A Tale of Two Medicares

Ironically, both the United States and Canada have publicly funded health insurance programs with the same name. But whereas the American“ Medicare” was enacted in 1965 to cover people aged 65 and over, the Canadian “medicare” was adopted in 1984 to cover all Canadians. Canadian medicare was the product of several decades of evolution.

In 1947, Saskatchewan was the first province to establish public universal hospital insurance, and 10 years later the government of Canada passed legislation to share in the cost of these services. By 1961 Canada's 10 provinces and two territories had public insurance plans that provided universal access to hospital services.

Beginning in 1962 Saskatchewan again took a pioneering step by providing insurance for physician services. In 1968 the Canadian government began cost sharing of physician services, and by 1972 all provincial and territorial plans had been expanded to include these services.

In 1984 the Canada Health Act was passed. It reinforced and fine-tuned the criteria, or basic principles, of a national public health insurance program that had been spelled out in earlier legislation.

Today Canadian medicare covers most medical procedures provided by either hospitals or physicians, including prescription drugs delivered in the hospital. No copays are charged. Canadian medicare is both national and provincial. The federal government sets national standards, but the insurance is administered by each province (see Canada's Health System Draws Mixed Reviews From Psychiatrists for more on Canada's medicare program).

All provinces cover inpatient and outpatient psychiatric care. The federal government does not mandate coverage of these services, but the provinces have elected to cover them.

Under medicare, physicians negotiate fees at the provincial level. Agreements can last from two to three years. The provincial government is the single payer.

Although medicare does not mandate coverage of out-of-hospital prescription drugs, each province has the option to set up outpatient prescription drug coverage. For example, in Quebec, everyone must have prescription drug coverage. All employees are insured by a private insurance company; the unemployed receive their coverage through a government plan. In Alberta, people can obtain outpatient prescription drug coverage through a provincial plan. People with moderate or high incomes pay something for this coverage; people with low incomes do not.

Provinces maintain their own drug formularies, although efforts are under way to institute a common formulary. There is ongoing controversy in Canada, as in other countries, about the inclusion of expensive drugs in drug formularies and about whether not-yet-approved drugs should be reimbursed under certain circumstances.

Drug costs are contentious. Prices are controlled by the Patented Medicines Price Review Board. Its pricing formula ensures that Canada pays prices based on the average of those charged to selected countries; they are neither the highest nor the lowest. Older, off-patent medicines are typically somewhat more expensive than those in the United States.

Aside from mandating universal health insurance coverage, the Canadian federal government exerts considerable control over health care finances and delivery. For example, there are only publicly funded hospitals. Physicians are not allowed to have private-paying patients for covered services. Government funds medical schools to a large extent, so that it exerts substantial control over physician education (and ultimately the physician workforce).

Nonetheless, Canadian health care is not altogether“ socialized” medicine. For instance, many physicians are self-employed; physicians can bill patients directly for services not covered by universal health insurance, such as eye exams, and laboratory services are often provided by for-profit companies. ▪