Canadian Health System Reforms: Lessons for Australia?

By Marchildon, Gregory P. | Australian Health Review, February 2005 | Go to article overview

Canadian Health System Reforms: Lessons for Australia?

Marchildon, Gregory P., Australian Health Review


This paper analyses recent health reform agenda in Canada. From 1988 until 1997, the first phase of reforms focused on service integration through regionalisation and a rebalancing of services from illness care to prevention and wellness. The second phase, which has been layered onto the ongoing first phase, is concerned with fiscal sustainability from a provincial perspective, and the fundamental nature of the system from a national perspective. Despite numerous commissions and studies, some questions remain concerning the future direction of the public system. The Canadian reform experience is compared with recent Australian health reform initiatives in terms of service integration through regionalisation, primary care reform, Aboriginal health, the public-private debate, intergovernmental relations and the role of the federal government.

Aust Health Rev 2005: 29(1): 105-119

THE PURPOSE OF THIS ARTICLE is to review the Canadian health reform experience of the last 15 years, and draw parallels with the Australian experience. The modern era of Canadian health care reform began shortly after the implementation of the Canada Health Act 1984. In one sense, this federal legislation locked in a pattern of universal coverage that had been originally set through the Hospital Insurance and Diagnostic Services Act 1958 and the Medical Care Act 1966. In the first 3 years of operation of the Canada Health Act, the federal government penalised those provinces which permitted health care facilities or physicians within their jurisdictions to charge user fees, and then returned most of the close to $250 million originally withdrawn after user fees were eliminated. They ensured the "narrow but deep" coverage aspect (ie, cover for all medically necessary physician and hospital care but no other services) of Canadian medicare. Just as importantly, the Canada Health Act's five principles of public administration, accessibility, universality, comprehensiveness and portability provided a framework within which 13 disparate provincial and territorial single-payer medicare systems could continue to grow and innovate separately while still providing all Canadians with common coverage entitlements.1,2

Over its two-decade existence, the Canada Health Act has achieved near-iconic status in Canada.1 It has also served as a constant reminder of the continuing federal role in Canadian health care, one much resented by some provinces particularly during the periods when the federal government has reduced its fiscal responsibility for health care even while posing as the defender of the public system.

Public health care in Canada during the past 15 years has been punctuated by stop-go financing, a product of two quite different economic environments. The first phase was marked by public fiscal constraint in an era of high government debt, first at the provincial level and then later at the federal level. The second phase was marked by increasing health expenditures influenced by a more buoyant economy and lower public debt.3,4

The stop-go aspect is evident from the Canadian Institute for Health Information's expenditure data. From 1990 until 1997 (as measured in constant 1997 Canadian dollars), the average annual growth rate was negative, a reflection of the provinces putting the brakes on health spending to an extent largely unmatched among OECD (Organisation for Economic Cooperation and Development) countries (see Box 1). From 1998 on, real growth suddenly moved up to between 6 and 7 per cent per year.6

Rationalisation and integration: Phase I of Canadian health reforms, 1988-1997

By 1987, Canada had the second highest level of per capita health care expenditure in the world as measured in US purchase power parity dollars.7 The federal and provincial governments combined had accumulated one of the highest public debt loads in the G7 group of large and wealthy national economies. By the time of the recession of the early 1990s, provincial governments were constraining health care spending, joined by the federal government by the mid-1990s, which cut its cash transfers for health care to the provinces. …

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