Canada Implements Its National Health Plan Summary

  • Last updated on November 10, 2022

Canadian political leaders developed and implemented a national health insurance plan that some experts believe could be used as a model for the United States. The plan took effect in Canada on July 1, 1968.

Summary of Event

Canada’s national health insurance program developed piecemeal over the course of the first half of the twentieth century. Landmark acts creating the universal program were passed on May 1, 1957, when a plan to provide hospital care insurance for Canada’s citizens was adopted, and on December 19, 1966, when medical insurance was secured with the Medical Care Act, which went into effect on July 1, 1968. Although the Canadian system has its critics, some proponents suggest that United States policy makers might learn some valuable lessons from the Canadian health care program. Medical Care Act, Canadian (1966) Health policy;Canada National health plan, Canadian Canada;national health plan [kw]Canada Implements Its National Health Plan (Dec. 19, 1966) [kw]National Health Plan, Canada Implements Its (Dec. 19, 1966) [kw]Health Plan, Canada Implements Its National (Dec. 19, 1966) Medical Care Act, Canadian (1966) Health policy;Canada National health plan, Canadian Canada;national health plan [g]North America;Dec. 19, 1966: Canada Implements Its National Health Plan[09060] [g]Canada;Dec. 19, 1966: Canada Implements Its National Health Plan[09060] [c]Government and politics;Dec. 19, 1966: Canada Implements Its National Health Plan[09060] [c]Health and medicine;Dec. 19, 1966: Canada Implements Its National Health Plan[09060] King, William Lyon Mackenzie Pearson, Lester B. Gordon, Walter Lockhart Martin, Paul Joseph James LaMarsh, Judy

Support for national health insurance emerged in 1919, when William Lyon Mackenzie King, who served as prime minister of Canada for most of the period from 1921 to 1948, proposed that the Liberal Party endorse several social programs, including health care. The need for a health care program was first recognized by policy makers when a large percentage of Canadian men was exempted from military service in World War I for medical reasons. In certain areas of Canada, as many as half of the men were excluded from military service because of poor health. Great Britain’s adoption of a comprehensive health care plan in 1912 also drew attention to the issue.

In the interwar period, the Great Depression illuminated the need for an improved system of medical service delivery, particularly for indigent persons. Many of Canada’s displaced workers and others, hit hard by the depression, went without medical attention during this time. Others sought medical treatment but were unable to pay physicians for services rendered.

In the period between 1942 and 1946, Parliament failed to pass a national program, but progress toward that goal was achieved. Canadian political leaders reached consensus on basic aspects of a program and public support for such a plan was strengthened. In 1942, the Interdepartmental Advisory Committee on Health Insurance Interdepartmental Advisory Committee on Health Insurance, Canadian , headed by J. J. Heagarty Heagarty, J. J. , was appointed by the health minister. The advisory panel created a basic blueprint for Canada’s health care program. The House of Commons also held hearings on health care. In recognition of the pressing need for such legislation, the Canadian Medical Association Canadian Medical Association (CMA) endorsed the national health insurance proposals drafted by the Heagarty committee.

Prior to adoption of national health insurance, some of the provinces created their own hospital insurance and medical care plans. For example, in 1947 the provincial government of Saskatchewan set up a pioneer program that provided virtually universal hospitalization coverage. In 1962, Saskatchewan’s program was expanded to include physician services. Physicians staged a strike in protest of the new system, withholding for a month all but emergency medical services. A compromise was reached between the government and physicians, allowing the program to be instituted, but physicians were permitted to opt out of the program and to “extra bill” patients at rates higher than those set by the government.

As World War II came to an end, Canadian officials met to carve out programs for postwar reconstruction. The provinces and national government could not reach agreement about a suitable method of financing a national health care program. In 1948, with the strong support of Paul Joseph James Martin, the new minister of health and welfare, a first step was taken toward adoption of a health insurance plan with passage of the National Health Grants National Health Grants, Candian program, which provided federal legislation in support of hospitals. The legislation funded grants for specific purposes such as hospital construction, medical research, and professional training.

By the 1950’s, support for national hospitalization insurance grew as many hospitals encountered financial difficulty, medical technology became more sophisticated and expensive, and hospital workers demanded better pay and working conditions. In addition, 60 percent or more of Canadians did not have hospital insurance. With Martin’s support, the Hospital Insurance and Diagnostic Services Act Hospital Insurance and Diagnostic Services Act, Canadian (1957) was approved by Parliament in 1957. The plan provided for prepaid hospital care for medically necessary services, to be funded by a combination of federal and provincial government contributions. By the early 1960’s, all the provinces had joined the hospital insurance program, resulting in coverage of nearly all of Canada’s population. Predictions that the legislation would result in a marked increase in hospital use proved to be false. The act has also been credited with increasing availability of accredited hospitals and hospital beds as well as providing all citizens with equal access to hospital care irrespective of their ability to pay.

Additional landmark legislation, which created medical insurance covering physician fees, was passed in 1966, during the prime ministership of Lester B. Pearson, a Liberal Party member. Pressing for the act were Judy LaMarsh, minister of health and welfare, and Walter Lockhart Gordon, the finance minister. In addition, a report by the Royal Commission on Health Services provided evidence demonstrating that a large number of Canadians did not have medical insurance or had inadequate coverage, that Canada’s infant mortality rate was relatively high, and that some provinces lacked the financial capacity to resolve the problems. By 1972, all the provinces had agreed to the program and were receiving federal contributions. Canada’s national health insurance program thus took in excess of fifty years to complete.

Canada has a federal system of government, with power divided between a national government and ten provinces. Canada is sometimes said to have twelve health insurance programs, since the plans are administered by the ten provincial and two territorial governments. Provinces, however, must meet certain requirements set by the federal government in order to receive federal funding. The national government grants relatively more federal funding to the poorer provinces and less to richer ones. The Canadian system is universal, offering coverage to all Canadians. It covers hospital fees and nearly all medical services, including physician visits, treatments, tests, X rays, laboratory fees, prescriptions for senior citizens, hospitalization, and surgery costs. In some provinces, additional services are also covered, such as chiropractic visits, physical therapy, and dental care for children. Private insurance is allowed for certain noncovered services only, such as private or semiprivate hospital rooms, pharmacy costs, and some nursing home care.

The Canadian program differs from national health care systems in other countries. The system depends heavily on tax subsidy payments rather than insurance premiums, although small premiums are collected from citizens in two of the provinces. The program generally provides for prepayment of services rather than for reimbursement to the patient for covered expenses. It is designed so that only a bare minimum of noncovered expenses is paid for by patients. Unlike many other systems, there is no limit on physician visits or number of days in the hospital that are covered. One of the advantages of the program is “portability.” Canadians who move from one province to another, for example, may claim benefits immediately. Most physicians are paid under the program on a fee-per-service basis, the rate schedule of which is negotiated with the provincial governments.

Significance

Canada’s health care system is sometimes criticized but remains one of the most popular of the nation’s social programs. The system is based on the assumption that health care is an essential service that should be widely available to citizens regardless of ability to pay. The situation may be compared with the United States, where, in the early twenty-first century, roughly forty-five million citizens did not have health insurance.

The Canadian system ensures that medical coverage will be provided for those who are unable to pay, including the unemployed and the working poor. It also provides coverage for those who may have difficulty obtaining insurance at a reasonable cost; for example, persons with preexisting medical conditions who find it difficult to obtain coverage under private insurance systems. In addition, in cases in which a person experiences catastrophic illness, under a system of public health insurance, income potential and existing assets are not threatened as severely, since insurance is guaranteed.

The Canadian system offers coverage on a universal basis. Because the system is regulated by the state, health care resources are subject to collective control, rather than control by the marketplace, where ability to pay becomes a major determinant of access to expensive treatment and surgery. Among the benefits cited by public regulation are control over expenditures, the number of physicians, and the number of hospital beds.

Physicians’ overhead is lower in Canada as compared with the United States, because Canadian physicians pay less to collect fees, for liability costs, and for accouterments such as office furnishings. Critics cite certain problems with the system, however, including the difficulty of maintaining control over costs, particularly with political demand for increased services, such as coverage for nursing home care, dental care, optometric and chiropractic services, and physical therapy. In addition, Canada’s population is aging, putting additional strain on the health care system. The system is also strained by unexpected costs, particularly in view of the AIDS (Acquired Immune Deficiency Syndrome) crisis, although some proponents of national health care point out that the costs of treating AIDS patients are more evenly spread among the population under a state-run system rather than concentrated on those who develop AIDS.

Perhaps the most common criticism of the Canadian system stems from the infamous waiting lists for surgery. Canadians report that the wait for ordinary medical care is very brief, but limits on hospital beds and equipment prevent some who need surgery, particularly open-heart surgery, from receiving it immediately. Patients in need of such surgery are put on waiting lists based on severity of illness. Supporters of the Canadian system point out that some research has claimed that physicians in the United States perform too many open-heart surgeries, whereas Canadian physicians take a relatively conservative approach. They further point out that rationing of medical services in the United States occurs because of ability to pay, whereas Canadian patients receive preference based on severity of illness. The per-capita cost for health care in the Canadian system was considerably lower than in the United States in 1990. Canada also had a higher life expectancy and a lower mortality rate than the United States.

Even with its advantages, the Canadian health care system may not be appropriate for other countries. It is difficult to transplant policies from one political system to another and to expect them to work equally well. Each nation has different political cultures, operative beliefs, population size, and distribution of wealth. Although the Canadian system of national health insurance may or may not work well elsewhere, it is a source of pride in Canada, ostensibly attracting widespread popular support. Medical Care Act, Canadian (1966) Health policy;Canada National health plan, Canadian Canada;national health plan

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Andreopoulos, Spyros, ed. National Health Insurance: Can We Learn from Canada? New York: John Wiley & Sons, 1975. Several chapters by health care experts that may be of interest to those looking for a national health care insurance model for the United States. Has sections on the historical perspective, economic perspectives, the public interest, and the medical profession, and implications for the United States. Statistical tables and charts.
  • citation-type="booksimple"

    xlink:type="simple">Armstrong, Pat, and Hugh Armstrong. Wasting Away: The Undermining of Canadian Health Care. 2d ed. New York: Oxford University Press, 2003. An examination of the development as well as ongoing politics of Canada’s national health care system.
  • citation-type="booksimple"

    xlink:type="simple">

    Canada’s Health Care System. Health Canada, 2005. Available at http://www.hc-sc.gc.ca/. Click on “Health Care System” link in left column. A helpful brochure that outlines Canada’s health care system. Includes a time line of significant events, a bibliography, and references to relevant Web sites.
  • citation-type="booksimple"

    xlink:type="simple">Flood, Colleen M., ed. Just Medicare: What’s In, What’s Out, How We Decide. Buffalo, N.Y.: University of Toronto Press, 2006. Discusses the issues of deciding what care within the Canadian health care system should be publically funded, who decides what will be publically funded, and how the “deciders” make their decisions.
  • citation-type="booksimple"

    xlink:type="simple">Glaser, William A. “Canada.” In Health Insurance Bargaining: Foreign Lessons for Americans. New York: Gardner Press, 1978. Includes chapters on national health insurance in eight nations other than the United States. The work focuses on the way in which physicians are paid and organized. The chapter on Canada includes a brief historical overview and discusses some of the major controversies surrounding the program. Similar chapters on other nations are intended to offer lessons for the United States. Tables.
  • citation-type="booksimple"

    xlink:type="simple">Globerman, Judith. “Free Enterprise, Professional Ideology, and Self-Interest: An Analysis of Resistance by Canadian Physicians to Universal Health Insurance.” Journal of Health and Social Behavior 31 (March, 1990): 11-27. The author surveyed Toronto physicians representing four specialties to determine the basis for opposition by organized medicine to state-operated programs. She found that many physicians resisted the system because of conservative beliefs, economic self-interest, and a desire for professional autonomy. Bibliography.
  • citation-type="booksimple"

    xlink:type="simple">Leary, Virginia A. “So Close and Yet So Different: The Right to Health Care in the United States and Canada.” In Economic Rights in Canada and the United States, edited by Rhoda E. Howard-Hassmann and Claude E. Welch, Jr. Philadelphia: University of Pennsylvania Press, 2006. A comparative study of the health care systems of Canada and the United States, close neighbors physically but far ideologically.
  • citation-type="booksimple"

    xlink:type="simple">Naylor, C. David. Private Practice, Public Payment: Canadian Medicine and the Politics of Health Insurance, 1911-1966. Kingston, Ont.: McGill-Queen’s University Press, 1986. Focuses on physicians as an interest group with a strong stake in Canadian health insurance policies. He argues that physicians represented by the Canadian Medical Association have been more open-minded about state-regulated health programs than their American counterparts, but that organized medicine is nevertheless an important, self-interested organization that has occasionally opposed changes that threatened the economic or social interests of members. Tables.
  • citation-type="booksimple"

    xlink:type="simple">Taylor, Malcolm G. Health Insurance and Canadian Public Policy. 2d ed. Kingston, Ont.: McGill-Queen’s University Press, 1987. This thorough, detailed history chronicles the development of the Canadian health insurance system. Taylor considers the factors that contributed to adoption of national health insurance as well as obstacles to the system. Relies on primary documents, interviews with participants, and firsthand knowledge. Tables.
  • citation-type="booksimple"

    xlink:type="simple">_______. Insuring National Health Care: The Canadian Experience. Chapel Hill: University of North Carolina Press, 1990. Examines developments in Canada’s national health insurance program and considers the major problems confronting the system. Includes a chapter on the Canadian political process. Contends that U.S. politicians could learn from Canada’s system, but that Canadian officials could also benefit from exposure to the U.S. system of health care delivery. The volume is condensed from a more comprehensive work by Taylor, Health Insurance and Canadian Public Policy (1987).

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