Medicare Is All About Money – Super Short History Lesson

Quick: define medicare.

How did it develop?

What makes it unique?

Like love and brain freeze, everyone knows what you mean when you say medicare.

Shared understanding works for honeymoons and slushies, but not for a $254 billion industry.

We need a common language to fix medicare.

Most people find policy rather boring. So here is a super short history of medicare.

“Canadian” Medicare

Europeans set fashion trends. Canadians copy them a year later. By then, Europeans have moved on to a new fad. This happened with healthcare.

Sir William Beveridge wrote the blueprint for British healthcare in 1942. Canada hired Leonard Marsh, a Beveridge team member, to create a blueprint for Canada.

Marsh produced a report in 1943 that looked much like the Beveridge report of ’42.

Medicare is European, despite the fact many Canadians consider it part of our national identity.  More precisely, medicare is an out-of-date European fashion.

By the time we built what we had copied, Europe had moved on to something better.

Just the Acts, Please

The Constitution Act gave healthcare to the provinces (formerly the British North America Act 1867).

But the Act also gave the federal government the power to tax and spend.

So the feds have used their spending power to bribe the provinces to do things provinces might not have otherwise.

The history of medicare is all about money:

Money for hospitals:

Feds funded provinces for healthcare services with the 1948 National health grants program. It created a hospital building boom well into the 1970s.

Money for hospital services:

Feds promised to pay 50% of all hospital and diagnostic services. (Hospital and Diagnostic Services Act, HIDSA 1957)

Money for medical care:

Feds promised to pay 50% of all necessary medical care (Medical Care Act, MCA 1966).

Money without strings:

Feds grew tired of paying 50% of everything; created block grants instead (Established Programs Financing Act, EPFA 1977).

Money for good behaviour: 

Feds promise claw backs from provinces that allow user fees or extra-billing (Canada Health Act, CHA 1984).

Who’s in Charge?

The feds give money with strings.

Federal healthcare laws put conditions on how the feds are allowed to spend money. If provinces meet the conditions, then the feds can release the money.

Provinces do not have to participate in medicare. Everything is voluntary, just like doctors voluntarily renew their medical licences. Click To Tweet

So provinces take the money and complain about the conditions.

Quebec Premier Francois Legault told reporters recently, “We will not be dictated to by the federal government [on healthcare].”

But do provinces have any right to complain? He who pays the piper calls the tune.  

To finance WW II, the provinces gave up corporate and personal tax room to the federal government, in a temporary tax-rental agreement, 1942.  In return, the feds gave provinces a per capita rental payment.

Thirty years later, the Carter commission brought peace but still never returned taxation to pre-war arrangements.

Management Won’t Save Medicare

Medicare has floundered for decades. 2008 sped up the process.

I used to think we could manage medicare to improve performance. We could lead better. Management and leadership will not fix medicare. We need to change the rules.

Most people point to the Canada Health Act as the heart of medicare.

But four of the core principles came from 1957: public administration, portability, universality, and comprehensiveness.

The CHA added ‘accessibility’. Other than outlawing user fees and balanced/extra billing, the CHA offered nothing new.

Romanow called for an update to the CHA in 2002. Naylor said the same in 2015.

Maybe it is time to re-evaluate the CHA?

Would We Do It Again?

Medicare is European. Medicare is old. And medicare is about money.

Medicare is a giant federal experiment that the provinces support because the feds help fund it.

If we were doing it again, would we build it this way?

18 thoughts on “Medicare Is All About Money – Super Short History Lesson”

  1. The top rated European ( and the top rated global countries for that matter) evolved into symbiotic hybrid public private health care systems.

    The myopic in the USA and Canada, seem to believe that the only alternative to their own dysfunctional health care system is their neighbour’s dysfunctional health care system.

    Both have the opportunity to build world class evidence based health care systems…it looks as if both will bungle it yet one more time.

    1. Great line, Andris: they “…seem to believe that the only alternative to their own dysfunctional health care system is their neighbour’s dysfunctional health care system.” Well said

      Canada ranked 3rd last in the most recent Commonwealth Fund comparison of OECD healthcare systems. In 2014, we ranked second last. No doubt, we do better than much of the developing world, but not compared with other developed countries.

      Great comments. Thanks again!

  2. Canadians’ infatuation with single payer health care is as unreasonable as Americans infatuation with guns.
    They have been fiddling while watching it burn for years.
    Doctors’ spirit has been nearly broken by the constant beat down and guilt promoted by elites who say that all would be fine if only the docs gave up power and would cooperate.We have now trained a whole generation of docs that realize after 5 yrs in practise they were sold a lie.It will have to get MUCH worse before there is enough impetus for change.

    1. The hatred ( the combination of fear and envy) of the Canadian medical profession has become the one unifying factor for all Canadians…

    2. Perceptive and well put, Ramunas!

      I too have noticed the great change between residents and new graduates with those who have worked for 5 years. They become disillusioned — that is, they become free of their illusion that the system would be just fine if docs weren’t so powerful and difficult to work with. Too many (not all) academics, politicians, regulators, bureaucrats and elites feed the narrative that healthcare would be great were it not for the doctors.

      I used to think change could be rational. We could dismantle the nonsense and improve performance. I think I was wrong. The nonsense is its own industry. Government funds the industry of regulation, oversight, and bureaucracy. It lives off the current doctor-patient model of care that the state has nationalized. The nonsense will leave only when it dies or transfers to a new host. The new host will be patients getting tests directly from tech providers or on-line consultants. After the current medical model has been thoroughly disrupted, it may rise again from the ashes after people have forgotten how to regulate it.

      Again, thank you for reading and sharing a comment!

      Cheers

  3. I think you missed an Act somewhere. They banned extra-billing which effectively took away all responsibility from the users and declared open-season 100% off for all medical services. A critical change that Tommy Douglas would have railed against

      1. Thanks Elizabeth and Ernest!

        I guess I squeezed it in to such a tiny space, you may have skimmed over it. I mention balanced/extra-billing under “Money for good behaviour.” You are both correct, the CHA would never have been written had it not been for the hospital user fees and balanced/extra billing issue. I do not like the term ‘extra’ billing. As you know, the reason doctors started charging patients was because government refused to maintain their fee schedule at the agreed 90% of the OMA schedule of fees. As OHIP fees lagged behind inflation, doctors started to bill, as originally agreed, up to the 90% mark. Patients hated this. Media slandered it as ‘extra’ billing.

        Thanks again to both of you for reading and sharing a comment!

        1. just to be clear, the CHA doesnt ban extra billing, it just punishes provinces who allow it. Provincial statutes banned it. The effect is the same though. It was ill considered.

          1. You are correct!

            Thanks for this. The CHA gets provinces to voluntarily disclose whether any hospital user fees or extra-billing has occurred. Then then feds give provinces 3 years to correct the issue. Once the issue has been corrected, any withheld funds get given to the provinces regardless.

            But it is ‘voluntary’!

  4. I have a semantic disagreement.
    It is not about money. It is about power and control.
    On the other hand, money = power and control.
    If you say that it is about money, there may be a subtle hint there suggesting that more money could solve the problems.
    The money is used to gain and exercise power and control.
    A step on the road to serfdom.

    1. Well said, Zork. I agree.

      The reason I went with the ‘all about money’ theme was to highlight that the federal laws that ‘created’ medicare were actually financial rules that directed what the federal government could do. Anyone looking in from the outside would probably conclude that this is an odd way to create a ‘system’.

      As the late Michael Bliss, professor of history, said, “With the passage of the Canada Health Act, the state had inaugurated the second era of Canadian medicare by effectively outlawing private medical and hospital practice…through the mechanism of a legislated monopoly. Provinces that did not agree with Ottawa’s approach to health care funding again had no realistic choice: the noncompliance costs to their treasuries and taxpayers would be too great.”

      So we could write a post called, Medicare is all about power and control. But I think I’ve written that one a few times already. 🙂

      Thanks again for taking time to read and share a comment! I hope readers take time to check out your blog and your articles on healthcare also.

      Cheers

  5. Aside from the suggested that old Europeans things need to be killed (sorry gram ma) this articular does say much at all. In It states that the 4 and half principles of the Canada health act need to be jettisoned because they are unfashionable. Then there is this insidious unstated desire to bring more money into the system with private payments. Do we really think the system is underfunded or is it that what we would really like is access to money that doesn’t have public accountability tied to it? Much easier to criticize than create. The author might focus more on what to change, why and to what. More a pout piece than a thought piece

    1. Thanks so much for your comment, Colin!

      I really appreciate when readers who disagree take the time to post a dissenting voice. Excellent.

      I wonder what you thought about Romanow’s call for reconsideration of the Canada Health Act? As a former Premier of Saskatchewan and member of Canada’s most left party, the NDP, I assume you support his call for action?

      Or how about Naylor’s call to reconsider the CHA also? I do not think you could accuse Naylor of just complaining.

      My comment about Europe was meant to highlight the fact that Europe has moved on to blended systems. We have not. Perhaps it is time for us to consider what Europe has done to decrease, and in many cases, eliminate wait lists. Sweden offers a wait time guarantee in the public system. If the public system cannot offer joint replacement in a timely fashion, the public system pays for patients to have it done in a private hospital.

      As for additional concrete suggestions, I might direct you to my book: No More Lethal Waits – 10 steps to transform Canada’s emergency departments. You could also comb through the several hundred blog posts I’ve written on the topic.

      Having said all this, I take your criticism about developing positive solutions seriously. I believe that the best solutions grow out of thousands of small groups of people innovating on the front lines of care. It is impossible for us to dream up what the brilliant people who face healthcare problems every day will create. So as step one, I would drastically decrease the regulatory and bureaucratic burden we place on doctors and nurses. I would unleash them to come up with creative solutions for the patients in front of them. We need to celebrate creativity and innovation and spend less time on central plans and ‘solutions’.

      Thanks again

      Best regards,

      Shawn

  6. Socialized medicine would be improved if there was an opt out clause. All of my wife’s health care that produced results is outside of OHIP and out of our wallet. I would prefer to have our tax money to help pay for our medical expenses.

    1. Agree. But that strikes fear in the hearts of those who want to nationalize everything.

      “BC Government spokesperson and Associate Deputy Minister of Health, in 1995, on being asked about BC patients on waiting lists seeking care in the United States: “If we could stop them at the border, we would” “

  7. “I used to think change could be rational. We could dismantle the nonsense and improve performance. I think I was wrong. The nonsense is its own industry. ”

    It makes me happy to read these words. After thirteen years of practice – struggling to deliver care at a level that met my own and my patients’ expectations – I gave up. Like many, I also tried to get involved at higher levels to no avail – healthcare administration is even more demoralizing.

    I didn’t leave medicine because I was burnt out and damaged. I left because there was no other endgame I could reasonably envision. And I care about my family (and myself) too much to let that happen.

    We made an epic departure and have been traveling around the world for six months now. Along the way, I have talked to many people about alternative systems and have even accessed services in a few different countries. These experiences have reinforced my opinion that Canada’s model is fundamentally flawed. But it’s a sad belief to hold as a physician, so to hear that you are starting to agree, Shawn, is validating.

    When the time is right, I would jump at the chance to be a part of something better. Perhaps these posts and comments are the seeds of that movement.

    1. Thanks Matt!

      Great to hear from you as you move around the globe. I’d love to have you share another guest post sometime, perhaps about your experiences with healthcare in different countries.

      I think we will see a shift in the medical-industrial-government complex soon. But it won’t be a return to the days before the ‘nonsense industry’ ruled. It will be new and disruptive. Whether it comes soon, or whether it delays until things get much worse, it will come. Everyone clings to their piece of the fixed funding pie hoping to delay the inevitable.

      Thanks again! Great to hear from you…wish I had some of your courage. I expect it has changed your family forever in more good ways than you can see.

      All the best…

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