The health care philosophy that nearly destroyed Medicare in Canada in a single decade.

Background: In 1989, governments in Canada perceived an economic crisis in health care funding and commissioned two economists, Drs. Barer and Stoddart, to review policies. They indicated that major costs were caused by physicians and recommended cutting physician training and hospital facilities. In 1991 governments selectively implemented their recommendations. The Federally established Romanow Commission 're-reviewed' the problem and reported in 2002.

Objectives: To examine whether there was an economic crisis and to assess the effects of reductions in funding on the provision of health care in Canada.

Method: We analyzed data from Statistics Canada, the Association of Canadian Medical Colleges, and the Canadian Institute of Health Information, the Canadian Nurses Association, and Health Canada. We focus exclusively on public health care spending.

Results: Publicly financed health care spending remained stable as percentage of Gross Domestic Product in the five years leading up to the commissioning of the Barer-Stoddart report (1986-1990). An increase in the elderly population partly explained rising costs. By 2000, people over 65 accounted for 48% of overall health costs. Emerging from the report's recommendations, between 1990 and 2000 medical students and residents as a proportion of the population were cut by 17% and 12% respectively and hospital beds by a third. Nurses per 100,000 fell 12%. Home care remained under-funded, less than 4% of the total health budget.

Conclusion: There was no economic health care crisis in the early 1990s. Growing costs were principally due to increased patient need. Funding reductions resulted in inadequate care, including the creation of prolonged wait lists that have resulted in legalizing private care, thereby threatening the universal equal care principle.