Federal Liberals received some politically unpalatable advice Saturday to champion the overhaul of one of Canada's most cherished national programs: medicare.

Influential speakers at the party's policy renewal conference -- including former Bank of Canada governor David Dodge -- said soaring health-care costs are rapidly becoming unsustainable as the country's aging population requires ever more costly medical services.

They said those costs must be reined in and recommended some solutions that have proved toxic to politicians who've flirted with them in the past. Those included setting up a two-tier system of public and private health care.

The gist of discussions on the second of the three-day conference left some advocates of the current health system worried that the party which introduced universal, publicly-funded health care may be preparing to dismantle it.

"I think it's all up for grabs," said Michael McBane, co-ordinator of the Canadian Health Coalition, who is attending the so-called thinkers conference as a delegate.

"That's partly why I'm here, to make sure they don't make a mistake and go the wrong direction and throw our heritage away."

Ironically, it was a 1960 Liberal thinkers conference in Kingston that paved the way for the introduction of a national medicare program by Lester Pearson's government.

Dodge, a former deputy finance minister, told the Montreal conference it's time to re-think the program, the cost of which is increasing at seven per cent a year -- twice the rate of growth in the economy.

He told delegates there are "really only four" options to rein in health spending:

-- Impose or increase dedicated health-care taxes or levies.

-- Reduce the scope of medical procedures covered by public health insurance, forcing people to buy private health insurance for services not covered.

-- Introduce "significant" co-payments.

-- Continually reduce the quality of services provided -- letting wait times increase and limiting drug coverage, for instance -- and allow people to buy upgraded, private health care. In other words, "so-called two-tier medicine."

"These are stark and unpalatable choices we face with respect to health care," Dodge said.

"There is no magic solution and we absolutely must have an adult debate about how we're going to deal with this."

Dodge's advice echoed similar sentiments expressed by various speakers on the opening day of the conference, including University of Quebec economist Pierre Fortin and Linamar Corp. CEO Linda Hasenfratz.

During a subsequent panel on health care Saturday, Alan Bernstein, former president of the Canadian Institutes of Health Research, said he's "skeptical" about suggestions that privatization is a "panacea" for Canada's health-care system.

Bernstein noted that the United States spends 18 per cent of its gross domestic product each year on strictly private health care, compared to 12 or 13 per cent in Canada. Even so, 30-40 million Americans are uninsured.

"Their costs are immeasurably higher than ours for a much worse product."

McBane told the panel that medicare spending in Canada has actually been stable at about four per cent of the economy for 35 years. What's skyrocketed is the cost of prescription drugs, which McBane noted are controlled by the private sector.

So, rather than dismantle medicare, he said Canada should be expanding it to include longterm care, home care and pharmacare.

In an interview later, McBane said his group has met with people in Liberal Leader Michael Ignatieff's office to remind them that opinion polls suggest Canadians overwhelming don't want privatized health care.

"So far, there's been no real message from Michael Ignatieff on whether he sees himself as a dreamer and builder or whether he'll preside over the continued dismantlement of the system."

Ignatieff listened to all sessions Saturday but did not offer his opinions on any of the advice given.

Toronto Liberal MP Gerard Kennedy said just because the party is listening to various opinions about how to fix the health-care system doesn't mean it must embrace them.

However, former New Brunswick premier Frank McKenna, a conference delegate, said Liberals must grasp the health-care nettle.

McKenna told reporters he "profoundly" believes in the single fee-payer health system but the Canada Health Act must be more flexible to allow provinces to experiment with things like private delivery of health care.

He said the rest of the world, court rulings, and the public, which is already opting in an "ad hoc" way for private care, are way ahead of public policy in Canada.

"Take the straight-jacket off and allow health-care innovation to take place."

McKenna allowed that any notion of tinkering with medicare has proven deadly to politicians who've raised the idea in the past. Liberals are particularly "gun shy" about proposing anything controversial since they were blown out of the electoral waters in 2008 for advocating a carbon tax.

"The question is: Is there room for courage in politics?" said McKenna.

"I'm not sure that this party or any party are ready for that. But there's a tidal wave coming here that is engulfing the political parties."