SPECIAL REPORT * DOCUMENT

Medicare turns 30

Malcolm Taylor, PhD

July 1992 marks the 30th an-niversary of Saskatchewan'sintroduction of the first uni-

versal, tax-supported program ofmedical care insurance in NorthAmerica. It is hard to believe thatan entire generation has grown upunder its protective umbrella and,given current nationwide popularsupport for medicare, it is equallydifficult to recall its horrendousbirth pangs.

But, despite the heavy costsfor the participants and for muchof the public, Saskatchewan hadpioneered again. Eleven yearsafter the province introduced hos-pital insurance in 1947, a nationalprogram was initiated; it wouldtake only half as long for nationalmedicare to arrive once Saskatch-ewan first offered it in 1962.

The Cooperative Common-wealth Federation (CCF) formedits first government in Saskatche-wan in 1944 and retained a ma-jority in three successive elections.Among its many commitments, a

comprehensive range of healthservices had the highest priority.This was made clear by the factthat the premier, Tommy Doug-las, also held the health portfoliofor the first 6 years.

Great strides were made bythe CCF. Although the medicalprofession had been apprehensiveabout what a CCF governmentwould do, the relationship startedsmoothly enough. On Aug. 23,1944, the council of the College ofPhysicians and Surgeons of Sas-katchewan invited Douglas to

meet with its members, and inthat one evening they worked outthe main details of the first socialassistance health services programin Canada. All recipients of old-age pensions and mothers' allow-ance, as well as wards of theprovince, were entitled to medi-cal, hospital, dental and drugbenefits beginning Jan. 1, 1945 -6 months after the election.

Health regions were orga-nized and public health serviceswere vastly improved, as weremental health services. Of course,

Malcolm Taylor is emeritus professor ofpublic policy at York University, Downs-view, Ont. He is author of HealthInsurance and Canadian Public Policy:The Seven Decisions that Created theCanadian Health Insurance System andTheir Outcomes (Montreal, McGill-Queen's University Press, 2nd Ed., 1988).From 1953 to 1955 he was adviser to theCMA's Committee on Economics. Saskatchewan Premier Tommy Douglas had given health care top priority

CAN MED ASSOC J 1992; 147 (2) 233JULY 15, 1992

the triumphal accomplishmentwas the success of the HospitalServices Plan (HSP), launched in1947.

Although most doctors bene-fitted directly from the HSP, ofequal interest was an experimentin public medical care. Swift Cur-rent Region Number 1 had intro-duced a medical care programcovering its 50 000 residents onJuly 1, 1946. By 1950 the numberof physicians practising in the re-gion had increased from 19 to 35.A physician in the region,' thechairman of the college's healthinsurance committee2 and Dr. Ar-thur Kelly3, the CMA general sec-retary, spoke out in support of theprogram, but attempts by twoother regions to introduce similarprograms in 1955 were defeatedin plebiscites, mainly because ofopposition by the college.

The amicable relationship be-tween the medical profession andSaskatchewan government wasturned around by the CMA's deci-sion to withdraw the ringing en-dorsement of the proposed gov-ernment program of health insur-ance that it had provided duringhearings of the House of Com-mons Committee on Social Secur-ity in 1943.4 Those proposals hadbeen drafted by an interdepart-mental committee that was greatlyassisted by the CMA, which wasable to ensure that almost all ofthe association's 1934 "Princi-ples" were incorporated in thedraft legislation that accompaniedthe proposals.

However, when the 1945 Do-minion-Provincial Conference onPost-War Reconstruction, with itsfederal offer to subsidize provin-cially administered health servicesprograms, collapsed in May 1946,the CMA saw an opportunity tooccupy the vacuum of unfulfilledpublic expectations through therapid development and expansionof profession-sponsored prepay-ment plans. In 1947 it began ne-gotiations to establish Trans-Canada Medical Plans, and in

1949 it officially abandoned its1943 policy. It now wanted tolimit government involvement topaying the full premiums to theprepayment plans on behalf ofthose receiving social assistance,and subsidizing those with lowincomes.

In 1950 the Saskatchewancollege, which had been calling for"state-aided health insurance"since 1933, adopted the new CMApolicy and accelerated efforts toexpand its sponsored plans, Medi-cal Services Inc. (Saskatoon) andGroup Medical Services in Regi-na. Efforts to amalgamate the twoplans were unsuccessful.

Some readers may be sur-prised that the college acted in thepolitical role that is usually filledby a provincial medical associa-tion. However, in the midst of theDepression, with membership inthe Saskatchewan Medical Associ-ation declining, the professionhad persuaded the Liberal govern-ment that it could no longer af-ford to finance the two bodies; in1937 the government agreed totheir amalgamation, and the col-lege council added the associa-tion's responsibilities to its own.The college became the Saskatche-wan division of the CMA and wasthe only body in Canada servingthe dual - and occasionally con-flicting - functions of regulatingthe medical profession in the pub-lic interest, and speaking as thevoice of organized medicine inpromoting the profession's inter-ests.

However, by the mid-'50s itappears that it was not only thecombining of these two roles thataccounted for the college's ex-traordinary political power andinfluence. What had emerged was,in essence, a unique "private"government. Its legal base restedon the Medical Profession Act. Itseconomic base lay in the profes-sion's control of the prepaymentplans - it determined the policiesrespecting enrolment, benefits,method of payment and, to a large

extent, the amount of payment.It was unique in that, unlike

other private governments, mem-bership was not voluntary. Withits compulsory membership, the"association" was assured of ade-quate revenues from the annuallicence fee. No physician could"opt out" by simply not payinghis association dues; as a Montre-al Star editorial observed (July 5,1962), the college resembled a"state within a state." One couldsay that Saskatchewan had twogovernments in the field of health- a private and a public one,each with its own legislature, cabi-net, bureaucracy, revenue system,territorial domain and politicalideology. Any action by one toencroach on the territory of theother would invite certain con-flict.

By now it was 1959, and theCCF faced an election in 1960. Ithad to refurbish its image as aparty of progress, and the mainissue was clearly medicare. De-spite its 15-year commitment, theparty had recognized that the eco-nomic foundations for an under-taking of such magnitude had sim-ply not been in place. In 1958,however, the "windfall" federalcontributions of the national hos-pital insurance program had pro-vided new funds that clearly be-longed to the health care sector.Now was the time for the CCF torecapture the positive thrust ofthe mid-'40s and to achieve itslong-standing objective.

The premier made the an-nouncement in a radio broadcaston Apr. 29, 1959. He said thegovernment would appoint an ad-visory committee representingdoctors, the public and the gov-ernment "in order that we mayhave the benefit of their advicebefore any policy decisions aremade." The government wanted areport no later than Dec. 31,1960. The college, fearful that itwould be outvoted on a commit-tee whose recommendations itwould undoubtedly oppose, saw

234 CAN MED ASSOC J 1992; 147 (2) LE 15 JUILLET 1992

delay as its most potent strategy.On Jan. 18, 1960, the college pres-ident, Dr. Harold Dalgleish, indi-cated that representatives wouldbe appointed if the committee wasenlarged and its terms of referencevastly expanded.

Negotiations continued and itwas not until Apr. 25 that themembership of the committee,chaired by Dr. Walter Thompson,a former president of the Univer-sity of Saskatchewan, was an-nounced. Three of the 12 mem-bers represented the college.

But even as the college acqui-esced in the appointments, it waspreparing for what it consideredto be the political battle of its life- the June 1960 election. Thecollege assessed its members $100to wage its publicity campaign,and about two-thirds of the prov-ince's 900 doctors paid the fee;later, the CMA contributed$35 000. The college's positionwas supported by the Liberal,Conservative and Social Creditparties, as well as by pharmacists,dentists and the Chamber ofCommerce.

But despite the expensivecampaign, the CCF increased itsmembership in the legislature andcaptured 40% of the vote in whathad been virtually a referendumon medicare. On June 9, Kelly,the CMA's general secretary, stat-ed: "This is a democracy . . . ourefforts will now be bent on avoid-ing the defects we see in govern-ment plans elsewhere."

But the college did not inter-pret the election in this light andcontinued its earlier strategy ofdelay. As the committee's deliber-ations dragged on into the 14thmonth, 6 months behind sched-ule, the government decided itcould brook no further delay. OnJune 21, 1961, the premier askedThompson for an interim reportso that the government could in-troduce "enabling legislationcouched in general terms, to beprepared and introduced in thelegislature at the fall session."

Dr. Gordon Fahrni Archives. CMA

This is a democracy.Our efforts will now bebent on avoiding thedefects we see ingovernment plans

elsewhere."

the late Dr. ArthurKelly, then CMA

general secretary, after1960 Saskatchewan

election

The Thompson committee re-sponded with an interim report onSept. 25. It included recommen-dations of the majority for a pro-gram providing universal cover-age and a comprehensive range ofmedical service benefits, financedby subsidized premiums and ad-ministered by a public commis-sion. Dissenting minority reportswere filed by the representativesof the college and the Chamber ofCommerce and by the Federationof Labour member.

The medical care insurancelegislation was introduced at thefall session in early Novemberand on Nov. 7, 1961, TommyDouglas crossed off the last itemon his agenda for Saskatchewanand resigned to assume his re-sponsibilities as national leader ofthe recently formed New Demo-cratic Party (NDP). WoodrowLloyd, the provincial treasurer,became premier.

Preparations for introductionof the program on Jan. 1, 1962,had been under way for severalmonths, but it was now clear thatthis target date was unrealisticand the "appointed day" was setfor Apr. 1. By now it was time toappoint the commission thatwould oversee the program, butthe college refused to nominate

candidates. Accordingly, when thecommission was announced onJan. 5, the chairman, DonaldTansley, was a senior finance offi-cial and the two physician mem-bers, Dr. Sam Wolfe and Dr. Or-ville Hjertaas, were not endorsedby the college.

Delays continued. First,mainly because of difficulties inbringing new computer facilitieson line, the launch date had to bepostponed to July 1. This delaywas nearly fatal because it gaveopponents, including the mush-rooming Keep Our Doctors com-mittees, 3 more months in whichto mobilize. Second, on Mar. 2,1962, the minister wrote to Dal-gleish informing him that the gov-ernment was prepared to makechanges in the legislation to meetdoctors' objections, but not to re-peal it. The invitation was finallyaccepted and meetings were heldMar. 28, Apr. 4 and, briefly, onApr. 11.

The government offered nu-merous concessions, the most im-portant being that physicians neednot accept payment by the com-mission - patients could pay thephysician and be reimbursed bythe commission. This was anenormous concession. Contrastthe difference in the administra-

CAN MED ASSOC J 1992; 147 (2) 235JULY 15, 1992

tive burden and costs, and thehassles for patients, between anindemnity contract administeredby insurance companies and theservice contract pioneered by BlueCross and the profession-spon-sored plans. And, of course, itopened up the entire issue of ex-tra-billing.

The college then presented itsalternatives. Insurance would beavailable through existing or newprepayment plans; the govern-ment would pay the premiums onbehalf of indigents; all other in-sured persons would be subsidizedby the government; each prepay-ment plan would charge the pre-miums it needed; patients wouldpay the doctor and receive a re-fund of a major (unstated) portionof the expense incurred; and noadditional charges would be madeto indigents. While the govern-ment's proposals incorporatedeven more completely the CMAprinciples, the college's proposalswere more unattractive than any-thing previously proposed; in fact,they marked a highly retrogradestep from the prepayment planscurrently operating.

When the council returned onApr. 11, it was evident that thegovernment had made up its mindthat further negotiations would befruitless. The premier read a pre-pared statement giving seven rea-sons for rejection of the college'sproposals, press releases were dis-tributed, and the meeting ended.Never had doctors' distrust of thegovernment been greater.

The college responded by call-ing a meeting of all Saskatchewandoctors in Regina on May 3 and4, and about two-thirds of themattended. The premier's speechwas a low-key review of events tothat date, an elaboration of theprogram, a firm declaration toadminister the program so as notto interfere with physicians' pro-fessional freedom, and an appealto the doctors "to join in a boldattempt to consolidate past gainsand to move to new horizons

in the field of medical care."But rational goals, coura-

geously expressed, could neitherlegitimize the government's ac-tions in the doctors' minds, norabate in any way their rising con-fidence that in solidarity theywould triumph. A near unani-mous standing vote was the re-sponse to the president's questionas to who would oppose the medi-care plan and refuse to workunder it. Those few who did notstand were later ostracized. Onthe second day the meeting passedresolutions instructing the councilto make plans for emergency ser-vices in designated hospitals onJuly 1, when all doctors' officeswould be closed. The two partieswere now on a collision course.

There was one more attemptto reconcile the impasse. At theCMA's annual convention inWinnipeg, the president, Dr. Ger-ald Halpenny, stressed the associ-ation's support and demandedthat the government meet withthe college. A meeting with thecabinet was arranged for June 22,and the college council repeatedits demand for the multicarrierplan proposed on Apr. 4. Thepremier countered with his earlieroffer that all doctors could prac-tise outside the act. At one pointDalgleish said that he could takethis proposal to his Health Ser-vices Committee but another doc-tor interjected that the entire pro-posal was unacceptable. Themeeting ended, and both partieswithdrew to write their press re-leases. On July 1, the withdrawalof all but emergency services indesignated hospitals began.

No provincial governmenthad ever faced such an over-whelming confrontation. Facedwith an alarming exodus of doc-tors - there were "For Sale"signs on doctors' houses and onthe Medical Arts Building in Sas-katoon - Dr. Sam Wolfe flew toEngland to recruit both perma-nent and temporary replacements.The premier flew to Toronto and

Montreal to meet with NDP lead-ers and constitutional experts. Healso invited Dr. Stephen Taylor(Lord Taylor of Harlow), a Lon-don physician who had been oneof the architects of Britain's Na-tional Health Service, to come toRegina.

But the most fortuitous (andfortunate) event was that the CCFannual convention, at which allcabinet members would be pres-ent, was to be held in Saskatoonin the third week of July; thecollege's council had been in al-most constant daily session in theMedical Arts Building there.

The convention also offeredan opportunity for reciprocal hos-pitality: at the request of the col-lege Dalgleish was invited to ad-dress the meeting. His proposalswere similar to those that thecollege had presented to the gov-ernment on May 4, with a specialplea that the act be suspended.

In the audience was LordTaylor, who had spent the previ-ous day meeting with the cabinetand with doctors on emergencyservice in Regina, and he andDalgleish now joined the councilin the Medical Arts building. "Al-though the guest could not beclassified as a mediator, he imme-diately began to act as one," Kel-ly5 reported. "He said that hefavoured retaining the prepay-ment plans . . . and would try topersuade the Cabinet of their mer-its. After two hours of discussionhe left to do just that. The nextday he reported back that [theplans] could continue to functionunder the Act."

Gradually, Taylor began to betrusted by most of the councilmembers. To expedite negotia-tions, he decided that the twoparties must be kept apart. There-fore, he assumed the role of inter-mediary, striding back and forthalong the three short blocks be-tween the two hostile forces, onebivouacked in the BessboroughHotel, the other encamped in theMedical Arts Building. For 5 days

236 CAN MED ASSOC J 1992; 147 (2) LE 15 JUILLET 1992

he laboured indefatigably, report-ing, interpreting, persuading, ca-joling, threatening to leave, andweaving through all of it withlarge measures of wit, humourand histrionics. With the assis-tance of government officials heprepared a draft agreement thatwas approved by cabinet and thennegotiated with the council. OnMonday, July 23, the SaskatoonAgreement was signed. Doctorsbegan returning to their officesand closed hospitals reopened.

There was one major conces-sion by each party. The councilaccepted the government's posi-tion that the medicare plan mustbe universal and that the govern-ment would be the sole collectorof revenues and the disburser ofpayments. The government ac-cepted the college's position thatthe prepayment plans be retainedas billing and payment conduitsfor those doctors who did notwant to deal with the MedicalCare Insurance Commission(MCIC). Four modes of paymentwere authorized:

* Doctors could choose di-rect payment from the commis-sion as payment in full.

* Doctors could practisepartly or entirely in associationwith one or more of the voluntaryagencies. Patients enrolled withthese agencies would be billed atthe agreed rate. The agency wouldtransmit the account to theMCIC, which would pay the agen-cy which, in turn, would pay thedoctor.

* Doctors could practisepartly, largely, or entirely outsideany voluntary agency and not beenrolled for direct payment by thecommission. They would bill pa-tients entirely at their own discre-tion and submit an itemized bill.Patients would be reimbursed thestandard fee and be responsiblefor any "extra-billing."

* Doctors could practise en-tirely for private fees, providedthe patient agrees to seek no reim-bursement.

There were many otherpoints, but one of the most impor-tant was the addition of threemore doctors to the MCIC. Butthe peaceful convalescence thatLord Taylor had prescribed wastoo much to expect, for the trau-ma had been too serious, the emo-tional wounds too deep, the dislo-cations too severe, the compro-mises too galling and the loss oftrust too great for any speedyreconciliation and recovery to oc-cur. Continuing suspicion cloudedevery action or statement by ei-ther party.

Saskatchewan had pioneered again, andwithin a few years all Canadians would enjoy

the results.

Numerous major events fol-lowed. One was defeat of Sas-katchewan's CCF government in1964, even though it obtained thesame percent of the votes it hadreceived in 1960. Ross Thatcherformed a new Liberal governmentthat, to the dismay of the college,did not restore the prepaymentplans to their earlier independentrole. There was some consolationin that Saskatchewan doctors' in-comes rose to the highest level inCanada, $3400 above the Canadi-an average. Even more important,while 68 doctors had left the prov-ince in 1962 and another 200 hadleft subsequently, by June 1964the physician-population ratiowas higher than ever before.

But perhaps most significantwas the June 1964 release of theReport of the Royal Commissionon Health Services. The commis-

sion had been appointed by PrimeMinister John Diefenbaker at therequest of the CMA, and chairedby Mr. Justice Emmett Hall. Thereport rejected the subsidy strate-gy urged by the CMA and theinsurance industry and unani-mously endorsed a plan funda-mentally the same as the originalSaskatchewan proposals. It wassmall comfort to the defeatedCCF-NDP leaders.

But Saskatchewan had pio-neered again, and within a fewyears all Canadians would enjoythe results. The list of medical

leaders who pioneered the prepay-ment plans and political partyleaders who made it all possible islegion. For many of them thepersonal costs were high, but thevalues for which they fought wereidealistic, humane and compas-sionate, reducing risk and fearand expanding confidence, hopeand freedom.

References

1. Howden CPG: The Swift Current Pro-gram. Sask Med Qtly 1949; 13: 4-6

2. Brown JL: Swift Current Health Insur-ance. Ibid: 251-258

3. Kelly AD: The Swift Current Experi-ment. Can Med Assoc J 1948; 58: 506-511

4. Taylor MG: Thirty years on . . . anostalgic look at Canadian medicine's'finest hour.' Can Med Assoc J 1973;108: 86-92

5. Kelly AD: Saskatchewan Solomon. CanMed Assoc J 1962; 87: 416-417

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