. Part of that financing must be federal if we are to have consistent national programs, and it is important that that federal share be committed in relation to provincial costs.

I emphasize that it is not the exact amount of that transfer that is important but rather that the amount be based on provincial costs, not on federal whims or federal convenience. That basic decision to return to some firmly assured type of federal contribution is absolutely essential to maintaining and improving health care across this country. I would say that it is even more important, if that is possible, for another reason: it is essential to restore federal integrity to the intergovernmental collaboration that is crucial to the working of our federalism. If that is done, if there is a clear recommitment of firmly assured federal share of costs, then, in my view, although the medicare problems will remain tough, they will be in no way overwhelming.

The Chairman: Thank you, Mr. Kent.

Please proceed, Professor Bliss.

Professor Michael Bliss, University of Toronto: Thank you very much for inviting me to appear before your committee. I commend the committee for holding these hearings. If this is not the top item on our national agenda it is very close and it will not go away. However we differ, holding a serious discussion in which there are no sacred cows about health care and its future is exactly what we hope our legislators will do.

I was asked to appear on fairly short notice but I was able to prepare a brief that is a revision of an historical presentation I made last year to an OMA conference. You have copies of that. It covers some of the same ground that Mr. Kent did. I must say that to talk about the history of health care in the presence of Tom Kent is like speaking learnedly about floods while sitting next to Noah.

I want to comment on only four aspects of my brief. The first and possibly most important thing I have to say is about the context of our intense concern for health and health insurance. Historically, over 100 years we have invested so many resources in health care and we have won so many battles against disease. The history of modern medicine is a history of great triumphs. We have utterly destroyed some of the greatest and most devastating plagues known to humankind. Smallpox, for example, does not exist. With the antibiotic revolution of the 1940s, we were able to defeat TB and many other terrible diseases. Medical science takes us from one victory to another. We are, by all accounts, the healthiest peoples in history. Every generation is becoming healthier, and that is wonderful progress.

The trouble is that, with all our progress, health care costs do not go down. We find ourselves in the strange paradox that the healthier we become, the more we spend on health. That is unusual when you make comparisons with other perils that we manage to conquer over time. A hundred years ago I suppose the ordinary family was terrified of two things: ill health and fire -- being burned out. In the last hundred years, for the most part the fear of fire has diminished in our society as we have developed fireproofing techniques, and the cost of fire insurance has shrunk to a very minor part of most of our budgets. The cost of health care, however, does not shrink. It just keeps growing. This realization is absolutely essential as we look to the future.

There are no savings, long-term, in health care. You cannot do it. The reason is the problem of human mortality. All your victories against ill health are simply temporary victories or postponements, because we have not changed human mortality by one iota. It is 100 per cent, give or take a little bit depending on what you think of Elvis. It will not change. In effect, our problems are increasing because of our success. I refer to the problem of health care as almost perfectly analogous to the problem of keeping a snowman from melting. You get the easy victories in January and February, but then you push the problem into March and April. The cost becomes higher and higher. The more success you have, the more problems you have. In the 21st century, we are facing the problem of an aging population that is aging because we have been so successful. However, it is building up more and more health care costs. That is a trap in which we find ourselves and there is absolutely no way out of it.

Some of the ethicists on the frontiers talk about euthanasia, but I find that profoundly dissatisfying. That is the context within which all of our talk about health insurance and its future must be seen. In the past, it was not seen terribly clearly. In Mr. Kent's days, when they did the projections about health care costs, they did not see, 30 years on, that we would have a $180-billion-a-year industry. Only nowadays are we doing the projections on into 2020. The people particularly in the provincial ministries are saying that in another 20 years, with the projected increases in health care costs, our provincial governments will become gigantic HMOs that will happen to have a few other departments that go along with them. This is an enormous problem.

Let me turn now to the history here. Mr. Kent has given you the background, the deep interest in health insurance, which goes back to the 19th century. In Canada, there was certainly a long run up to medicare. I point out in my brief that concern for health insurance existed before there was a CCF or NDP. It was the Liberal Party that first committed to national health insurance in 1919. We have a very odd and checkered background. The first doctors' strike in Canada was in Winnipeg, in 1933, as doctors went on strike to try to force the state to pay them for looking after the indigent because they were doing so much health care for free. In the early days, there was a deep physician interest in health insurance, because for many of them it would mean that they would be paid.

I endorse Mr. Kent's view that, in the years after World War II, Canadians thought that the public policy issue of health insurance probably could be dealt with effectively only by the state. There was not a golden age of private health insurance in Canada. The issue is partly analogous to the pension issue, when it was seen that there was a serious problem with low-income people saving for their retirement and only the state had the resources to provide pension entitlements to the aged. Similarly, although private health insurance developed rapidly in the 1950s and 1960s, the private industry began running into all the problems that still plague private health insurance in the United States. There is a bias for private insurers to pick healthy people. There is a problem of whether you will have first dollar coverage or comprehensive coverage, and so on.

While some politicians in the 1960s -- for example, John Robarts in Ontario -- did think that it was possible to work out a private/public mix in health insurance, a large number of people bought into the view that probably the whole problem had to be handled by turning it over to the state where the state becomes the insurer of everyone. I defer to Mr. Kent's account of how they produced medicare in 1968.

In my brief, I quote from the Hall commission, which said, in 1964, that it was time that Canada moved to a situation in which the fruits of health science are available to Canadians without hindrance. I think that is a nice concept.

In the 1960s, removing the hindrance meant removing the financial barriers. That was a great breakthrough in social policy. Many of us remember the kind of golden age of Canadian health care that existed from about 1968 to the early 1970s, when it was seen to be a free good to all of us. We suddenly went into our doctors' offices and there were no more bills. Patients were wonderfully happy and physicians were wonderfully happy because they were being paid 100 cents on the dollar. It looked as though all the health care you wanted was available without any cost.

The most important part of the story is the 1970s, when, very quickly, the public insurers realized they had a huge problem because they had given blank cheques to Canadians and their health care providers. In the 1970s, the problem of paying for health insurance quickly became the most serious thing that ministries of health, both provincial and federal, had to face. Immediately, the question of how to contain health care costs came to the fore, and a whole cadre of experts and health care economists grew up to try to give advice to state insurers on how you could stop the escalation of costs. We remember the 1970s of stagflation, in which the overall costs of Canadian social programs began to be a terrible burden on governments. The Trudeau government felt the full force of it. It responded in many ways and provincial governments responded in many ways, but they began to try to squeeze the providers of health care, the hospital system and the physicians in order to try to hold down costs.

The providers responded the way anyone else does when they are squeezed: They began to look for alternatives. The medicare system of 1968 was a pluralist system that allowed for the freedom of providers to practise outside the system. You could opt out; you could extra bill. It was not surprising, then, in the 1970s, that, as the provincial governments began to squeeze the medicare fee schedule, more and more practitioners opted out. By the end of the 1970s and early 1980s, a kind of re-privatization occurred in health care. Many people saw the public system as a penny-pinching system and they wanted to work in the private sector where there was more freedom, more protection of incomes, and more possibilities for innovation.

By the early 1980s, we were seeing across the country serious problems in our medicare system. So many specialists had opted out that, in large parts of the country, it was impossible to have access to certain specialists under medicare. That was particularly true in obstetrics and gynaecology. The issue of accessibility became very important. The Trudeau government finally decided that the only way to protect the public health care system was to close off the private alternative.

That was the essential decision that led to the Canada Health Act. There are various ways of phrasing this. The exact language used is fraught with connotations. The state set out to protect the accessibility of the system by, in effect, outlawing private health care in essential medical and hospital services. To put it another way, the Canada Health Act was a legislative wall that created a state monopoly in medicare. The crumbling of the medicare system appeared to be inevitable without that kind of legislative bulwark.

We have had 16 years of experience since then. What has happened? The inexorable mounting of health care costs simply continues. The pressure on the state system has continued. The protection provided by the Canada Health Act allowed cost controls to be brought into the state system without the kind of fear seen in the 1970s because the providers could not go anywhere else.

We have had more experiments with cost control, the most significant of which has been the belief by some health care economists that you could reduce demand for health care by limiting the supply of physicians and nurses and other health care providers. You will undoubtedly hear the view that health care is a strange industry in which suppliers create demand. If the system graduates a new doctor, he or she will generate patients. That led to the decision in the early 1990s to limit the supply of physicians. That decision, among others, will lead to huge problems in the future.

History does change. In the 1960s, we brought in private health care in an era when the state was seen as the collective instrument for solving our major social problems. We had great faith in the capacity of government in the 1960s. You will remember that we brought in the Canada Pension Plan at about the same time. The provinces were interested in automobile insurance. The state was moving to get user fees out of university education. We talked about the next step as the guaranteed annual income. That was an era of enormous optimism.

I suggest that, in the last 30 years, we have lost some of our faith in the capacity of the state to manage social issues, to manage problems, to manage enterprises, better than the private sector. In many areas of our social policy, we have agreed that the private sector has flexibility and nimbleness, and that market forces give signals and allocate resources more effectively than state planners can.

We have realized -- and this is very important -- that health care is, above all, about individuals taking responsibility for their own health. They cannot rely on their physicians to look after them. They cannot rely on anyone else. Fundamentally, health care is about individuals making decisions about their lives and their lifestyles.

At the end of the century we must face the question of whether we have taken the state approach to health insurance about as far as it can go. In the face of the ongoing and inexorable pressures, must we finally admit that our state monopoly and the problems entailed have become a hindrance to giving Canadians the full benefits of health science?

You have been getting political flak about the health care system in the last few years because Canadian citizens have decided that, in fact, it is the public health care system that is beginning to be a hindrance. When they go to hospitals or ER wards or to look for specialists, someone is getting in their way. That "someone" is increasingly seen to be the provincial ministries, the planners and the politicians who have been trying to put the brakes on spending and who will not allow a private alternative.

To fulfil the promises of the Hall Commission in the 1960s to minimize hindrances to health care, we must ask whether it is time to allow the entries into the private sector that will keep the system expanding and keep us doing the best we can in what is ultimately a Sisyphean task.

The Chairman: I want to thank the two of you for the both provocative and comprehensive overview.

Before turning to other senators, may I ask the two of you to respond to the last point raised by Professor Bliss? Tom Kent raised it in a different context when he made a distinction between what he called two-tier medical care versus separate medical care.

In light of the state monopoly that prevents opting out, essentially, is it possible to go from our present system to one that ensures accessibility regardless of income, as per the Canada Health Act objective, while at the same time increasing the flexibility described by Professor Bliss, and which Mr. Kent suggested might be possible?

The minute the question is raised about whether Canada can have a mixed public-private system, most witnesses will say that within a two-tiered system all the good doctors would go to the privately funded sector. Therefore, the quality of care would become a function of income. I am simplifying the argument, but that is what the argument is.

I wonder, Mr. Kent, if you wish to comment. First, do you think we need to go from the state monopoly to a more mixed system? If so, how do we get there while meeting the accessibility objectives of the Canada Health Act?

Mr. Kent: First of all, there are two distinct issues. In my view there can be no question of legislating out of existence a private sector, if people want to pay for the whole cost of health care for themselves and if they can find physicians and surgeons and so on willing to provide that health care at a cost that these, obviously by definition, relatively well-to-do people are prepared to pay. It is not a question of whether or not there should be a private sector. It is a question of whether it is possible to mix in operation the public health care with a system whereby people can buy extra services on top of what they get tax-financed, and, in effect, provided within the ambit of the public system. The answer to that, surely, is not, if you want, equal access unrelated to whether you have money in your pocket or not.

To look at the history, when the Liberal rally, in 1961, so firmly committed the Liberal Party to health care, it was with a provision. It was that the costs that an individual thereby incurred through the tax system, would indeed become a charge through the tax system directly to the individual. The value of the services that you obtained from public health insurance would become a part of your statement for income tax purposes, within limits, and so on, so that it would never be overwhelming in any one year for any individual or family, and it would mean that people who paid little or no tax would pay nothing for their health care, but people who had relatively large incomes, had a significant tax, would pay something.

That, if you like, is a mixing of private and public financing, which personally I very strongly supported at the time. It was never carried through. In other words, what I am saying is that I agree that there is not a rigid line between a complete state monopoly, entirely state financed and entirely tax financed, and, on the other hand, a private health insurance system.

The public health system can be made to work in conjunction with some different financial incentives, some user charges, provided that they are related to income, are not absolute amounts, and so on. Given the reality of the problems that Mr. Bliss spoke about, that, arguably, health care by its nature is likely to cost more and more, just because of its success, certainly we must be flexible in devising ways of dealing with that situation.

The Ontario government has just taken one very sensible step in this direction, one that I have favoured for a long time, which is that we begin at least to qualify the fee-for-service principle by providing an extra incentive for doctors to practice in groups, which would do an enormous amount to take the strain off the hospital emergency system.

There is scope for a great deal of flexibility. I would repeat, though, that I do not think that you will get successful answers to that unless the federal government's recommitment to a share in the costs of this increasingly expensive system is reaffirmed.

Mr. Bliss: When you turn to the situation in other countries, you will find that most other countries in the world manage to have private and public systems coexisting, and you will soon quickly get beyond the bogeyman that the only alternative for Canada is the American system.

When you think about accessibility, and private and public, I urge you to think about what we do in public education. We have a wonderfully accessible public education system at the elementary and secondary levels. It is accessible to virtually all Canadians in every part of the country. It coexists in virtually every province with private options. It is my view that that is an extremely healthy coexistence because of the competition for excellence between private and public. If any province tried to outlaw private school systems, there would be a huge outcry of people complaining about their lack of freedom, but we have done this with health care.

It is fascinating that you ask the question of whether, if we have a private health care alternative, it will siphon off all the best personnel. When we write the history of health insurance in Canada, we will talk about the cadre of people who grew up in the 30 years after 1968 to defend the status quo, and the very large number of experts who began to have a vested interest in socialized medicine in Canada, and the skills with which they tried to argue against any change; and we will notice, for example, that whenever anybody suggested that privatizing some services would be useful, the health insurance establishment said, "This shouldn't be done, because private sector health care is far less efficient than public sector health care, because it has a profit motive, and so the public sector will be more efficient and more effective in every case."

On the other hand, when you propose allowing the private sector, the very same people reverse their argument and say we cannot allow the private sector because the private sector will become so effective and so efficient that the public sector will be starved. In other words, when it is useful for argumentative purposes, they say that in any competition the public sector would win, but then they reverse themselves and say the public sector cannot possibly compete with the private sector.

Of course, the gem of truth in what they say is that we are still in the situation we were in back in 1983 or 1984, where, if you threw it open right now, a large number of medical personnel would move into the private sector to increase their incomes. The reason is that we have huge shortages of supply, because we have made absolutely the wrong planning decisions about health care personnel.

We bought a bill of goods from planners who thought they could read the market and the future and they have made ghastly mistakes in cutting back on the numbers of physicians and nurses -- there is another problem with nurses -- that will have enormous implications in the next few years. If we think things are bad now, they will get worse because of our shortages of supply.

I hesitate to use the words "flood the market," but I do believe that the single most urgent need in the country is to produce more health care personnel to meet the demands of Canadians. If that means spending more money, spending more of our GNP on health care, that is fine. I have no problem with that.

We have made public and private systems work within education, partly because there are many teachers. They balance out. All the good teachers do not go into the private system. The public system has wonderful education. My children all benefited from the public system and got it for free. Why pay those extra fees if the public system works? The challenge in health care is to make the public system as good as any private system.

Senator Fairbairn: May I say that it is a treat to have both of you here. At this point in our hearings, not only are you giving us a much appreciated history lesson, but you are also getting right at some of the issues that clutter our minds going into this.

Mr. Kent said something to the effect that, if the public had its way, we would probably have changes more easily; we are now clearly in the grip, and coming from Alberta I feel in the grip, of the politics of federalism, which are very much involved in the situation in Alberta.

In this country we politicians have simplified our system when we deal with the public. We talk about medicare; we talk about the five principles and that we will live and die by them; but, if you are talking in terms of flexibility, that narrows it somewhat when you consider how much change has taken place, as you have said, Mr. Bliss, through drugs, through science, and everything else. We are no longer in quite as narrow a situation as we were back in the 1950s and 1960s, when this all began.

We often use the term "health care" rather than "medicare," and that brings me to an element related to aging. I refer to the demographics of our aging society, which I do not believe governments anywhere in this country have done anything to plan for in the last many years, when it has been very obvious. In respect of the health system, no longer do we just go to the doctor, get diagnosed, go to the hospital, get dealt with and then that is it. It is not that way any more. Now you go home. That makes that part of the health care system for Canadians absolutely fundamental and critical.

Mr. Kent, you said that you thought that it would be a disaster to split off home care, and have it settled with separate bags of money on its own. I personally would agree with that. The problem is that along the way we have failed, I think, to put in the connecting links that make home care part of the overall health care dimension.

I wonder if the two of you could comment on that, because it is something that we have already been hearing from witnesses, that that end piece, so to speak, is very scary. Perhaps that is one of the reasons why the public, although they may not want state monopoly on all of this, are often not looking at their provincial governments, when they become afraid, but are looking at the federal government for reassurance and some vision on this. I would like to have your comments on that.

Mr. Kent: The only way to deliver health care both fairly, with access and so on, and efficiently is to organize it at a community level, with a coordinating responsibility in a health organization area, which is responsible for the allocation of resources to the various forms of services, including home care, most definitely.

I agree that we have under-provided ourselves with doctors and so on, but what we have above all under-provided ourselves with are nurses. It is the role of the nurse in community care that probably is really the worst feature of our health system, at the moment. It is also important that the medical profession, in the narrow sense, play a major role in that community arrangement, and that services be available on a community basis 24 hours a day, seven days a week, at the home and office level, on the telephone, and, above all, now. People should not need to go to the emergency ward of a hospital whenever they think there is something wrong with them.

The thing must work as a whole if it is to be efficient. Looking after health is not just health care. It is the prevention of foolish activities, of ill health, as far as one can, and influence against them. It is essential, I say again, that that be seen as a whole and not as some separate services for home came or this, that and the other. We made that mistake in the hospitals. We made it for understandable reasons, but it was a great mistake.

I should like to talk, if the opportunity arises, a little bit about the relationship of this to the public-private mix, but that is separate from your direct question, and I hope I have responded to that.

The Chairman: Go ahead and make your comment, because I was going to ask you a question about the public-private mix in any event. Go ahead, and then we will turn to Mr. Bliss.

Mr. Kent: I would first say to Mr. Bliss that certainly there is a public-private mix in education, but if you choose to send your sons to Upper Canada College, you do not get any tax help for that.

Mr. Bliss: Yes.

Mr. Kent: I do not know how anyone could oppose separate system in that sense. In our sort of society, nobody is going to say that, so long as some people are very much better off than others, then those who are very much better off should not be free to buy their own health care, their own education for their kids, or whatever they want. That is not the issue.

The issue is whether, given that we have, have chosen to have, and are going to maintain in some form, a public system essentially, then that public system in itself must be entirely tax financed -- not financed by a mixture of tax financing with add-ons that you can buy as an individual if you can afford them. If you do that, then you will bleed the provision for people who cannot afford the add-ons, because there is just no avoiding the fact that, if you have the two-tier system, then certainly the resources of doctors and so on are going to be bled off from the public system. It is just absolutely unavoidable. If you give extra care to some people for a fee, then there are going to be fewer doctors and fewer nurses working for the people who cannot afford those extra fees.

If we had lots of doctors and lots of nurses, obviously this would not be a serious problem. However, we do not, and we are not going to be able to afford them. Certainly we will need to continue to spend somewhat more of our GNP on health, probably, but we want to limit the extent to which that happens.

I would say again that the type of user fee related to income through the tax system that many of us suggested four years or something ago, is a desirable feature of the system. It is a pity that it was never incorporated. We certainly provided that the assurance of federal support is there, and it ought to be possible to agree on a more flexible, in some respects, and a narrower range of services to be included in the definition of "comprehensive care." Certainly, there have been things done within the tax finance system that ought never to have been done -- cosmetic surgery and so on.

There is ample room for improving a public system without in any way jeopardizing the existence of a private system, if people want to have it and can afford to have it. Some people will work in such a system, but you cannot mix the public system with user charges made as a condition of service, as distinct from some recovery through the tax system, which is a very different way of doing things.

Mr. Bliss: In respect of the private system, if some of us wanted to found the health care equivalent of an Upper Canada College, such as a private hospital that offered emergency services, and we wanted to be free to charge anything we liked, in most parts of Canada that would be illegal because of the constraints imposed on the provinces by the Canada Health Act. We, in Canada in 1984, outlawed health care acts between consenting adults. I think it was a remarkable limitation on the freedom of our people and only the doctors realized what was happening, but they were so discredited for so many other reasons that nobody paid them any attention.

Here is where there may be a fundamental disagreement with Mr. Kent. When I listen to him, I detect the "planner's" ambivalence -- the same ambivalence that the current government has displayed: "There is a problem with the system. It is not working properly. How do we fix it?" There is a temptation, when a planner is faced with a problem, to suggest that the answer is: "We have to extend our control." Therefore, in health care, since the system is in trouble, perhaps we should expand health care into home care, and into pharmacare, because in that way we could have more and more control over the whole system. It is the same problem that the price controllers ran into during the war and again in the 1970s -- that you just have to keep expanding your reach because otherwise you get nibbled away.

If we have learned anything about socialist economics, socialized planning, and planning in general in the 20th century, it is that this is a mug's game. It does not work. In Canada, some people are saying, "Well, we should take over pharmacare and put this all on a managed, administered basis." In effect, what they are suggesting is that it be turned over to the same people who are currently failing to plan the current system, on the assumption that somehow they will get it right the next time. I say that, if we have learned anything in the 20th century about managing economies, it is that we have to go the other direction and let market forces operate as best we can.

It is scary, yes, it is scary. The problem is that old age and death are scary. We have ourselves impaled on the fear dilemma. Whenever we talk about trying to change the way we organize and fund our system, many of our citizens, and you can perfectly understand it, get worried that they will not be able to get health care.

It is easy to understand the exasperation of Mr. Klein because of the protests that he has faced. He feels that he is trying to improve things, but people are frightened. That is a very powerful problem and there are no easy answers to it.

Senator Carstairs: Because people are watching on television, I think it is important that we make sure that there are some clear facts here. While there isn't any public funding to attend Upper Canada College, there is public funding to attend St. John's Ravenscourt School in Winnipeg; 50 cent dollars is what you get in that province.

Mr. Bliss: They pay to go where?

Senator Carstairs: St. John's Ravenscourt in Winnipeg, which is the equivalent private school, I would suggest, to Upper Canada College. There is, then, that mix out there within the public-private school system. However, I would carry that analogy a little further, because we have a growing private school system in Canada, and it is growing faster than the public school system, I would suggest, because people feel frustrated with the public system. People fell frustrated with the public system in Manitoba because the fastest growing expenditure in the province in education is not for textbooks, but is for busing.

The second highest expenditure growth, in terms of percentage, is for special needs students. Those students used to be paid for out of the social service budget, but now they are being paid for out of the education budget. We have an increasing number of youngsters who have attention deficit disorder and are now in the public school system. Parents are saying, "I don't want my child in that class, so I am going to move into the private school system."

With respect to health care, what concerns me, therefore, is that, if there is an attempt to mix the two health care systems, people will be driven into the private system. I would suggest that that will lend a deteriorating quality to the public system.

My understanding of the Canada Health Act is that there could be private hospitals in Canada, provided that they did not receive public monies and provided that the doctors working in those private facilities did not take any public patients; if they wanted to opt out and not accept any government money whatsoever, they could, in fact, continue to function, even under the Canada Health Act.

Mr. Bliss: Perhaps that is so in Manitoba. My understanding of Ontario and other provinces is that their fees would be fixed at the same levels as the public system compensates for. They could not charge above a certain level.

Mr. Kent: I will comment on that, if I may. We must be clear that the ultimate responsibility for the education system and the health system lies with the individual province. Many provinces do, in fact, effectively prohibit a separate, private health system, just as those provinces also ensure that the private education system is entirely private, and does not get public subsidies, which is the situation in Ontario.

The situation in this respect is not, as I understand it, legally the consequence of the Canada Health Act. There is nothing in the Canada Health Act that in itself prohibits separate, private medicine. What is prohibited, and in my view certainly should remain prohibited, is the mixing of the two. A mixing of the two would be disastrous for the accessibility, the quality, and the efficiency of the public health system.

The Chairman: Why? You make a categorical statement that the mixing of the two would be disastrous for the public sector. What is the evidence for that statement? What logic leads you to that conclusion?

Mr. Kent: We are clear that we are talking about two-tier medicine, as I define it: that is to say, there is an extra charge that is paid directly to the physician, or whatever, for services additional to those non-insured services, although the insured services remain entirely tax financed.

Let's take a concrete example: a patient can have a cataract operation, a lens replacement, within the public system entirely tax financed. However, in the private eye clinics that have developed, you can get what is alleged to be a better quality lens, provided you pay $200, $300 or $400 for it. If we make it financially attractive to the doctor who is practising within the public system to provide additional services for an extra fee, obviously he will pay more attention to those opportunities than he would to the work within the public system.

We all know that most doctors work very hard. We also know that there are lazy doctors who do very well without working very hard within the public system. If there is an incentive and we are able to combine the two, then clearly the quality of effort within the public system will deteriorate. That is a dogmatic statement, but it is also an obvious one. How can one not be dogmatic on that point?

Mr. Bliss: There are other ways of establishing the mix. The University of Toronto is a mixed public-private institution that takes in money both ways. However, I can see some of Mr. Kent's arguments.

The education model and what Senator Carstairs said is interesting. In most provinces, those systems have managed to coexist for 100 years, so that if we have problems now, we may find ways to work them out. People in education are now saying that perhaps the way to resolve the public-private split is to go to vouchers in which the state, in effect, gives people money and they decide which schools they favour. Of course, the Americans are experimenting with this in a tremendous way.

The health care equivalent of vouchers appears to be the medical savings accounts that people are talking about. On this very evening, David Gratzer will be getting the Donner prize for public policy for his book Code Blue: Reviving Canada's Health Care System, which advocates medical savings accounts. I read it on the way up here this morning. It is an interesting and fascinating idea. I hope your committee will study the new ideas in the book because they may help us through our dilemmas.

Senator Carstairs: Interestingly enough, he is a graduate of a private school, St. John's-Ravenscourt. Perhaps that has something to do with his overall view of how society should work.

Mr. Bliss: I just assumed creative ideas come out of Manitoba.

Senator Carstairs: My question to you, Mr. Bliss, has mainly to do with your statement, which I think is absolutely correct, that some planner made a decision that we had too many physicians and, therefore, we should cut the number of doctors being trained in our medical schools. When I went back and reviewed the so-called planning argument, it was that at the same time we would change the way in which health care was delivered. We would introduce a system of nurse practitioners who could then pick up those things that doctors do that quite frankly they do not need to do. For example, they do not need to give inoculations, nor do they need to do 90 per cent of the blood pressure readings, and so on.

Why is it that we look at a planning document such as that and leap into the simple solution offered, but we never seem to look at all of the other recommendations the planner has made in order to make that simple solution work?

Mr. Bliss: Again, that is the planner saying, "You have to buy the whole package. If one chink in it goes, then, sorry, the whole thing is done and it is not my fault."

When you talk about nurse practitioners, you raise a whole raft of other issues that are nicely summarized in your assumption that the planners could tell us what we needed. We do not need these things. This is the 21st century. Who will tell me what my health care needs are? Who will tell my wife and my children? Surely, in one of the wealthiest societies the world has ever known, for a bunch of planners to say that they will give us medical personnel who are not as well trained -- that is, nurse practitioners -- because they do not think we have the needs that we think we do is a recipe for impossibility. People in a modern society simply will not accept that. Again, that is part of the notion that planners can tell us our health care needs and tell us that we are overusing the system.

Anyone who knows the dynamics of illness and the relationship between patients and physicians knows that the system is so much more complicated than the health care economists can begin to understand. We have made huge mistakes and have been misled by the people who say, "You do not need these things." Historically, it is particularly ironic because one of the rationales for the introduction of first-dollar health insurance was to get people to go to their physicians more often. The evidence was that when we put financial barriers in the way, people would not go when they really needed to go. As soon as those barriers were removed and the people started going to the doctor, then there were complaints that they were going when they did not need to go. That is the problem. The planner's world rests on all sorts of assumptions. If one turns out to be wrong, then we have got ourselves into a mess.


Senator Gill: Sixty years ago, universality became necessary for some systems. A little later, it was decided to provide amounts for old-age security, and a great deal has been done in this regard.

It seems to me that there was a lack of information, that people did not know that some services existed. We have established systems, structures and administrations. Over time, a number of steps between the patient and the care required increased. Today, people have to go through a number of steps before they get a service.

Given this, why not proceed as is being done in education, where everything is now accessible? If people need help, they get help through the tax system or through scholarships.

There are no longer any limits on the health care system, and we have to find some solutions. The solutions should enable people to make decisions about their own health care and get financial assistance if they need it.

The health care system should be more tailored to individual needs. We should try to find ways of giving people access to health care services in somewhat the same way as is done in education.


Mr. Bliss: I agree with everything you have just said, senator. Yes, we must individualize the system. The model of education is an interesting one, as is the model of other countries that have experimented with a public-private mix. We must get away from our obsession with the United States, where they have a set of particular problems. We do not need to go down the American route. There are other ways we can go. I do not know whether Scandinavia is still the way to go, or whether we should look to our friends in New Zealand, Australia, France or Germany. Unfortunately, Britain is a poorer society than Canada, and their public-private balance still does not seem to work properly.

Mr. Kent: Most people do not make market decisions, and never have made market decisions about health care. They do not know enough about what it is that they are buying. They are dependent on the view of physicians and health care advisers. If they had to pay those advisers, they did not go to them if they could not afford it. If they do not have to pay, they do go.

The issue is not that I or Michael Bliss or anybody is in a position of choosing what he should have as a health care, making his own decisions about health care. People need a health care system of some kind to go to. The issue is whether or not the access to that system, whether you call it a market system or a public system, is provided on some organized basis.

In the private health systems, nothing is more organized than the managed care systems in the United States. The issue, as I see it, is simply how the access to the system is determined. Obviously, the nature of the system is controlled, to a very considerable degree, by how one arrives at the access.

The idea that some set of planners or other group is going to make all the right decisions is nonsense. All the right decisions and detail can only be made by the medical profession, taking that in the broad sense: the medical professions. That is why it is so important that an efficient service be one that is delivered as a whole, whether it is hospital, doctor's office, home care, whatever, by the organized medical professions in a community.

Obviously, that can be done only within a clearly defined degree of public financing. That in turn certainly limits the range of the services that can be provided within the system. There are other separate services that some people may or may not be able to buy for themselves. Fine.

However, the basic system is either public or private. It is a system in any event, and if there is to be fair access to it then it is going to be public.


Senator Gill: I agree that we should continue to use specialists to get medical information of all types. Moreover, access to this ever-growing body of information has been greatly improved since medicare came into being.

Thirty or more years ago, we did not know about the beneficial or harmful effects of the food we ate. Now there is information on cans about the nutritional value of the ingredients they contain. In addition, I used to think that sugar was good, because it produced energy, but I know today that it can be harmful, because sugar is converted into fat.


Mr. Kent: Certainly, it is one of the positive developments. Much more is now known about the ways to be healthy. I see my 50-year-old sons running in marathons and things, which nobody at the age of 50 would have thought of doing in my day. They are a lot healthier than I was at that time.

The quality of the information is better. To the extent that the information has improved, then we are less dependent than we were on the advice of doctors, or whatever. However, that does not alter the fact that when it comes to what we do about our hearts or eyes or whatever, we need medical attention. The issue is the terms on which the public as a whole will have access to that medical attention, using again "medical" in the broad sense.

The Chairman: I am going to put three questions on the table, and you can both respond to them. Two of them are historical to assist us in understanding how we got to where we are.

As I listened to Professor Bliss describe some of the problems, it struck me that a huge piece of the problem was the decision made in the mid-1960s to move to fee for service rather than salary. It was fee for service that originally drove people to opt out. It was fee for service that then ultimately led to the Canada Health Act.

The first question would be whether you could enlighten us on why we ended up at fee for service, which it seems to me if we were starting out today is not the way we would go?

The second historical question, trying to understand the intent of the people who started medicare, has to do with what I would call the quality question. If ones says that we would provide what the Canada Health Act would call all medically necessary services, there are a variety of different ways you could do that. For instance, a gall bladder operation can be done by cutting the body open or there can be a laparoscopy. Artificial hips can be aluminium or ceramic, which costs considerably more money. Mr. Kent was talking about cataract operations; well, they can be done with a laser or with the old-fashioned system.

Was the intent of the founders of medicare to provide medical service that would solve a problem, or was it to provide medical service at the leading edge of technology? In other words, there is a decision between making medical services free versus making the highest possible quality of medical services free.

My third question goes back to some comments Mr. Kent made. I, too, have been a very big fan of the notion of raising additional money for health care by effectively having the government issue a T4 slip based on the dollar value of medical services consumed by a family or by the individual taxpayer, provided, of course, it was capped so that you avoided the disaster scenario. That is a very progressive way of paying for it.

That raises money but does not deal with the fundamental problem, which is supply, that is to say, the availability of doctors. None of that is affected by effectively changing the tax system to make it a more equitable way, or a more progressive way, of raising funds for medical care.

I understand why Mr. Kent favours that system. I do also, but it is a taxing system, and does not fundamentally deal with the supply question. Would you comment on whether I am I correct that that is simply a funding mechanism and does not deal with any of the other problems?

Mr. Kent, would you begin by responding to the first two questions, because you were involved in the fee for service decision, and the question of what relevant quality people thought they were providing at the time medicare was established?

Mr. Kent: The position to accept fee for service was seen at the time, I think it is fair to say, as a matter of absolute necessity. A doctors' strike in Saskatchewan influenced this. There seemed to be no possibility of a smooth transition to publicly financed, tax financed health care unless it was on a fee for service basis.

The Chairman: I want to be sure that I understand. Was it an absolute necessity because it was the only practical way to solve the problem or because it was the best public policy?

Mr. Kent: Clearly, it was not the best public policy.

The Chairman: Did people understand that, even then?

Mr. Kent: Certainly. In fact, early on, before any decisions had been made, in about 1959 or 1960, I personally could not understand why priests, professors, and teachers could be paid by salary but it was somehow impossible to imagine that doctors should be paid by salary. Nonetheless, that was unquestionably the entrenched attitude of the profession, and to propose medicare on any other basis would, at the time, have been impossible. I think that many of us hoped that there would be some transition to a more salaried service. That has happened to some extent.

The Chairman: The current Ontario experiments are, in fact, designed to try to move more people in that direction.

Mr. Kent: That is correct, and I think it will continue. I wrote a memorandum about that, a short while ago, urging that that was the way to move away from fee for service and, in time, towards a more salaried service. I do not think there was any question that it was the right decision at the time. This has occurred, not primarily because of the sins of the planners, but because of the reluctance of politicians to come to grips with problems before they need to. We have been much slower than we might have been to make the gradual transition from fee for service to a more civilized system.

In respect of the quality issue, I have to say that I do not think the issue was faced as sharply by any of us as, in retrospect, it might have been. It must be remembered that nobody, at that stage, anticipated the decline in fertility of the Canadian people. That is the real point about the aging population. It is not primarily that people are living longer, though they are to some extent; rather, it is, above all, that fewer people are being born. That has thrown out many of the calculations of what lay in the future, in a way that I do not think either the market system or the public system clearly anticipated in time.

The assumption was that, if public health insurance was established, then that would, indeed, encourage, rather than discourage, progress in the development of better health care, and that it would remain true, as the whole intent of the system was, that, as the quality of health care improved, the extra quality and the more sophisticated techniques, and so on, should be available primarily on the basis of need. If somebody had a poor heart, so to speak, early in life, then it was terribly important that the best possible operation be performed for that person early in life. It was perhaps less important that those sophisticated techniques be used in the cases where the chances of long-term recovery were less good. There was obviously no anticipation that the very best of health care could always be provided in every case of every possible need.

The Chairman: Would you agree that that is the current public expectation?

Mr. Kent: No. We can, perhaps all too easily, say what the public attitude is because, obviously, every individual would like the best for himself. However, I do not think there is a public expectation as a matter of policy that the very best should be provided irrespective of the degree of need in every case. It is likely that most of us magnify our own needs as opposed to other people's.

Regarding the T4 slip issue, I still think that that is of fundamental importance, not because it would, as you say, contribute greatly to the supply problem. However, we should remember that doctors, perhaps more than most of us, are aware of the significance of income tax. If their patients were having to contribute, through the tax system, directly to a significant extent to what the doctor recommended for them, then the tendency to misuse the fee for service system for unnecessary services would be somewhat weakened on the supply side, as well as on the demand side.

The Chairman: I want to press you on your question of need. Forget whether opinion polls would show that average Canadians think that they should be entitled to the best quality of care -- they certainly think that they, as individuals, should be entitled to the best quality of health care, although they are not sure that everyone else should be -- and deal with the concept of need. I am puzzled about that concept of need. Here is my problem: Do you attempt to take the same route, for example, as the State of Oregon? I am just picking them as an example because they have attempted to define need, whereby, for instance, for people past a certain age, and it is somewhere in the eighties, a hip replacement will not be done? Their view is akin to what you were saying: if someone needed a heart operation in their 30s, that was of greater need than someone who happened to be substantially older. Are you saying that the people who developed the original policy for medicare had at least reflected on the notion that there might be this allocation of services based on need? I ask that because my sense is that that is about the most politically impossible thing to do explicitly. Now, we may well do it implicitly. We do it implicitly by rationing systems; we do it implicitly in all kinds of ways. There are public rules respecting speed limits and there are other things that are designed to minimize the number of accidents but not eliminate them. Therefore, we have implicitly, whether we like it or not, put a cost on the value of human life and the value of human injury. It is one thing to do it implicitly, where you cannot identify the decision-maker and the particular consequences. It is another to do it explicitly in the way that I heard you suggesting. Am I right or wrong?

Mr. Kent: There is no question that the driving concept of the time was that financial consideration should be removed from the assessment of need. It should be unrelated to finances. That was the politically driving motivation and, I hope, the surviving one.

There was, at the decision-making level at that time, the assumption that it was to take place in an environment where the quality of medical services was to improve. The federal government, before medicare was introduced and before hospital insurance was introduced, put a lot of money into medical education, hospitals and medical research. Therefore the assumption was that there would be improvements in the level of service, but I do not think that there was a failure to know in one's heart, or one's mind, that various kinds of rationing are inevitable. Nothing can be done without rationing. You cannot hold a committee meeting without rationing time, and so on and so forth. Any system, public or private, is going to use a degree of rationing. There is no question about that. Obviously, for the reasons that you have given, no politician is going to say a great deal about that in very explicit terms. There is no reason why he should, because the decisions, in detail, are going to be made within the system, when it is set up, essentially by the doctors. In other words, it is a system in which doctors make those decisions according to a reasonable assessment of comparative need and not according to funds.

Mr. Bliss: I agree with that. Medicine has moved so far and so fast in 30 years that these issues were not being discussed at that time. Hip operations were not available; they could not be done. There was a sense in the 1960s that we could meet our health care needs. However, we have found that that is not the case.

Yes, rationing will be a problem. My answer to a rationing dilemma is: Let us do everything we can to avoid it by pouring more and more resources into health care, both public and private, because I think that is a good cause. It is better to do that than to spend them on BMWs. Let the state provide more hip replacements and if the state is near the limit of its resources, it can reduce the queues by letting private people do hip replacements.

I do not understand the complexities of the tax system. I think that the tax issue also shades into the medical savings account issue and the voucher issue. That is what we hire experts to tell us about.

Regarding fee for service, I am a salaried professor at the University of Toronto. However, if one of my students called me up at three o'clock in the morning for advice on his exam, I would tell him to go away.

Senator Carstairs: So would the doctor.

Mr. Bliss: Similarly, if the university said to me, "You cannot take a fee for anything you write in The Globe and Mail," maybe I would say, "Well, I will leave," or "I want a higher salary, if I have to give my fees to the university."

The Chairman: Or perhaps "I will not write for The Globe and Mail."

Mr. Bliss: There is being on salary and being on salary. It seems to me that the idea of abolishing fee-for-service medicine is another panacea, another sort of planner's way out. One would be saying that the system is not working, so we must bring these doctors under the tight control that putting them on salary involves. Mr. Kent said that it was desirable public policy, but it was not practical back then. It strikes me that impractical public policy is never desirable. You could not do it; but say you had done it; it is hard to get one's mind around the idea that, if we had our whole medical profession on salary these days, as salaried civil servants, we would have a better, more effective, more efficient health care system. I just find that inherently implausible.

I think there are good reasons for fee-for-service medicine. In truth, in North America we have a long history of contract medicine in which doctors did agree to service rosters of patients in contract with a lumber company to be their doctor for a dollar a head. That never seemed to work terribly well. One of the reasons is that the patients, of course, will, if anything, up their demands on the physicians. The physicians have no incentive to respond to the demands and there is a clash between the provider and the client.

Technically, it was also unpopular in Canada in the 1950s, because rostering in the U.K. under the national health system seemed very unpopular, at least in the eyes of North American doctors. I think that the idea of experimenting, of paying a doctor a high enough salary -- yes, he or she will abandon fee for service. You can do it, but you may find, in fact, that it is certainly not going to help your costs at all.

It may be part of a pluralist application, but the idea that you could ever go over entirely to abolishing fee for service strikes me as utterly utopian.

The Chairman: I thank the two of you for what has been an absolutely fascinating history lesson. We really appreciate your taking the time to do so. This has been wonderful.

I say to my colleagues, particularly in light of the comments that the two witnesses have made this morning, that our session next Wednesday will feature three people who have recently completed a not yet published study of the comparative medical systems in Western Europe and Australia and New Zealand, and how they compare and differ from the Canadian system. That will be our session next Wednesday.

The committee adjourned.