Canada - World Health Organization Regional Office for Europe

Health systems in transition Canada 23
principles of which are upheld by provinces wanting to receive their full share
of the Canada Health Transfer (see Fig. 2.1). By not taxing health benefits
through employment-based insurance, the federal government also provides an
implicit subsidy to encourage PHI coverage for non-medicare health services
and pharmaceuticals.
2.2 Historical background
Provincial governments have a long history of providing subsidies to hospitals
to admit and treat all patients irrespective of their ability to pay. The government
of Ontario set the template through the Charity Aid Act of 1874 in which
non-profit-making municipal, charitable and faith-based (mainly Catholic but
also Protestant and Jewish) hospitals were obliged to accept some regulatory
oversight – and indigent patients on the basis of medical need – in return for a
per diem reimbursement. Private profit-making hospitals were excluded from
this arrangement, thus restricting the growth of such hospitals in Canada. At
the same time, the proliferation of municipal and non-profit-making hospitals
voluntarily serving a public purpose meant that there were few state-owned and
controlled hospitals (Boychuk, 1999). The major exceptions to this evolution
were the provincially administered mental hospitals that emerged in the
twentieth century in response to the poor state of private and nongovernmental
asylums (Dyck, 2011). Cottage hospitals in the coastal fishing communities of
Newfoundland as well as the inpatient institutions for the treatment of severe
and chronic mental illness, tuberculosis and cancer were also run directly
by some provincial governments (Grzybowski & Allen, 1999; Lawson &
Noseworthy, 2009).
As was the case with hospital care of the indigent, Ontario initially led
the way in facilitating financial protection in the event of illness. In 1914, the
provincial government introduced worker’s compensation legislation that
provided medical, hospital and rehabilitation care for all entitled workers in the
event of any work-related accident or injury in return for workers giving up their
legal right to sue employers. This Ontario law, and the Workers’ Compensation
Board (WCB) that it established, became the model for the remaining provinces
(Babcock, 2006). Less than two decades later, Ontario would also be the first
jurisdiction to establish a province-wide medical service plan for all social
assistance recipients (Naylor, 1986; Taylor, 1987).