Canadian Healthcare System: Frequently Asked Questions!

I resume writing after a busy week of exams and other MBA related activities. Following are a few FAQs and answers, which I think are important to understand before we get into the debate:

1. What is "socialized medicine"? Is Healthcare in Canada socialized?

Definitions of socialized medicine vary, and are inconsistent. The term can refer to any system of medical care that is publicly financed, government administered, or both. Some say the literal meaning is confined to systems in which the government operates health care facilities and employs health care professionals. This narrower usage would apply to the British National Health Service hospital trusts and health systems that operate in other countries as diverse as Finland, Spain, Israel and Cuba. Some label Canada's system as "socialized medicine". To use this term to describe Canadian Healthcare system is inaccurate. The Canadian system provides public coverage for private delivery. Canadian hospitals are controlled by private boards and/or regional health authorities, rather than being part of government. The health care system in Canada is funded by a mix of public (70%) and private (30%) funding, with most services delivered by private (both for-profit and not-for-profit) providers.

2. What is the source of funding for healthcare system in Canada?

Canada's healthcare system is funded by both the federal government, and by the provincial and territorial governments. The main source of revenue is taxation, i.e., personal and corporate income taxes (in some provinces, sales tax is also used). Some provinces also charge a yearly healthcare premium based on annual income. In Ontario, for example, an individual with taxable income of C$48,500 (US$40,500) would pay a premium of C$575 (US$480) in the 2005 tax year.

3. What is the difference between single-tier and a two-tier healthcare system? Is Canadian healthcare system single-tier or two-tier?

Two-tier health care is a system in which a guaranteed public health care system exists, but where a private system operates in parallel competition. The private system provides the opportunity for patients to have more choice in choosing their doctors and benefit from generally shorter waiting times, but is known for being quite costly and reserved only for those who can afford it. Doctors in the private sector may also benefit financially as they can set their own prices. Some advanced countries in the world have two-tier primary health care to varying degrees. In Canada, publicly funded single tier system provides for medically necessary hospital and medical services. General practitioners run their clinics as private operations but are publicly funded from patients' perspective as patients are not billed for services. There is a new trend with opening of privately funded and privately delivered care for some specialist services like orthopedic services provided at Cambie surgery centre in Vancouver and with the opening of a few private cancer clinics in Ontario. Patients avail of the latter private services either due to long waiting lines for say a hip-replacement surgery or non-availability of chemotherapy services for a particular cancer medicine.

4. How does healthcare Insurance work in Canada?

Under the Canada Health Act, insured persons are eligible residents of a province or territory. A resident of a province is defined in the Act as "a person lawfully entitled to be or to remain in Canada who makes his home and is ordinarily present in the province, but does not include a tourist, a transient or a visitor to the province."

Healthcare care insurance pays for your visit to the doctor's office and your x-ray but might leave you to pay for the antibiotic drug that you are prescribed. This is the case in many provinces. It is a mixed system: you are either covered by your employer's private group insurance plan or the government plan. In all cases, there is a deductible, a user contribution and a maximum annual premium to pay. In the case of underprivileged citizens, the government pays the premium and fees.

5. How does drug reimbursement work in Canada?

Under the Canada Health Act, all necessary drug therapy administered within a Canadian hospital setting is insured and publicly funded. Outside of the hospital setting, provincial and territorial governments are responsible for the administration of their own publicly-funded prescription drug benefit programs. Most Canadians have access to insurance coverage for prescription medicines through public and/or private insurance plans. The federal, provincial and territorial governments offer varying levels of coverage, with different eligibility requirements, premiums and deductibles. The publicly-funded drug programs generally provide insurance coverage for those most in need, based on age, income, and medical condition.

Access to drugs is not uniform across various provinces. Provincial authorities make the final decisions regarding the reimbursement or denial for a new drug or new indication for an existing drug. This has led to situations where patients in a particular province had access to for example, a new cancer drug, but other provinces had not listed the drug on their formularies. Some people ironically have called it "postal-code lottery".

You can find more information on various drug coverage programs here:

• Federal Public Drug Benefit Programs
• Provincial and Territorial Public Drug Benefit Programs
• Reports on Access to Insurance Coverage for Prescription Medicines

Chander