In a recent speech to the Canadian Medical Association, federal Health Minister Jane Philpott acknowledged what few politicians seem willing to recognize — Canada’s health-care system is in desperate need of repair and more money isn’t the answer.

Crucially, Philpott also provided some examples of countries that outperform Canada’s health-care system on a number of indicators, but which do “universal health care” differently.

Researchers have long pointed out that while Canada ranks among the most expensive universal health-care systems in the developed world, it has fewer medical resources (physicians, beds, diagnostic scanners) on average, a mixed track record on outcomes, and some of the longest wait times for medically necessary treatment.

That the minister acknowledged this imbalance marks a significant shift from the pervading misperception that Canada has the world’s best (or only) universal health-care system.

Philpott’s acknowledgement that more money (through the Canada Health Transfer, or CHT) is not the answer also marks a bold move away from the politically savvy promises of arbitrarily-determined and unsustainable annual increases in federal funding that we saw in the 2000s.

Unlike many of her predecessors, Philpott has signalled that innovation — not more taxpayer funding — is key to improving our health-care system.

Of course, this raises two crucial questions.

What kind of innovation is needed? And what prevents it from taking place?

While provincial governments have enough latitude to pursue improved efficiency by moving towards electronic health records, activity-based funding for hospital care and centralizing the patient-referral process, the Canada Health Act (CHA), which sets the terms and conditions provinces must fulfill before receiving full cash transfers from Ottawa, remains responsible for a lack of meaningful innovation through policy reform.

Why?

Because it discourages provinces from employing policies found in Australia, the United Kingdom, France and Germany — the very countries Philpott pointed towards as potential models for reform.

Specifically, each of these countries embraces the private sector as either a partner or an alternative for the insurance and delivery of medical services.

Further, Australia, France and Germany expect patients to share the cost of treatment (with annual caps and exemptions) to encourage them to make more informed decisions about the use of scarce (and costly) medical resources.

Notably, all four of these countries have shorter wait times for medically necessary treatment than Canada.

If the federal government is truly interested in promoting meaningful, beneficial innovation it could relax the CHA and let the provinces be freer to pursue policies they feel best serve their respective populations.

Philpott’s recent statements about the state of Canada’s health-care system were refreshingly honest and correctly diagnosed the problem — a lack of innovation, not a lack of money.

What remains to be seen, however, is whether she’ll be bold enough to allow provinces to introduce the sort of policies long ago adopted by the very countries she identifies as potential models for reform.

-- Barua, Lafleur and Eisen are analysts at the Fraser Institute.