Coming on the heels of the Castonguay Report which we commented on yesterday, we learn today that Quebec, unlike BC, has not been found in violation of the Canada Health Act even though it does not share information with its Federal counterparts. (click here to read Gloria Galloway's article in today's Globe and Mail). This naturally prompted us to look into the wording of the Canada Health Act.

1) Our first stop was Wikipedia.org (click here) where we found the following wording: “Violations and Penalties - In order to document compliance with the act the federal Minister of Health annually reports to the Canadian Parliament on how the act has been administered by each province over the course of the previous fiscal year.

For non-compliance with the any of the five criteria listed above, the federal government may withhold all or a part of the transfer payment with “regard to the gravity of the default” (Section 15). Thus far all non-compliance issues have been settled through discussion or negotiation. Some argue that the federal government has not actively attempted to enforce these conditions, with particular issues around handling of portability (e.g., the reduction of coverage for residents while traveling abroad) and comprehensiveness (e.g., de-insuring of some medical procedures).

In accordance with section 20, if a province were to violate the prohibition on extra-billing or user charges, the corresponding amount of that collected would be deducted from the transfer payment. Details about these amounts are available from the Canadian government websites.

One aspect of the CHA was provision for reimbursement of funds withheld for extra-billing and user charges if these were eliminated within three years. Although often contentious (e.g., Ontario's physicians went on strike), all provinces complied with the provisions of the Act. Although the amounts withheld were relatively modest - financial penalties totaling $246,732,000 were withheld from the provinces in the first two years—provinces found it difficult to resist the pressure. (They found that many interest groups seeking additional funds would argue that it could be afforded if the province/territory eliminated their extra billing/user fees. Faced with multiple claims on the same pot, most provinces decided that the easiest path was to eliminate these charges.

In 1993, British Columbia allowed approximately 40 medical practitioners to use extra-billing in their practices. In response, the federal government reduced B.C.’s EPF payments by a total of $2,025,000 over the course of four years

In 1996, Alberta had their EPF payment reduced by a total of $3,585,000 over the course of a few years due to the use of private clinics that charged user fees. Newfoundland suffered the loss of $323,000 until 1998 and Manitoba lost a total of $2,056,000 until 1999 from user fees being charged at private clinics. Nova Scotia has also forgone EPF payment for their use of user fees in private clinics.”

2) Our next stop was “The Library of Parliament – Parliamentary Information and Research Services” (click here to access that web-site). There we found a document titled “Canada Health Act: Overview and Options” and in particular “Section E: Penalties for Defaults Under the Act “ and “Section F: : Imposition of Penalties” which begin by stating that: “Penalties under the Canada Health Act are linked to federal transfers to the provinces. More precisely, each provincial health-care insurance plan must comply with the requirements of the Act before the province receives its total entitlement of cash transfers. If a province fails to comply, the federal government may impose a penalty and withhold part or all of the transfers. Between 1984-1985 and 1990-1991, this financial penalty was applied to that portion of EPF cash transfers earmarked for health care. Between 1991-1992 and 1995-1996, financial penalties were not limited solely to federal cash transfers for health care. In fact, the government expanded the penalties to cover other cash transfers. It had become necessary to extend the financial penalty to transfer payments in other fields because of the federal government’s continued restriction on the growth rate of EPF transfers and its specific impact on cash transfers. Studies such as those conducted by the National Council of Welfare in 1991 and Jenness and McCracken in 1993 had predicted that EPF cash transfers to some provinces would be non-existent by the year 2000. These additional withholdings or deductions were not stipulated in the Canada Health Act, but were specifically set out in paragraphs 23.2(1), 23.2(2) and 23.2(3) of the Federal-Provincial Fiscal Arrangements Act, the legislation that established the EPF and that now governs the CHST. These provisions apply as well to the CHST, but have become less relevant with the merger of EPF and CAP transfers into a single envelope. By introducing the CHST, the federal government moved to prevent the erosion of its power to enforce compliance with the Canada Health Act across the country. Obviously, if a province were to decide to forego its cash entitlement under the CHST, it would no longer be required to comply with the requirements of the Canada Health Act. Although the Act will be linked to the new Canada Health Transfer effective 1 April 2004, the penalties will apply to total cash transfers to the provinces for health and social programs.

The financial penalties stipulated in the Act vary depending on whether a default is directly related to extra-billing and user charges or involves failure to satisfy any of the five criteria or the two conditions. Sections 18 to 21 of the Act, which describe the provisions relating to penalties for extra-billing and user charges, stipulate that the federal government may withhold one dollar of cash transfer for every dollar collected through direct patient charges. In the case of failure to satisfy the criteria or conditions, section 15(1)(a) of the Act stipulates that the cash value of the penalty is left to the discretion of the Governor in Council, who sets the amount depending on the “gravity” of the default. As Sheilah L. Martin suggested in a paper published in 1989, the discretionary nature of this penalty does not require the federal government to impose a fine, but leaves it the option of doing so. At one extreme, Cabinet could decide to withhold all CHST cash transfers, and even reduce federal contributions paid as part of other programs. At the other extreme, the federal government could decide not to impose any financial penalty and to confine its action to persuasion and negotiation.

The Act also includes a conflict resolution mechanism for cases where a province violates the requirements of the Act. It is a long process, however, with the result that federal contributions are not reduced immediately. In the event that Health Canada deems that a provincial plan is failing to satisfy any one of the five criteria or the two conditions, under section 14(2) it must inform the province of the problem, obtain its explanations, draft a report on its concerns and, if the provincial Health Minister so requests, hold a meeting to discuss the issue. Section 15 states that where the Governor in Council is convinced that a province no longer meets the criteria and conditions of the Canada Health Act, the Minister of Health may direct by order that federal contributions be reduced or withheld.

3) We then came across an older article titled “Quebec Dodges Health Canada” by Aaron Derfel which appeared on the front page of the “Montreal Gazette” on February 23, 2005, almost 3 years to the day (click here to access that article).

4) Lastly (we had to draw the line somewhere!) we came across a paper written by Sujit Choudhry titled: “The Enforcement of the Canada Health Act” published in the “McGill Law Journal” (click here to access that article).

So for those of you who are interested in digging a little deeper into this question we deliver these web-links (as they are).