THE HISTORY OF HEALTH INSURANCE IN CANADA AND HOW ONE PERSON’S STORY CHANGED HEALTHCARE IN CANADA:

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In the 1920’s and 1930’s, the farmers got it right. They organized healthcare cooperatives to finance healthcare in their communities. There was no government involvement. This solution worked well for the community. Unfortunately, healthcare cooperatives did not scale up in Canada.

In Spain, healthcare cooperatives started in the 194o’s and 1950’s. They did, however, scale up and become important in building private healthcare capacity in Spain.

For example, in Barcelona there is one healthcare cooperative with 175,000 members. This cooperative provides healthcare insurance and owns private hospitals.  Spain also has a large healthcare cooperative with 20,000 doctors. This cooperative owns a healthcare insurer and a chain of private hospitals.

Citizens of Spain all have universal healthcare. The cooperatives provide a private option for those seeking care options.

In 1947, Tommy Douglas, the democratic socialist premier of Saskatchewan, helped to bring free hospital care to the citizens of Saskatchewan. This was the first publicly funded hospital insurance plan in Canada.

Mr Douglas was a former linotype operator and minister. He had grown up poor. When he was a child, he developed osteomyelitis  ( a severe bone infection) of his leg. His family could not afford the care. A kind orthopedic surgeon offered to treat him for free. He did well and his leg was saved. This seminal event convinced him that hospital insurance should be free for all Canadians.

In 1957, the Federal government passed the Hospital Insurance and Diagnostic Services Act. With this act, the Federal government agreed to finance 50% of the cost of provincial hospital care. The act was used by the Federal government to negotiate publicly-funded hospital care plans throughout Canada. In 1977, the 50% funding was stopped.

In 1962, Saskatchewan passed the Saskatchewan Medical Care Insurance Plan. This plan paid the doctors of the province. This lead to a short strike by the doctors.

In 1966, the Federal government passed the Medical Care Act. This act committed the Federal government to share the cost of healthcare with the provinces for all physician services.

From about 1940 to 1969,  Physician Services Inc. (PSI) ran a doctor-sponsored prepaid medical care plan in Ontario. This was organized by the Ontario Medical Association. PSI was a not for profit corporation. PSI was financially sustainable. It was closed in 1969, when the Province of Ontario started OHIP. PSI was left with a surplus of $17M in 1969. This has grown at 20% per year to over $200M.  Over $100M has been used to fund medical research.

Ontario is served by a single organization- OHIP. In 1995, the Israeli government passed the National Health Insurance Law. This law formed 4 funds similar to OHIP. The 4 funds compete for customers. An Israeli citizen has the right to switch from one fund to another once per year. This competition between the funds such as Maccabi and Clalit has resulted in an improved and efficient system. In fact, Israel was rated 4th in efficiency of 48 countries in 2013.

In 1984, Monique Begin, minister of health for the Federal government, passed the Canada Health Act. The government used its spending power to enforce universality. The provinces would be penalized for allowing private healthcare services or private health insurance.

A major fear in Canada is the fear that doctors will flee the public healthcare system and spend their productive time in the private system.

The government had not factored in the impact of botox on the flight from the public system.  Many doctors are choosing to inject botox instead of meeting the needs of their clients. When occupational health and private diet clinics, IMEs and 3rd party work is included, it is likely that over 20% of productive doctor capacity is now private in Canada.

Australia and the U.K. found a solution to this flight to private by legislating how much time a doctor can practice in the private system. This seems to work for both Australia and the U.K.

In 1976, the Australian government decided that it wanted to encourage the construction of private healthcare infrastructure.  Everyone in Australia has publicly funded medicare at no cost.

The Australian government started a private healthcare insurer- Medibank. This private insurer is still owned and operated by the Australian government. It insures 4,000,000 Australians. The flow of private premiums has lead to the construction of significant capacity to ensure that waiting lists in both the private and public systems are kept to a minimum.  Australians have a choice. They can accept publicly funded medicare at no cost or they can purchase private health insurance, as an option.

This strategy has proven to be so successful, the in 2007 the Australian government passed the Private Health Insurance Act. There are now over 30 private health care insurers in Australia. More private premium dollars are building more private capacity to better  serve Australians.

In 2005, the Supreme Court of Canada ruled in Chaoulli v. Quebec that the Quebec Health Insurance Act prohibiting private medical insurance violated the Quebec Charter of Human Rights and Freedoms and violated section 7 of the Canadian Charter of Rights and Freedoms.

This ruling promised to open the Canadian marketplace to private healthcare insurance. In this way, Canada would leave the club of 3- Cuba, North Korea and Canada- 3 countries with no option for their citizens to purchase private healthcare insurance.

In April 2014, an Alberta court ruled against Chaoulli. The court ruled that an Albertan can not rely on Chaoulli to argue charter rights because provincial law bans health insurance. A plaintiff has to prove personal harm. It seems from this ruling that provincial legislative authority extends to almost all areas of health care delivery.

In April 2014, the same month as the prior ruling, private healthcare insurance went on sale in Alberta. An insurer provided a $5M benefit and immediate service if the insured could not get a MRI or new hip in Alberta. The trick was that care had to be delivered in the US. The result was that premium dollars flowed to US hospitals and not to Canadian hospitals. This was a lost opportunity to finance Canadian healthcare infrastructure.

A question that is often asked is how much do Canadians spend in the US on healthcare services each year. According to sources,  it is likely that there is an annual $2B capital flow into the US to pay for healthcare services.

The demographic trend over the next 25 years is for more patients with chronic diseases. About 80% of our healthcare dollars pay for chronic diseases.  With boomers entering the era of chronic disease, the requirement for services and therefore for capital will accelerate. Many experts agree that the system is not sustainable.  There will be a need for new capital for new infrastructure.

Patient groups recognize this. That is why we now have patient groups like Patient Commandos. Each patient is given a voice. This group is sophisticated in advocating for system change. And there are lawyers who are ready to rumble and make a name for themselves by creating the next Chaoulli.

In summary- it is likely the right time to reassess how Canadians will create a sustainable solution in order to protect all our citizens who find themselves in need of essential healthcare services.