The Health of Canadians – The Federal Role

Interim Report

Volume One – The Story So Far


Myths and Realities

The current debate over Canada’s health care system and its future has generated a great deal of confusion. It mixes large elements of truth with misconceptions and erroneous beliefs about health, health care, health care financing and health care costs. This debate is an important one, however, as it will pave the way for discussions about future reforms. Therefore, the Committee strongly believes that it is essential to put a series of arguments into perspective in order to have an informed, fact-based debate. In the following sections, several of the most widespread notions are analyzed briefly in order to help separate myth from reality. It is our hope that this discussion will throw some light on the fundamental issues at stake with health care.

Based on facts, and in comparison to other countries, our health care system in respect to the health of Canadians is not in a real crisis. Based on perception, it is in crisis… Some of the crisis is related to myths, beliefs and values in respect to health care."

Dr. J. Fraser Mustard,
Brief to the Committee, p. 1


6.1 Myths About Rising Health Care Costs

Myth: The single biggest increase in health care expenditures is attibutable to the needs of older Canadians.

Reality: Persons over 65 consume, on average, more health services than those under 65. However, the ageing of the population is only one of many factors contributing to increasing health care costs. In fact, a complex mix of factors – both supply and demand related – has contributed to the increase in health care spending.

Other cost drivers include the use of new technology, the cost of new drugs, changing consumer expectations and needs, and new and changing patterns of disease (e.g. emergence of new strains of bacteria, resistance of old infectious diseases, such as tuberculosis, health effects of global warming, AIDS). These all have a significant influence on the cost of health care.

Although it is difficult to identify or quantify the importance of each factor with precision, some estimates were made available to the Committee. On the one hand, Dr. Robert McMurtry suggested that the annual growth in health care expenditures attributable to ageing is approximately 4.8%. This is expected to rise by 0.6% per year for the next ten years(75). On the other hand, a 1995 OECD study indicated that probably one-half of the growth in overall health care expenditures in OECD countries between 1960 and 1990 could be attributed to factors such as technological developments, growth in the number of medical personnel and facilities, and real increases in the price of health care inputs. (76)


Myth: Health care expenditures have been rising uncontrollably in Canada.

Reality: As discussed in Chapter 4, it is important to remove the effect of inflation in order to interpret long-term trends in health care expenditures. A dollar today is not the same as a dollar in 1975. Data should also be adjusted to the size of the population.

Health care expenditures per capita in constant (1992) dollars increased from 1975 to the early 1990s, but then decreased slightly between 1992 and 1996. Similarly, the health care to GDP ratio, which increased throughout most of the 1970s to the early 1990s, declined continuously from 1992 to 1997. Therefore, Canada has been successful in controlling total health care costs over the last decade.

The notion that she emphasized, which is that the hypothesis that health care costs are out of control was a myth, needs to be reiterated. (…) During the 1990s, we went from expending 10 per cent of our GDP on health care to 8.9 per cent, as per the most recent year for which statistics are available. Estimates and forecasts for 1998 and 1999 would have us rising to 9.1 per cent or thereabouts, well below where we have been.

Robert McMurtry,

( 8:20-21)


Myth: The cost of an ageing society to the health care system will be far in excess of present health care expenditures.

Reality: As stated previously, there is no doubt that beyond the age of 65, more money per capita is spent on health care. However, the annual growth in health care spending attributable to ageing is estimated at less than 5%. Furthermore, Canadians are living both longer and more healthily. Therefore, the anticipated demographic impact of ageing on the health care system may need to be revised. While the costs associated with ageing must be analyzed and managed, a more significant issue concerns the health care costs that are generally incurred during the last six months of life, regardless of age. The cost of medical care individuals receive skyrockets as they near the end of their life. As a result, it is not the ageing per se of the population which has an impact on health care costs, but rather the overall increase in the population.

Clearly, we are living longer. The corollary to that is: Are we living healthier or less healthier? If we are living more healthily, then we could anticipate that the costs would not necessarily go up as we age. The early demographic findings published fairly recently by Statistics Canada indicate that we are living both longer and more healthily. Therefore, the anticipated impact on the health care system is not necessarily as severe as we once thought it might be.

Dr. John S. Millar, CIHI


6.2 Myths About Public Financing

Myth: Canada’s health care system is 100 percent publicly funded.

Reality: Not true! According to data from CIHI, the public share of health care spending amounted to 71% in 2000, while private spending accounted for 29% of total health care expenditures.

As shown in Graph 4.7, the public sector is the main source of funding for public health (100%), hospital care (91%) and physician services (99%). Private funding is generally concentrated on items not completely covered under the Canada Health Act (e.g. prescription drugs, dental services, vision care, home care and so forth.).


Myth: The only problem is a shortage of money. If the federal government would restore previous funding levels, then the problems in the current system would be fixed.

Reality: Although more public funding will help deal with immediate problems in the system – long waiting lists, crowded emergencies and so on. – witnesses stressed the importance of stability and predictability in federal financing. Following the federal-provincial agreement on health care renewal of 11 September 2000, the federal government enacted Bill C-45 which provides some $21 billion of additional cash transfers over the next five years. It is the view of the federal government that this new investment will ensure stable, predictable and growing funds in the CHST.

However, in recent years, we have had a series of commissions and special committees across the country that have examined the health care system in Canada and in some provinces. Their conclusions were clear: the problems with our current system would not be resolved even if previous funding levels were restored.

On the contrary, without a new vision of what the future health care system should be, there is a risk that new money will be reinvested only in traditional, publicly funded, sectors of health care (e.g. hospitals and institutional care). Therefore, witnesses stressed that, before devoting additional government dollars in health care, three major questions should be addressed: 1) What would we be willing to give up in other areas to support the increased investment in health care?, 2) What would the return on our increased investment in health care be? and 3) What is the best balance between prevention and treatment? In other words, there are trade-offs to be made in allocating limited public financial resources:

The more money that goes into the health care sector, and as you know that is now up to 40 per cent of some provincial government budgets, the less that is available for other things like early childhood care. There is always that balance that one has to trade off, and that is very important.(77)

(…) throwing increasing amounts of money into the health care system is not sustainable in the absence of economic growth. Putting more and more into it means we spend less and less on other things, such as education, income support, job development, et cetera.(78)

(…) we are trying to balance all of these notions. Presumably, we are also trying to balance the fact that there are other spending priorities that are also meritorious. Health is important for the future of the country, but so are post-secondary education, research and innovation. They are viewed as key to the development of our country.(79)


6.3 Myths About the Canada Health Act

Myth: The Canada Health Act ensures the provision of the same set of free health services across the country.

Reality: Health services that must be covered under the Canada Health Act are determined on the basis of the "medical necessity" concept under the criterion of comprehensiveness. All medically necessary services provided by hospitals and doctors must be insured under provincial health care insurance plans. The determination of what services meet the requirement of medical necessity is made in each province by the provincial government in conjunction with the medical profession.

(…) under the comprehensiveness criterion of the Canada Health Act, provincial and territorial health insurance plans must insure all medically necessary hospital, physician, and surgical dental services to eligible persons in the particular province. (…) medical necessity is not defined anywhere in legislation, and therefore is a matter of negotiation that may give rise to some differences from province to province.

Abby Hoffman, Health Canada (13:13).

During her presentation to the Committee, Professor Raisa Deber explained that the Canada Health Act is quite permissive as provinces are free to go beyond its definition of necessary services, but they cannot go below it. In her view, comprehensiveness is a floor, not a ceiling. Over the years, provinces have expanded the array of services insured under their public plan, but they have not done so uniformly. As a result, public coverage for health services vary greatly among provinces. Frank Fedyk, Acting Director of the Canada Health Act Division at Health Canada, stated:

Many provinces do have home and community care programs, but they are very much a patchwork.(80)

(…)The palliative care programs across Canada are at different stages of development, similar to other home care services. Some are very well developed and include home visits by physicians, care nurses and other health professionals. Unfortunately, it does vary across the provinces and is not covered by the federal legislation. Therefore, there is a patchwork and there are no national standards.(81)

Furthermore, most provinces have de-insured some services previously covered under their public health care insurance plans. This has generated further disparities in provincial health care coverage. A list of some of the de-insured services by province is presented in Table 6.1. For example, the removal of warts is no longer covered in Nova Scotia, New Brunswick, Ontario, Manitoba, Alberta, Saskatchewan and British Columbia, but it remains publicly insured in Newfoundland, Quebec and Prince Edward Island. In addition, coverage varies widely across the country in the areas of reproductive services. While stomach stapling is covered in most provinces, it is not insured in New Brunswick, Nova Scotia and the Yukon, and patients in these provinces must pay for this procedure.


Myth: The Canada Health Act prohibits the private sector from playing a role in the provision of health care services.

Reality: The public administration criterion of the Canada Health Act relates to the administration of provincial insurance plans for medically necessary services, not to the delivery of insured health services. It stipulates that provincial health care insurance plans must be administered by a public agency on a non-profit basis. As a corollary, private insurance is not allowed for insured services. But the Act does not preclude private insurers from supplementing provincial health care insurance plans. Private plans can and do insure services that are not covered or are only partially covered under public plans (e.g. prescription drugs outside hospitals, semi-private or private rooms, dental care, vision care, assistive devices, ambulance, long-term care, chiropractors, cosmetic surgery and so on.).




Routine circumcision of newborn


Xanthelasma excision (removal of fatty spots on eyes)




Removal of impacted teeth




Gastroplasty (stomach stapling)


Tattoo removal


Reversal of sterilization

PEI, NB, ONT, MAN, SASK, ALTA, YK (uninsured service in NS and BC)

Penile prosthesis




Eye examination (People aged 19 to 64)


Wart and benign skin lesion removal


Second or subsequent ultrasounds in uncomplicated pregnancies


In-vitro fertilization

ONT, MAN (uninsured service in NFLD, NS, NWT)

Simple sclerotherapy (removal of varicose veins)

QC, ONT, MAN (uninsured service in NS)

Artificial/intrauterine insemination

NS, NB (uninsured service in ALTA)

Ear wax removal


Anaesthesia associated with a non-insured service


Chiropractic services


Epilation of facial hair


Eye refractions


Cosmetic surgery

ALTA (uninsured service in NFLD, NS, PEI, NB, QC, MAN, SASK, BC, YK, NWT)

Breast reduction/augmentation


(1) Some exceptions may apply.
Source: Health Canada, Insured Services De-insured From 1990 by Province/Territory, Information binder prepared for the Committee, Section 12, February 2000.


In addition, the Canada Health Act does not prevent private providers from delivering, and being reimbursed for, provincially insured health services, so long as extra-billing or user charges are not involved. In fact, most doctors are private practitioners who work in independent or group practices. Private practitioners are generally paid on a fee-for-service basis and submit their service claims directly to the provincial health care insurance plan for payment. Physicians in other practice settings may also be paid on a fee-for-service basis, but are more likely to be salaried or remunerated through an alternative payment scheme.(82)

All physicians who are on fee-for-service can be seen as private providers of care. As well, there are not-for-profit charitable organizations. Part of the confusion is that in Canada we use the term "public hospital" to refer to private organizations. This becomes confusing because the argument against "public hospitals" gets into the rigidity of government employees. However, these are not government employees; they are people who work for hospitals on a not-for-profit basis. There is not a lot of inherent reason that they could not achieve the same sort of efficiencies that for-profit organizations can achieve and not have to find additional money to return to shareholders.

Professor Raisa Deber
University of Toronto (8:16).

Similarly, over 95% of Canadian hospitals are operated as private not-for-profit entities run by community boards of trustees, voluntary organizations or municipalities. The for-profit hospital sector comprises mostly long-term care facilities or specialized services such as addiction centres.(83)

We acknowledge that some provinces do have private, for-profit hospitals. For example, the Shouldice hospital in Ontario is a private, for-profit facility whose status was grand fathered when Medicare was enacted in that province. Facilities like this one are regulated on a rate of return basis, to reduce the risk of overcharging patients. However, Alberta’s Bill 11, which was enacted earlier this year, allows private, for-profit surgical facilities to charge a fee for "enhanced" services sold in combination with the provision of an insured service.

Overall, the real debate in health care delivery is not about the role of the private sector – it is about the distinction between not-for-profit and for-profit providers.


Myth: Canada’s health care system – or Medicare – is an insurance plan that could be run either privately or publicly.

Reality: Illness is unpredictable. Therefore, the demand for health care is unpredictable. Such uncertainty can be offset by insurance. In Canada, the evolution of health care insurance has been marked by a shift from the private to the public sector. We have favoured public insurance over private insurance in part because of market failures. For example, private insurance companies could refuse to insure high-risk clients or force them to pay a much higher premium to offset the risk (as is happening increasingly in the United States). In addition, in a private insurance market, individuals with a low income would be subject to the same fee structure as high-income individuals and, thus, would have to assume a relatively higher proportion of health care costs. But most importantly, Canadians have opted for universal public health care insurance on the grounds of compassion, equity and social justice.

All developed countries, with the notable exception of the United States, have a common goal in mind with their health care systems, and that is to ensure that everyone has access to a comprehensive range of high quality services on the basis of need and not on the basis of ability to pay. That is basically the redistributive goal that most developed countries, apart from the United States, have.

Professor Colleen
Flood University of Toronto (14:15)

By contrast, the United States relies extensively on private health care insurance. The American system, no matter how we measure spending, is the most expensive health care system in the world. The Canadian system, which is publicly financed for the most part, has proven to be less expensive to administer and more cost-effective that the American system. In fact, an article in the New England Journal of Medicine some years ago estimated that Canada saved one percentage point of GDP compared to the United States by having a "single payer".

Moreover, our system of Medicare and the national principles set out in the Canada Health Act – universality, accessibility, comprehensiveness, portability and public administration – are strongly supported by Canadians.


Myth: The Canada Health Act was a monumental change.

Reality: The Canada Health Act was a consolidation of the prior legislation on hospital insurance (1957) and medical care insurance (1966). The Hon. Monique Bégin told the Committee that, for the most part, the principles and conditions of the Act existed already in the previous pieces of legislation:

(…) the five principles or conditions of the Canada Health Act existed in the previous pieces of legislation. (…) There were originally four principles. Accessibility was included as a sort of subtext of universality, but we extracted it and made it a formal fifth condition. The legislation consolidated and did away with the two previous acts, borrowing everything it could from the spirit and the conditions of the previous acts.(84)

What was new in the Canada Health Act was the explicit reference to free access and the addition of specific restrictions with respect to direct patient charges in the form of user fees and extra-billing.


6.4 Myths About Privatization

Myth: "Two-tier" health care means the same thing to everyone.

Reality: Almost every day, conflicting and confusing statements are made about "two-tier" health care in Canada. Politicians, health care providers and health experts alike hold differing views about the existence of a two-tier health care system in Canada because they all provide their own definition for the concept of two-tier.

If there is one statement to which the leaders of all parties in Canada’s current federal election would undoubtedly subscribe, it is the one imprinted on Stockwell Day’s infamous cue-card: "No 2-tier health care". And yet no issue in the campaign has generated more heat. This irony points out the central problem: "Two-tier health care" is an ambiguous and negatively charged phrase that makes a convenient political weapon but says little about actual policy intentions.

Carolyn Hughes Tuohy,"Comment",
Globe and Mail, 17 November 2000, p. A-23.

Most frequently, a two-tier system refers to two co-existing health care systems: a publicly funded system and a privately funded system. This definition of two-tier health care implies differential access to health services based on one’s ability to pay, not his or her need. Those who can afford to pay may obtain either access to better quality of care or access to quicker care, while the rest of the population continue to access health care only within the publicly funded system.

However, in the field of health care in Canada, the variant definitions for the concept of two-tier include the following:

  • For some, a two-tier system is one that requires patients to pay a user charge to access medically necessary services.
  • For some others, a two-tier system is one in which some patients pay out of their own pockets to get to the front of the line to receive faster medically necessary care (this situation is often referred to as "queue jumping").
  • Still, others define two-tier health care as made of two separate or parallel systems that provide medically necessary services. One system is accessible and publicly funded and the other is entirely private and allows patients to pay for faster and preferential treatment. The two systems compete for the provision of publicly insured services. To obtain health services privately, however, patients must pay the full cost, either out-of-pockets or through private insurance.
  • For some, a two-tier system is one in which certain health services are available free to some citizens but other services are only available to those who pay for them. By this definition, the current system in Canada definitively could be described as a two-tier system since certain expensive drugs, even though prescribed by a physician as "medically necessary", are not publicly funded and are only available to those who pay for them, personally or through a private drug insurance plan.

Under the Canada Health Act, hospital and physician services deemed "medically necessary" must be made available to all Canadians based on need, and without financial barrier. The Act discourages user charges for these insured health services and is enforced by the federal government via a reduction in cash transfers to the provinces that permit this practice. As such, the Act does not explicitely prohibit two-tier medicine (no matter which of the above definitions of "two-tier" is used); rather, the Act strongly discourages two-tier medicine. This strong disincentive led the National Forum on Health to conclude in its 1997 report that Canada has a single-tier system for medically necessary hospital and physician services.

The Canada Health Act, however, applies only to physician and hospital services. All other health care services lie in a realm of shared public/private or fully private finance. This includes additional benefits such as prescription drugs, optometry services, long-term care and home care, as well as semi-private and private ward accommodation in hospitals, medical examinations required by insurers, and so on.

Some health services traditionally regarded as being under the purview of the publicly funded health care system are now available privately. These services include for example diagnostic services provided in MRI clinics (Magnetic Resonance Imaging) in some cities of some provinces (namely Quebec and Alberta). Patients can obtain a scan at these private MRI clinics by paying the full fee. Queue jumping is one of the dangers of private clinics. Those who can afford to pay are able to get their diagnostic tests done more quickly; they then return to the publicly funded system one step ahead of patients still awaiting diagnostic tests in the public system. Although the number of such private clinics remains limited, some analysts contend that there existence means that a two-tier system exists in Canada. Others say that, at the very least, the existence of these choices constitutes a step towards the gradual erosion of Canada’s publicly funded health care system along with the development of a second tier of health service delivery.

A few other private health care facilities are also accessible in Canada without referral or reference to medical necessity. They offer same-day surgery procedures, such as cataract removal, as fully private transactions. The physician performing the operation does not get paid by the provincial health care insurance plan, nor is the patient reimbursed by the public plan. Moreover, patients must pay the full cost out of their own pockets, since in most provinces private insurance is not permitted for health services that are insured publicly. The prohibition on private insurance to cover the kind of services covered by provincial health care insurance plans was designed to discourage the development of private facilities performing services which are also available free under provincial health care insurance plans. Indeed, some people argue that allowing private insurers to compete with public insurance would open the door to a two-tier system of health care in Canada.

Whether a private tier of health care services can improve the access to and effectiveness of the publicly funded system remains open to question. Another important issue concerns the right of individual Canadians to establish and use a private market alternative to the publicly funded system. These questions are critical and must be debated in discussing the future of Canada’s health care system.


Myth: A free market system would solve the problem of waiting lists as well as other problems associated with public health care.

Reality: Those who support this idea contend that a free market would reduce the number of people on public waiting lists. They explain that wealthier persons, by removing themselves from the public waiting lists and seeking care in the private system, would allow people on the public lists to move up faster and receive care in a more timely fashion.

The Committee was told, however, that a private system might attract an excess of health care providers and this could result in an under-supply of professionals in the public system. This would, in turn, create longer public sector waiting lists for these under-supplied health services.

The Committee was also told that, if we deliver health care services using a free market system, it would likely result in a more expensive system. In his brief, Dr. Mustard stated:

What is more important in this whole debate is that health care does not fit the market concepts of the productive or wealth creating sector of society. (…) privatization of health care does not increase efficiency and lower costs. Recent assessments of the American system have come to some interesting perceptions. The conversion of not-for-profit hospitals to for-profit hospitals increased health care expenditures in the affected region. Conversion back to not-for-profit institutions decreased per capita health care expenditures.(85)


Myth: The American health care system is 100% privately funded.

Reality: The latest OECD data indicate that the private share of total health care spending in the United States amounted to 55% in 1998, while the public sector accounted for the remaining 45% of overall expenditures on health care. During his testimony, Professor Mark Stabile from the University of Toronto described Medicare and Medicaid, the major public health care insurance programs in the United States:

While the majority of Americans receive their health insurance through private insurance plans, offered primarily through their place of employment, a substantial number of Americans also qualify for public insurance. The two largest public insurance programs in the United States are the Medicare program, which serves individuals aged 65 and over, as well as the disabled and people with permanent kidney failure, and the Medicaid program, which serves the poor. The Medicare program is a federally run program while the Medicaid program is run by individual states. Twenty-five per cent of Americans claim either Medicare or Medicaid as their primary source of health insurance.(86)

Moreover, the American Medicare and Medicaid systems require user charges and provide less coverage than the Canadian system does.

It is interesting that being next door to the one nation with the largest proportion of its health care costs funded by the private sector that we have not as consumers listened to what many thoughtful Americans try to tell us about the problems with their health care.

Dr. J. Fraser Mustard, Brief to the Committee, p. 3.

Myth: The real alternative to the current Canadian model of health care is the American model.

Reality: On the contrary, many other models exist, particularly in Europe. Health care systems can be classified according to how they are organized, financed, regulated and delivered. At one extreme are the mostly publicly financed and publicly managed systems, such as in the United Kingdom, and at the other are the mostly private systems that are predominantly financed and delivered by the private sector, such as in the United States. The health care system of most OECD countries includes a combination of the public and private models. However, there are differences among these countries in the way the public/private split is organized. In some countries, the private sector complements the public sector (for example hospital services in Britain and Australia). In other countries, some population groups are covered by a public health care insurance plan, while the others must rely on private insurance (for example, in the United States and Germany). What lessons Canada can learn from the health care system models in other OECD countries will be the subject of the Committee’s report on Phase Three of this study.


6.5 Myths About Health Care Utilization

Myth: Introducing user fees would help alleviate the problem of too many patients making too many frivolous demands on the health care system.

Reality: Some people argue that user charges would limit unnecessary utilization (or abuse) by patients thereby reducing health care expenditures. However, many studies indicate that user charges may delay necessary visits, resulting in complications and higher health care costs. Moreover, studies also suggest that user charges may act as a deterrent for low-income people.

In New Zealand, they have user charges just to go to see your doctor. We really have problems with health outcomes. We have worse infant mortality. We have concerns about access to care for people on lower incomes.

Professor Colleen Flood,
University of Toronto (14:31).

Martin Zelder, Director of the Health Policy Research at the Fraser Institute, who is a proponent of user charges, agreed that such fees act as a deterrent for low-income individuals: "Yes, low-income people are deterred from consuming care that improves their health if they are required to pay user fees(87)." For this reason, he suggested that user charges should apply to all people except those with low income. This, therefore, would result in a means test: "(…) the means test would have to be used to exempt low-income people from paying user fees. To ensure that they are not harmed financially then, yes, the means test would be necessary." (88)

However, the imposition of a means test runs counter to Canadians’ expectations and values. With respect to the impact of user charges on total health care expenditures, Professor Evans stated:

despite heavy user charges in the United States and despite heavy user charges for pharmaceuticals in Canada, those costs actually escalate much faster than the costs in a public system.(89)


6.6 Myths About the Health Status of the Population

Myth: The health of the population is directly proportional to the amount of health care available.

The United States spends more per capita out of tax dollars on health care than does Canada. They also spend more in terms of private expenditures, privately purchased insurance and out-of-pocket expenditures, than do Canadians. Yet, Canadians are almost the healthiest people in the world, whereas the United States ranks twentieth-fifth in terms of life expectancy.

Dr. John S. Millar,
V.P., Research and Analysis, CIHI (14:34).

Reality: The information provided in Chapter 5 clearly indicates that the health of a population is determined by many other factors outside the delivery of health care services. Investing more and more money in the traditional health care system will not lead to commensurate improvements in the health of the population. In fact, it is important to ensure that investments are not overly skewed towards the delivery of traditional health care services as the primary strategy for improving the health of the population.  

More attention needs to be given to the non-medical determinants that promote good health (e.g. adequate income, early childhood development, employment and so on.), to the development of strategies that control health risks and prevent disease and disability, and to the need for an increased focus on evaluating and measuring health outcomes. To highlight the importance that other factors play in the health of Canadians, Dr. McMurtry provided the following examples(90):

  • There are currently 66 million days of workforce absence in Canada annually; 60% of those absences are related to stress. Decreasing work stress could not only act to improve the health of Canadians, but might indirectly improve our productivity and save the health care system money.
  • 80% of people who are 65 years and older have the lowest two levels of literacy on the international adult literacy survey. More than half of them will have trouble understanding their prescriptions.

Investment in these areas holds the greatest potential for generating positive returns, and would lead to greater improvements in the health of Canadians than a comparable money degree of spending on health care delivery.


Myth: Health care reform has been responsible for a decline in the health of Canadians.

Reality: The health status of Canadians, as measured by life expectancy and mortality rates, has continued to improve during the period of health care reform. In his brief to the Committee, Dr. Fraser Mustard referred to a recent OECD report showing that the health status of Canadians remains high, despite the reform that took place in the 1990s:

Whatever the changes in our health care system, we have not, from a population perspective, been placed at a disadvantage in relation to other countries.(91)


Myth: The closure of hospitals has compromised the health of Canadians.

Reality: Over the last decade, the number of hospital beds have dropped year after year in Canada. For example, 53 small hospitals were closed or converted to health centres in rural Saskatchewan and 727 hospital beds were closed in urban Manitoba (Winnipeg). Despite these cuts, the overall health status of these populations (measured by death rates) has continued to improve and the quality of care (measured by indicators such as readmission after discharge and emergency room visits) has not deteriorated.


Myth: The Aboriginal population enjoys the same health status as other Canadians.

Reality: The life expectancy of Aboriginal peoples in Canada is at least five years below the average for all Canadians. This is an enormous gap. It has been estimated that increasing the life expectancy of the Aboriginal population by five years would require the elimination of all deaths from cardiovascular diseases (the leading cause) and almost all deaths from cancer (the second cause of death)(92). Although this would appear to be an insurmountable obstacle, the Committee was told that progress is being made:

The health status of Aboriginal peoples relative to the non-Aboriginal population is improving on average. The disparities are significant and they persist. There is no question that there is still a great deal to achieve. There is also no question that some significant improvements have been accomplished.(93)

Although the discrepancies in the health status of the Aboriginal population are evident, the underlying causes are not as easily identified. Aboriginal Canadians are less likely to have finished high school, and are twice as likely to be under Statistics Canada’s low income cut-offs(94). This could help explain some of the factors contributing to the Aboriginal population’s higher incidence of health problems. In Phase Two of its study, the Committee will examine the health concerns of Aboriginal Canadians with a view toward better understanding their specific needs, identifying preventive interventions and debating federal responsibility.


6.7 Myths About the Need for Change

Myth: Waiting lists and waiting times are unique to the Canadian health care system.

Reality: Not true! At the Committee’s session on international health care systems, experts told us that the waiting list problem is significantly worse in New Zealand, the United Kingdom and in other countries which permit private insurance to compete with public coverage:

In the U.K. and New Zealand, countries that have this supplementary private insurance system, which I reiterate again is quite different from what happens in the Netherlands, waiting lists are far, far longer. In fact, they are five times as long as a percentage of the population in New Zealand and three times as long in the U.K. Arguably, once there is that kind of private insurance, perhaps the middle class and wealthy lose their incentive to lobby for improvements in the public system.(95)


Myth: Canada’s health care system is completely broken.

Reality: The health care system is not broken, but it is undergoing necessary changes. Witnesses stated that we need to find a way to move beyond our current preoccupation with protecting the status quo and preserving a health care system that was put in place some fifty years ago. We were told that, in spite of all of its merits, that system is no longer equipped to deal with the present or emerging needs of our society.

The reality is that health care can now be provided by a greater variety of health care professionals. Further, health services can be delivered in a wider range of sites – not only in the hospital, but also in the home and the community. New health care technologies are now being introduced as a means of reducing, and even preventing, surgery.

The Canadian health care system was designed in the 1960s and early 1970s. Since then, much has changed in the way health care services are administered and delivered. The changes need to be reflected in the conditions on which the Canadian health care system is built. Defending the status quo on the grounds that it worked well more than forty years ago does not stand up to scrutiny.


Myth: The health care system needs to be rebuilt from the ground up.

Reality: Not true! There is much that is good in the current system, not the least of which is the confidence most people have that when they are sick or injured they will have relatively ready access to services of the range and quality necessary to facilitate their return to health. This confidence is well placed. Canada’s well-trained professionals, institutions, and organizations are committed and dedicated to serving in the public interest. We need to build on what is good in the system while embracing the need for a "fresh start". In short, although our health care system needs to be reformed, it does not need to be transformed.


Myth: Definitive intervention with a major investment by the federal government is required within the next 12-24 months.

Reality: While reinvestment is essential, it is equally important to define a vision for the health care system of the future. The vision will enable reinvestment to facilitate the appropriate trajectory of change rather than simply funding a return to the past. Dr. Robert McMurtry stressed that:

the fundamental founding principles of the Medical Care Act of 1966 as originally pronounced are still real. What is missing, however, is a unifying vision of the future. That is something that I feel is imperative if we are to move forward with any effect.(96)

The recent federal-provincial agreement on health care renewal represents a major step toward the development of a common vision based on shared principles and a commitment to work in a collaborative manner. Governments have agreed to co-operate in many important areas such as:

  • improving the timely access to, and quality of, health services;
  • strengthening investments in health education and strategies to prevent illness;
  • accelerating primary health care reforms;
  • strengthening investment in home care and community care;
  • investing in health information and communications technology, as well as in health equipment, new health care technologies and facilities; and
  • measuring, tracking and reporting on the performance of health services.(97)


6.8 Myths About Health Care Providers


Myth: Fee-for-service is the only model that physicians will accept.

Reality: Most physicians are currently paid under a fee-for-service scheme in Canada. There is evidence, however, that many physicians would prefer an alternative mode of remuneration. A 1999 survey by the Canadian Medical Association reported that only 33% of respondents would prefer to be paid on a fee-for-service basis. Another 21% would prefer to be salaried, while less than 1% would select capitation. Some 35% indicated a preference for a blend of payments (e.g. mix of fee-for-service and capitation). Data from a recent CIHI report shows that, at present, the proportion of physicians remunerated by non fee-for-service mechanisms ranges from 2% in Alberta to 53% in Manitoba.

The fee-for-service scheme has some drawbacks. Graham Scott, former Deputy Minister of Health in Ontario, told the Committee:

Fee-for-service family physicians make sufficient income enjoying an office practice from 9 a.m. to 5 p.m. without any need for a hospital relationship and the responsibilities it demands.

The fee codes ensure a good income only if the family physician engages in a high-volume, high-turnover practice. This in turn dictates addressing only the less complex challenges posed by presenting patients. The rest get referred to a specialist or to the hospital emergency. Since they only work 9 to 5, patients after hours must also go to emergency regardless of the severity of their complaint.(98)


Myth: Nurses continue to play the same caregiving role that they have always played, assisting individual physicians in a hospital or clinic setting.

Reality: The nursing profession has undergone a revolution. Nurses are found at every point in care delivery in the health care system: in hospitals, in private institutions and in the community. At least 12,000 nurses are now certified in a specialty, using specialized knowledge to contribute to the individual needs of patients as members of specialized health care teams(99). They play a critical integration and communication role in terms of the needs of individual patients and their families.

During his testimony, Graham Scott indicated that nurses have gained higher status in accordance with their qualifications. For example, in some teaching hospitals and in some large community hospitals, nurses are seen as an integral part of the health care team, rather than as adjuncts, or add-ons, to teams. This contrasts with the traditional hierarchy where the physician was in charge.

The Committee was told that, despite the important gains that nurses have made, the nursing profession is facing challenges that could affect the integrity of the health care system as a whole. Of all workforce categories, nurses have more time off, more disability and more back pain(100). The average age of nurses is about 45, which means that the majority of nurses will be retiring in the next 10-15 years. In addition, 50% of nurses do not have a full-time job and sometimes work for two, three or four different employers.(101)


This report completes Phase One of the Committee’s study on health care. It summarizes the evidence we heard from March 2000 to September 2000, and makes reference to documents that were either tabled with the Committee or brought to the attention of the Members.

During Phase One, the Committee learned about the origins and current status of public health care insurance in Canada. We now have a better understanding of the federal government’s involvement in health care in terms of funding and enforcement of the Canada Health Act. We have a clearer idea of Canadians’ opinions about the health care system and health care policy. We have gathered a lot of information on health care expenditures and on health status. We know how Canada’s spending on health care compares with that of other countries and how the health status of Canadians contrasts with the health status of other nations.

With all this background information, we attempted to shed light on the current debate over health care in Canada by separating myths from realities. We hope that this report will serve as a useful reference document to anyone who wishes to participate in future phases of the Committee’s study on health care.


Phase Two of the study, which will begin in March 2001, is designed to obtain an overview of existing and foreseeable pressures for change within the health care system. During this phase of the study, Committee members will explore the implications for health care in Canada of:

  • the ageing of the population and the increasing demands on the system if past and present patterns of use continue;
  • our growing Aboriginal population and its specific health care needs, which include higher incidence of foetal alcohol syndrome, HIV/AIDS, tuberculosis, diabetes, injury and chronic diseases;
  • advances in health care technology, including drugs, that affect the organization, delivery and cost of health care and raise issues relating to ethics and effectiveness;
  • the appearance of new diseases and the resurgence of "old" ones that may require costly therapy and treatment;
  • expectations of both patients and health care providers which may lead to misuse of services and inappropriate service delivery;
  • the impact of health research, which is a critical component of the health care system. Canada’s health care system will depend increasingly upon scientific information about biological and social determinants of health, as well as upon objective data on health and health care. For example, the identification of the 30,000 or so genes that determine our susceptibility to disease will mark a revolution that could transform both health research and the health care system;(102)
  • the need for sufficient and comparable health-related information to make decisions in allocating resources and in delivering care;
  • the growing concern about the workload, stress and ageing of our health care providers. Planning for human resources in health care is a complex exercise that must take into account both the needs of the population and the needs of health care professionals;
  • health care issues specific to rural and remote areas;
  • the role of preventive intervention in encouraging healthy lifestyles and thereby enhancing the potential for better health;
  • the incidence of mental health problems in Canadian society and the implications for health care delivery.

Phase Two of the study will focus on affordability and sustainability and conclude with a report reviewing the key factors that will have an impact on the Canadian health care system over the next 25 years. The planned release date for this report is June 2001.

Phase Three of the study will provide Committee members with a review and discussion of the experiences of other countries, including up-to-date information and analyses obtained through a series of videoconferences. Supplemented by panels of experts and specialists from Canada, these hearings will allow the Committee to:

  • explore the health care systems of selected countries, including their objectives and principles, and health care delivery systems;
  • compare selected countries both with one another and with Canada; and
  • consider the strengths and weaknesses of the prime alternatives.

Phase Three of the study will culminate in a report reviewing developments in other countries, and key comparative findings. The planned release date for this report is June 2001.

In Phase Four of the study, the Committee will draw upon the findings from the first three phases of the study to develop a set of policy options relating to the Canadian health care system. This process will focus on two related aspects:

  • a framework of fundamental principles and objectives; and
  • a set of alternatives regarding the implementation of the principles and objectives.

The Phase Four report will provide a brief statement of policy options, for the purpose of providing a reference point for public hearings. The planned release date for this report is September 2001.

During Phase Five, the concluding phase of the study, the Committee will hold extensive public hearings on the options paper developed in Phase Four. Witnesses will be invited to comment on:

  • the proposed framework of principles and objectives;
  • the respective strengths and weaknesses of the options developed by the Committee, along with other suggestions warranting consideration; and
  • the preferred option(s).

The report of Phase Five will summarize the key findings obtained during the public hearings and describe the Committee’s preferred option(s) and recommendations. The planned release date is March 2002.


(2nd Session, 36th Parliament)

Raisa Deber, Professor University of Toronto, Department of Health Administration March 2, 2000
Dr. Robert McMurtry, G.D.W. Cameron Visiting Chair Health Canada March 2, 2000
Sharon Sholzberg-Gray, Co-Chair Health Action Lobby (HEAL) March 2, 2000
Dr. Mary Ellen Jeans, Co-Chair Health Action Lobby (HEAL) March 2, 2000
Sholom Glouberman, Director, Health Network Canadian Policy Research Network March 22, 2000
Dr. Fraser Mustard Founder’s Network March 22, 2000
Dr. Scott Evans, Senior Statistical Consultant Goldfarb Consultants March 22, 2000
Chris Baker, Vice-President Environics Research Group March 22, 2000
Wendy Watson-Wright, Director General, Policy and Major Projects Directorate, Health Promotion and Programs Branch Health Canada March 23, 2000
Sylvain Paradis, Acting Policy Group Manager, Policy and Major Projects Directorate, Quantitative Analysis and Research Section, Health Promotion and Programs Branch Health Canada March 23, 2000
Liz Kusey, Policy Analyst, Policy and Major Projects Directorate, Health Promotion and Programs Branch Health Canada March 23, 2000
Monique Charon, Acting Director, Program Policy and Planning, Program Policy, Transfer Secretariat and Planning Directorate, Medical Services Branch Health Canada March 23, 2000
Robert G. Evans, Director, Population Health Program University of British Columbia April 6, 2000
Colleen Fuller, Research Associate Canadian Centre for Policy Alternatives April 6, 2000
Martin Zelder, Director of Health Policy Research Fraser Institute April 6, 2000
Cliff Halliwell, Director General, Applied Research and Analysis Directorate, Information, Analysis and Connectivity Branch Health Canada May 3, 2000
Abby Hoffman, Senior Policy Advisor Health Canada May 3, 2000
Frank Fedyk, Acting Director, Canada Health Act Division, Intergovernmental Affairs Directorate, Policy and Consultation Branch Health Canada May 3, 2000
Tom Kent As an individual May 4, 2000
Michael Bliss, President University of Toronto May 4, 2000
Ake Blomqvist, Professor University of Western Ontario May 10, 2000
Colleen Flood, Professor University of Toronto May 10, 2000
Mark Stabile, Professor University of Toronto May 10, 2000
John S. Millar, Vice-President, Research and Analysis Canadian Institute for Health Information May 11, 2000
Margaret Somerville, Professor McGill University May 11, 2000
Laura Shanner, Professor University of Alberta May 11, 2000
The Honourable Marc Lalonde, P.C. As an individual May 17, 2000
The Honourable Monique Bégin, P.C. As an individual May 31, 2000
Guillaume Bissonnette, General Director, Federal-Provincial Relations and Social Policy Branch Department of Finance June 7, 2000
Barbara Anderson, Director, Federal-Provincial Relations and Social Policy Branch Department of Finance June 7, 2000
Graham Scott, Former Deputy Minister of Health, Province of Ontario As an individual September 21, 2000

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