New report highlights dramatic increase in enforcement as multiple provinces penalized in recent years
A new analysis from the Fraser Institute has reignited debate over federal oversight of Canada’s healthcare system, with the think tank claiming that escalating federal penalties for violations of the Canada Health Act are hindering provinces from pursuing reforms that could improve patient care.
The Vancouver-based research organization released findings this week showing what it characterizes as a sharp increase in both the frequency and financial impact of federal penalties in recent years.
According to the Fraser Institute’s report, titled “Ottawa’s Enforcement of the Canada Health Act Constrains Provincial Health Care Reform,” the pattern of federal enforcement has expanded significantly. The organization claims penalties grew from minimal amounts in earlier years to substantially higher levels by 2023-24, though the total cumulative figure cited in their press release has not been independently verified by government sources.
“The federal government’s increasingly interventionist approach to provincial health care delivery is not good for patients, as it sends a chill across the country that certain meaningful reforms are not to be pursued,” said Nadeem Esmail, director of health policy at the Fraser Institute and co-author of the study.
Understanding the Penalties
The penalties stem from violations of the Canada Health Act, the 1984 federal legislation that establishes five core principles for provincial health systems: public administration, comprehensiveness, universality, portability, and accessibility.
Federal enforcement has particularly targeted patient charges for diagnostic services. In March 2024, Nova Scotia, New Brunswick, Quebec, Saskatchewan, Manitoba, Alberta and British Columbia were subject to mandatory dollar-for-dollar deductions, totalling approximately $72.4 million as a result of patient charges for medically necessary diagnostic services.
The penalties represent deductions from the Canada Health Transfer, the mechanism through which Ottawa funds provincial health systems. In 2023-2024, the federal government transferred over $49.4 billion to provinces and territories through the Canada Health Transfer.
However, the federal government has also implemented a reimbursement policy. Since 2018, when the Reimbursement Policy came into effect, over $175 million has been reimbursed to provinces under the Reimbursement Policy. Provinces can recover penalties if they eliminate patient charges and address underlying issues within two years.
The Policy Debate
The Fraser Institute argues that Ottawa’s interpretation of the Act effectively prohibits private sector involvement in delivering medically necessary care. The study contends the Canada Health Act doesn’t explicitly prohibit private for-profit hospitals and private health service delivery, but notes Ottawa interprets the law to disallow such activity, discouraging provinces from pursuing reforms.
The organization points to international comparisons suggesting Canada’s approach is more restrictive than other universal health care systems. According to Fraser Institute research, private for-profit hospitals comprise approximately 40% of hospitals in Australia. The organization also claims similar private sector involvement exists in Germany’s universal healthcare system.
Canada maintains notably restrictive rules under the Canada Health Act that prohibit private charges for medically necessary services, with some provinces like Ontario imposing particularly strict limits by not allowing opted-out private billing for insured services.
Defending Universal Access
Health care policy experts hold differing views on the appropriate balance between federal oversight and provincial flexibility. Some argue the Canada Health Act’s enforcement ensures equitable access regardless of ability to pay, while others contend it prevents provinces from adopting approaches used in other countries with universal coverage.
A 2009 Nanos Research poll found that 86.2% of Canadians “supported or strongly supported” “public solutions” to make Canadian “public health care stronger”, suggesting widespread public attachment to the principles underlying the Canada Health Act.
The Broader Context
The debate occurs against a backdrop of persistent challenges in Canada’s health system. Emergency departments across the country have experienced severe overcrowding, with extensive boarding times and capacity strain. Data indicates that over 1.3 million Canadians left emergency rooms without being treated during the 2022-2023 period.
Gregory Marchildon, a professor emeritus at the University of Toronto’s Institute of Health Policy, Management and Evaluation, has noted that while the Act hasn’t been substantially updated in over 40 years, “We need to fundamentally alter our thinking because not all Canadians have access to the medically necessary care they need”.
The Fraser Institute recommends that Ottawa should reduce enforcement and allow provinces greater flexibility to experiment with alternative delivery models while maintaining universal access. The organization argues this approach would enable provinces to learn from countries that achieve better health outcomes with similar or lower spending.
Critics of increased privatization, including the Canadian Health Coalition, maintain that the Canada Health Act’s protections are essential for preventing a two-tiered system where access depends on wealth rather than need.
As provinces continue to grapple with emergency room overcrowding, physician shortages, and lengthy wait times for procedures, the tension between federal enforcement and provincial autonomy in health care delivery remains a central policy debate.
Sources:
- Fraser Institute press release (January 29, 2026)
- Health Canada – Canada Health Act Annual Report 2023-2024: https://www.canada.ca/en/health-canada/services/publications/health-system-services/canada-health-act-annual-report-2023-2024.html
- Government of Canada – Canada Health Transfer: https://www.canada.ca/en/department-finance/programs/federal-transfers/canada-health-transfer.html
- Health Canada – Canada Health Transfer Deductions and Reimbursements March 2024: https://www.canada.ca/en/health-canada/news/2024/03/canada-health-transfer-deductions-and-reimbursements—march-2024.html
- Fraser Institute – Role of Private Hospitals in Australia’s Universal Health Care System: https://www.fraserinstitute.org
- Canadian Health Coalition: https://healthcoalition.ca
- Montreal Economic Institute – Emergency Room Data: https://www.iedm.org
Editor’s Note: Some figures cited in the original Fraser Institute press release, including cumulative penalty totals and specific historical comparisons, could not be independently verified through government sources. This article focuses on verified data from official Health Canada reports while noting the Fraser Institute’s broader claims and recommendations.
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