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Two-Tier Fee System in Canada

Executive Summary

This paper deals with some drawbacks of the current Canadian healthcare system and includes a brief description of possible policies that could address the issues mentioned. The major issues the system has are the substantial governmental investment and insufficient health outcomes. The country is facing numerous issues, which translates into the lack of resources that can be allocated to the healthcare system. The quality of services provided is significantly lower than in other developed countries while the government invests a lot into the system. The possible options considered in this paper include further development of the private sector, the introduction of fees for healthcare services, and the development of a truly one-tier system. At that, the first option is recommended as it is more appropriate for the Canadian context.

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First, it reduces the load on the federal and provincial budgets while the other options are associated with the allocation of significant funds in the healthcare system or even the change in taxation. The development of the private sector will also increase competitiveness, which cannot be achieved through the implementation of the other options since they imply the dominance of the public sector. Private-sector health-care facilities will try to innovate and provide high-quality services at lower prices. This may drive the change in the entire system. More so, this option also presupposes the development of the platform for collaboration between the public and private sectors. Knowledge sharing will become the key to the development of the system as the two sectors often have different approaches to the provision of healthcare services. The implementation of the policy will imply three stages: the debate in the society, the development of the necessary legislation and the collaboration platform, the implementation of supervision and control.

Overview / Background

Historically, the Canadian healthcare system has been regarded as one of the exemplary ones and, of course, one of the most equitable. Nonetheless, the recent research shows that that Canadian health care is not as perfect as it may appear. For instance, it is found the second worst (after the USA) among developed countries as regards health outcomes (Belchetz). At the same time, Canada is ranked fifth among developed countries in terms of its spending per capita on health care with $4,522 per year (Belchetz). It is noteworthy that the country’s investment in its healthcare system is increasing at quite a considerable pace. For instance, the country’s medical spending grew from 7% of GDP in the 1970s to 11.6% in 2010 while provinces spend up to 40% of their budgets on health care (Belchetz). The increase is specifically alarming in the view of the issues associated with the aging population.

Notably, Canadians are proud of their system (they focus on its equity) and state that it is a one-tier health care system (Brenan 32). However, some researchers emphasize that the system is de facto two-tier as numerous services are not publicly funded, and people have to pay for them from their pockets. For example, the exclusion of dental services from the public sector or partial inclusion of long-term care and drugs prescription result in the lack of access for many Canadians (Marchildon and Allin 168). This inconsistency (which is mainly created by the lack of the corresponding laws, policies, and regulations) contributes to the deteriorating quality of health outcomes. Researchers state that the two-tier system has proved to be effective in many developed countries (Belchetz).

The hearings of Dr. Brian Day’s case show that many people are not satisfied with this status quo and seek for consistency and changes (Flood and Thomas). Dr. Day, for instance, is questioning the laws concerning the ban on the private insurance associated with certain medical services, the ban on dual practice requiring doctors to work for either public or private sector and the ban on extra-billing. Less drastic ways to address the flaws of the Canadian healthcare system are associated with medical tourism as many Canadians travel to other countries (mainly, the USA) to receive some healthcare services (Snyder et al. 5). Thus, many Canadians think that it is time to stop focusing on symbols and ideas and concentrate on economic aspects and health outcomes. To come up with an efficient policy, it is essential to identify the major concerns associated with the system. These are inequity, long waiting time, insufficient health outcomes and ineffective funding.


Private Sector Development

Many researchers, healthcare professionals, officials and users of healthcare services agree that the development of the private sector can be an important factor contributing to the entire system’s success. Therefore, a policy can be associated with the changes in the Canadian legislation banning the provision of certain healthcare services by private healthcare facilities. The public sector should provide the whole range of healthcare services to people. Clearly, the policy will include the use of standards and regulations existing in the public sector, but it will also describe mechanisms of changes that can be implemented.

For instance, there should be opportunities for stakeholders to improve the system through revisiting requirements and standards. The process of change should be transparent and quite easy. Every stakeholder should be able to initiate a discussion or offer a solution to an existing problem. The online platform where all the offers and concerns will be analyzed and addressed by officials (of the federal government and provinces) should be developed. The policy will also address the way the collaboration between the two sectors can be implemented. This element is quite important to make the system viable and the two sectors competitive. There should be programs of exchange of the healthcare staff between public and private healthcare facilities.

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As far as the benefits of this approach, they are manifold. First, the development of the private sector in health care will reduce the burden on the federal and provinces’ budgets as some people will address private healthcare facilities (Belchetz). Compared to the other options mentioned below, this approach addresses the issues associated with limited governmental funds. Clearly, the waiting time issue will be addressed as well (Hua et al. 1430). Furthermore, people will have the choice and will be able to choose the best quality instead of using a limited number of options including leaving the country for treatment (Snyder et al. 5). Carson claims that the collaboration between public and private stakeholders is beneficial for health outcomes in such aspects as capacity, expertise, innovation, and institutional learning (55).

This model can be applied to a more general context, and it is possible to analyze the benefits of the development of the private sector. The private sector will facilitate the development of the entire healthcare system as it will create the necessary competitiveness that will drive the change. For instance, private healthcare facilities tend to have a better capacity/innovation or rather flexibility, which results in better resources (equipment, staff, methods, and so on). The public sector may become less rigid if the effective collaboration between the two sectors is established. The concepts of expertise and institutional learning involve knowledge sharing, which can be managed through the platform of collaboration between the two sectors. The other options provided lack the focus on competition, innovation, and development while this approach makes it the central aspect.

As for the flaws of this policy, it is possible to note that it may lead to the deterioration of quality in the public sector if implemented improperly. At that, this can be the case with all the three options discussed in this paper. In this particular case, healthcare professionals may wish to work in the private sector to earn more, and less qualified personnel will remain in public hospitals. It will meet quite severe opposition as Canadians regard the private sector in health care as something extremely negative (Brennan 32). It will also take quite a significant amount of time to make the benefits of the two-tier system apparent, which may lead to more dissatisfaction among people. Notably, the other two options are characterized by more satisfaction among masses as people are concerned about equity in health care.

User Fee

Another option may involve the introduction of the user fee. All the people may pay a certain amount for services they receive. This will alleviate the load on the federal and provinces’ budgets, which will enable the government to include the whole scope of healthcare services (including dental, diagnostic and long-term care) into the range of services provided by public hospitals. This policy will address the issues associated with actual equity in the Canadian healthcare system. As for the fees, they will be provided after the service has been delivered. The amount paid will depend on the service, but some groups will pay less as the government will pay the rest for them through subsidies. Thus, there can be a limit to be paid for each service, and a description of the groups eligible for the governmental aid, as well as the amount of this aid.

The benefits of the approach are quite numerous. First, it will enable the country to develop a one-tier system characterized by the complete dominance of the public sector in the healthcare system. This is one of the most important aspects for Canadians who fear that the private sector will lead to an unprecedented inequity (Brennan 32). Another advantage of the policy is its beneficial impact on the country’s budget. People’s payments will help the government to allocate funds in a more effective way. This aspect makes it similar to the approach associated with the private sector. Both policies help to replenish the federal and local budgets. The funds can be used to set up new hospitals and hire more healthcare professionals as well as educate them in a more efficient way. Furthermore, the use of fees will help address the issues associated with infinite demand (Belchetz). People will think twice before attending a hospital for some minor suspicion concerning their health if they need to pay for the visit. This is also the case in the approach mentioned above.

At the same time, this strategy has a number of disadvantages. First, the idea of equity will still be compromised as people will have to pay differently for the services they receive. This peculiarity of the option mentioned makes it similar to the one mentioned above as people using private healthcare services will also pay for them. More so, some families will find it difficult to pay the fees and will address healthcare professionals when their health deteriorates significantly (Simpson). In this case, their treatment will require more funds compared to the sum necessary to treat minor healthcare issues or illnesses in their initial phase. This may mean quite a significant load on the budget. Importantly, this is a characteristic of this approach only as the other two options do not have such an effect on demand. Finally, the calculation of fees may become a very difficult task and is likely to meet quite a significant criticism from many stakeholders. Healthcare professionals will argue that the fees are too low while patients will find them rather high (Flood and Thomas).

Further Development of the One-Tier System

Another approach can help the country develop a truly one-tier healthcare system where all people receive healthcare services without any fees. This strategy has some similarities with the one associated with service fees. This policy will imply the establishment of additional public healthcare facilities, with the focus on long-term care, diagnostic services, and dental care. This is also the case with the fees policy. At that, the increase in public healthcare facilities will be a heavy load for the federal and local budgets that will have to be replenished. The funds will be acquired through the changes in the country’s taxation. It is noteworthy that the taxation changes are associated with this option only as the other two do not require such unpopular measures. Taxes may be increased, especially in such spheres as alcohol and tobacco production, or some drugs production. Private healthcare units will gradually cease to exist in the country as the law will give the right to provide healthcare services to public facilities only. This aspect makes the fee policy and public sector approach quite similar while the private sector option stands out. Importantly, there will be some compensations to owners of private facilities.

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Some of the benefits of the policy will be the creation of a truly one-tier system valued so highly in the Canadian society. This makes the option very different from the other two as they are associated with certain kind of fees for users of healthcare services. Another advantage is the establishment of the governmental control over an important sector of the economy. Thus, the government will be able to regulate quality, health outcomes, the use of resources, and so on. The governmental control is the feature that makes the fees option and this approach quite similar. Finally, this approach will improve the image of the country in the international arena. People will be glad to live in a country where they can be sure that their health issues will be addressed effectively and without any fees.

Nonetheless, the policy is associated with quite serious shortcomings. First, it will require substantial funding, but Canada is facing significant financial issue to be addressed. To meet the needs of the aging population, more and more healthcare facilities will have to be established. Other options require less governmental investment. Furthermore, the country already has quite high taxes and the changes in the taxation system mentioned above are likely to meet fierce opposition. Finally, the absence of the private sector or, in other words, any alternative may contribute to the deterioration of the entire system. The lack of competitiveness will make healthcare facilities and each healthcare profession disinterested in development and growth as well as innovation.


The option associated with the most significant advantages (and less crucial shortcomings) is the one that focuses on the development of the private sector. First, this approach requires the lowest governmental investment, which is of paramount importance for modern Canada. The country’s aging population is becoming a significant load that will increase gradually. The other two options are associated with the considerable governmental investment or even the change in the country’s taxation. Besides, the development of the private sector will create strong competition that will potentially make the entire system more effective as well as competitive in the international arena.

The other options considered in this paper lack the focus on competitiveness as well as innovation and development, which makes them less efficient. Importantly, people will have an alternative as they will be able to choose between the public and private healthcare facility. This option will also enable the government to improve the healthcare system through the establishment of the effective collaboration between the private and public sector. Knowledge sharing will be instrumental in achieving the progress in this area. The issues associated with long waiting times may be partially addressed as those who have money will be able to pay for receiving healthcare services. Notably, Canadians will not have to fund other countries’ healthcare systems through medical traveling as they will receive a full range of high-quality healthcare services in Canada.


Stage One

The implementation of the approach will be carried out in several stages. The debate concerning the benefits of the implementation of the two-tier system will be launched. It will involve politicians, professionals, economists, the public. The implementation of the policy can also be discussed. Besides, the development of standards for the private sector facilities and the platform for collaboration between the two sectors will be developed. This stage will start in December 2016 and will last for a year, but it will also continue as people will need to discuss the changes occurring.

Stage Two

The development of the corresponding laws and regulations. It is important to introduce certain amendments to the Canada Health Act of 1984 and remove the ban on charging fees for any healthcare services. It is also important to create some legislative base for the collaboration platform between the two sectors. Thus, private healthcare facilities may be required to participate in various programs aimed at exchanging experience between the public and private healthcare facilities. This stage will start in December 2016 and will finish in the August 2017.

Stage Three

It is also necessary to make sure that the private sector will be monitored properly. Health Canada will be responsible for this supervision. At that, local governments will be involved in the process as they will implement their supervision as well. This stage will start in August 2017.

Works Cited

Belchetz, Brett. “Brett Belchetz: Canada’s War on Healthcare Economics.” National Post. 2014, Web.

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Brennan, Kelly. “The Unpredictable Prognosis of Medicare – A Book Review on Chronic Condition: Why Canada’s Health-Care System Needs to Be Dragged into the 21st Century by Jeffrey Simpson.” Revue Interdisciplinaire des Sciences de la Santé – Interdisciplinary Journal of Health Sciences, vol. 5, no. 1, 2016, pp. 32-34.

Carson, A. Scott. “The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance.” Managing a Canadian Healthcare System, 2015, Web.

Flood, Colleen M., and Bryan Thomas. “European-Style, Two-Tier System Won’t Save Canadian Health Care.” Huffington Post. 2016.

Hua, Zhongsheng, Wuhua Chen, and Zhe George Zhang. “Competition and Coordination in Two-Tier Public Service Systems Under Government Fiscal Policy.” Production and Operations Management, vol. 25, no. 8, 2016, pp. 1430-1448.

Marchildon, Gregory P., and Sara Allin. “The Public-Private Mix in the Delivery of Health-Care Services: Its Relevance for Lower-Income Canadians.” Global Social Welfare, vol. 3, no. 3, 2016, pp. 161-170.

Simpson, Jeffrey. “Patient User Fees in Canada? Hot Potato.” The Globe and Mail. 2013, Web.

Snyder, Jeremy, et al. “How Medical Tourism Enables Preferential Access to Care: Four Patterns from the Canadian Context.” Health Care Analysis, vol. 23, no. 2, 2016, pp. 1-13.

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