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The Canadian Health Care System

by Sara Allin and David Rudoler, University of Toronto

What is the role of government?

Provinces and territories in Canada have primary responsibility for organizing and delivering health services and supervising providers. Many have established regional health authorities that plan and deliver publicly funded services locally. Generally, those authorities are responsible for the funding and delivery of hospital, community, and long-term care, as well as mental and public health services. Nearly all health care providers are private. The federal government cofinances provincial and territorial programs, which must adhere to the five underlying principles of the Canada Health Act—the law that sets standards for medically necessary hospital, diagnostic, and physician services. These principles state that each provincial health care insurance plan needs to be: 1) publicly administered; 2) comprehensive in coverage; 3) universal; 4) portable across provinces; and 5) accessible (i.e., without user fees).

The federal government also regulates the safety and efficacy of medical devices, pharmaceuticals, and natural health products; funds health research; administers a range of services for certain populations, including First Nations, Inuit, Métis, and inmates in federal penitentiaries; and administers several public health functions.

Who is covered and how is insurance financed?

Publicly financed health care: Total and public health expenditures were forecast to account for an estimated 10.9 percent and 8.0 percent of GDP, respectively, in 2015; by that measure, 70.7 percent of total health spending comes from public sources (Canadian Institute for Health Information, 2015a). The provinces and territories administer their own universal health insurance programs, covering all provincial and territorial residents according to their own residency requirements (Health Canada, 2013a). Temporary legal visitors, undocumented immigrants (including denied refugee claimants), those who stay in Canada beyond the duration of a legal permit, and those who enter the country “illegally,” are not covered by any federal or provincial program, although provinces and territories provide some limited services.

The main funding sources are general provincial and territorial spending, which was forecast to constitute 93 percent of public health spending in 2015 (Canadian Institute for Health Information, 2015a). The federal government contributes cash funding to the provinces and territories on a per capita basis through the Canada Health Transfer, which totaled CAD34 billion (USD27 billion) in 2015–2016, accounting for an estimated 24 percent of total provincial and territorial health expenditures (Canadian Institute for Health Information, 2015a; Government of Canada, 2015a).

(Please note that, throughout this profile, all figures in USD were converted from CAD at a rate of about CAD1.26 per USD, the purchasing power parity conversion rate for GDP in 2014 reported by OECD (2015) for Canada.)

Privately financed health care: Private insurance, held by about two-thirds of Canadians, covers services excluded from public reimbursement, such as vision and dental care, prescription drugs, rehabilitation services, home care, and private rooms in hospitals. In 2013, approximately 90 percent of premiums for private health plans were paid through group contracts with employers, unions, or other organizations (Canadian Life and Health Insurance Association, 2014). In 2015, private health insurance accounted for approximately 12 percent of total health spending (Canadian Institute for Health Information, 2015a). The majority of insurers are for-profit.

What is covered?

Services: To qualify for federal financial contributions under the Canada Health Transfer, provincial and territorial insurance plans must provide first-dollar coverage of medically necessary physician, diagnostic, and hospital services (including inpatient prescription drugs) for all eligible residents. There is no nationally defined statutory benefits package; most public coverage decisions are made by provincial and territorial governments in conjunction with the medical profession. Provincial and territorial governments provide varying levels of additional benefits, such as outpatient prescription drugs, nonphysician mental health care, vision care, dental care, home health care, and hospice care. They also provide public health and prevention services (including immunizations) as part of their public programs.

Cost-sharing and out-of-pocket spending: There is no cost-sharing for publicly insured physician, diagnostic, and hospital services. All prescription drugs provided in hospitals are covered publicly, with outpatient coverage varying by province or territory. Physicians are not allowed to charge patients prices above the negotiated fee schedule. In 2012, out-of-pocket payments represented about 14.2 percent of total health spending (Canadian Institute for Health Information, 2015a), going mainly toward prescription drugs (21%), nonhospital institutions (mainly long-term care homes) (22%), dental care (16%), vision care (9%), and over-the-counter medications (10%) (Canadian Institute for Health Information, 2015a).

Safety net: Cost-sharing exemptions for noninsured services such as prescription drugs vary among provinces and territories, and there are no caps on out-of-pocket spending. For example, the prescription drug program in Ontario exempts low-income seniors and social assistance recipients from all cost-sharing except a CAD2.00 (USD1.60) copayment, which is often waived by pharmacies. Low income is defined as annual household income of less than CAD16,018 (about USD12,700) for single people and less than CAD24,175 (USD19,168) for couples.

There are no caps on out-of-pocket spending. However, the federal Medical Expense Tax Credit supports tax credits for individuals whose medical expenses, for themselves or their dependents, are significant (above 3% of income). A disability tax credit and an attendant care expense deduction also provide relief to individuals (or their dependents) who have prolonged mental or physical impairments, and to those who incur expenses for care that is needed to allow them to work.

How is the delivery system organized and financed?

Primary care: In 2014, about half of all practicing physicians (2.24 per 1,000 population) were general practitioners, or GPs (1.14 per 1,000 population) and half were specialists (1.10 per 1,000 population) (Canadian Institute for Health Information, 2015b). Primary care physicians act largely as gatekeepers, and many provinces pay lower fees to specialists for nonreferred consultations. Most physicians are self-employed in private practices and paid fee-for-service, although there has been a movement toward group practice and alternative forms of payment, such as capitation. In 2013–2014, fee-for-service payments made up 45 percent of payments to GPs in Ontario, compared with 67 percent in Quebec and 84 percent in British Columbia (Canadian Institute for Health Information, 2015c). In 2014, 46 percent of GPs reported to work in a group practice, 19 percent in an interprofessional practice, and 15 percent in a solo practice (National Physician Survey, 2014).

In some provinces, such as Ontario, some new primary care teams paid partly by capitation must require patients to register to receive those partial payments; otherwise, registration is not required. Clinical fee-for-service payments to primary care physicians in Canada averaged CAD249,154 (USD197,550) in 2013–2014 (Canadian Institute for Health Information, 2015c); these do not account for alternative payments and nonclinical payments. It has been estimated that the average payment, including alternative payments, for primary care physicians in Ontario is 21 percent higher than for fee-for-service alone (Henry, et al., 2012).

In several provinces, networks of GPs work together and share resources. For instance, Primary Care Networks in Alberta, My Health Teams in Manitoba, and Family Health Teams in Ontario support interdisciplinary health professionals (e.g., nurses, pharmacists, and dietitians). In Ontario, the minimum size of practice for physicians in alternative payment models (not fee-for-service) is three (Sweetman and Buckley, 2014). In Family Health Teams, the average practice size is approximately 10 physicians, and ranges from seven to 14 physicians in other models (Rudoler, et al., 2015). In Ontario, team composition varies among practices, and interdisciplinary providers are generally salaried employees of the practice.

Patients have free choice of primary care doctor, although in some areas choices are restricted owing to limited supply.

Provincial and territorial ministries of health negotiate physician fee schedules (for primary and specialist care) with provincial and territorial medical associations. In some provinces, such as British Columbia and Ontario, payment incentives have been linked to performance, and are also used to encourage the provision of a number of services including, but not limited to, delivering “guideline-based” care for specified chronic conditions, offering preventive services, developing care plans for patients with complex needs, and registering complex or vulnerable patients.

Outpatient specialist care: The majority of specialist care is provided in hospitals, although there is a trend toward providing services in private nonhospital facilities. Specialists are mostly self-employed and paid fee-for-service. Specialists in Canada received an average of CAD379,051 (USD300,545) annually in clinical fee-for-service payments in 2013–14 (Canadian Institute for Health Information, 2015c). In most provinces, specialists have the same fee schedule as primary care physicians. In 2014, 65 percent of specialists reported to work in a hospital, as compared to 24 percent in a private office or clinic (National Physician Survey, 2014). Patients can choose, and have direct access to, a specialist, but it is common for GPs to refer patients to specialty care. Specialists who work in the public system are not permitted to receive payment from private patients for publicly insured services. There are few formal multispecialty clinics, although in some provinces, such as Ontario, there are informal, or virtual, networks of specialists that share patients and information (Stukel, et al., 2013).

Administrative mechanisms for paying primary care doctors and specialists: The majority of physicians and specialists bill provincial governments directly, although some are paid a salary by a hospital or facility. There are no direct payments from patients to physicians; there is no cost-sharing, although patients may be required to pay for services that are not medically necessary—for example, physician letters sent to employers when employees are ill.

After-hours care: After-hours care is provided generally by physician-led (and mainly privately owned) walk-in clinics and hospital emergency rooms. In most provinces and regions, a free telephone service (“telehealth”) is available 24 hours a day for health advice from a registered nurse. Traditionally, primary care physicians were not required to provide after-hours care, although many of the government-enabled group practice arrangements have requirements or financial incentives for providing after-hours care to registered patients. For example, in Ontario, physicians practicing in non-fee-for-service models have to provide sessions during some evenings and weekends. In some models, this amounts to a single three-hour session per week per physician in the group, up to five sessions per week (MOHLTC, 2009). These physicians are paid a 30 percent bonus for primary care services provided during evenings, weekends, and holidays (MOHLTC, 2011). Manitoba has implemented QuickCare clinics, staffed by nurses and nurse practitioners, to meet health care needs after hours (Government of Manitoba, 2015).

The 2012 Commonwealth Fund International Survey of Primary Care Doctors found that only 46 percent of physician practices in Canada had arrangements for patients to see a doctor or nurse after hours, with the highest rate in Ontario, at 67 percent (Health Council of Canada, 2013). The same survey found that only 30 percent of physicians received notification of hospital emergency department visits by their patients, and only about a quarter received a full report on specialist consultations.

Hospitals: Hospitals are a mix of public and private, predominantly not-for-profit, organizations, often managed locally by regional authorities or hospital boards representing the community. In provinces with regional health authorities, many hospitals are publicly owned (Marchildon, 2013), whereas in other provinces, such as Ontario, they are predominantly private nonprofit corporations. There are no data on the number of private for-profit clinics (which are mostly diagnostic and surgical). In Ontario, as of May 2014, the government was providing funding to 145 not-for-profit hospital corporations (with 224 different facilities and sites) and six private for-profit hospitals (Ontario Ministry of Health and Long-Term Care, 2014).

Hospitals in Canada generally operate under annual global budgets, negotiated with the provincial or territorial ministry of health or regional health authority. However, several provinces have considered introducing activity-based funding for hospitals, including Ontario, Alberta, and British Columbia (Sutherland, et al., 2013, 2013a). Hospital-based physicians generally are not hospital employees and are paid fee-for-service directly.

Mental health care: There is universal coverage for physician-provided mental health care, alongside a fragmented system of allied services. Hospital mental health care is provided in specialty psychiatric hospitals and in general hospitals with adult mental health beds. The provinces and territories all provide a range of community mental health and addiction services including case management, community-based crisis response, and supported housing (Goering, et al., 2000). Psychologists may work privately and are paid out-of-pocket or through private insurance, or under salary in publicly funded organizations. Mental health has not been formally integrated into primary care; any coordination or colocation of mental health services within primary care is unique to its particular practice. In Ontario, the government introduced an intersectoral mental health strategy in 2011 that aims to better integrate mental health care into primary care (Government of Ontario, 2011).

Long-term care and social supports: Long-term care and end-of-life care provided in nonhospital facilities and in the community are not considered insured services under the Canada Health Act. All provinces and territories fund services, but coverage varies among and within them. All provinces provide some nursing home care and some combination of case management and nursing care for home care clients, but there is considerable variation when it comes to other services, including medical equipment, supplies, and home support, and many jurisdictions require client contributions (OECD, 2011). About half of the provinces and territories provide some home care without means-testing, but access may depend both on assessed priority and on availability within capped budgets (Health Canada, 2013b).

Eligibility criteria for home and institutional long-term care services vary across provinces but generally include a needs assessment based on health status and functional impairment. Some provinces have established minimum residency periods as an eligibility condition for facility admission. Spending on nonhospital institutions, of which the majority are long-term care facilities, accounted for just over 10 percent of total health expenditure in 2013, with financing mostly from public sources (71%) (Canadian Institute for Health Information, 2015a).

A mix of private for-profit (41%), private not-for-profit (43%), and public facilities (13%) provide long-term care (Statistics Canada, 2011). Public funding of home care is provided either through provincial or territorial government contracts with agencies that deliver services (e.g., the Community Care Access Centres, in Ontario) or through government stipends to patients to purchase their own services (e.g., the “Choice in Support for Independent Living” program in British Columbia).

Provinces and territories are responsible for delivering palliative and end-of-life care in hospitals, where the majority of such costs occur. But many provide some coverage for services outside those settings, such as doctors, nurses, and drug coverage in hospices, in nursing facilities, and at home.

Support for informal caregivers (estimated to provide 66% to 84% of care to the elderly) varies by province and territory (Grignon and Bernier, 2012). In Ontario, for example, the Family Caregiver Leave Bill offers job protection to caregivers. There are also some federal programs, including the Family Caregiver Tax Credit and the Employment Insurance Compassionate Care Benefit (Canada Revenue Agency, 2014; Government of Canada, 2014).

What are the key entities for health system governance?

Because of the high level of decentralization, provinces have primary jurisdiction over administration and governance of their health systems. The federal ministry of health, Health Canada, plays a role in promoting overall health, disease surveillance and control, food and drug safety, and medical device and technology review. The Public Health Agency of Canada is responsible for public health, emergency preparedness and response, and infectious and chronic disease control and prevention.

At the national level, several intergovernmental nonprofit organizations aim to improve governance by monitoring and reporting on health system performance; disseminating best practice in patient safety (the Canadian Patient Safety Institute); providing information to the public on health and health care and standardizing health data collection (the Canadian Institute for Health Information); and providing funding and support for provincial health information systems (Canada Health Infoway). The Canadian Agency for Drugs and Technologies in Health oversees the national health technology assessment process, which produces information about the clinical effectiveness, cost-effectiveness, and broader impact of drugs, medical technologies, and health systems. The Agency’s Common Drug Review reviews the clinical effectiveness and cost-effectiveness of drugs and provides common, nonbinding formulary recommendations to the publicly funded provincial drug plans (except in Quebec) to support greater consistency in access and evidence-based resource allocation.

Nongovernmental organizations with important roles in system governance include professional organizations such as the Canadian Medical Association, provincial regulatory colleges, which are responsible for licensing professions and developing and enforcing standards of practice, and Accreditation Canada (see below). Most providers are self-governing under provincial and territorial law; they are registered with professional associations that ensure that education, training, and quality-of-care standards are met. The professional associations for physicians are also responsible for negotiating fee schedules with the provincial ministries of health. Most provinces have an ombudsperson providing patient advocacy.

What are the major strategies to ensure quality of care?

Since 2014, there have been no new national strategies initiated to ensure quality of care, although in the previous decade the Canada Health Accord provided for dedicated federal funding to provinces to achieve common goals in wait times, primary care, and home care. Some provinces have agencies responsible for producing health care system reports and for monitoring system performance, and many quality improvement initiatives take place at the provincial and territorial level. Examples include the Saskatchewan Health Quality Council, Health Quality Ontario, the British Columbia Patient Safety & Quality Council, and the New Brunswick Health Council.

The use of financial incentives to improve quality is limited. For example, since 2010, Ontario hospitals have been required to develop and report quality improvement plans, and executive compensation has been linked to the achievement of targets set out in these plans (Government of Ontario, 2010).

The federally funded Canadian Patient Safety Institute promotes best practices and develops strategies, standards, and tools. The Optimal Use Projects program, operated by the Canadian Agency for Drugs and Technologies in Health, provides recommendations (though not formal clinical guidelines) to providers and consumers in order to encourage the appropriate prescribing, purchasing, and use of medications. The Canadian Institute for Health Information produces regular reports on health system performance.

There is no system of professional revalidation for physicians in Canada, but each province has its own process of ensuring that physicians engage in lifelong learning, such as a requirement that they participate in a continuing education program, and undergo peer review. There is no information available on doctors’ performance. Accreditation Canada—a not-for-profit organization—provides voluntary accreditation services to about 1,200 health care organizations across Canada, including regional health authorities, hospitals, long-term care facilities, and community organizations.

Few formal disease registries exist, although many provincial cancer care systems maintain some type of patient registry. Provincial cancer registries feed data to the Canadian Cancer Registry, a national administrative survey that tracks cancer incidence. There is no national patient survey, although a standardized acute-care hospital inpatient survey developed by the Canadian Institute for Health Information has been implemented in several provinces. Each province has its own strategies and programs to address chronic disease (see below).

What is being done to reduce disparities?

By signing the Rio Political Declaration on Social Determinants of Health, Canada committed to reducing inequalities in health (Public Health Agency of Canada, 2011). Although no single body is responsible for addressing health disparities, several provincial or territorial governments have departments and agencies devoted to addressing population health and health inequities.

Aboriginal health is a concern for federal as well as provincial and territorial governments; recent federal initiatives include the Aboriginal Diabetes Initiative, the National Aboriginal Youth Suicide Prevention Strategy, and the Maternal Child Health Program. The Public Health Agency of Canada includes in its mandate reporting on health disparities, and the Canadian Institute for Health Information also reports on disparities in health care and health outcomes (Canadian Institute for Health Information, 2015d). However, no formal and periodic process exists to measure disparities.

What is being done to promote delivery system integration and care coordination?

Provinces and territories have introduced several initiatives to improve integration and coordination of care for chronically ill patients with complex needs. These include Divisions of Family Practice (British Columbia) (Divisions of Family Practice, 2014), the Regulated Health Professions Network (Nova Scotia), and Health Links (Ontario). Also, Ontario has alternative community-based and multidisciplinary primary care models that are funded by the province and serve primarily vulnerable populations; these models include Community Health Centres and Aboriginal Health Access Centres. Also in Ontario, a pilot program that bundles payments across different providers is being expanded (from one to six communities) to improve coordination of care for patients as they transition from hospital to the community (Government of Ontario, 2015). As discussed above, some provinces have also implemented incentives to encourage physicians to provide guideline-based care for chronic disease. In Ontario, for example, Diabetes Education Programs (employing teams of diabetes education nurses and registered dieticians) support individuals and primary care physicians in providing guideline-based diabetes care (Government of Ontario, 2015a).

Each province determines its own structure for the coordination of health and social care services. In Ontario, for instance, Community Care Access Centres are also responsible for coordinating services for vulnerable populations, particularly the elderly and individuals with disabilities, including health and social care services (e.g., supportive housing and meal delivery programs). In Ontario, there is a single ministry responsible for health and long-term care, with funding devolving to the regional level.

What is the status of electronic health records?

Uptake of health information technologies has been slowly increasing in recent years. Provinces and territories are responsible for developing their electronic information systems, with support from Canada Health Infoway; however, there is no national strategy for implementing electronic health records and no national patient identifier. According to Canada Health Infoway, provinces have systems for collecting data electronically for the majority of their populations (Canada Health Infoway, 2014). Interoperability, however, is limited (Ogilvie and Eggleton, 2012). In 2014, 42 percent of GPs reported using exclusively electronic records to enter and retrieve patient clinical notes, and 38 percent used a combination of paper and electronic charts (National Physician Survey, 2014). In the same survey, 87 percent of GPs report that their patients are not able to access their personal health record for any function, and only 6 percent reported that patients can request appointments online.

How are costs contained?

Costs are controlled principally through single-payer purchasing, and increases in real spending mainly reflect government investment decisions or budgetary overruns. Cost-control measures include mandatory global budgets for hospitals and regional health authorities, negotiated fee schedules for providers, drug formularies, and resource restrictions vis-à-vis physicians and nurses (e.g., provincial quotas of students admitted annually) as well as restrictions on new investment in capital and technology. The national health technology assessment process is one of the mechanisms for containing the costs of new technologies (see above).

The federal Patented Medicine Prices Review Board, an independent, quasi-judicial body, regulates the introductory prices of new patented medications. This measure ensures that prices are not “excessive,” on the basis of their “degree of innovation” and by comparison with prices of existing medicines in Canada and in seven other countries, including the United States and the United Kingdom. The board regulates “ex-factory” prices but does not have jurisdiction over wholesale or pharmacy prices, or over pharmacists’ professional fees. However, prices of all patented drugs are reviewed regularly, and the board can intervene if price increases are deemed excessive. Since 2010, the Pan-Canadian Pricing Alliance also coordinates, across provinces, negotiations to reduce the prices of branded drugs. Jurisdiction over prices of generics and control over pricing and purchasing under public drug plans (and, in some cases, pricing under private plans) is held by provinces, leading to some interprovincial variation. “Choosing Wisely Canada” is a new publicly funded campaign that provides recommendations to governments, providers, and the public on reducing low-value care (Choosing Wisely Canada, 2015).

What major innovations and reforms have been introduced?

At the annual meeting of Canada's provincial premiers in July 2015, national health care priorities included pharmaceuticals, appropriateness of care, senior care, and dementia. There has not been a meeting between the first ministers of the federal and provincial governments on health care since 2009. In its 2015 election platform, the Liberal Party committed to a CAD3 billion (USD2.4 billion) investment in home care services and proposed a pan-Canadian collaboration to improve access to prescription medication (Liberal Party of Canada, 2015).

In 2015, the Canadian government expanded the National Anti-Drug Strategy to include prescription drug abuse. This strategy focuses on reducing the supply of and demand for illicit drugs (Government of Canada, 2015b). Also introduced in 2015 was the Protecting Canadians from Unsafe Drugs Act (Vanessa’s Law), which strengthens regulation on therapeutic products to promote reporting of adverse reactions by health care institutions (Government of Canada 2014).

Provincial health system governance: Several provinces have reformed or are in the process of reforming their health system governance structures, mostly in an attempt to achieve efficiencies and reduce costs. Quebec is merging 182 Health and Social Centres, which include hospitals, clinics, and long-term care facilities, into just 28 (Assemblée Nationale Québec 2015). In April 2015, Nova Scotia passed legislation to consolidate 10 district health authorities into two: the Nova Scotia Health Authority and the IWK Health Centre. The two merged authorities will work together to plan and deliver primary care, community health services, and acute care across the province (Government of Nova Scotia, 2015). The 2015 Newfoundland and Labrador provincial budget announced the consolidation of administrative service for the health care system into one shared services organization. The regional health authorities will remain in place, while the shared services organization will provide them with support for human resources, information technology, telecommunications, marketing, communications, finance, and payroll (Government of Newfoundland Labrador, 2015). The government appointed an implementation team in August 2015.


The authors would like to acknowledge Diane Watson as a contributing author to earlier versions of this profile.


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