Canada Health Act

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The Canada Health Act is a piece of Canadian federal legislation, adopted in 1984, that lists the conditions and criteria to which the provinces and territories must conform in order to receive the full amount of negotiated transfer payments relating to health care. The legislation encourages the provinces to maintain public health insurance plans for their residents and discourages the use of extra-billing and user fees in health care delivery. The purpose, and the effect, of the act is to maintain national standards for public health care delivery.

The preamble of the Act justifies Canadian Health Care policy by stating the objective "that continued access to quality health care without financial or other barriers will be critical to maintaining and improving the health and well-being of Canadians." However, the act is a source of controversy. Whereas the proponents view it as correcting free market failures and certain injustices, the opponents view it as limiting the supply and efficiency of health care delivery.


While the constitution gives the provinces legislative authority over hospitals, it does not specifically give authority over 'health care' to either the federal government or the provinces. At the time of its drafting, the public health movement was in its infancy so it was given little attention. It was not until the 1938 Rowell-Sirois Commission that health care was recognized as an important, and expensive, issue. Subsequent court cases and interpretations have generally established the province's paramount authority over local health care delivery but the federal government is entitled to set national standards, specifically through its spending powers.

The 1957 and 1966 acts

Health care came to the nation’s attention in 1947 when the premier of Saskatchewan, Tommy Douglas, established Canada's first public hospital insurance plan. The popularity of this program, along with the high cost of health care delivery, led to the Diefenbaker government getting involved in funding public health care with the Hospital Insurance and Diagnostic Services Act of 1957. This encouraged more provinces to establish a public hospital insurance plan by sharing some of the cost with the federal government.

To investigate what the federal government can do for health care in Canada Justice Emmett Hall headed the Royal Commission on Health Services. The final recommendation of the Hall Commission was that a nationwide public health insurance similar to Saskatchewan's would be beneficial for Canada, specifically that the health insurance plans should be extended to physician services outside of hospitals.

So in 1966 the Pearson government introduced Medical Care Act of 1966. These two Acts established a formula, of 50 cents to the dollar, for federal transfers to the provinces based on the provinces’ health insurance expenditures. To that effect, it indirectly prevented extra-billing and user charges by counting the province's expenditures, where revenue gained from charging patients would have been off-set in the federal contributions.

The 1977 act

As health care costs continued to rise and since the constitution gave the federal government the majority of the taxation powers, federal transfer payments to the provinces became crucial. This became a regular and legislated event with the establishment of the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act of 1977. The Canada Health Act is actually an extension of this 1977 act that sets out the conditions and criteria for federal transfers with respect to health care. The 1977 act set up the Established Programs Financing (EPF) which were block transfers of cash and tax point transfers to replace the 1957 and 1966 formula for transfers.

The 1984 act

However, since the EPF was not linked to provincial expenditures, the impediments to establishing extra-billing and user charges were removed. Because these charges began to proliferate Justice Emmett Hall was asked to report on the future of medicare. In 1979, he drafted 'Canada's National-Provincial Health Program for the 1980s' in which he warned that accessibility to health care was being threatened by extra billing and user fees. On December 12, 1983 the Canada Health Act was introduced by the Trudeau government and set national standards for health care delivery. This new Act combined elements from both the 1957 and 1966 acts. The Canada Health Act was passed unanimously by Parliament in 1984, and received Royal Assent on 1 April. In June 1985, after consultation with the provinces, federal Health Minister Jake Epp wrote a letter to his provincial counterparts that clarified and interpreted the criteria points and other parts of the new Act.

In 1996, the EPF transfers merged with the Canada Assistance Plan transfers to form the Canada Health and Social Transfer (CHST). This lumped several classes of transfers into one lump sum and had the effect of reducing the amounts transferred specifically for health care. In 2004, the Canada Health Transfer (CHT) was established and linked directly to the Canada Health Act.


The primary objective of the Act is "to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers." (Section 3).

To do so, the Act lists a set of criteria and conditions that the Provinces must follow in order to receive funds from the federal government as part of the CHST payments. The Minister of Health judges the provinces' health care delivery based on the following: Public administration, Comprehensiveness, Universality, Portability, and Accessibility. There also a requirement that the provinces must not accept extra-billing or user charges, and that the provinces must recognize the CHST in any public documents it publishes relating to insured health services and extended health care services.

Public administration

The first criterion is that health care delivery must be "administered and operated on a non-profit basis by a public authority" (Section 8). The administration of the health care must be responsible to the provincial government and be subject to regular audits of its accounts and financial transactions.


The second criterion is that the provinces' health care insurance plan must cover "all insured health services provided by hospitals, medical practitioners or dentists" (Section 9). The Act lists, in the Definitions (Section 2), specific and general services that the provinces must insure. The provinces, by provincial law, may also insure additional services.


The third criterion is that all residents of the province (except the Canadian Forces, the RCMP, federal prisoners, and transients) are entitled "to the insured health services provided for by the plan on uniform terms and conditions" (Section 10). Since the Canadian Forces, the RCMP, and federal prisoners are under federal jurisdiction, they are covered under a federal health plan. Transients include landed immigrants and returning expatriates who both must endure a waiting period, not more than three months, before becoming an insured person.


The fourth criterion is that a province's health care insurance plan must continue to cover a resident who is temporarily out of province or is enduring a waiting period in a new province of residence. For accounting purposes, regardless of the actual cost of delivery, payment is recorded "on the basis of the amount that would have been paid by the province for similar services rendered in the province" (Section 11.b.ii). This criterion also includes expenses for health care delivery provided outside Canada. However, this criterion does not entitle residents to seek treatments outside the home province. It is intended to cover travellers in case of emergency situations.


The fifth criterion is that health care delivery must be provided "on uniform terms and conditions and on a basis that does not impede or preclude, either directly or indirectly whether by charges made to insured persons or otherwise" (Section 12.a). There must be no discrimination between clients based age, lifestyle, or health status. This section also provides for "reasonable compensation rendered by medical practitioners or dentists" and payments to hospitals that cover the cost of the health services provided. Compensation is established through negotiations between the provincial governments and organizations representing the physicians and dentists.

Conditions for cash contributions

Section 13 lists two conditions which must be met by the province in order to receive its full share of the CHST. The first condition is that the federal Minister of Health is entitled to specific information relating to a province's insured & extended health care services. This information is used in drafting annual reports, presented to parliament, on how the province administered its health care services over the previous year.

The second condition is that the province must "give recognition to the [CHST] in any public documents, or in any advertising or promotional material, relating to insured health services and extended health care services in the province" (Section 13.b).

Extra-billing and user charges

A restriction to full CHST payments is placed on provinces who allow extra-billing and/or user charges. "Extra-billing" refers to payments made directly by patients to medical practitioners or dentists for services covered by the province insurance plan. "User charges" are payments made directly by patients for health care other than extra-billing. Both of these are discounted from the CHST payments.

Violations and penalities

In order to document compliance with the act the federal Minister of Health annually reports to the Canadian Parliament on how the act has been administered by each province over the course of the previous fiscal year.

For non-compliance with the any of the five criteria listed above, the federal government may withhold all or a part of the transfer payment with “regard to the gravity of the default” (Section 15). Thus far all non-compliance issues have been settled through discussion or negotiation. Some non-compliance issues, such as the reduction of coverage for residents while travelling abroad and the de-insuring of some medical procedures, have been ignored by the federal government.

In accordance with section 20, if a province were to violate the prohibition on extra-billing or user charges, the corresponding amount of that collected would be deducted from the transfer payment.

Because all provinces already had established extra-billing and/or user charges financial penalties totaling $246,732,000 were withheld from the provinces in the first two years. However, the act made considerations for this and allowed the reimbursement of this money if extra-billing and user charges were eliminated within three years of the act coming into force. As such, the provinces complied and the money was duly transferred.

In 1993, British Columbia allowed approximately 40 medical practitioners to use extra-billing in their practices. In response the federal government reduced B.C.’s EPF payments by a total of $2,025,000 over the course of four years.

In 1996, Alberta had their EPF payment reduced by a total of $3,585,000 over the course of a few years due to the use of private clinics that charged user fees. Newfoundland suffered the loss of $323,000 until 1998 and Manitoba lost a total of $2,056,000 until 1999 from user fees being charged at private clinics. Nova Scotia has also forgone EPF payment for their use of user fees in private clinics.

See also

External links