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Chapter 6

FIN 512 Chapter Notes - Chapter 6: Canada Health Act, Canada Pension Plan, Emmett Matthew Hall

Course Code
FIN 512
Giulio Iacobelli

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Chapter 6: Health Care
This chapter is the first of the three that addresses life and health risks. These risks are addressed by:
- Health care plans for the provinces and territories
- Income protection plans
- Life insurance, and
- Retirement plans, which are not covered in this textbook
There are three sources of health care benefits which are summarized in Table 6.1:
1. Government plans
2. Group plans through employers or associations
3. Individual plans
Sources of Coverage
Government Plans
Plans Through Employers
or Associations
Individual Plans
Health Care
(Chapter 6)
Provincial and
Territorial Health Plans
Group Insurance
Individual plans such as
Blue Cross
Travel Insurance
Long-Term Care
(Chapter 7)
Employment Insurance
Canada Pension Plan
disability benefits
Group disability
Disability insurance
Critical illness
(Chapter 8)
Canada Pension Plan
death benefit
(maximum $2500)
Group life insurance
Key person insurance
Individual politics:
Whole Life
Universal Life
Segregated Funds
Canada Pension Plan
retirement benefits
Old Age Security
Program which
includes Old Age
Security Pension (OAS)
and Guaranteed Income
Supplement (GIS)
Registered Pension
Plans (RPP)
Deferred Profit Sharing
Plans (DPSP)
Retirement Account
Registered Retirement
Savings Plan (RRSP)
Individual Pension
Plans (IPP)
Government Health Insurance Plans: Canadians have the benefit of universal health care- health care
coverage available to all residents of a province or territory
- T.C. (Tommy) Douglas is known as the father of Medicare born in Scotland, and settled in Winnipeg
- Douglas came close to having a leg amputated due to a bone infection since his family could not afford a
specialist however, a surgeon offered to operate it for free if his students could attend the surgery, thus
saving his leg and his life (this is said to be the formation of his dream of universal health care)

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Hospital Insurance Plans:
- By the 1920s, Saskatchewan was providing treatment and free hospitalization for tuberculosis patients
- Under Douglas, the Saskatchewan CCF passed the Saskatchewan Hospitalization Act to provide free
hospital care (universal hospital care) in 1946
- Limited provincial hospital insurance plans followed in B.C. and Alberta
- In 1957, the federal Hospital Insurance and Diagnostic Services (HIDS) Act funded 50% of the cost
for any jurisdiction that adopted a universal hospital insurance plan
- The HIDS Act contained 5 conditions that are also the requirements of the current Canada Health Act:
public administration, comprehensiveness, universality, portability, and accessibility
Health Care Plans:
- In 1961 the federal Conservative party under John Diefenbaker created a Royal Commission on Health
Services, led by Supreme Court Justice Emmett Hall
- In 1964, his report, the Hall Report, recommended a national health care plan- a joint federal/
provincial system to cover the costs of preventative health care services and hospital care for everyone
- In 1966, the federal Liberals under Lester Pearson introduced the Medical Care Act of 1966, which
once again paying 50%
- Provinces and territories started charging users fees and allowing extra billing or, in the case of Ontario,
paid 90% of the Schedule of Benefits amount in order to fund increasing medical costs
- In 1980, the Health Services Review, again under Emmett Hall, recommended putting an end to user
fees and extra billing
- In 1984, the federal government passed the Canada Health Act (CHA), which mandated 5 criteria for
the health plans and banned extra billing and user fees
Canada Health Act (CHA)- Provincial and Territorial Health Plans
- The Canada Health Act is Canada’s federal health insurance legislation
- The act sets out the primary objective of Canadian health care policy:
“… To protect, promote, and restore the physical and mental well-being of residents of Canada and to
facilitate reasonable access to health services without financial or other barriers.”
- Our system is based on the principle of “universal health care” for residents of provinces and territories,
comes under provincial jurisdiction, and is based on the Canada Health Act that sets out the minimum
criteria that provinces and territories must meet:
1. Public Administration. The plan must be administered and operated on a non-profit basis by a
public authority accountable to the provincial or territorial government.
2. Comprehensiveness. The plans be comprehensive- it must cover all health services provided by
hospitals, physicians, or dentists (i.e., surgical-dental services that require a hospital setting) and,
where the law of the jurisdiction so permits, similar or additional services rendered by other health
care practitioners.
3. Universality. All of the province or territory’s residents must be covered by the plan based on
uniform terms and conditions. Provinces and territories generally require that residents register with
the plans to establish entitlement, usually as evidenced by having a valid health card. Newcomers to
Canada, such as landed immigrants or Canadians returning from other countries to live in Canada,
may be subject to a waiting period not to exceed three months as set by a province or territory before
they are entitled to receive insured health services.
4. Portability. Converge must be portable form one province to another, i.e., you are never not covered
while in Canada. The waiting period from province-to-province must not exceed three months. In
addition, the following applies:

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a. Residents temporarily absent from their home province or territory or from Canada must
continue to be covered for insured health services during their absence.
i. This does not entitle a person to seek services in another province, territory, or
ii. It is intended to permit a person to receive necessary services in relation to an urgent
or emergency need when absent from Canada temporarily, such as on business or
b. While temporarily absent in another province or territory, insured services are paid at the
host province’s rate- the rate in the jurisdiction where the patient needs treatment.
c. While temporarily out of the country, insured services are to be paid at the home province’s
rate- the rate where the patient normally lives. (Note: This is where the problem arises when
travelling in, for instance, the United States, where the costs are significantly higher.)
d. Prior approval by the health care insurance plan in a person’s home province or territory may
also be required before coverage is extended for elective (non-emergency) services to a
resident while temporarily absent from his or her province or territory. This means that if
someone goes to the United States for a hip replacement, for instance, he or she needs prior
approval from the home province’s plan, which may reimburse either the home’s province’s
rate or the full cost.
5. Accessibility. The same services must be provided for all residents in a province or territory so that
insured persons have reasonable access to insured hospital, medical, and surgical-dental services on
uniform terms and conditions, unprecluded or unimpeded, either directly or indirectly, by charges
(user charges or extra-billing) or other means (e.g., discrimination on the basis of age, health status,
or financial circumstances). In addition, health care insurance plans of the province or territory must
a. Reasonable compensation to physicians and dentists for all the insured health services they
provide, and
b. Payment to hospitals to cover the cost of insured health services.
- Reasonable access in terms of physical availability of medically necessary services has been
interpreted under the Act using a “where and as available” rule
- Thus, residents of a province or territory are entitled to have access on uniform terms and
conditions to insured health services at the settling where the services are provided and as the
services are available in that setting
What is covered?
- The Canada Health Act prescribes the two services- extended heath care and insured health- to be
included in a provincial or territorial plan and provided to residents of the jurisdiction
- Extended Health Care Services: these services are:
Nursing home intermediate care services,
Adult residential care service,
Home care service, and
Ambulatory (aisle in a church) health care service.
- Insured Health Services: this means hospital services, physician services, and surgical-dental services
provided to insured persons, but does not include any health services that a person is entitled to and
eligible for under any other act of Parliament and provincial Workers’ Compensation
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