The Health of Canadians – The Federal Role

Final Report

Volume Six: Recommendations for Reform

The Standing Senate Committee on Social Affairs, Science and Technology

Chair: The Honourable Michael J.L. Kirby
Deputy Chair: The Honourable Marjory LeBreton

October 2002









1.1 Summary of Some Key Points from Volumes One through Five
    1.1.1 The role of the federal government
    1.1.2 Objectives of federal health care policy
    1.1.3 The current system is not fiscally sustainable
    1.1.4 A national health care guarantee is critical to successful reform 
1.2 Improving Governance - The Need for a National Health Care Commissioner 
    1.2.1 Canadian Medical Association (CMA) 
    1.2.2 Colleen Flood and Sujit Choudry 
    1.2.3 Tom Kent 
    1.2.4 Duane Adams 
    1.2.5 Lawrence Nestman 
1.3 The Committee's Proposal


2.1 Funding Methods for Hospitals in Canada: Advantages and Disadvantages
    2.1.1 Line-by-line 
    2.1.2 Ministerial discretion
    2.1.3 Population-based
    2.1.4 Global budget
    2.1.5 Policy-based 
    2.1.6 Facility-based 
    2.1.7 Project-based 
    2.1.8 Service-based 
2.2 Service-Based Funding: Review of International Experience
    2.2.1 United States
    2.2.2 United Kingdom
    2.2.3 France
    2.2.4 Denmark
    2.2.5 Norway
    2.2.6 Review of international experience by the Comité Bédard
2.3 The Rationale for Service-Based Funding in Canada
    2.3.1 Appropriateness of service mix 
    2.3.2 Over-servicing and up-coding
    2.3.3 Rates, information and data
    2.3.4 Innovation
    2.3.5 Comprehensive health care
    2.3.6 Escalation of costs
    2.3.7 Lack of simplicity
    2.3.8 Committee commentary
2.4 Academic Health Sciences Centres and the Complexity of Teaching Hospitals
2.5 Small and Rural Community Hospitals
2.6 Financing the Capital Needs of Canadian Hospitals
2.7 Public Versus Private Health Care Institutions
Appendix 2.1 Academic Health Sciences Centres in Canada and their Affiliated Hospitals and Regional Health Authorities 

3.1 RHAs Across Canada: A Portrait
3.2 RHAs: Goals and Achievements
3.3 Barriers that Prevent RHAs from Functioning to Their Fullest Potential
3.4 RHAs and the Potential for Internal Markets
3.5 Committee Commentary

4.1 Why is Primary Health Care Reform Needed?
4.2 The Provinces and Primary Care Reform
    4.2.1 Recent reports
    4.2.2 The Ontario Family Health Network
    4.2.3 Quebec
    4.2.4 New Brunswick
4.3 Overcoming the Barriers to Change
4.4 The Federal Role
Appendix 4.1: GP Fundholding in Great Britain


5.1 The Right to Health Care - Public Perception or Legal Right? 
5.2 The Extent to which Publicly Insured Health Services are Available Outside the Publicly Funded Health Care System
5.3 Timely Health Care and Section 7 of the Canadian Charter of Rights and Freedoms
5.4 Committee Commentary

6.1 The Public Perception of the Problem of Waiting Lists
6.2 The Reality of the Waiting List Problem
6.3 Canadian Experience
    6.3.1 Cardiac Care Network of Ontario
    6.3.2 The Western Canada Waiting List Project
6.4 International Experience
    6.4.1 Sweden 
    6.4.2 Denmark
6.5 Committee Recommendations
6.6 The Potential Consequences of Not Implementing a Health Care Guarantee
6.7 Concluding Thoughts on the Health Care Guarantee


7.1 Trends in Drug Spending
7.2 International Comparisons
7.3 Coverage for Prescription Drugs in Canada
    7.3.1 Public prescription drug insurance plans
    7.3.2 Private prescription drug insurance plans
    7.3.3 Plan features and their relation to protection from severe drug expenses
7.4 An Emerging Issue: Catastrophic Prescription Drug Expenses
7.5 Protecting Canadians Against Catastrophic Prescription Drug Expenses
    7.5.1 How the plan would work
    7.5.2 The benefits of the plan
    7.5.3 How much would the plan cost?
    7.5.4 Committee's Proposal for a Catastrophic Prescription Drug Insurance Plan
7.6 The Need for a National Drug Formulary

8.1 Brief Review of Key Points about Home Care from Volumes Two and Four
8.2 Other Options
8.3 The Extra-Mural Program in New Brunswick
8.3.1 Building on the New Brunswick example: direct referrals to home care
8.4 Organizing and Delivering Post-Acute Home Care
    8.4.1 Definition of post-acute home care When does Post-Acute Home Care (PAHC) servicing start? When does PAHC servicing end?
    8.4.2 Organizational arrangements for PAHC
    8.4.3 Who provides PAHC?
8.5 The Cost of a National Post-Acute Home Care Program
    8.5.1 How to calculate the cost of a national PAHC program
    8.5.2 What about hidden costs?
    8.5.3 How much will a national PAHC program cost?
8.6 Paying for Post-Hospital Home Care

9.1 The Need for a National Palliative Home Care Program
9.2 Financial Assistance to Caregivers Providing Palliative Care at Home
9.3 Caregiver Tax Credit
9.4 Job Protection
9.5 Concluding Remarks


10.1 Health Care Technology
10.2 Electronic Health Records
10.3 Evaluation of Quality, Performance and Outcomes
10.4 Protection of Personal Health Information

11.1 The Extent of Health Human Resource Shortages
11.2 Health Human Resources: The Need for a National Strategy
11.3 Increasing the Number of Physicians Trained in Canada
11.4 Integrating International Medical Graduates
11.5 Alleviating the Shortage of Nurses
11.6 Allied Health Professionals
11.7 Funding Post-Graduate Training
11.8 Health Human Resources: Scope of Practice Rules Review
11.9 Committee Commentary

12.1 Assuming Leadership in Canadian Health Research
12.2 Engaging the Scientific Revolution
12.3 Securing a Predictable Environment for Health Research
    12.3.1 Federal funding for health research
    12.3.2 Federal in-house health research
12.4 Enhancing Quality in Health Services and in Health Care Delivery
12.5 Improving the Health Status of Vulnerable Populations
12.6 Commercializing the Outcomes of Health Research
12.7 Applying the Highest Standards of Ethics to Health Research
    12.7.1 Research involving human subjects
    12.7.2 Issues with respect to research involving human subjects
    12.7.3 Animals in research
    12.7.4 Privacy of personal health information
    12.7.5 Genetic privacy
    12.7.6 Potential situations of conflict of interest


13.1 Trends in Diseases
    13.1.1 Infectious diseases
    13.1.2 Chronic diseases
    13.1.3 Injury
    13.1.4 Mental health
13.2 The Economic Burden of Illness
13.3 The Need for a National Chronic Disease Prevention Strategy
13.4 Strengthening Public Health and Health Promotion
13.5 Toward Healthy Public Policy: The Need for Population Health Strategies


14.1 More Money Is Needed for Health Care
14.2 The Financing Role of the Federal Government
14.3 How New Federal Funding for Health Care Should Be Managed

15.1 The Amount of Increased Federal Funding Required
15.2 Potential Sources of Increased Federal Funding
15.3 General Taxation 
15.4 Earmarked Taxation
15.5 Payroll Taxes
15.6 National Health Care Premiums
15.7 User Charges 282
15.8 Medical Savings Accounts
15.9 Pre-Funding for Health Care
15.10 Committee Commentary
15.11 Current Federal Funding for Health Care

16.1 Private Health Care Insurance in Canada and Selected OECD Countries
16.2 Review of Recent Literature on the Impact of Private Health Care Insurance and Private For-Profit Delivery
16.3 Committee Commentary


17.1 Universality
17.2 Comprehensiveness
17.3 Accessibility
17.4 Portability
17.5 Public Administration
17.6 Committee Commentary






Extract from the Journals of the Senate of Tuesday, October 8, 2002:

Resuming debate on the motion of the Honourable Senator Kirby seconded by the Honourable Senator Pépin:

That the Standing Senate Committee on Social Affairs, Science and Technology be authorized to examine and report upon the state of the health care system in Canada. In particular, the Committee shall be authorized to examine:

a)       The fundamental principles on which Canada’s publicly funded health care system is based;

b)      The historical development of Canada’s health care system;

c)       Health care systems in foreign jurisdictions;

d)      The pressures on and constraints of Canada’s health care system; and

e)       The role of the federal government in Canada’s health care system;


That the papers and evidence received and taken on the subject and the work accomplished during the Second Session of the Thirty-sixth Parliament and the First Session of the Thirty-seventh Parliament be referred to the Committee;

That the Committee submit its final report no later than October 31, 2002;

That the committee retain the powers necessary to publicize its findings for distribution of the study contained in its final report for 60 days after the tabling of that report; and

That the Committee be permitted, notwithstanding usual practices, to deposit any report with the Clerk of the Senate, if the Senate is not then sitting; and that the report be deemed to have been tabled in the Chamber.

The question being put on the motion, it was adopted.


Paul C. Bélisle
Clerk of the Senate


The following Senators have participated in the study on the state of the health care system undertaken by the Standing Senate Committee on Social Affairs, Science and Technology:

The Honourable Michael J. L. Kirby, Chair of the Committee
The Honourable Marjory LeBreton, Deputy Chair of the Committee 


The Honourable Senators:

Catherine S. Callbeck
Joan Cook
Jane Cordy 
Joyce Fairbairn, P.C.
Wilbert Keon
Yves Morin
Lucie Pépin
Brenda Robertson
Douglas Roche 

Ex-officio members of the Committee:

The Honourable Senators: Sharon Carstairs, P.C. (or Fernand Robichaud, P.C.) and John Lynch-Staunton (or Noel A. Kinsella)

Other Senators who have participated from time to time on this study:

The Honourable Senators Atkins, Banks, Beaudoin, Carney, Cochrane, Cohen,* DeWare,* Ferretti Barth, Grafstein, Graham, P.C., Hubley, Joyal, P.C., Lawson, Léger, Losier-Cool, Maheu, Mahovlich, Meighen, Milne, Murray, Rompkey, St. Germain, Sibbeston, Stratton, Tunney*, and Wilson*

* retired



Association of Canadian Academic Healthcare Organizations


Association of Canadian Medical Colleges


Advisory Council on Science and Technology


Academic Health Sciences Centre


Canadian Nurses Association


Clinicians Assessment and Professional Enhancement


Canadian Biotechnology Advisory Committee


Canadian Council on Animal Care


Canadian Council on Health Services Accreditation


Cardiac Care Network of Ontario


Canadian Coordinating Office for Health Technology Assessment


Chronic Disease Prevention Alliance of Canada


Canada Foundation for Innovation


Canada Health Act


Canadian Health Services Research Foundation


Canada Health and Social Transfer


Canadian Institute for Advanced Research


Canadian International Development Agency


Canadian Institute for Health Information


Canadian Institutes of Health Research


Centre local de services communautaires  (community health centre)


Canadian Medical Association


Canada Pension Plan


Canada Research Chairs


Council of Science and Technology Advisors


Computed Tomogram (scan)


Department of National Defence


Diagnostic Related Group


Electronic Health Record


Employment Insurance


Extra-Mural Program


Established Programs Financing




Fetal Alcohol Effects


Fetal Alcohol Syndrome




Family Health Networks


Family Medicine Groups


Gross Domestic Product


General Practitioner


Human Resources Development Canada


Health Care Technology Assessment


Health Transition Fund


International Conference on Harmonization


information and communications technologies


International Development Research Centre


International Medical Graduates


Information Technology


Joint Policy and Planning Committee


Licensed Practical Nurse


Medical Equipment Fund


Ontario Ministry of Health and Long-Term Care


Medical Research Council of Canada


Magnetic Resonance Imaging


Medical Savings Account


National Advisory Committee on Aging


New Brunswick Extra-Mural Hospital


National Council on Ethics in Human Research


National Health Expenditure Database


National Health Research and Development Program


National Health Service


National Research Council


Natural Sciences and Engineering Research Council


Ontario Drug Benefit


Organisation for Economic Co-operation and Development


Ontario Family Health Network


Ontario Hospital Association


Ontario Medical Association


Post-Acute Home Care


Primary Care Groups


Primary Care Network


Primary Care Reform


Primary Care Trust


Protein Engineering Network of Centres of Excellence


Positron Emission Tomography (scan)


Primary Health Care Transition Fund


Personal Information Protection and Electronic Documents Act


Programme de Médicalisation du Système d’Information


Purchasing Power Parity


Prospective Payment System


Quebec Pension Plan


Research Ethics Board


Regional Health Authority


Regional Hospital Corporation


Registered Nurse


Canada’s Research-Based Pharmaceutical Companies


Social Sciences and Humanities Research Council


Tri-Council Policy Statement: Ethical Conduct for Research Involving Humans


University of British Columbia


Urgency Rating Score


Workers’ Compensation Board


Western Canada Waiting List


The Committee wants to publicly acknowledge the enormous assistance it has received during the past two years from those who have worked so hard in helping the Committee to produce its six reports.

The Committee particularly wants to express its deep appreciation to:

·        Odette Madore and Dr. Howard Chodos of the Research Branch of the Library of Parliament, the full-time research staff of the Committee, who have been deeply involved in all drafts of the six reports that the Committee has released during this study.  Without their extraordinary help, these reports would not have been completed in such a short time, nor in such a competent manner.

·        Catherine Piccinin, the Committee Clerk and her Administrative Assistant, Debbie Pizzoferrato, who were responsible for organizing all the meetings the Committee held on the health care issue, including scheduling the appearances of all the witnesses, for overseeing the translation and printing of all six reports, and for responding to thousands of requests for information about the Committee’s work and for copies of the Committee’s reports. 

·        Dr. Duncan Sinclair, the former chair of the Health Services Restructuring Commission of Ontario, who gave so generously of his time and expertise in reviewing, editing and offering suggestions for improvement in all of the drafts of the Committee’s reports.

·        The staff of each of the members of the Committee, who have had to endure a substantially increased work load for the past two years.

To all of these people, we express our heartfelt thanks for a job very well done.

The Committee worked long hours over many months, requiring the services of a large number of procedural, research and administrative officers, editors, reporters, interpreters, translators, messengers, publications, broadcasting, printing, technical and logistical staff who ensured the progress of the work and reports of the Committee.  We wish to extend our appreciation for their efficiency and hard work.


This report is the culmination of a two-year study by the Standing Senate Committee on Social Affairs, Science and Technology.  During this period, the Committee has heard the views of over 400 witnesses.  The Committee wishes to express its sincerest thanks for the effort these witnesses made to give us their advice on what needs to be done to reform Canada’s health care system and make it fiscally sustainable. 

As one would expect, given the complex, ideological and political nature of health care issues, the advice we received was often conflicting.  Nevertheless, the Committee considered seriously the views of all the witnesses in arriving at our recommendations.

The recommendations in this report reflect the unanimous view of the eleven Senators on the Committee (seven Liberals, three Progressive Conservatives, and one Independent).  The experience of the eleven Committee members in public policy and health-related issues is as deep as it is varied.  The Committee includes:

·        two doctors:  Yves Morin, a former Dean of Medicine at Laval University, and Wilbert Keon, the Chief Executive Officer of the Ottawa Heart Institute;

·        two former provincial ministers of health:  Brenda Robertson and Catherine Callbeck, who was also a provincial premier;

·        two former Members of Parliament:  Douglas Roche and Lucie Pépin, who was also a nurse;

·        a former federal cabinet minister and former journalist:  Joyce Fairbairn;

·        two community activists:  Joan Cook, who served for many years on various hospital boards, and Jane Cordy, who was also a teacher;

·        two former senior members of a Prime Minister’s office:  Marjory LeBreton and Michael Kirby, who was also a former federal Secretary to the Cabinet for Federal-Provincial Relations.

The Committee believes that its recommendations meet the four objectives the Committee set for itself at the outset of its work:

·        To formulate a detailed, concrete plan of action that did not focus heavily on governance issues or intergovernmental structures;

·        To attach a cost to its recommendations and propose a specific revenue raising plan. For its report to be truly useful, the Committee felt it could not be vague on the question of precisely how its recommendations would be funded;

·        To specify clearly the changes that each of the major stakeholders – individual Canadians, health care professionals, provincial and federal governments, etc. – would have to make so that the Committee’s reform plan could be implemented successfully. 

·        To make clear the consequences of not changing, and hence of not reforming, the health care system.

The Committee feels that there is a real window of opportunity for implementing the kind of reform that is needed to ensure the long-term sustainability of Canada’s health care system. The Committee believes it has worked out a detailed, concrete and realistic plan which, if implemented integrally, would lead to the strengthening of the publicly funded health care system in Canada and help guarantee its sustainability for the foreseeable future. It looks forward to pursuing its work in this direction, along with all those who share this objective.


For the past two years the Standing Senate Committee on Social Affairs, Science and Technology has been studying the state of the Canadian health care system and the federal role in that system.  The Committee has sat for over 200 hours and held 76 meetings. Most of these meetings were public sessions during which the Committee heard from over 400 witnesses, many of whom represented organizations that have thousands of members (such as the Canadian Medical Association and the Canadian Nurses Association).

To date the Committee has published five reports. This sixth report contains the Committee’s final recommendations for reform and renewal of the Canadian health care system.   These recommendations flow from the principles enunciate in Volume Five.The major topics covered in the five previous reports, as well as the subjects to be treated in future reports, are summarized in the following table:



Timing of Report


Historical Background and Overview,

Myths and Realities

March 2001


Future Trends, Their Causes and

Impact on Health Care Costs

January 2002


Health Care Models and

Practices in Other Countries

January 2002


Issues and Options

September 2001



Principles for Restructuring the Hospital and Doctor System and Recommendations

on Several Health Care Issues

April 2002



Recommendations with respect to Financing and Restructuring the Hospital and Doctor System and Closing the Gaps in Drug and Home Care Coverage

October 2002


Thematic Studies

Aboriginal Health, Women’s Health, Mental Health, Rural Health, Population Health,

Home Care and Palliative Care

At future dates to be determined


As the table indicates, following the release of this report, the Committee intends to examine a number of additional health-related issues.  These studies will result in a series of thematic reports on: 1) Aboriginal health; 2) women’s health; 3) mental health; 4) rural health; 5) population health, including literacy issues; 6) home care; and 7) palliative care. 

In addition, the Committee held public hearings in September 2002 to examine the document French-Language Healthcare – Improving Access to French-Language Health Services, a study coordinated by the Fédération des communautés francophones et acadiennes du Canada for the Consultative Committee for French-Speaking Minority Communities. The Committee will be releasing a report on this issue, and readers of this volume are strongly encouraged to read that report as well.

The recommendations contained in Volume Six can be grouped into six categories:

·        recommendations on restructuring the current hospital and doctor system to make it more efficient and more effective in providing timely and quality patient care;

·        recommendations on enacting a health care guarantee that would ensure that patients receive treatment within a specified maximum amount of time for major hospital or diagnostic procedures; if the waiting time is exceeded, the health care guarantee would require the insurer/government to pay the cost of the patient receiving the necessary service in another jurisdiction or another country;

·        recommendations on expanding public health care insurance to include coverage for catastrophic prescription drug costs, immediate post-hospital home care costs, and costs of providing palliative care for patients who choose to spend the last weeks of their lives at home;

·        recommendations that strengthen the federal contribution to, and role in, developing health care infrastructure, including health information systems, health care technology, the evaluation of health care system performance and outcomes, the supply of health human resources, health research, wellness promotion and illness prevention, and the nation’s 16 Academic Health Sciences Centres;

·        recommendations on how additional federal revenue should be raised, and on how this new revenue should be administered in a transparent and accountable manner in order to implement the recommendations in this report;

·        observations on the consequences that would arise if the additional federal revenues that the Committee recommends be raised are not invested in the health care system.

As some of these recommendations will require the financial participation of the provincial and territorial governments if they are to be implemented, the Committee is keenly aware of the importance of fostering a spirit of cooperation and collaboration amongst the various levels of government in the course of working to reform and renew Canada’s health care system.




To formulate realistic recommendations to improve the provision of health care services to Canadians, it is necessary first to have a clear view of the health care system now and an assessment of its strengths and weaknesses. From the outset, the Committee has sought to portray accurately the reality of Canada’s health care system and to separate myth from fact.[1]

The Committee believes that an ongoing evaluation of the health care system is essential, conducted in as objective a fashion as possible. In this chapter the Committee presents its recommendations for the creation of a new National Health Care Council chaired by a Health Care Commissioner charged with carrying out this task by producing an annual report on the state of the health care system and the health status of Canadians.

Before turning to this, however, we begin with a brief review of some key elements from previous volumes of the Committee’s study. These summarize the basic approach that the Committee has adopted in the course of its multi-volume study, as well as the objectives it has sought to achieve in developing its recommendations.  

1.1     Summary of Some Key Points from Volumes One through Five

1.1.1   The role of the federal government

The Committee identified the various roles of the federal government in health and health care; Volume Four set out these roles, together with a set of policy objectives for each.[2] The Committee also affirmed the legitimacy and importance of the federal government’s roles from a number of perspectives:

·        First, it is clear that Canadians strongly support national principles in health care and look to the federal government to play an important role in maintaining these principles; 

·        Second, federal funding for health care is especially critical at this time of reform and renewal. As the Committee makes clear in the present volume, making changes in the way the health care system is structured and operates will require spending more money - money that must be raised primarily by the federal government;

·        Third, and some would say most important, only the federal government is in a position to make sure that all provinces and territories, regardless of the size of their economies, have at their disposal the financial resources to meet the health care needs of their citizens.  This redistributive role of the federal government is fundamental to what many call “the Canadian way.”

·        Fourth, fundamental changes to the health care system should not be confined to one or two provinces.  Our national system requires inter-provincial harmonization in which the federal government has a crucial role to play, through, for example, its use of financial incentives and/or penalties to encourage provincial and territorial governments to adopt country-wide standards.

·        Fifth, the Committee believes strongly that the substantial sums of money transferred by the federal government to the provinces and territories for health care should ensure that the federal government has a seat at the table when restructuring of the health care system is discussed. The principle of accountability to the taxpayers requires the federal government to have a say in how that money is spent.

Finally, it is very clear to the Committee that Canadians want the provinces, the territories and the federal government to work collaboratively in partnership to facilitate health care renewal.  Canadians are impatient with blame-laying; they want intergovernmental cooperation and positive results. 



1.1.2   Objectives of federal health care policy

The Committee has pointed out that federal policy in health care flows from two overarching objectives – objectives that the Committee strongly supports as the primary goals to be pursued by the federal government in the field of health care. These two objectives are:

·        To ensure that all Canadians have timely access to medically necessary health services regardless of their ability to pay for these services.

·        To ensure that no Canadian suffers undue financial hardship as a result of having to pay health care bills.

Implicit in these two objectives, particularly the first, is the requirement that the medically necessary services provided under Medicare be of high quality. Clearly, providing access to services of inferior quality would defeat the purpose of Canada’s health care system.

With respect to the pre-eminent piece of federal legislation in health care, the Canada Health Act (1984), the Committee has repeatedly expressed its unqualified support for the four patient-oriented principles in the Canada Health Act. The Committee has also endorsed the intent of the fifth principle of the CHA, although it is of a different character:

·        The principle of universality, which means that public health care insurance must be provided to all Canadians;

·        The principle of comprehensiveness, which is meant to guarantee that all medically necessary hospital and doctor services are covered by public health care insurance;

·        The principle of accessibility, which means that financial barriers to the provision of publicly funded health services, such as user charges, are discouraged, so that needed care is available to all Canadians regardless of their income;

·        The principle of portability, which means that all Canadians are covered under public health care insurance, when they travel within Canada or move from one province to another.

·        The principle of public administration does not focus on the patient but “is rather the means of achieving the end to which the other four principles are directed.”[3]  The public administration condition of the Canada Health Act is the basis for the single insurer/funder model that the Committee has endorsed in Volume Five under Principle One.[4]  This condition of the Act requires provincial and territorial health care insurance plans to be managed on a not-for-profit basis by a public agency.

The Committee has also agreed with the Honourable Monique Bégin, the federal Minister of Health at the time that the Canada Health Act was passed, that the principle of public administration has come to be misunderstood.[5] The Committee strongly supports the single-payer insurance system whereby the government is the funder of hospital and doctor services. The public administration principle refers to the funding of hospital and doctor services, not to the delivery of those services.

The misunderstanding of the principle of public administration has arisen out of the confusion between publicly funded and administered health insurance and the actual delivery of health care services themselves. Under the Canada Health Act, services do not have to be delivered by public agencies. Indeed, in Canada today the great majority of health care services are delivered by a variety of private providers and institutions.

The Committee reaffirms its commitment to the principle that every Canadian should be guaranteed access to medically necessary services by a publicly funded and administered insurance program, everywhere in Canada. This has been the essence of Canadian health care policy for over 30 years, and is clearly reflected in the Canada Health Act.

Pursuit of the objectives of Canadian health care policy involves a “contract” between Canadians and their governments – federal, provincial and territorial. Canadians pay taxes to their governments, which then use the money (in part) to fund a universal insurance plan that provides to all Canadians first-dollar coverage for medically necessary services delivered by hospitals and doctors. These services must be accessible, comprehensive, and portable among provinces and territories.  The “contract” requires governments (federal and provincial/territorial) as insurers, to use the funds collected from Canadians to meet the two policy objectives stated above, i.e., to ensure that Canadians are publicly insured and have timely access to medically necessary hospital and doctor services of high quality.


1.1.3   The current system is not fiscally sustainable

The Committee’s next step was to tackle the question of whether or not the system, in its current form and given current levels of government funding, was sustainable. In Volume Five, the Committee defined a fiscally sustainable health care system as one on which Canadians could rely both today and in the future, given governments’ predicted fiscal capacity and taxpayers’ willingness to pay.

Two constraints must be taken into account in assessing fiscal sustainability. The first is the willingness of taxpayers to pay (consent of the governed). The second is the need, for economic development purposes, for governments to keep tax rates competitive with those in other OECD countries, and particularly with the United States.

In the Committee’s view, long-term fiscal sustainability depends on the ratio of public expenditures on health care to other government spending. If this ratio becomes too large it may indicate that spending on health care is crowding out other necessary government spending.

The Committee recognizes that sustainability can also be considered in terms of the total share of the Gross Domestic Product (GDP) that is devoted to health care, whether paid through the public purse or privately. However, what that share should be is impossible to say without thorough analysis of the benefits Canadians derive from health care. Conducting such a cost-benefit analysis is precluded at present by the system’s lack of the capacity to capture, record, share, and otherwise manage health information. So the best the Committee can do is observe that Canada’s spending on health care, expressed as a share of GDP, is roughly comparable to that of other developed countries apart from the United States, where it is clearly much higher than in any other industrialized country.

The Committee is keenly aware that shifting more of the cost to individual patients and their families via private payments, the facile “solution” recommended by many, is really nothing more than an expensive way of relieving or, at the least, diminishing governments’ problem. Regardless of how it is expressed (as a share of GDP, share of government spending, etc.), there is only one source of funding for health care – the Canadian public – and it has been shown conclusively that the most cost-effective way of funding health care is by using a single (in our case, publicly administered or governmental) insurer/payer model.

The Committee believes strongly that Canada should continue to adhere to this most efficient and effective model of universal health care insurance, and it is clear to the Committee that Canadians believe this too. Therefore, in formulating its recommendations, the Committee has not concentrated on measures of funding related to GDP. Instead, it has sought to assess how much public spending is necessary to sustain Medicare and, in particular, how much is needed to accomplish the changes that are essential if this highly popular and largely publicly funded program is to meet the needs of Canadians into the twenty-first century.

During the Committee’s cross-country hearings, a wide range of witnesses, including health care managers, providers and consumers, expressed deep concern about rising health care costs and their impacts both on governments’ budgets and on patient care.  Based on this testimony as well as on numerous reports, the Committee has concluded that rising costs strongly indicate that Canada’s publicly funded health care system, as it is currently organized and operated, is not fiscally sustainable given current funding levels.

The lack of sustainability is already manifest in the fact that the system does not currently have sufficient resources to respond to all the demands that are placed upon it.  In particular, timely access to quality health services is increasingly not the norm. The Committee is aware that no system providing services that are perceived to be “free” can ever fully meet the demands placed on it, and that at present we are unable to discriminate between the demand and the genuine need for timely access to health services of all kinds. Nonetheless, the widespread perception of deterioration in the quality of service available to Canadians highlights the fact that Canadians must decide what future course of action they want their governments to take. The Committee stressed that there are three basic options from which the Canadian public must choose:

·        Growing waiting lists as a result of increased rationing of publicly funded health services;

·        Increasing government revenue;

·        Making some services available more quickly to those who can afford to pay privately for them by allowing the development of a parallel privately funded tier of health services, supplementary to the publicly funded system maintained for all other Canadians.[6]

As will be evident in the remainder of this report, the Committee fervently hopes that Canadians will agree with the Committee that the second option is the most desirable choice. Having unanimously reached this conclusion, the Committee has departed from usual practice in parliamentary committee reports by specifying in some detail how much additional public money is required to ensure the long-term fiscal sustainability of the health care system, recommending where this new money should be spent, and recommending how the increased government revenue could be raised.

The Committee has concluded that an additional $5 billion is needed annually to reform and renew the health care system. This is the estimated annual cost of implementing the Committee’s recommendations. The Committee also stresses, however, that unless changes are made to the structure and functioning of the system, no amount of new money will make the current system sustainable over the long term. This $5 billion in new federal money must be used to buy change, to reform and renew the system.


1.1.4   A national health care guarantee is critical to successful reform

In general, the principle that the Committee has followed in working out its vision for reform of the system has been that incentives for all participants must be introduced in the publicly funded hospital and doctor system – providers, institutions, governments and patients – to deliver, manage and use health care more efficiently and effectively. In particular,  although it does not stand entirely on its own, one element that is key to the successful reform of the system is what the Committee has called the health care guarantee.

This recommendation, described in detail in Chapter Six, is designed to address the problem of growing waiting times for access to health services by requiring governments to meet reasonable standards, by ensuring patients have access to services in their own jurisdiction, elsewhere in Canada or, if necessary, in another country. Meeting reasonable patient service standards is an essential part of the health care contract between Canadians and their governments. The Committee believes that by judiciously investing the new money and legislatively enshrining the principle of the health care guarantee, it will be possible to restore the Canadians’ confidence that their governments will spend their tax dollars in ways that reinforce the publicly funded health care system and ensure that the system provides access to medically necessary services when and where they are needed.

In presenting its proposals, the Committee also believes that it was important to acknowledge that its preferred option for raising new money, and its plan on how to spend it, including implementing the health care guarantee, are not the only options available. If, after public discussion, governments decide that they are not willing to pay more to fund hospital and doctor services, or if the insurer (government) decides not to implement the health care guarantee, then the result would be the continued (and probably increased) rationing of services and lengthening of waiting times.

Moreover, as the Committee points out in Chapter Five below, allowing waiting times to grow longer - that is, failing to implement the health care guarantee - could have significant additional consequences. Such failure is highly likely to lead to the Supreme Court issuing a judgment that since timely access to needed medical service is not being provided in the publicly funded system, then government can no longer deny Canadians the right to purchase private insurance to cover the cost of paying for the provision of service elsewhere, i.e., at private health care institutions in Canada. Thus, failing to implement the health care guarantee is likely to move the Canadian health care system in the direction of introducing a second private tier of services available only to those who can afford to pay for them out-of-pocket or through supplementary private health care insurance.

When this possibility was raised in previous reports, some commentators felt that the Committee was in fact advocating greater privatization of the health care system. As this volume should make abundantly clear, that is not the case.

The Committee has worked out a detailed, concrete and realistic plan that, if implemented integrally, will lead to strengthening the publicly funded health care system in Canada and guarantee its sustainability for the foreseeable future. However, this option costs money, and the great majority of Canadians would be required to contribute additionally in taxes in order to implement the proposed plan. In the event that governments are unwilling to raise increased revenue to invest in the publicly funded health care system, it is essential that Canadians fully understand the implications of such a decision. One such implication is likely to be not only the continued deterioration of the system, but also judgments by the courts that hasten the development of a parallel private system of health care in Canada.


1.2     Improving Governance – The Need for a National Health Care Commissioner

An essential element to enable Canadians to make informed choices, now and in the future, is for the Canadian public to have access to a reliable and non-partisan assessment of the true state of the health care system. The remainder of this chapter sets out the Committee’s proposal to create an institutional structure that would give Canadians such an assessment annually.

It is essential to improve the governance of Canada’s health care system. The question of governance (which is to say leadership) brings together a number of issues that the Committee has raised in previous volumes and that witnesses have addressed from a number of perspectives.

One thing is very clear. Canadians are tired of the endless finger-pointing and blame-shifting that have been recurring features of intergovernmental relations in the health care field. As the Honourable Monique Bégin has accurately pointed out, the current state of federal-provincial relations is dysfunctional.[7] On far too many occasions, each side seems more interested in attributing blame for the system’s apparent deterioration to the other, rather than taking the lead to ensure that the health services Canadians need and deserve are there when they need them.

Fundamentally the underlying issue is one of accountability. In order to establish who is to be held accountable for the deficiencies (and also the strengths) of the health care system, the Committee has repeatedly pointed out that detailed and reliable information on the performance of the system and on health outcomes is essential. This is why the Committee has placed such importance on the development of a capacity for health information management, on putting in place a national system of electronic patient records[8] and on sustaining and expanding the health research infrastructure.[9] The Committee has drawn attention to the important contribution that the Canadian Institute for Health Information (CIHI) has already made to improving our knowledge of the state of the health care system; it is clear that this positive source of experience must be built upon.

Information must be analyzed and interpreted objectively if it is to serve as a reliable guide to evidence-based decision-making. In Volume Five, the Committee identified four fundamental elements that are necessary to create the capacity to evaluate fully and fairly the performance of the health care system and the health status of the Canadian population, as well as to hold the appropriate parties accountable:

·        First, such evaluation must be conducted by a body that is independent of government. The Committee expressed its strong support for “the view of witnesses and provincial reports that the roles of the funder and provider should be separated from that of the evaluator in order to obtain independent assessment of health care system performance and outcomes.”[10] Only in this way can actual and perceived conflicts of interest be avoided and the credibility of evaluation reports with the Canadian public be assured.

·        Second, the Committee affirmed that “such independent evaluation should be performed at the national (not federal) level.”[11] The reality of the Canadian health care system is that it is a joint responsibility of the provincial/territorial and federal governments. No body that reports exclusively to, or was created exclusively by, one level or the other would have the necessary credibility.

·        Third, while the evaluation must be conducted by an independent, arms-length agency, it must be funded by government. Moreover, as we will argue below, leadership in providing the necessary financing for this initiative must be provided by the federal government, despite the “national” (as opposed to federal) character of the evaluation organization.

·        Finally, as noted above, it is essential  that this undertaking build on the successes of existing organizations, such as the Canadian Institute for Health Information (CIHI) and the Canadian Council for Health Services Accreditation (CCHSA). The Committee makes specific recommendations with regard to these organizations in Chapter Ten.

The Committee believes, however, that, on their own, existing organizations are not enough. What is needed is a permanent independent body charged with reporting annually to the Canadian public on the state of the nation’s health care system and on the health status of Canadians. The Committee also believes that this body should be responsible for advising the federal government, on an annual basis, on how new money raised for renewing and reforming the health care system should be allocated. Such a body must have sufficient resources at its disposal, and work with CIHI and CCHSA (and possibly others), to collect and assess the data and information it requires.

Before setting out the Committee’s own proposal, we review briefly some other ideas that have been put forward in recent months that describe ways of providing the Canadian public with annual evaluation reports on the state of the health care system. In the Committee’s view, the various proposals contain many useful elements, but none fully meets the Committee’s requirements.


1.2.1   Canadian Medical Association (CMA)

The CMA has proposed a two-pronged approach.[12] First, it advocates the adoption of a Canadian Health Charter with three main parts: a vision statement, a section on national planning and coordination, and a section on roles, rights and responsibilities. This Charter would set the parameters for better national planning and coordination, particularly with respect to reviewing core health care services; developing national benchmarks for the timeliness and quality of health care; determining resource needs, including health human resources and information technology; and establishing national goals and targets to improve the health of Canadians.

The CMA’s proposal also provides for the creation of a Canadian Health Commission, a permanent, depoliticized forum at the national level for ongoing dialogue and debate. The  commission’s mandate would include the following responsibilities:

·        Monitor compliance with the Canadian Health Charter

·        Report annually to Canadians on the performance of the health care system and the health status of the population

·        Advise the Conference of Federal–Provincial–Territorial Ministers of Health on critical health-related issues.

The commission proposed by the CMA would be chaired by a Canadian Health Commissioner, who would be an officer of Parliament (similar to the Auditor General) appointed for a five-year term by consensus among the federal, provincial and territorial governments. The commission would operate at arm’s length from governments, yet maintain close links with government agencies such as the Canadian Institute for Health Information and the Canadian Institutes of Health Research. Its deliberations would be made public, and its composition would not be constituency-based but would reflect a broad range of perspectives and expertise.


1.2.2   Colleen Flood and Sujit Choudry

In a paper prepared for the Romanow Commission,[13] Professors Colleen Flood and Sujit Choudry of the University of Toronto argue that there is a real need for a non-partisan national body, protected from day-to-day politics, with a longer-term view than is possible for an elected government. They propose the creation of a Medicare Commission that would be an expert, independent body, appointed jointly by provincial and federal governments, but funded by the federal government.

The role of this Medicare Commission would include:

·        determining specific performance indicators to help provinces achieve national standards set out in the Canada Health Act;

·        publishing (in conjunction with the Canadian Institute for Health Information) annual reports on the performance of provincial health insurance systems;

·        providing financial assistance to those provinces that undertake to implement the processes or programs identified by the Commission.

Funding for the commission would be separate from federal transfers for health care. It would consist of new federal money, a consolidation of all one-off payment initiatives in the health care area currently undertaken by the federal government (for example, in primary care and other areas).

One possible method Flood and Choudry describe for composing the commission is for each province to appoint 1 commissioner and the federal government to appoint 5, for a total of 15 full-time commissioners, who would then select a chief commissioner from among themselves. All decisions would require a two-thirds majority, meaning that federal commissioners would require support from a majority of provincial commissioners for any decision.[14] The commission that they propose would have an expert staff of health service researchers and would make its reports publicly available, including specific findings on the compliance of provincial health care plans with national standards.


1.2.3   Tom Kent

Tom Kent was a senior federal public servant at the time Medicare was created, and is often referred to as a father of Medicare. Her has suggested that Ottawa and the provinces appoint, by consensus, an advisory council with a wide range of expertise.[15] The purpose is neither to replace provincial management of provincial programs nor to impair federal accountability for the principles of Medicare. Rather, the council is conceived as a collaborative mechanism that would be a bridge between the two levels of government, thereby bringing political reality into harmony with the way most Canadians already see Medicare, namely, as a joint responsibility within our federal system.

Kent’s council would be funded jointly by the federal and provincial governments. It would employ an executive director and staff, who would be neither federal nor provincial officials. It would report to a joint committee of health ministers, for which it would conduct investigations and make recommendations over the whole range of medicare principles and practices.

The proposed council would provide a focus for collaboration that would facilitate innovation and efficiencies, as well as provide a forum for broader consultation on health policy. Administratively, it could be used to supervise the implementation of agreements on such matters as electronic health records, health care information, a national drug formulary, bulk purchasing, facility sharing, etc. Importantly, Kent argues that the agency could foster public accountability by preparing regular reports for the ministerial committee to issue. 


1.2.4   Duane Adams

In his review of proposals for improving the governance of the Canadian health care system,[16] the late Professor Duane Adams, founding director of the Saskatchewan Institute of Public Policy, noted that “there may be benefits to the federation and the Canadian people if an external-to-government health oversight body were added to the Canadian health system’s governance mechanism.” He points out that even though most governments are very sceptical and leery of these “arm’s-length” agencies because they have the potential to “deplete the unilateral power of governments,” “an independent oversight body should be seen as one option in a range of possibilities, to enhance public participation, transparency, public accountability, and public confidence.”

One option presented by Adams was a Canadian Health Council that would have an element of public participation and employ a small number of perma­nent staff. Its functions might include:

·        monitoring the Canadian health system, and regularly advising governments and Canadians about its findings;

·        appraising specific Canada-wide health issues of immediate public con­cern and developing practical options to address them;

·        serving as a neutral fact-finding body for intergovernmental disputes concerning the Canada Health Act and other issues referred to it by governments, and serving upon request by governments as a facilitator/mediator in the dispute resolution process;

·        providing an annual report to the public about the performance of the health system and emerging issues;

·        taking some defined responsibility to test innovative health service de­livery and management concepts of national significance;

·        perhaps serving as one possible vehicle to assemble and disseminate best­ practice experiences from the Regional Health Authorities across Canada.

This Council would be part of a network of bodies that would contribute to improving the governance of the health care system. It could include representatives from the Canada Health Services Research Foundation, the Canadian Institutes of Health Research, the Canadian Institute for Health Information, and the Canadian Council on Health Services Accreditation.


1.2.5   Lawrence Nestman

In his testimony before the Committee,[17] Professor Lawrence Nestman from the School of Health Services Administration at Dalhousie University drew on the experience of the Dominion Council of Health in the 1960s. This Council was a permanent body where deputies and ministers liaised with a number of health commissions at both the federal and provincial levels. It had a permanent secretariat staffed by highly skilled people who related to full-time public servants in provincial health departments. This arrangement enabled greater continuity in policy making and more coordination of federal-provincial relationships than is possible today. Professor Nestman therefore proposed “the concept of a revised Dominion Council of Health for the federal government as well as some kind of permanent infrastructure in the provinces [that] would improve federal-provincial relations and provide continuity as well as some arm’s length input for the day-to-day operations.”[18]


1.3     The Committee’s Proposal

While each of the above proposals contains interesting elements and valuable suggestions, none meets fully the Committee’s view of what is required. Moreover, they all tend to assign much broader mandates to the bodies they recommend than the Committee feels is appropriate at this time. The Committee agrees with the many witnesses who stressed the importance of taking measures to “depoliticize” the management of the health care system. However, the Committee feels that this will be a long-term process, and that it is important to begin with the evaluation function only. Therefore, the Committee believes that the mandate of the independent evaluation body should be to publish an annual report on the state of the health care system, and on the health status of Canadians, as well as whatever other reports it feels are needed to spur improvements in health outcomes and the delivery of health care in Canada. The Committee believes it would also be appropriate for this independent evaluation body to advise the federal government on how new money raised to reform and renew the health care system should be spent (see Chapter Fourteen).

To legitimate such reports with all levels of government, and yet to ensure their independent production and thereby their credibility with the Canadian public, the Committee recommends that the following structures and procedures be put in place.

First, a new federal/provincial/territorial (F/P/T) body is required. This committee must be structured so that neither the federal nor the provincial/territorial representatives are able to dominate it. It is therefore proposed that the committee be composed of one provincial/territorial representative from each of the five major regions of the country  (Atlantic, Quebec, Ontario, Prairies, British Columbia), and five representatives from the federal government. The provincial/territorial representatives would be selected in a manner that remains to be determined.[19]

This F/P/T committee, after consulting with a broad range of health care stakeholders, would appoint a National Health Care Commissioner. It would also select the members of a National Health Care Council that the Commissioner would chair from among those nominated by the Commissioner. In making nominations to the Council, the Commissioner would have the responsibility of ensuring that the membership of the Council is balanced, and that the public at large is represented. Councillors should be appointed on the basis of their ability to take a global view of the health care system, and not as representatives of specific health care constituencies.

So that the selection of the Commissioner and the members of the Council not be dominated by either the federal or provincial/territorial representatives, a two-thirds majority would be required for all appointments. With 10 members on the F/P/T committee, seven votes would be required to confirm all appointments, meaning that neither the federal nor the provincial/territorial representatives could succeed on their own. This procedure further guarantees that the members of the Council would be independent of government (having being nominated by the Commissioner), yet possessing sufficient legitimacy to lend weight to their report (having been appointed by the F/P/T committee).

The Commissioner should be appointed for a five-year term, with the possibility of a single renewal. Council members should be appointed for three-year terms, with the possibility of a single renewal. Half the council would be up for renewal every three years. Eight is a reasonable number of councillors, a total of nine including the Commissioner. They should be adequately compensated for their work with the Council, but would not be full-time employees. A full-time staff would report to the Commissioner.

The Council would have ultimate responsibility for the publication of the annual report and would present it to each Ministry of Health with a request that it be tabled with all federal, provincial and territorial legislatures. The Committee recommends that all F/P/T Ministers of Health respond formally within six months to the annual report that the National Health Care Council would produce. While the Committee recognizes that it would not be possible to require legally that the F/P/T Ministers of Health respond to the annual report, it believes that the Ministers should accept responsibility for issuing a formal response within a six-month period. This would be much like the current requirement for the federal government to respond within a specified time frame to the recommendations made by House of Commons committees. It would ensure that serious consideration is given to the Council’s annual report. Furthermore, since the Council’s annual report would simultaneously be made public, there would be additional public pressure on all governments to consider carefully and respond to the report and its recommendations.

The Committee believes that the federal government should show leadership by providing the funding for the work of the Commissioner and the Council. This funding should come from the new money that the Committee recommends be raised in Chapter Fifteen.

Should the Commissioner and the Council see the need to broaden the scope of their work, or should the federal and provincial governments initiate such expansion, the provision of any additional funding should be the responsibility of governments on a 50/50 federal/provincial basis, and not necessarily fall exclusively on the shoulders of the federal government.

The Commissioner would be responsible for hiring the necessary professional and technical staff to carry out the Council’s mandate. In this regard, however, the Commissioner should not attempt to duplicate the work of existing organizations. Rather, the Commissioner would cooperate with CIHI and CCHSA, and other concerned federal and provincial organizations, to ensure application of the most efficient methods possible to gather the data and information  required to produce the annual report (see Chapter Ten).

The Committee believes that, structured in this way, the National Health Care Council chaired by an independent Health Care Commissioner meets the four conditions described earlier:

·        The process has a national and not purely federal character;

·        The Commissioner and the Council are independent of government, yet have the legitimacy of having been appointed by government representatives;

·        The production of an annual report is funded by government;

·        The work of the Commissioner and the Council builds on existing organizations.

In summary, then, the Committee recommends that:

New federal/provincial/territorial committee made up of five provincial/territorial and five federal representatives be struck. Its mandate would be to appoint a National Health Care Commissioner and the other eight members of a National Health Care Council from among the Commissioner’s nominees;

The National Health Care Commissioner be charged with the following responsibilities:

§         To put nominations for members to a National Health Care Council before the F/P/T committee and to chair the Council once the nominees have been ratified;

§         To oversee the production of an annual report on the state of the health care system and the health status of Canadians. The report would include findings and recommendations on improving health care delivery and health outcomes in Canada, as well as on how the federal government should allocate new money raised to reform and renew the health care system;

§         To work with the National Health Care Council to advise the federal government on how it should allocate new money raised to reform and renew the health care system in the ways recommended in this report;

§         To hire such staff as is necessary to accomplish this objective and to work closely with existing independent bodies to minimize duplication of functions.

The federal government provide $10 million annually for the work of the National Health Care Commissioner and the National Health Care Council that relates to producing an annual report on the state of the health care system and the health status of Canadians, and to advising the federal government on the allocation of new money raised to reform and renew the health care system.


Figure 1.1
Proposal For A National Health Care Commissioner and A National Health Care Council


[1] See Volume One, The Story So Far, Chapter Six, Myths and Realities, pp. 93ff.

[2] See Volume Four, Issues and Options, Chapters Three and Four, pp. 9-26.

[3] Volume One, p. 41.

[4] Volume Five, pp. 23-25.

[5] See her testimony before the Committee, May 8, 2002 (54:5).

[6] Note that the “delisting” of services means requiring Canadians to pay privately for specific services that once were paid for under the publicly administered and funded health insurance program (Medicare).

[7] Monique Bégin, “Renewing Medicare,” Canadian Medical Association Journal, July 9, 2002, p. 47.

[8] See Chapter 10.

[9] See Chapter 12.

[10] Vol. 5, p. 51.

[11] Ibid.

[12] See its document, A Prescription for Sustainability, June 2002.

[13] Colleen M. Flood and Sujit Choudry, Strengthening the Foundations: Modernizing the Canada Health Act, Discussion Paper No.13, released by the Commission on the Future of Health Care, August 2002.

[14] It should be noted that is formula would appear to allow the provincial commissioners to band together to make decisions that were unanimously opposed by the federal commissioners.

[15] Tom Kent, Medicare: It’s Decision Time, The Caledon Institute of Social Policy, 2002.

[16] Duane Adams, “Conclusions: proposals for advancing federalism, democracy and governance of the Canadian health system,” in Federalism, Democracy and Health Policy in Canada, ed. Duane Adams, McGill-Queen’s University Press, 2002.

[17] May 9, 2002. (Proceedings, Issue 55)

[18] Ibid., 55:13.

[19] This form of provincial/territorial representation is already used in the composition of the Board of Directors of Canadian Blood Services, whose mission is to manage the blood and blood products supply for Canadians in all provinces except Quebec. Four of its Directors represent one of each of the following regions: (a) British Columbia and Yukon, (b) Prairies, Northwest Territories and Nunavut, (c) Ontario, and (d) Atlantic.


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