The document discusses the history and rationale for eliminating extra billing and user fees in Canada's health care system. It describes how extra billing proliferated in the 1980s due to funding cuts, undermining the principles of accessibility and universality. Several reports from this time recommended banning extra billing, leading to the Canadian Health Act of 1984 which eliminated the practices nationwide. The document argues that extra billing and user fees should continue to be banned, as they pose economic and ethical issues that could erode the social values underlying Canada's universal health care system. Allowing their re-introduction could risk accessibility for those unable to pay and higher overall costs.

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Extra billing and/or user fees:
Why the Canada Health Act of 1984 eliminated them. Does this continue to be a good idea?
Xiomara Arias Fernandez
HESA 4000: Canadian Health Delivery System
Dalhousie University
Fall 2009

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On the road to construct a universally accessible health system directed to health needs.
Early in the 20th century the Canadian federal government was concerned with creating a
system of social security which would also include public health insurance. With the social
changes experienced in Canada after the war, and with the expansion of the power of the federal
and provincial governments, it was clear that a funding intervention was required to fulfill the
public health needs for an affordable health system. (Lazar & St-Hillarie, 2004).
From these preliminaries ideas the government introduced public hospital insurance. This
happened in Saskatchewan in 1945. Later in 1957, the Hospital Insurance and Diagnostic
Services Act (HIDSA) was enacted. The Medical Care Act, (MCA) was proclaimed ten years
later to provide personal health services. Together, the HIDSA and the MCA are often referred to
as Medicare. Manga and Weller (1985) wrote about the positive financial and social
consequences of the creation of the HIDSA and MCA. Both acts helped to progressively
diminish inequalities in the accessibility of hospital care by region, providing equivalent
coverage to both rich and poor, and generated a more proportionate interprovincial assignment of
funds. But according to Manga and Weller not all the results were positive. Expenses were
inflated by high physician incomes due to an increased demand for patient services, and the
individualized health system created produced considerable and unpredictable costs in
government budgets. The solution to this dilemma came in 1977 with the Established Program
Financing Act (EPF) which replaced the preceding acts. The EPF re-established total
accountability to the provinces for health issues and allowed more flexibility in health
programming. However, the EPF act promoted a fragmentation of the health system and a
tendency toward privatization rather than the proclaimed universal coverage encouraged by

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HIDSA and MCA (Medicare). It was under this fragmented atmosphere that government
institutions started to examine EPF regimen detriments, especially those concerned with whether
or not the goals of the Canadian health principles of reasonable access and universal coverage
had been met, and how extra-billing was undermining those goals.
Extra-billing: Reasons to eliminate it.
In 1980, as a consequence of severe recession and a continuing deterioration of federal
finances, contributions of federal funding were limited with the intent to contain costs.
Proliferation of extra-billing was the immediate consequence of underfunding. (Lazar & St.
Hilaire, 2004). As was stated before, at this point the government became concerned about the
effect of extra-billing on detracting from the principles of accessibility and universality
contemplated in Medicare. Physicians argued that they had an inalienable right to extra-bill
patients and that the government’s intentions to ban it were for political reasons rather than for
patient’s wellbeing. They blamed underfunding for the deterioration of Medicare. Meanwhile,
under these premises, injustices and violations in extra-billing regulation were committed. For
instance, Taylor (2009) reported flagrant physician violations of guidelines for extra-billing
welfare patients in Alberta. As a response to these concerns, the Hall report, undertaken in 1980,
pointed out user fees and extra-billing as responsible for the deterioration of Medicare. The Hall
report recommended the adoption of public health insurance (Zukowsky, 1981) and an end to
extra-billing (Taylor, 2009). These recommendations were also supported by the Parliamentary
Task Force on Federal Provincial Arrangements (Manga & Weller, 1981). Commissioner Hall
remarkably reported that: “ If extra-billing is permitted as a right and practiced by physicians in
their sole discretion it will over the years destroy the program…[( Medicare)] [and will create
]… a two-tier system incompatible with the societal level which Canadians have attained” (Hall,

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1980, p. 30 ). From the recommendations in the Hall report a new act was outlined on December
13, 1983. The main purpose of this act was to eliminate user fees and extra-billing by penalizing
hospitals and physicians dollar by dollar (Manga & Weller, 1981) and “facilitating reasonable
access without financial or other barriers” (Taylor, p. 441). That new document was called The
Canadian Health Act (CHA). After the CHA was introduced, a long battle was established by
physicians against the government’s intention of banning the practice of extra-billing, and this
battle was more relevant in some provinces than others. After numerous strikes executed by
specialist practitioners and subsequent meetings, government and physician associations in each
province gradually came to agree on the elimination of extra-billing and user fees, as was
established in the CHA.
The present: Does Banned extra-billing continue to be a good idea?
According to Lazar and St-Hilarie (2004), two of the main assumptions contained in the CHA
are: to keep a public health insurance system across the country and that all residents, rich and
poor, have guaranteed access to medical services. Extra-billing is considered an obstacle that
impedes people from obtaining medical care, and thus is contrary to the accessibility principle of
the CHA. In the same way, user charges are not permitted under the CHA because they also
constitute a barrier or impediment to accessing basic health services for all the populace (Health
Canada, 2009). Canadians are aware of the CHA’s guarantees, thus there is a strong consensus
that these principles must be maintained and defended nationally. In effect, there is nothing
closer to the truth, as expressed by Mendelsohn (2002): “The Canadian public strongly supports
the principles of the Canada Health Act ...” (p.22). However Mendelssohn also states that in
polling data captured from public opinion, almost fifty percent of Canadians in 1995 supported
user fees in hospital visits, but this support was viewed as a way to discourage people from

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overusing the service, not really to bill the healthcare. This point of view is shared by some
experts who also argue that user fees could reduce health expenditure. However, in the view of
many analysts, the need to contain public health costs must not be used as an excuse to dismantle
the Act and that doing this might be counter-productive in terms of diminishing the efficiency of
the system, going against the essence for what it was created. (Madore, 2003). In accordance
with Flood and Choudhry (2002), the experience in the United States, for example, fully evinces
that an increase in private financing does not produce an improved system by itself, in terms of
equity or efficiency. Flood and Choudhry (2002)state that assuming that generally doctors make
recommendations to patients about what care is needed, and that patient trust their physicians’
advice, then dictated user charges may not result in a more appropriate use of services. On the
contrary, Flood and Choudhry denote that when patients are faced with a user fee they could not
attempt to get deserved treatment, which could derive later in higher costs. Furthermore, Flood
and Choudhry add (as cited in Epp et al., 2000; Rice and Morrison, 1994; Stoddart et al., 1993;
Flood, 1996, pp. 1-3; Hutton, 1989; and Deber 2000a and b) that it is no feasible to reduce total
health expenditures if physicians (in response to a drop in demand) continue to provide more
health services to those who can pay them.
From all the concerns described above it is easy to recognize the importance of eliminating
extra-billing and fee-charges in the Canadian health system. Not only economic threats arise
from extra-billing both for the poorest and for public administration, but there are also ethical
issues that potentially would erode the fundamental social values on which the CHA was based.
If reforms should be made in the CHA, it would be a step backward to charge money or to put
more stress on the back of people in times of despair Those potential reforms, if enacted, will
involve risk and a long-term commitment, especially in the political context. This paper is

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conclusive in affirming that user charges are not the path to defend people against the financial
adversity of malady. Instead, banning any additional out-of-pocket expenses guarantees the
quality of care and accessibility that everyone wants and deserves.

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References
Flood, C.M & Choudhry (2002) Strengthening the Foundations: Modernizing the Canada Health
Act. Discussion paper N. 13.Commission on the future of health future in Canada.
Hall, E.M. (1980).Canada’s national provincial health program for the 1980’s.Health services
review’79.Saskatchewan: Craft litho.
Health Canada. (2009). Canada Health Act. Retrieved September 28 2009. At
http://laws.justice.gc.ca/en/showdoc/cs/C-6/bo-ga:s_18/20090929/en#anchorbo-ga:s_18
Lazar, H. & St-Hilaire, F. (Eds.). (2004). Money, politics and health care. Reconstructing the
federal- provincial partnership. Montreal: Institute for research on public policy.
Madore, O. (2003). The Canada health act: overview and options. Current issue review. Library
of the parliament. Government of Canada. Ottawa. Retrieved 28 September 2009 at
http://dsp-psd.tpsgc.gc.ca/Collection-R/LoPBdP/CIR/944-e.htm
Manga, P & Weller, G.R. (1985) The Canada health act of 1984 and the future of the Canadian
Health System.(working paper 85-25). Ottawa University.

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Mendelsohn, M. (2002). Canadians’ Thoughts on Their Health Care System. Preserving the
Canadian model through innovation. Discussion paper, Queen’s University. Commission on the
future of health care in Canada. Retrieved September 20 2009. At
http://www.queensu.ca/cora/_files/MendelsohnEnglish.pdf
.Taylor, M.G. (2009) Health insurance and Canadian public policy: The seven decisions that
created the health insurance system and their outcomes. Montreal: McGill-Queen’s
University Press.
Zukowsky, R.J. (1981). Struggled over the constitution: From the Quebec referendum to the
supreme court. Intergovernmental Relations in Canada: The Year in Review 1980. Vol. 2
Ontario: Queen’s University. Retrieved 20 September 2009 at
http://books.google.ca/books?id=PY9JK6Dlr5gC&printsec=frontcover&dq=Ronald+jam
es+Zukowsky#v=onepage&q=&f=false