Public policy lecture features Dr. David Naylor on Canada’s healthcare system post-pandemic

A stethoscope and patient chart

What questions will need to be addressed about Canada’s healthcare system in a post-COVID-19 world? Dr. David Naylor, physician and professor of medicine at the University of Toronto, delved into this topic during his keynote at the 2020 McLaughlin College Annual Public Policy Lecture held virtually Nov. 12.

Naylor, president emeritus of the University of Toronto and the former dean of the Faculty of Medicine, University of Toronto, presented “Paying for Healthcare, Investing in Health: Options After COVID-19,” and focused on three areas: six decades of healthcare cost-sharing; the implications of funding gridlock; and future challenges in health and healthcare policy.

Dr. David Naylor, physician and professor of medicine at the University of Toronto
Dr. David Naylor, physician and professor of medicine at the University of Toronto

The lecture opened with a summary of what Canadians call Medicare, a system comprised of first-dollar public coverage of general hospital care, diagnostic services and medical doctors’ services. Coverage of other healthcare services, such as pharmaceuticals, long-term care and home care, varies by province and territory, and is covered by a mix of public and private insurance – and often, substantial ‘out-of-pocket’ payments. While Medicare is highly valued by Canadians, Naylor noted that the system has not aged well and Canada’s overall performance was ranked nine out of 11 major industrialized nations assessed in the most recent (2017) Commonwealth Fund league table.

To understand Canada’s current healthcare systems, Naylor reviewed the history of healthcare policymaking and funding arrangements between the federal, provincial and territorial governments. Some highlights from this summary included:

  • The 1957 Hospital Insurance and Diagnostic Services Act and the 1966 Medical Care Act, where the federal government agreed to cost-share one-half of hospital and medical services
  • The federal government’s 1977 Established Program Financing (EPF) Act to replace cost-sharing and introduce ongoing cash transfers (block grants) and tax point transfers, allowing provinces and territories flexibility in their use of federal funds for health services
  • The Canada Health Act in 1984, which consolidated previous federal legislation while imposing financial penalties on provinces and territories that allowed extra billing by physicians or user charges by hospitals
  • From 1991-99, federal health-related cash transfers were scaled back by tens of billions of dollars relative to the levels set by the 1977 agreement
  • In 2001-02, the Jean Chretien government sought advice from a Royal Commission headed by former Saskatchewan Premier Roy Romanow, who affirmed shortfalls in transfers to provinces and territories
  • Romanow pressed the federal government to cover 25 per cent of spending on MDs and hospitals – a benchmark soon raised by premiers to 25 per cent of their total healthcare outlays
  • During this period, two Health Accords were approved, and a third was agreed to in 2004 by premiers and Prime Minister Paul Martin that included base increases to the cash transfer, one-time funding to support long-term care and home care, and a six per cent annual escalator that would continue for a decade
  • In 2011, Harper announced when the 2004 CHC Accord expired there would be a three-year adjustment, where the escalator would be the larger of a three per cent per annum, or a rolling average of GDP growth
  • The current Trudeau government has continued this escalator agreement, while providing one-time finds for home care and mental health services

Summarizing the current flow of funds for healthcare in Canada, Naylor noted $265 billion in total healthcare expenditures in 2019-20 included $186 billion of public spending, $174 billion by provincial and territorial governments. Those outlays were offset by $40 billion from the Canada Health Transfer, and an estimated $20 billion in annual value arising from the 1977 federal tax points transferred to the provinces and the territories.

The historical benchmarks illustrate the uncertainty on what constitutes a fair deal in federal healthcare transfers, said Naylor, adding that depending on the calculations, the current federal contributions land anywhere between a shortfall of $24 billion to a surplus of $14 billion.

Naylor described the current state of Canadian healthcare as “funding gridlock,” further describing Canadian healthcare as stuck in a “1960s model of healthcare delivery,” with public funding concentrated on hospitals and doctors.

What Canada lacks, he said, is a “well-integrated system” of healthcare delivery including alternative models, such as team-based care and virtual services in the U.S., which have broader coverage than Canadian healthcare systems.

Naylor presented options for expanding public coverage in Canada, including some form of Pharmacare, improvements in long-term care, and improvements in home care to make “aging well” more affordable and to mitigate the extent of growth needed in residential seniors’ facilities.

Given fiscal realities, he said these and other potential outlays on healthcare need to be weighed against the yield from investments in the social determinants of health – for instance, a guaranteed annual income or universal basic income to address issues of poverty. If adopted, Naylor suggested, it could be an effective means of improving overall health status and reducing total healthcare expenditures in Canada.

Naylor concluded by asking: “With the COVID-19 vaccines expected to arrive in the spring of 2021, what will the ‘new normal’ be? How will governments resolve the current funding gridlock for our healthcare systems?” There will be many difficult questions that need to be addressed about spending on healthcare and population health, he observed, in our post-COVID-19 future.

The lecture concluded with a lively and interesting round of questioning that dealt with the future of healthcare in Canada post the COVID-19 pandemic. The question period was preceded by breakout room sessions that afforded students the opportunity to meet and get to know the special guests, faculty, staff, and College Fellows who were in attendance.

The video of Naylor’s full lecture is available on the McLaughlin College website at:

McLaughlin College’s Annual Public Policy Lecture is a highlight event of the academic year.