I. INTRODUCTION
The Canadian Medical Association (CMA) commends the federal government, in its second mandate, for continuing the pre-budget consultation process. This open process encourages public dialogue in the finance and economics of the country and the CMA appreciates the opportunity to submit its views to the House of Commons Standing Committee on Finance.
Many issues were raised by the CMA and other health organizations, with members of the Standing Committee, at the "health roundtable" held on October 28, 1997. This brief provides greater detail of those concerns that were discussed by the members of the CMA delegation.
II. BACKGROUND
"Good health is fundamental to the quality of life of every Canadian. In this century, we have learned a great deal about the effective treatment of illness and disease, which requires early access to appropriate and high-quality health care services." 1
Over the past year, Canadians, their physicians and the provincial/territorial governments have all been voicing their concerns about the state of the health care system across the country. In every instance it is a united voice that shares concerns about access to quality health care services as well as the sustainability of the health care system. A consistent theme is "will the health care system be there for me or my family when needed"?
Canadians perceive that access to services has further deteriorated over the past year. CMA surveys undertaken by the Angus Reid Group between the spring of 1996 and 1997 clearly demonstrate that Canadians perceive a deterioration in many critical areas of the health care system. If one looks at indicators such as waiting times over the past two years it is quite clear that Canadians have felt the cutbacks in the health care sector:
* in 1997 65% reported that waiting times in emergency departments had worsened, up from 54% in 1996,
* 63% reported that waiting times for surgery had worsened, up from 53% in 1996,
* 50% reported that waiting times for tests had worsened, up from 43% in 1996,
* 49% reported that access to specialists had worsened, up from 40% in 1996,
* 64% reported that availability of nurses in hospital had worsened, up from 58% in 1996.
Physicians not only provide direct care to their patients but are also concerned about their patients' access to quality health care.
In Ontario, more than 16,000 were reported to be waiting for placement in long-term care institutions 2. In Newfoundland patients requiring heart surgery have had to be sent to other provinces to alleviate growing waiting lists 3 .
The Conference of Provincial/Territorial Ministers of Health has expressed concerns about the ability of provinces and territories to maintain current services. The Ministers state that "Federal reductions in transfer payments have created a critical revenue shortfall for the provinces and territories which has accelerated the need for system adjustments and has seriously challenged the ability of provinces and territories to maintain current services. Federal funding reductions are forcing the acceleration of change beyond the system's ability to absorb and sustain adjustments". 4
The concerns of the Provincial/Territorial Ministers of Health about the ability of the system to absorb and sustain adjustments are well founded as demonstrated by the anxieties expressed by the public and by physicians. The CMA has clearly stated and continues to state that "health cuts hurt everyone".
III. FEDERAL HEALTH CARE FUNDING AND THE CANADA HEALTH AND SOCIAL TRANSFER (CHST)
(i). Getting the facts straight
Prior to April 1, 1996 the federal government's commitment to insured health services, post-secondary education and social assistance programs could be readily determined since the federal government made separate payments 5 to the provinces/territories in each of these areas. However, with the introduction of the Canada Health and Social Transfer (CHST), on April 1, 1996, the federal government combined all of its payments into one transfer payment to the provinces and territories. The net result is that there are no separately identifiable contributions to health, post-secondary education or social assistance programs. The federal government's accountability and commitment to health care have been blurred.
However, prior to the CHST, the federal government's diminishing commitment to health care could at least be documented. Under the Established Programs Financing (EPF) arrangements the federal government has unilaterally revised the EPF funding formula eight times over the past decade. During the period 1986/87 to 1995/96, it was estimated that $30 billion in cash transfers has been withheld from health care (and an additional $12.1 billion for post-secondary education - for a total of $42.1 billion) 6.
Federal "offloading" has forced all provinces/territories to make do with significantly less resources for their health care systems.
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Table 1: Canada Health and Social Transfer (in $ billions)
Year
Total
Entitlement
(1)
Tax Point
Transfer
(2)
Cash
Entitlement
(3)
Quebec
Abatement
(4)
Cash
Payments
(5)
Cumulative
Reductions
from 95/96
(6)
1997
Budget
Health Items
(7)
1995-96
29.7
11.2
18.5
1.9
16.6
0.0
1996-97
26.9
11.9
15.0
2.0
13.0
(3.6)
1997-98
25.1
12.6
12.5
2.1
10.4
(9.8)
0.1
1998-99
25.8
13.3
12.5
2.2
10.3
(16.1)
0.1
1999-00
26.5
14
12.5
2.3
10.2
(22.5)
0.1
2000-01
27.1
14.6
12.5
2.4
10.1
(29.0)
2001-02
27.8
15.3
12.5
2.5
10.0
(35.6)
2002-03
28.6
16.1
12.5
2.6
9.9
(42.3)
[TABLE END]
The September 1997 Throne Speech stated that the government "... will introduce legislation to increase to $12.5 billion a year the guaranteed annual cash payment to provinces and territories under the Canada Health and Social Transfer" 7. Table 1 illustrates what the $12.5 billion cash entitlement will mean in terms of actual cash payments in 2002-03.
The important point to remember is that this so called "increase" in the cash entitlement (3) is merely a stop in cuts . For 1998-99 the previous cash entitlement would have dropped to $11.8 billion with a further drop in 1999-00 to $11.1 billion, whereas cash entitlements are now stabilized at $12.5 billion.
However, cash payments will continue to drop into the foreseeable future. Cash payments (5) exclude the Quebec abatement which is comprised of tax points not cash payments.
For Canadians the CHST has meant, and continues to mean, less federal government commitment to our health care system and has compromised the federal government's ability to preserve and enhance national standards.
(ii). Implications for the future of health care in Canada
The reduction in federal government funding has not only compromised the federal government's ability to preserve and enhance national standards but this continued policy of "under-funding" has compromised access to quality health care for Canadians. As previously mentioned, declining public sector resources allocated to health care has manifested itself in the form of longer waiting times in emergency departments, for surgery, for diagnostic tests and in decreased access to specialists and decreased availability of nurses in hospitals.
In the federal government's 1997/98 budget released this past February much fanfare was made about sustaining and improving Canada's health care system. The government announced three health care initiatives 8 totalling $300 million in expenditures over 3 years, or $100 million per year.
If, on the other hand, one looks at the accumulated reduction in CHST cash payments to the provinces/territories during the same 3 years when the federal government will spend this $300 million it can be seen that the accumulated reductions total $18.9 9 billion. Therefore, during the same 3-year period the "investment" in health care by the federal government represents 1.5% of the reductions to cash payments to the provinces and territories during the same period.
For the longer term, the federal government can demonstrate its commitment to health care by linking growth in CHST cash payments to factors other than the economy. The factors that are becoming increasingly important are those such as technological change, population growth and aging. Such linkage of cash payments would be less subject to fluctuations in the economy and would be an acknowledgement of the impact of technological and population structure changes on the need for health care services.
From Table 2, which shows 1994 per capita provincial government health expenditures by age group, it can be concluded that as the population of Canada ages the cost structure of health care increases reflecting the fact that as we age we make greater use of the health care system to maintain our health. The age group 65 and over continues to grow, in 1994 11.9% of the population was over the age of 65, in 2016 this is projected to increase to 16% and by 2041 to 23%. 10
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Table 2: Per Capita Provincial Government Expenditures by Age Group, Canada 1994 11
Age Group
$ per Capita
Increase
0-14
514
15-44
914
77.8%
45-64
1446
58.2%
65+
6,818
371.5%
Total
1,642
[TABLE END]
In other areas of health care the CMA commends the federal government for their recent commitments to applied health services research.
On an international basis however, Canada does not fare very well. In fact, on a per capita basis Canada came in last out of the five G-7 countries for which recent data were available. Figure 1 shows the per capita health R&D expenditures for G7 countries for which 1994 data are available. Canada's per capita spending was $22 (U.S.), compared with $35 for Japan, $59 for the U.S., $63 for France and $78 for the U.K. 12
While applied health services research is important, it must be recognized that research is a continuum beginning with basic biomedical research, moving to clinical research and ending with applied health services research. The CMA is concerned with the governments plans to cut the annual budget of the Medical Research Council (MRC) from $238 million in 1997-98 to $219 million in 2000-01.
In Prime Minister Jean Chrétien's reply to the Speech from the Throne on September 24, 1997 he states that there is " . . . no better role for government than to help young Canadians prepare for the knowledge-based society of the next century." He then makes a commitment to establish, ". . . at arms-length from government, a Canada Millennium Scholarship Endowment Fund." which is to reward academic excellence. The Government of Canada should also be reminded that a knowledge-based society and scholarship also requires a commitment to research funds. Therefore the CMA calls on the Federal Government to establish national targets for spending and an implementation plan for health care research. Such an approach would buttress the other initiatives as announced by the Prime Minister.
To restore access to quality health care for all Canadians, the CMA respectfully recommends:
1. At a minimum, that the federal government restore CHST cash entitlements to 1996/97 levels.
2. That, beginning April 1, 1998, the federal government fully index CHST cash payments through the use of a combination of factors that would take into account: technology, economic growth, population growth and demographics.
3. That the federal government establish a national target (either in per capita terms or as a proportion of total health spending) and an implementation plan for health research and development spending including the full spectrum of basic biomedical to applied health services research, with the objective of improving Canada's position relative to other G-7 countries where we now rank last among the five G-7 countries for which recent data are available.
IV. HEALTHY PUBLIC POLICY
The federal role in funding health care is clearly important to physicians and to their patients given its influence on access to quality health care services. However, there are other important issues that the CMA would like to bring to the attention of the Standing Committee on Finance.
(i). Tobacco Taxation
Smoking is the leading preventable cause of premature mortality in Canada. The most recent estimates suggest that more than 45,000 deaths annually in Canadaaredirectlyattributable to tobacco use.,
The estimated economic cost to society from tobacco use in Canada has been estimated from $11 billion to $15 billion. Tobacco use directly costs the Canadian health care system $3 billion to $3.5 billion annually. These estimates do not consider intangible costs such as pain and suffering.
CMA is concerned that the 1994 reduction in the federal cigarette tax has had a significant effect in slowing the decline in cigarette smoking in the Canadian population, particularly in the youngest age groups - where the number of young smokers (15-19) is in the 22% to 30% range and 14% for those age 10-14.
A 1997 Canada Health Monitor Survey found that smoking among girls 15-19 is at 42%. A Quebec study found that smoking rates for high school students went from 19% to 38%, between 1991 and 1996.
The CMA understands that tobacco tax strategies are extremely complex. Strategies need to consider the effects of tax increases on reduced consumption of tobacco products with increases in interprovincial/territorial and international smuggling. In order to tackle this issue, the government could consider a selective tax strategy. This strategy requires continuous stepwise increases to tobacco taxes in those selective areas with lower tobacco tax (i.e., Ontario, Quebec and Atlantic Canada).
The goal of selective increases in tobacco tax is to increase the price to the tobacco consumer over time (65-70% of tobacco products are sold in Ontario and Quebec). The selective stepwise tax increases will approach but may not achieve parity amongst all provinces however, the tobacco tax will attain a level such that inter-provincial/territorial smuggling would be unprofitable. The selective stepwise increases would need to be monitored so that the new tax level and US/Canadian exchange rates does not make international smuggling profitable. The objectives of this strategy are:
* reduce tobacco consumption;
* minimize interprovincial/territorial smuggling of tobacco products; and
* minimize international smuggling of tobacco products.
The selective stepwise increase in tobacco taxes can be combined with other tax strategies. The federal government should apply the export tax and remove the exemption available on shipments in accordance with each manufacturers historic levels. The objective of implementing the export tax would be to make cross-border smuggling unprofitable. The ultimate goals for implementing this strategy are:
* reduce international smuggling of tobacco products;
* reduce and/or minimize Canadian consumption of internationally smuggled tobacco products.
The federal government should establish a dialogue with the US federal government. Canada and the US should hold discussions regarding harmonizing US tobacco taxes to Canadian levels at the factory gate. Alternatively, US tobacco taxes could be raised to a level that when offset with the US/Canada exchange rate differential renders international smuggling unprofitable. The objective of implementing the harmonizing US/Canadian tobacco tax levels (at or near the Canadian levels) would be to increase the price of internationally smuggled tobacco products to the Canadian and American consumers. The ultimate goals for implementing this strategy are:
* reduce risk of international smuggling of tobacco products from both the Canadian and American perspective;
* reduce and/or minimize Canadian/American consumption of internationally smuggled tobacco products.
4. The Canadian Medical Association is recommending that the federal government follow a comprehensive integrated tobacco tax policy:
(a) That the federal government implement selective stepwise tobacco tax increases to achieve the following objectives:
* reduce tobacco consumption,
* minimize interprovincial/territorial smuggling of tobacco products,
* minimize international smuggling of tobacco products;
(b) That the federal government apply the export tax on tobacco products and remove the exemption available on tobacco shipments in accordance with each manufacturers historic levels;
(c) That the federal government enter into discussions with the US federal government to explore options regarding tobacco tax policy, bringing US tobacco tax levels in line with or near Canadian levels, in order to minimize international smuggling.
The Excise Act Review, A Proposal for a Revised Framework for the Taxation of Alcohol and Tobacco Products (1996), proposes that tobacco excise duties and taxes (Excise Act and Excise Tax Act) for domestically produced tobacco products be combined into a new excise duty and come under the jurisdiction of the Excise Act. The new excise duty is levied at the point of packaging where the products are produced. The Excise Act Review also proposes that the tobacco customs duty equivalent and the excise tax (Customs Tariff and Excise Tax Act) for imported tobacco products be combined into the new excise duty [equivalent tax to domestically produced tobacco products] and come under the jurisdiction of the Excise Act. The new excise duty will be levied at the time of importation.
The CMA supports the proposal of the Excise Act Review. It is consistent with previous CMA recommendations calling for tobacco taxes at the point of production.
(ii). Tobacco Control
Taxation should be used in conjunction with other strategies for promoting healthy public policy, such as, programs for tobacco prevention and cessation. The Liberal party, recognising the importance of this type of strategy , promised:
"...to double the funding for the Tobacco Demand Reduction Strategy from $50 million to $100 million over five years, investing the additional funds in smoking prevention and cessation programs for young people, to be delivered by community organizations that promote the health and well-being of Canadian children and youth".
The CMA applauds the federal government's efforts in the area of tobacco prevention and cessation. However, a time limited investment is not enough. More money is required for investment in this area. Program funding is required for more efforts and programs in tobacco prevention and cessation. A possible source for this type of program investment could come from tobacco tax revenues or the tobacco surtax.
5. In the short term, the Canadian Medical Association calls upon the federal government to fulfil the its promise to invest $100 million, over five years, into the Tobacco Demand Reduction Strategy. In the longer term, the Canadian Medical Association calls upon the federal government to establish stable program funding for its comprehensive tobacco control strategy, including smoking prevention and cessation.
(iii). Non-taxable health benefits
The federal government is to be commended for its decision to maintain the non-taxable status of supplementary health benefits. This decision is an example of the federal governments' commitment to maintain good tax policy that supports good health policy (the current incentive fosters risk pooling).
Approximately 70% or 20 million Canadians rely on full or partial private supplementary health care benefits (e.g., dental, drugs, vision care, private duty nursing, etc.). As governments reduce the level of public funding, the private component of health expenditures is expanding. Canadians are becoming increasingly reliant on the services of private insurance.
In the context of funding those health care services that remain public benefits, the government cannot strike yet another blow to individual Canadians and to Canadian business by taxing the very benefits for which taxes were raised.
In terms of fairness, it would seem unfair to "penalize" 70% of Canadians by taxing supplementary health benefits to put them on an equal basis with the remaining 30%. It would be preferable to develop incentives to allow the remaining 30% of Canadians to achieve similar benefits attributable to the tax status of supplementary health benefits.
If supplementary health benefits were to become taxable, it is likely that young healthy people would opt for cash compensation instead of paying taxes on benefits they do not receive. These Canadians would become uninsured for supplementary health services. It follows that employer-paid premiums may increase as a result of this exodus in order to offset the additional costs of maintaining benefit levels due to diminishing ability to achieve risk pooling. In addition,
6. That the current federal government policy with respect to non-taxable health benefits be maintained.
V. FAIR AND EQUITABLE TAX POLICY
CMA has demonstrated that good economic policy reinforces good health policy in past submissions to the Standing Committee on Finance. The CMA again reiterated the important role that fair tax policy plays in supporting healthy public policy.
(i). The Goods and Services Tax (GST)& the Harmonized Sales Tax (HST)
The CMA strongly believes in a tax system that is fair and equitable. This point has been made on several occasions to the Standing Committee on Finance. In particular, the point was stressed as part of the Standing Committee's consultation process leading to the report "Replacing the GST: Options for Canada".
In the case of the GST, however, the reality is that physicians as self-employed Canadians are singled out and discriminated against by virtue of not being able to claim input tax credits (ITCs) since medical services are designated as "tax exempt".
The CMA does not dispute the importance that the federal government has attached to medical services such that Canadians are not subject to GST/HST for having availed themselves of such medical services from their physician. However, the GST/HST are consumption taxes and as such are paid for by the end consumer.
If, however, government determines that such a consumption tax should not be applied to the consumers (in this case physicians' patients) of a particular good or service it behooves government not to implement half measures that bring into question the equity and fairness of the Canadian tax system.
While other self-employed professionals and small business claim ITCs, an independent (KPMG) study has estimated that physicians have "over contributed" in terms of unclaimed ITCs to the extend of $57.2 million per year. Since the inception of the GST and by the end of this calendar year, physicians will have been unfairly taxed in excess of $400 million. All this for providing a necessary service that has been deemed so important by government.
Physicians are not asking for special treatment. What they are asking for, however, is to be treated in a fair and equitable manner like other self-employed Canadians and small businesses. Unlike other businesses and professionals, physicians cannot recoup the GST/HST by claiming ITCs or passing the GST/HST onto customers/patients.
The federal government has acknowledged the inequitable impact of the GST/HST on other providers in the health care sector. Municipalities, universities, schools and hospitals have been given special consideration because they, like physicians, are not able to pass the GST/HST on to their clients. Hospitals have been afforded an 83% rebate for purchases made in providing patient care while physicians must absorb the full GST/HST costs on purchases also made in providing patient care. At a time when health policy measures are attempting to expand community-based practices, the current tax policy (and now harmonized tax policy) which taxes supplies in a clinical practice setting but not in a hospital setting acts to discourage this shift in emphasis.
To complicate matters further, the recent agreement between the federal government and some Atlantic provinces to harmonize their sales taxes will make matters worse for physicians. With no ability to claim ITCs, physicians will, once again, have to absorb the additional costs associated with the practice of medicine. It has been estimated that harmonization will cost physicians in Atlantic Canada an additional $4.7 million each year (over and above the current GST inequity).
In the current fiscal environment, this unresolved issue does not help matters when it comes to physician recruitment and retention across the country. Furthermore, for established physicians who have had to live with the current policy, the GST/HST serves as a constant reminder that the basic and fundamental principles of equity and fairness in the tax system is not being extended to the physicians of Canada.
To date, the CMA has made representations to the Minister of Finance and Finance Department Officials but yet to no avail. We look to this Committee and to the federal government to not only ensure that the tax system is perceived to be fair and equitable but that it is in fact fair and equitable to all members of society.
The unfairness of the GST/HST, as applied to medical services, has raised the ire of physicians and has made them question their sense of fair play in Canada's tax system.
In the interests of fairness and equity, the CMA respectfully recommends the following:
7. The CMA recommends that health care services funded by the provinces and territories be zero-rated.
The above recommendation could be accomplished by amending the Excise Tax Act as follows:
(1). Section 5 part II of Schedule V to the Excise Tax Act is replaced by the following:
5. "A supply (other than a zero-rated supply) made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes)."
(2). Section 9 Part II of Schedule V to the Excise Tax Act is repealed.
(3). Part II of Schedule VI to the Excise Tax Act is amended by adding the following after section 40:
41. A supply of any property or service but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government under a plan established under an Act of the legislature of the province to provide for health care services for all insured persons of the province.
Our recommendation fulfils at least two over-arching policy objectives: 1) strengthening the relationship between good economic policy and good health policy in Canada; and 2) applying the fundamental principles that underpin our taxation system (fairness, efficiency, effectiveness), in all cases.
(ii). Registered Retirement Savings Plan (RRSP)
Experts have stated that there are (at least) two fundamental goals of retirement savings: (1) to guarantee a basic level of retirement income for all Canadians; and, (2) to assist Canadians in avoiding serious disruption of their pre-retirement living standards upon retirement. Looking at the demographic picture in Canada, we can see that an increasing portion of society is not only aging, but is living longer. Assuming that current demographic trends will continue and peak in the first quarter of the next century, it is important to recognize the role that private RRSPs savings will play in ensuring that Canadians may continue to live dignified lives well past their retirement from the labour force.
This becomes even more critical when one considers that Canadians are not setting aside sufficient resources for their retirement. Specifically, according to Statistics Canada, it is estimated that 53% of men and 82% of women starting their career at age 25 will require financial aid at retirement age - only 8% of men and 2% women will be financially secure.
The 1996 federal government policy changes with respect to RRSP contribution limits run counter to the White Paper released in 1983 (The Tax Treatment of Retirement Savings), where the House of Commons Special Committee on Pension Reform recommended that the limits on contributions to tax-assisted retirement savings plans be amended so that the same comprehensive limit would apply regardless of the retirement savings vehicle or combination of vehicles used. In short, the Liberal government endorsed the principle of "pension parity".
According to three more recent papers released by the federal government, the principle of pension parity would have been achieved between money-purchase (MP) plans and defined benefit (DB) plans had RRSP contribution limits risen to $15,500 in 1988. The federal government postponed the scheduling of the $15,500 limit for seven years, that is achieving the goal pension parity was delayed until 1995.
In its 1996 Budget Statement, the federal government altered its course of action and froze the dollar limit of RRSPs at $13,500 through to 2003/04, with increases to $14,500 and $15,500 in 2004/05 and 2005/06, respectively. As well, the maximum pension limit for defined benefit registered pension plans will be frozen at its current level of $1,722 per year of service through 2004/05. This is a de facto increase in tax payable. The CMA is frustrated that ten years of careful and deliberate government planning around pension reform has not come to fruition, in fact if the current policy remains in place will have taken more than 17 years to implement (from 1988 to 2005).
As a consequence, the current policy of freezing RRSP contribution limits and RPP limits without making adjustments to RRSP limits to achieve pension parity serves to maintain inequities between the two plans until 2005/2006. This is patently unfair for self-employed Canadians who rely on RRSPs as their sole vehicle for retirement planning.
CMA respectfully recommends to the Standing Committee:
8. That the dollar limit of RRSPs at $13,500 increase to $14,500 and $15,500 in 1998/1999 and 1999/2000, respectively. Subsequently, dollar limits increase at the growth in the yearly maximum pensionable earnings (YMPE).
VI. SUMMARY OF RECOMMENDATIONS
With the future access to quality health care for all Canadians at stake, the CMA strongly believes that the federal government must demonstrate that it is prepared to take a leadership role and re-invest in the health care of Canadians.
The CMA therefore makes the following recommendations to the Standing Committee in its deliberations:
Canada Health and Social Transfer (CHST)
1. At a minimum, that the federal government restore CHST cash entitlements to 1996/97 levels.
2. That, beginning April 1, 1998, the federal government fully index CHST cash payments through the use of a combination of factors that would take into account: technology, economic growth, population growth and demographics.
3. That the federal government establish a national target (either in per capita terms or as a proportion of total health spending) and an implementation plan for health research and development spending including the full spectrum of basic biomedical to applied health services research, with the objective of improving Canada's position relative to other G-7 countries where we now rank last among the five G-7 countries for which recent data are available.
Tobacco Taxation
4. The Canadian Medical Association is recommending that the federal government follow a comprehensive integrated tobacco tax policy:
(a) That the federal government implement selective stepwise tobacco tax increases to achieve the following objectives:
< reduce tobacco consumption,
< minimize interprovincial/territorial smuggling of tobacco products,
< minimize international smuggling of tobacco products;
(b) That the federal government apply the export tax on tobacco products and remove the exemption available on tobacco shipments in accordance with each manufacturers historic levels;
(c) That the federal government enter into discussions with the US federal government to explore options regarding tobacco tax policy, bringing US tobacco tax levels in line with or near Canadian levels, in order to minimize international smuggling.
Tobacco Control
5. In the short term, the Canadian Medical Association calls upon the federal government to fulfil the its promise to invest $100 million, over five years, into the Tobacco Demand Reduction Strategy. In the longer term, the Canadian Medical Association calls upon the federal government to establish stable program funding for its comprehensive tobacco control strategy, including tobacco prevention and cessation.
Non-Taxable Health Benefits
6. That the current federal government policy with respect to non-taxable health benefits be maintained.
The Goods and Services Tax (GST)& the Harmonized Sales Tax (HST)
7. The CMA recommends that health care services funded by the provinces and territories be zero-rated.
Registered Retirement Savings Plan (RRSP)
8. That the dollar limit of RRSPs at $13,500 increase to $14,500 and $15,500 in 1998/1999 and 1999/2000, respectively. Subsequently, dollar limits increase at the growth in the yearly maximum pensionable earnings (YMPE). 13
1 Liberal Party, Securing Our Future Together. The Liberal Party of Canada, , Ottawa, 1997. p. 71.
2 Lipovenko, D,1997: Seniors face shortage of care. Globe & Mail [Toronto]; Feb 26 Sect A:5
3 Joan Marie Aylward, Minister of Health, Newfoundland and Labrador, public statement, May 14, 1997
4 Conference of Provincial/Territorial Ministers of Health, A Renewed Vision for Canada's Health System. January 1997. p. 7.
5 Thomson, A., Diminishing Expectations - Implications of the CHST, [report] Canadian Medical Association, Ottawa. May, 1996.
6 Thomson A: Federal Support for Health Care: A Background Paper. Health Action Lobby, June 1991.
7 Speech from the Throne to Open the First Session Thirty-Sixth Parliament of Canada. Ottawa; 1997 Sept 23.
8 Health Transition Fund: $150 million over 3 years - to help provinces to test ways to improve their health system, for example, new approaches to home care, drug coverage, and other innovations.
Canada Health Information System: $50 million over 3 years - to create a network for health care providers and planners for sharing information.
Community Action Program for Children: $100 million over 3 years - for support of community groups for parent education for children at risk and for Canada Prenatal Nutrition Program to ensure the birth of healthy babies.
9 See Table 1: Cumulative reductions to 1999/00 of $22.5 billion subtracting $3.6 billion for 1996/97 gives a cumulative reduction during 1997/98 to 1999/00 of $18.9 billion.
10 Statistics Canada, Population Projections for Canada, Provinces and Territories 1993-2016. Ottawa: Statistics Canada; 1994. p. 73. Cat no 91-520 [occasional].
11 Health Canada, National Health Expenditures in Canada, 1975-1994 [Full Report]. Ottawa: Health Canada; January 1996. p. 41.
12 Organization for Economic Cooperation and Development. OECD Health Data 97. Paris: OECD; 1997.
13 Cunningham R, Smoke and Mirrors: The Canadian War on Tobacco, International Development Research Centre, Ottawa, Canada, 1996. p. 8.
"Restoring Access to Quality Health Care" 1998 Pre-Budget Consultations Page " 1998 Pre-Budget Consultations Page
The impact of the Goods and Services Tax (GST) and the proposed Harmonized Sales Tax (HST) on Canadian physicians : Brief submitted to the House of Commons Standing Committee on Finance
The Canadian Medical Association (CMA) commends the federal government for its clear and open process, and for encouraging a dialogue in areas of tax policy and economics. Canadians from all walks of life look to the government for strong and constructive leadership in this area. The CMA therefore appreciates the opportunity to present its views to the House of Commons Standing Committee on Finance as it considers Bill C-70 "An Act to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account Act and related Acts."
The CMA has appeared before the Committee on several occasions when it has considered matters pertaining to federal tax policy in Canada. In addition to our submissions, as part of the government's pre-budget consultation process, the CMA appeared before the Committee when it examined a number of tax policy alternatives to the Goods and Services Tax (GST) in 1994. 1
At that time, the CMA clearly articulated the medical profession's concerns about the need to implement a federal sales tax system that is simplified, fair and equitable for all. The CMA remains strongly committed to the principles that underpin an efficient and effective sales tax system. However, it is of the strong view that there is, on the one hand, a need to review the relationship between sales tax policy and health care policy in Canada, and between the sales tax policy and the physicians as providers of services, on the other.
Canada's health care system is a defining characteristic of what makes Canada special. It is no secret that funding for the health care system is under stress and all providers, including physicians, are being asked to shoulder their responsibility in controlling costs and responding to this fiscal challenge. However, physicians have had their costs of providing medical services increased by the federal government through the introduction of the GST.
Specifically, the introduction of the GST as it applies to physicians serves as a constant reminder that there still remain some tax policy anomalies - that, without amendment, their consequences will be significantly magnified with the introduction of a proposed harmonized sales tax (HST) on April 1, 1997, as was the case with the introduction of the Quebec Sales Tax (QST) on July 1, 1992.
The tax anomaly is a result of the current categorization of medical services as "tax exempt" under the Excise Tax Act. As a consequence, physicians are, on the one hand, in the unenviable position of being denied the ability to claim a GST tax refund (that is, denied the ability to claim input tax credits - ITCs), on the medical supplies (such as medical equipment, medical supplies, rent, utilities) necessary to deliver quality health care, and on the other, cannot pass the tax onto those who purchase such services (i.e., the provincial and territorial governments). Physicians, from coast to coast, are understandably angry that they have been singled out for unfair treatment under the GST, QST and the soon to be implemented HST.
II. BACKGROUND
The GST was designed to be a " consumer-based tax" where the tax charged for purchases during the "production process" would be refunded - with the consumer, not producer of a good or a service, bearing the full burden of the tax. As a result, self-employed individuals and small businesses are eligible to claim a tax refund of the GST from the federal government on purchases that are required in most commercial activities. It is important to understand that those who can claim a tax refund under the GST in most commercial activities will still be able to do so with the proposed introduction of a harmonized sales tax in Atlantic Canada. The rate is proposed to be set at 15% (7% federal tax, 8% provincial tax).
In the case of medical services, the consumer (i.e., the one who purchases such services) is almost always the provincial and territorial governments. Since the provincial and territorial governments do not pay GST (due to their Constitutional exemption), one would have expected the cost of providing medical services to be free of GST. However, this is not the case. It is difficult to reconcile federal health care policies to preserve and protect publicly funded health care with tax policy which singles out and taxes the costs of medical services.
Regrettably, physicians find themselves in an untenable situation of "double jeopardy". This is patently unfair and on the basis of the fundamental principles of administering a fair and equitable tax system should be amended accordingly.
In an effort to document the impact of the federal government's decision to designate medical services as tax exempt, an independent study by the accounting firm KPMG estimated that physicians' costs increased by $60 million of GST per year. 2 Since 1991, this total is now in excess of $360 million.
The recent agreement between the federal government and Atlantic provinces (except Prince Edward Island) to harmonize their sales taxes will make matters significantly worse for physicians as the HST broadens the provincial tax base to essentially that of the GST in those provinces. With no ability to claim a tax refund on the GST they currently pay (and the proposed HST effective April 1, 1997), physicians once again will have to absorb the additional costs associated with the practice of medicine.
In assessing the impact of the proposed HST, KPMG has estimated that physicians in New Brunswick, Nova Scotia, and Newfoundland will be out-of-pocket an additional $4.7 million each year because they are not eligible for a tax refund for their purchases. 3
The medical profession, is not looking for special treatment. What we are asking for is to be treated no differently than other self-employed Canadians and small businesses who have the opportunity to claim ITCs, and to be placed on the same footing with other health care providers who have the ability to recoup GST costs.
Physicians, as self-employed individuals are considered small businesses for tax purposes, therefore, it seems entirely reasonable that they should have the same tax rules that apply to other small businesses. This is a question of fundamental fairness.
III. POLICY CONTEXT
Prior to the introduction of the GST, the federal sales tax (FST) was included in the price of most goods (not services) that were produced in, or imported to, Canada. Therefore, when goods were purchased by consumers, the FST was built into the price. At that time, physicians, and other self-employed Canadians and small businesses, were essentially on a level sales tax playing field. Since 1991, however, the introduction of the GST has tilted the table against physicians.
Unless this situation is rectified, with the introduction of the HST, physicians in Atlantic Canada will join those in Quebec who experience additional costs due to the GST and their provincial sales tax using the same rules.
(i). The Impact of the GST on Good Tax Policy and Good Health Care Policy
When it reviews Bill C-70, the Standing Committee on Finance should look for opportunities where tax policy and health care policy go hand-in-hand. The principle of aligning good health policy with sound tax policy is critical to managing change while serving to lay down a strong foundation for future growth and prosperity. Unfortunately, the current GST policy introduces a series of distortions that have tax policy and health policy working against one another. Tax policies that do not reinforce health policy are bad tax policies. Consider, for example:
1. Under the current system, hospitals (under the "MUSH" formula - Municipalities, Universities, Schools and Hospitals) have been afforded an 83% rebate on GST paid for purchases made while physicians must absorb the full GST cost on their supplies. At a time when health policy initiatives across Canada are attempting to expand community-based practices, the current GST policy (and now harmonized sales tax policy) which taxes supplies in a private clinic setting while rebating much of the tax in a hospital setting acts to discourage the shift in emphasis;
2. Prescription drugs are zero-rated. The objective was to ensure that pharmaceutical firms are no worse off than under the previous federal sales tax regime. Recognizing that medical services can play an equally important role as drugs, it appears inconsistent that the government would choose to have drugs as tax free, and medical services absorbing GST;
3. In the current fiscal climate, the current GST policy, and now the proposed harmonized sales tax in Atlantic Canada, is threatening to harm the important role when it comes to recruitment and retention of physicians across Canada, and in particular, the Atlantic provinces - where they are already experiencing difficulty; and,
4. It is estimated that the 55,000 physicians employ up to 100,000 Canadians. Physicians play an important role in job creation. The disproportionate effects of the GST policy could have an adverse effect on the number of individuals employed by physicians.
With these issues at hand, it is apparent that good tax policy and good health policy are themselves not synchronized and are working at cross purposes. At this point, when the Standing Committee is reviewing Bill C-70, it is the time to address this situation based on the fundamental principle of fairness in the tax system, while ensuring that good tax policy reinforces good health care policy.
(ii). Not All Health Care Services Are Created Equal under the GST/HST
Physicians are not the only group of health care providers whose services are placed under the category of "tax exempt", with the result that they incur increased GST costs. For example, the services of dentists, nurses, physiotherapists, psychologists and chiropractors are categorized as "tax exempt".
However, there is an important distinction between whether the services are government funded or not. Health care providers who deliver services privately and which are not publicly funded do have the opportunity to pass along the GST in their costs through their fee structures.
For these services that are government funded there are no opportunities for physicians to recover the tax paid for purchases unless a specific rebate has been provided (e.g., hospitals). To date, in negotiations with the medical profession, no provincial/territorial government has agreed to provide funding to reflect the additional costs associated with the introduction of the GST. Their position has been that this is a "federal" matter. This becomes important when one considers that under the Canadian Constitution one level of government cannot tax another, and the provincial governments are not prepared to absorb the cost of the GST.
It is critical to point out that since doctors receive 99% of their professional earnings from the government health insurance plans, 4 they have absolutely no other option when it comes to recovering the GST - they must absorb it!
In summary, while a number of health care services are categorized as tax exempt, it must be emphasized that some providers "are more equal than others" under the GST - contrary to other health care providers, physicians do not have the ability to claim ITCs. This distinction becomes readily apparent when one considers the sources of (private and/or public) funding for such services.
IV. THE SEARCH FOR A SOLUTION
Like many others in Canadian society, physicians work hard to provide quality health care to their patients within what is almost exclusively a publicly-financed system for medical services. Physicians are no different from Canadians in that they, too, are consumers (and purchasers).
As consumers, physicians pay their fair share of taxes to support the wide range of valued government services. By the same token, as providers of health care, physicians have not accepted, nor should they accept, a perpetuation of the fundamental injustices built into the current GST, QST and proposed HST arrangements.
To date, the CMA has made representations to two Ministers of Finance and their Department Officials. We have discussed several ways to address a situation that is not sustainable, with no resolution to date. We look to this Committee and the federal government for a fair solution to this unresolved issue.
V. RECOMMENDATION
This unfair and discriminatory situation can be resolved. There is a solution that can serve to reinforce good economic policy with good health care policy in Canada. An amendment to the Excise Tax Act, the legislation which governs the GST (and proposed HST) can make an unfair situation fair to all Canadian physicians.
In its recent submission to the Standing Committee as part of the 1997 pre-budget consultation process, the CMA recommended "that medical services be zero-rated, in order to achieve a fair and equitable GST policy for physicians." In order to achieve this objective all health care services, including medical services, funded by the provinces could be zero-rated.
This recommendation serves to place physicians on a level playing field with other self-employed Canadians and small businesses. In addition, from a health care perspective, this would treat medical services in the same manner as that of prescription drugs. This is a reasonable proposition, as in many instances, medical treatments and drug regimens go hand-in-hand.
Furthermore, this recommendation would ensure that medical services under the GST and proposed HST would be no worse off than other goods or services that provincial governments' purchase and where suppliers can claim a tax refund (i.e., ITCs).
While the recommendation is an important statement in principle of what is required to address the current inequities under the GST, and soon to be HST, the CMA offers a more specific recommendation to the Standing Committee as to how the principles can be operationalized within the context of Bill C-70 and the Excise Tax Act.
The CMA respectfully recommends the following:
1. "THAT HEALTH CARE SERVICES FUNDED BY THE PROVINCES BE ZERO-RATED."
CMA has been advised that this would be accomplished by amending Bill C-70 as follows:
(1). Section 5 of Part II of Schedule V to the Excise Tax Act is replaced by the following:
5. "A supply (other than a zero-rated supply) made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes)."
(2). Section 9 of Part II of Schedule V to the Excise Tax Act is repealed.
(3). Part II of Schedule VI to the Excise Tax Act is amended by adding the following after section 40:
41. A supply of any property or service but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government under a plan established under an Act of the legislature of the province to provide for health care services for all insured persons of the province.
VI. SUMMARY
By adopting the recommendation above, the federal government would fulfil, at least two over-arching policy objectives, they are:
1. Strengthening the relationship between good economic policy and good health policy in Canada; and,
2. Applying the fundamental principles that underpin our taxation system (fairness, efficiency, effectiveness), in all cases.
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1 the Goods and Services Tax: Fairness for Physicians, Presentation to the House of Commons Standing Committee on Finance, Ottawa, Ontario, March 15, 1994. The Canadian Medical Association.
2 Review of the Impact of the Goods and Services Tax on Canadian Physicians, KPMG, June, 1992.
3 Review of the Impact of a Provincial Value Added Tax on Physicians in New Brunswick, Nova Scotia, and Newfoundland and Labrador, KPMG, August, 1996.
4 National Health Expenditures, 1975-1994, Health Canada, January 1996.
The Canadian Medical Association urges federal/provincial/territorial governments to explore tax incentives as a possible component of a broad comprehensive strategy to increase physical activity.
The Canadian Medical Association urges federal/provincial/territorial governments to explore tax incentives as a possible component of a broad comprehensive strategy to increase physical activity.
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The Canadian Medical Association urges federal/provincial/territorial governments to explore tax incentives as a possible component of a broad comprehensive strategy to increase physical activity.
The Canadian Medical Association supports the development of programs that will facilitate the mentoring of early career physicians in their transition to clinical practice by experienced physicians.
The Canadian Medical Association supports the development of programs that will facilitate the mentoring of early career physicians in their transition to clinical practice by experienced physicians.
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The Canadian Medical Association supports the development of programs that will facilitate the mentoring of early career physicians in their transition to clinical practice by experienced physicians.
The Canadian Medical Association calls for adequate resources and coordination for the development, implementation and ongoing evaluation of physician recruitment and retention programs.
The Canadian Medical Association calls for adequate resources and coordination for the development, implementation and ongoing evaluation of physician recruitment and retention programs.
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The Canadian Medical Association calls for adequate resources and coordination for the development, implementation and ongoing evaluation of physician recruitment and retention programs.
The Canadian Medical Association will assist physicians during all stages of their career, with special emphasis on helping medical students and residents make informed career choices by providing job-trend data and other career-planning resources.
The Canadian Medical Association will assist physicians during all stages of their career, with special emphasis on helping medical students and residents make informed career choices by providing job-trend data and other career-planning resources.
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The Canadian Medical Association will assist physicians during all stages of their career, with special emphasis on helping medical students and residents make informed career choices by providing job-trend data and other career-planning resources.
The Canadian Medical Association opposes the sale of undergraduate training positions to foreign students if this practice reduces the opportunities for Canadian applicants or negatively affects their educational experience.
The Canadian Medical Association opposes the sale of undergraduate training positions to foreign students if this practice reduces the opportunities for Canadian applicants or negatively affects their educational experience.
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The Canadian Medical Association opposes the sale of undergraduate training positions to foreign students if this practice reduces the opportunities for Canadian applicants or negatively affects their educational experience.
The Canadian Medical Association actively encourages and will facilitate the incorporation of increased formal training in the techniques of advocacy and leadership in the undergraduate and postgraduate medical curricula.
The Canadian Medical Association actively encourages and will facilitate the incorporation of increased formal training in the techniques of advocacy and leadership in the undergraduate and postgraduate medical curricula.
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The Canadian Medical Association actively encourages and will facilitate the incorporation of increased formal training in the techniques of advocacy and leadership in the undergraduate and postgraduate medical curricula.
The Canadian Medical Association supports the development of a national forum to foster the alignment of postgraduate training positions with current and future societal needs, evolving models of care delivery and available health system resources.
The Canadian Medical Association supports the development of a national forum to foster the alignment of postgraduate training positions with current and future societal needs, evolving models of care delivery and available health system resources.
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The Canadian Medical Association supports the development of a national forum to foster the alignment of postgraduate training positions with current and future societal needs, evolving models of care delivery and available health system resources.
The Canadian Medical Association supports inclusion of training in the uses of modern media for the delivery of medical care in undergraduate and postgraduate medical training programs within Canada.
The Canadian Medical Association supports inclusion of training in the uses of modern media for the delivery of medical care in undergraduate and postgraduate medical training programs within Canada.
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The Canadian Medical Association supports inclusion of training in the uses of modern media for the delivery of medical care in undergraduate and postgraduate medical training programs within Canada.
The Canadian Medical Association will work to identify how funding can be used to support physicians and physician groups who wish to learn about process improvement methodologies, participate in process improvement initiatives, and become physician champions of such methods and initiatives.
The Canadian Medical Association will work to identify how funding can be used to support physicians and physician groups who wish to learn about process improvement methodologies, participate in process improvement initiatives, and become physician champions of such methods and initiatives.
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The Canadian Medical Association will work to identify how funding can be used to support physicians and physician groups who wish to learn about process improvement methodologies, participate in process improvement initiatives, and become physician champions of such methods and initiatives.
Dear Minister:
On behalf of the Canadian Medical Association, I am writing to highlight the concerns of our members regarding the issue of mandatory retirement for physicians practicing medicine in Canada. The sustained interest in this subject follows as a result of a resolution adopted by the CMA General Council on August 20, 2003. This resolution reads "that CMA, its divisions and affiliates advocate for the enactment of regulations and/or legislation that will prevent mandatory retirement of physicians based on age." Your predecessor, the Honourable Anne McLellan, requested further information from the CMA with regard to the aforementioned legislation, for the purposes of further discussion with provincial counterparts.
Currently, rules governing mandatory retirement of physicians are complex and vary across jurisdictions. Nationally, the Canadian Human Rights Act governs mandatory retirement only insofar as physicians are considered employees of a federally regulated sector. The Act states that mandatory retirement is not discriminatory when a person has "reached the normal age of retirement for employees performing similar types of work."
Provincially/territorially, human rights legislation varies from jurisdiction to jurisdiction. In general, employers are not allowed to discriminate on the basis of age, although some provinces and territories only protect employees to the age of 65. Most physicians however, operate as self-employed business persons, billing provincial Medicare plans on a fee-for-service basis, according to tariffs agreed upon by provincial medical associations. This means that human rights legislation does not protect most physicians. Therefore, while physicians are still free to practice medicine after they reach the age of 65 (i.e. contract to provide medical care to patients, and bill the provincial insurer for insured services), renewal of their admitting privileges depends on the policies or regulations of individual hospitals.
In light of the evidence supporting an existing shortage of physicians, federal and provincial/territorial decision makers should be acutely aware of the detrimental effect mandatory retirement has with regard to health human resource planning initiatives. Currently, 10.7% of practising Canadian physicians are over the age of 65. Many of these physicians practice quite actively. In 2003, a CMA survey indicated that physicians over 65 reported working on average 46 hours per week, excluding on-call responsibilities. To remove this experienced cohort of practitioners from the practice setting would be to further exacerbate the growing medical professional shortage. It is shortsighted to uphold restrictions on the practice of medicine by physicians, solely on the basis of age.
Continuing professional development for practicing physicians throughout their medical careers is mandated by both the College of Family Physicians of Canada and the Royal College of Physicians and Surgeons of Canada as a requirement of maintenance of certification. In a system which self-regulates based on competency, barriers to practice that are age-based are both unnecessary and discriminatory.
The CMA respectfully requests you to follow the lead of your predecessor and raise the issue of mandatory retirement with your provincial/territorial counterparts. There should be no disparity nation wide; age-based barriers to practicing medicine should not be tolerated for physician employees or independent contractors alike. In some cases, federal, provincial and territorial human rights legislation may need to be amended. Equally as important, these concerns must be factored into discussions around health human resource planning.
Thank you for your time and interest in this very important matter. We look forward with anticipation to your response. For your information, a more detailed account of mandatory retirement follows in the addendum to this letter. Should you have any further questions, I would be pleased to discuss this issue in further detail with you and your staff.
Sincerely,
Dr. Sunil Patel
President, Canadian Medical Association
cc: Presidents, Provincial / Territorial Medical Associations
BACKGROUNDER: MANDATORY RETIREMENT
Preface:
Since its introduction in 1884 by German Chancellor Otto von Bismarck, the age of 65 has become firmly entrenched as "retirement age". Mandatory retirement can be considered a form of discrimination or bias, insofar as scientific data does not support the principle of retirement on the basis of attainment of a specific chronological age. While human rights legislation governs the mandatory age of retirement for employees (including some physicians) with variations from province to province, the extent to which provincial human rights legislation applies to the mandatory retirement of physicians varies, depending on whether the physician is an employee of the hospital or an independent contractor.
Legislative and regulatory framework:
Human Rights Legislation vis-à-vis Mandatory Retirement
Federal and provincial/territorial human rights legislation govern mandatory retirement for physician employees, depending on whether their employers are under federal or provincial jurisdiction. As most health institutions are under provincial jurisdiction, the vast majority of physician employees are protected by provincial human rights legislation.
Each province and territory has enacted human rights legislation that governs in their respective areas of jurisdiction. The legislation tends to be analogous from one province to the next, but there are differences worth noting. Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of seven provinces and territories. Four provinces do not consider mandatory retirement to be discrimination if the employee is 65 years or older. In two provinces, if mandatory retirement is provided for in a retirement or pension plan, it does not amount to discrimination.
Jurisdiction
Provisions governing mandatory retirement age
Canada
Mandatory retirement is not a discriminatory practice when a person has reached the normal retirement age for employees performing the same type of work. Consequently, in that case, the Act allows for mandatory retirement.
Alberta
Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of this province.
British Columbia
Older employees are protected until the age of 65 against discrimination based on age. Consequently, employees aged 65 or over cannot file a complaint if they are obliged to retire for that reason.
Manitoba
Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of this province.
New Brunswick
Termination of employment provided for in a retirement or pension plan does not constitute a discriminatory measure. In the absence of such a plan, however, employees who are obliged to retire may file a complaint for discrimination based on age, under the legislation on human rights.
Newfoundland and Labrador
Termination of employment provided for in a retirement or pension plan does not constitute a discriminatory measure. In the absence of such a plan, however, employees who are obliged to retire may file a complaint for discrimination based on age. They may use this recourse until the age of 65.
Jurisdiction
Provisions governing mandatory retirement age
Northwest Territories
Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of this territory.
Nova Scotia
Mandatory retirement at age 65 does not constitute a discriminatory measure if it is standard in the workplace in question. However, the Human Rights Commission of this province investigates when an employee aged 65 or over is not treated in the same manner as others of the same age where retirement is concerned.
Nunavut
Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of this territory.
Ontario
Older employees are protected against age-based discrimination up to the age of 65. Consequently, employees aged 65 or over cannot file a complaint if they are obliged to retire for this reason.
Prince Edward Island
Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of this province.
Quebec
Mandatory retirement constitutes a form of discrimination according to the Charter of Human Rights and Freedoms and, more explicitly, is forbidden by the Act Respecting Labour Standards.
Saskatchewan
Older employees are protected against age-based discrimination up to the age of 65. Consequently, employees aged 65 or over cannot file a complaint if they are obliged to retire for this reason.
Yukon
Mandatory retirement constitutes a discriminatory measure for employers under the jurisdiction of this territory. Employment Status of Practicing Physicians
Most physicians operate as independent contractors, billing provincial Medicare plans on a fee-for-service basis. Human rights legislation therefore does not protect the majority of physicians because the application of the legislation is limited to certain specific relationships, such as the traditional employment relationship. In other words, since physicians are more likely to be engaged by their patients to provide care than by the hospitals in which they provide it, the relationship between physicians and hospitals is more similar to a service contract than to a traditional employment contract. As a result, physicians who are independent contractors are free to practice medicine after they reach the age of 65. Depending on the hospital specific regulatory framework however, physicians may or may not be allowed to maintain their admitting privileges.
Colleges of Physicians and Surgeons
Regulatory bodies that license physicians do not place any restrictions on physician practice based solely on age. The Colleges of Physicians and Surgeons are not involved in administering hospital admitting privileges. None of the provincial or territorial colleges restrict licenses to practice medicine on the basis of a physician's age. Physicians who are employed in a traditional employment or master/servant relationship are covered by applicable human rights legislation, depending on whether their employers are federally or provincially/ territorially regulated. This means that some physicians can be forced into retirement at the age of 65, while others cannot.
Policy Considerations:
The Changing Physician Workforce
Mandatory age-based retirement for health care workers has been a contested policy for almost 25 years. The issue assumes significant value for the CMA membership. Most physicians, operating as independent contractors, are not protected by human rights legislation in terms of retirement. Hospital admitting privileges are administered by the individual institutions, and renewal of such privileges may be subject to hospital policies on mandatory retirement. As more and more physicians choose to work in a traditional employment situation, the lack of human rights protection for physicians in private practice will be thrown in sharp relief.
Health Human Resources
Labour shortages challenge arguments for mandatory retirement. The health sector in particular has been hit hard by human resource shortages, which are predicted to increase as the baby-boom generation begins to retire in 2012. According to a study released by the Institute for Research on Public Policy (IRPP), challenges associated with the aging workforce in Canada will require greater flexibility, by way of removing barriers to labour force participation among individuals nearing retirement.1
Physician Health and Wellbeing
For many people, employment provides a fundamental sense of dignity and self-worth. Practicing medicine promotes independence, security, self-esteem and a sense of participation in the community. Involuntary termination of employment can cause psychological and emotional distress. Physician malaise is a burgeoning concern and its address has become a strategic priority for the Canadian Medical Association. Protection of physicians, be they employees or independent contractors, from mandatory retirement is a strategy which would see one dimension of physician anxiety diminished and would therefore be supported by the CMA.
Mandatory retirement can have a particularly serious financial impact on physicians. Employer pension plans are often not available in employment relationships which feature part-time or provisional employees. In order to secure or maintain their standard of living upon retirement, physicians must save extensively via RRSPs or private pension plans. Those physicians with family members to support, such as young adults in post secondary education, children with disabilities, or older family members fear that they will not be able to do so if forced to leave the practice of medicine.
Liability Issues
While the threat of malpractice may present as one logical argument in support of a mandatory retirement age, the statistics do not support such a claim. The Canadian Medical Protective Association (CMPA) maintains that there is no significant correlation between physicians' physical age and the corresponding number of lawsuits. Dr. Norman Brown of the CMPA notes that of the over 500 new lawsuits a year, there is not a significant number involving elderly physicians.
Conclusion:
The public interest is best served by ensuring that all competent physicians, regardless of age, are able to practice medicine. Artificial barriers to practice based on age are simply discriminatory and counter productive in an era of health human resource shortages.
1 Merette, Marcel. (2003) "The Bright Side: A Positive View on the Economics of Aging." Institute for Research on Public Policy. Nov 18/03.
That Canadian Medical Association, with the relevant national medical associations, study the reduced enrollment in the general specialty training programs (family medicine, general surgery, general obstetrics and gynecology, general internal medicine and general pediatrics) and propose strategies to reverse this trend.
That Canadian Medical Association, with the relevant national medical associations, study the reduced enrollment in the general specialty training programs (family medicine, general surgery, general obstetrics and gynecology, general internal medicine and general pediatrics) and propose strategies to reverse this trend.
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That Canadian Medical Association, with the relevant national medical associations, study the reduced enrollment in the general specialty training programs (family medicine, general surgery, general obstetrics and gynecology, general internal medicine and general pediatrics) and propose strategies to reverse this trend.
That Canadian Medical Association and the Divisions work with the Federation of Medical Licensing Authorities of Canada and the provincial/territorial licensing bodies to develop a national locum licence.
That Canadian Medical Association and the Divisions work with the Federation of Medical Licensing Authorities of Canada and the provincial/territorial licensing bodies to develop a national locum licence.
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That Canadian Medical Association and the Divisions work with the Federation of Medical Licensing Authorities of Canada and the provincial/territorial licensing bodies to develop a national locum licence.
That Canadian Medical Association work with divisions, affiliates and other stakeholders, through the Canadian Medical Association Centre for Physician Health and Well-Being, to address issues of physician stress and burn-out.
That Canadian Medical Association work with divisions, affiliates and other stakeholders, through the Canadian Medical Association Centre for Physician Health and Well-Being, to address issues of physician stress and burn-out.
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That Canadian Medical Association work with divisions, affiliates and other stakeholders, through the Canadian Medical Association Centre for Physician Health and Well-Being, to address issues of physician stress and burn-out.
That Canadian Medical Association in its strategic planning process identify as a priority the crisis in primary medical care delivery and study the ongoing loss of physicians providing comprehensive primary medical care and develop a strategy to reverse this pattern.
That Canadian Medical Association in its strategic planning process identify as a priority the crisis in primary medical care delivery and study the ongoing loss of physicians providing comprehensive primary medical care and develop a strategy to reverse this pattern.
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That Canadian Medical Association in its strategic planning process identify as a priority the crisis in primary medical care delivery and study the ongoing loss of physicians providing comprehensive primary medical care and develop a strategy to reverse this pattern.
That Canadian Medical Association, in collaboration with the divisions, address specific needs of retired physicians in the Canadian Medical Association's physician health and well-being program.
That Canadian Medical Association, in collaboration with the divisions, address specific needs of retired physicians in the Canadian Medical Association's physician health and well-being program.
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That Canadian Medical Association, in collaboration with the divisions, address specific needs of retired physicians in the Canadian Medical Association's physician health and well-being program.
