Not all healthcare is created equal

Parker Bolt

August 2014

Canada has one of the most commonly cited single-payer health systems in the world. Many countries are constantly trying to improve their healthcare system, leading to comparisons to perceptually better systems. But before anyone tries to make direct comparisons, they should remember that regardless of its design, no healthcare system was created in one step. Canada’s healthcare system has developed over decades, with the goal of providing equal care to every citizen.

Prior to large changes in the 1940s, private insurance in Canada could be purchased as one saw fit, though most people simply paid their doctor as needed. Doctors privately charged patients based on the service, ability to pay, charging more or less based on the patient’s wealth. The end of WW1 and the subsequent Spanish Flu epidemic motivated the government to consider changes to provide for the mass of sick and injured. Changes to healthcare included setting lower medical costs for the poor and urban dwellers, and encouraging doctors to practice in rural areas that were otherwise short of medical professionals. The medical society in Canada briefly discussed ways of creating a national standard of accessible and affordable care, leading to  the idea of government controlled healthcare. However the idea never gained popular support, and the onset of the Great Depression put a halt to healthcare reform.

The Great Depression changed the mindset of Canada, namely due to the actions of the prime ministers that lead during that time. William King was Prime Minister with the Liberal Party from 1921-30. He believed the economy would right itself without any government involvement. During his administration King adamantly refused to give financial assistance to provinces, believing they should solve their problems independently. Though King did extend the legal powers of the provinces, the fiscal and economic issues they faced were out of their control. His strategy for solving the troubles of the Depression can be exemplified in his saying,  “It is what we prevent, rather than what we do that counts most in Government.”[1] Throughout the Depression, provinces had the legal power and authority but lacked the funds to overcome the problems facing them. During a campaign speech in 1930, King declared he “would not give a five-cent piece” to any province for Welfare relief; proving to the people that he simply refused to aid them in their suffering. King lost the election in 1930 to the Conservative Richard Bennett.

However, Bennett proved to be of a like mind with King with regards to taking action, again leaving provinces to struggle with their own problems. Bennett did not pledge to take strong action until the last year of his first (and final) term. When he did though, he wholeheartedly embraced the ideas of FDR’s New Deal. In 1935 Bennett declared that capitalism was dead and embraced FDR’s New Deal in a radio address that vastly differed from any of his previous speeches. “In the last five years great changes have taken place in the world,” he told his listeners. “The old order is gone. We are living in conditions that are new and strange to us. Canada on the dole is like a young and vigorous man in the poorhouse … If you believe that things should be left as they are, you and I hold contrary and irreconcilable views. I am for reform. And in my mind, reform means government intervention. It means government control and regulation. It means the end of laissez-faire.”[2] However, Bennett’s new promises failed to win him reelection. He lost to William King who campaigned on Bennett’s failings during the height of the Great Depression, with the slogan “King or Chaos”. King returned to the office of Prime Minster towards the Depression’s end, still believing that provincial matters should be solved by the provinces themselves.

Despite Bennett losing the election in 1935 and the government swinging to a Liberal majority, Bennett’s plan was sent to the supreme court, to rule on its constitutionality. However, the proposed federal powers were deemed beyond constitutional limits. The Depression had eroded the wealth of Canadians. Both King and Bennett had made the impression that provinces were on their own when it came to the well-being and health of the citizens.

Saskatchewan in particular had been severely hit by the depression, becoming the epitome of the “dirty thirties.” Its successful farming economy plummeted due to years of drought and a decrease in demand for farm products. In 1928 Saskatchewan’s net income from farming was $363 million, by 1933 it had decreased to a mere $11 million[3]. With such a crippling impact to the population’s finances, basic healthcare services for many became unaffordable.

After World War Two, Canada finally had the time and money to institute social programs and changes.  Saskatchewan had seen the worst of the Depression, and while Bennett and King served, provinces had gotten used to fending for themselves. Under the leadership of premier Tommy Douglas, Saskatchewan was the first to act on healthcare, passing the Hospital Services Plan  in 1947. It focused on guaranteeing accessibility to hospitals. Designed to be simple and affordable, a $5 premium per person to a maximum of $30 per family was supposed to account for all costs and possibly even make the province some money.[4] Those enrolled could simply go to a hospital and receive their care without any hassle of payment.

However, a year-end study found that per-capita costs were twice the original estimate in 1947 at $7.56; leaving Saskatchewan to pay 40% of hospital costs.[5] Subsequent years saw significant increases as costs rose to $11.41 in 1948 and to $13.59 in 1949. Despite the higher cost, the federal government took Saskatchewan’s plan and offered it to every province in 1957 by passing the Hospital Insurance and Diagnostic Services Act. In exchange for a province establishing a hospital insurance system, half of the cost would be covered by the federal government.  British Columbia, Alberta, Saskatchewan, Ontario, and Newfoundland accepted in 1958, but only after each had sent representatives to Saskatchewan to copy their method of organization and payment. By 1961 every province had instituted a hospital insurance plan, giving virtually all of the population hospital coverage.[6]

In 1960 Saskatchewan was on the eve of an election. Douglas promised the next major step in healthcare reform, proposing a universal insurance plan for Saskatchewan. Though this time, the population was starkly divided and the plan became a political talking point for the Liberal party hoping to win control from Douglas’ New Democratic Party (NDP). The vast majority of doctors opposed the plan, citing fears that they would become civil servants and be unable to treat their patients as they thought best. July 1st 1962, the day the law went into effect, 90% of Doctors went on strike. At first, public sympathy favored doctors plight, and the Liberal party used them to highlight flaws in Douglas’ administration. However the strike quickly lost momentum; Saskatchewan brought in doctors from other provinces as well as the U.S. to ensure that care was still being administered, and by mid-July many doctors had returned to work. Despite failing to prevent universal insurance in Saskatchewan, the strike had enough of an impact for a later concession to be added, which allowed doctors to opt-out of the Medicare plan.

In 1966, the Canadian government passed The Medical Care Act (MCA), allowing every province to provide universal insurance, with the federal government paying for half. The MCA also set requirements of affordability, comprehensiveness, accessibility, portability, and universality.[7] By 1971 every province had instituted an insurance plan that fulfilled all requirements.

The federal government was constitutionally unable to directly provide healthcare to citizens. However, the financial power it wielded could assist provinces with health costs they would otherwise be incapable of affording. Federal funds enabled every province to follow Saskatchewan’s example, and continued to support growing healthcare usage. The federal government was legally barred from directly controlling healthcare, they could only offer financial support, which they willingly gave in MCA’s early years.  The agreement involved in every national healthcare law since 1961 had included federal dollar for dollar contributions based on provincial spending. Increasing healthcare costs caused the federal government to limit its payments to provinces, and to give a five-year notification for the cancellation of the hospital insurance plan.

As an attempted solution, the Established Programs Financing (EPF) Act of 1977 moved from cost-sharing to block funding. Block funding gave healthcare providers far greater freedom with respect to billing in an attempt to make provinces fund their own costs. Due to the payment freedom, many doctors began billing directly to patients and extra-billing. Many doctors also opted out of Medicare and returned to a more private method of practice. The federal government was dissatisfied with the prospect of extra-billing, and the possibility that all of the money granted to provinces was not being spent on healthcare. The Canada Health Act, unanimously passed in 1984, altered the existing laws to force provinces to cover 100% of their populations (previously 95%) and prevented any form of direct-billing, extra-billing, or user charges. EPF also allowed the federal government to deduct funds from provinces if any form of extra-billing or direct payment took place. Due to the EPF, the federal government maintains a greater influence over provincial affairs, (a serious point of contention at the time) while paying less than their original pledge.

The changes to Canada’s healthcare system were designed to provide the same care to every Canadian with no differences in access or quality; and to prevent quality and access from being influenced by a patient’s ability to pay. Saskatchewan was the foundation of change for every major healthcare plan, any problems they had (finding adequate funds for hospital insurance in 1947) would carry on to every other province. An issue that many critics of universal insurance or any major social program often mention, is a governments ability to pay into the far future; a prospect which Canada has struggled and continues to struggle.

Canada has a well established system (one that is highly revered and held as a national symbol in its home), and I would be very surprised if it took any major changes in the foreseeable future; but it is not a cut and paste template for every country, nor is it feasible for every country due to its specific goals of equality and billing control over other issues.

Canadian healthcare is where it is today due to decades of pursuit. As Americans seek ways to improve our healthcare, we should follow Canada’s example and focus on creating a system that is unique to our own needs, rather than copying another nations plan.


[1] — Mackenzie King, August 26, 1936

[2] Blaming the Prime Minister. 05/02/14

[3] Encyclopedia of Saskatchewan 6/11/14.

[4] Encyclopedia of Saskatchewan. 5/19/14/

[5] Encyclopedia of Saskatchewan. 5/19/14/

[6] Historica Canada: Health Policy. 4/29/14.

[7] Parliament of Canada. 5/7/14.