Universal Hospital and Medical Care Insurance in Canada: Utilization and Cost Performance

Abstract

jra *n5LTHOUGH the Canadian provinces have constitu{ tional responsibility for hospital and medical care, a universal program was established in Canada when the federal government offered 5o/5o sharing of hospital and, later, medical care costs (1). The terms of reference 3*4t2X c!.A required to qualify for federal cost-sharing are broad, and there is variation among the ten provinces, particularly in the case of supplemental benefits. Under the new 1977 funding arrangements, even greater variation can be expected. The 50 /5o cost sharing was calculated to pay the poorer provinces more than half their costs and the wealthier provinces slightly less than half. Revenue sharing has been retained in the new 1977 fiscal arrangements. How has the system performed since 1958 when universal hospital insurance began, and since 1968 which marked the beginning of universal medical insurance? Despite initial concerns, the universal plans themselves did not result in persistent runaway utilization, although there were sharp increases in hospital spending between 1958 and 1961 and in medical care spending between 1968 and 1971. The universal plans in Canada were built on existing provincial insurance programs. In the case of hospital insurance, five provinces already had universal insurance when the Hospital and Diagnostic Services Act was adopted and implemented, and there were varying degrees of insurance in the other provinces. No persistent utilization effect can be demonstrated after the universal hospital insurance was adopted, but it may well be that any utilization effect had already been absorbed by the public and private health insurance which predated the universal plan. Per-capita admissions and patient days in general and allied special hospitals (acute-care hospitals) increased between 1% and 2% per year in the 1950S and 196os. Since 1970, patient days per 1,ooo population have fallen slightly. The decrease has