Canadian and American health care systems compared

Canadian and American health care systems compared

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The comparison of the health care systems of Canada and the United States is of great importance to both nations. The very different methods of delivering health care allows citizens and politicians to look to the other side of the border for alternatives. In Canada, the United States is used as a model and as a warning against increasing private sector involvement in health care. In the United States, meanwhile, Canada's monopsonistic health system is seen by different sides of the ideological spectrum as either a model to be followed or avoided.

Contents [hide] 1 Government involvement 2 Cost of health care 2.1 Medical professionals 2.2 Drugs 2.3 Technology 2.4 Litigation 2.5 Ancillary expenses 3 Quality of health care 3.1 Cancer 3.2 Effect of poverty 4 Economic effects 5 Flexibility 6 Politics of health 7 See also 8 References

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Government involvement

The two neighbours are a dramatic contrast. Canada has one of the world's most fully socialized health care systems (with the exception of services noted below) while the United States is one of only two OECD countries (with Mexico) to not have some form of guaranteed health insurance for all citizens.

The governments of both nations are closely involved in the delivery of health care. The central structural difference between the two is in health insurance. In Canada all citizens are guaranteed access to health care by the Canada Health Act, which explicitly prohibits billing end users for procedures that are covered by Medicare. In the United States health insurance must be paid for privately if one is not disabled or over 65, in most cases by a person’s employer. However, there are about 45 million Americans who do not have health insurance, while in Canada waiting times for some procedures can be very long.

Canada's health plan only covers certain areas. Dental care and prescription drugs are not covered, and optometry is only covered in some provinces. Visits to many specialists may require an additional user fee. Also, some procedures are only covered under certain circumstances. For example, circumcision is not covered, and a fee is usually charged when a parent requests the procedure; however, if an infection or medical necessity arises, the procedure would be covered. When compared, the privately managed sectors of the health system have similar rates of participation and treatment in both countries.

Until the 1960s both countries had almost identical health care systems. The creation of Medicare in Canada in 1966 rapidly lead to government funding of much of the health system. Since then, the American government has also become deeply involved in the delivery of health care, but has not created a system of universal government coverage. There are a number of explanations for this difference. Traditionally it has been ascribed to the more individualistic and free market nature of American society. However in several other areas of the economy, such as education, the American government is just as, or even more deeply, involved when compared with Canada. Even in some health areas, such as in placing restrictions of smoking, the United States has been faster to restrict freedoms than Canada. An alternate explanation is that during the period that Canada, and most other developed nations, introduced a publicly funded health system the American government was pouring a huge slice of its GDP into the military due to the Cold War and thus could simply not then afford to the time the Cold War had eased the post-war consensus on government involvement in the economy had broken down throughout the west, it was all but impossible to introduce new spending programs on the scale of a national health plan. This argument does not hold water however, because as seen below, a national health plan would actually be less expensive than what the U. S. currently pays.

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Cost of health care

Health care is one of the most expensive items of both nations’ budgets. In 2001, in Canada, about 16.2% of government money was spent on health care, while in the United States this number was 17.6%. When exchange rates are included it can be seen that government in the United States spends more per capita on health care than the government does in Canada. In 2001, the government of Canada spent $1533 (in US dollars) per person on health care, while the United States government spent $2168.

Despite the American government paying more per capita, private sources also pay far more for health care in the United States. In Canada an average of $630 dollars is spent annually by individuals or private insurance companies for health care, including dental, eye care, and drugs. In the United States this number is $2719. In 2001 the United States spent in total 13.6% of its annual GDP on health care. In Canada only 9.5% of the GDP was spent on health care. This difference is a relatively recent development. In 1971 the nations were much closer with Canada spending 7.1% of GDP on health while the U. S. spent 7.6%. Most observers take these numbers to mean that the Canadian health care system is substantially more cost effective than the American.

Some analysts do not feel the straight GDP numbers give a wholly accurate picture. The difference in cost might have more to do with societal differences than approaches to health care. Drug abuse, obesity, and violence are all more common in the United States than in Canada, and all place a burden on the health care system. Recent history has meant that the United States has far more veterans and war wounded, also somewhat increasing cost. Accounting practices also differ and in Canada fewer capital investments are included in health care costs. Another important caveat is that research and development spending in Canada is lower, but Canada still benefits from the research done in the United States. This leads some scholars, such as David Gratzer, to argue the actual cost difference, while still real, is much smaller than the straight GDP numbers would indicate.

In some areas the private system in the United States allows for greater reduction in costs. In recent decades managed care has become common in the United States, with some 70% of privately insured Americans belonging to managed care plans. Managed care is when the insurance company controls patients health care to reduce costs, for instance by demanding a second opinion prior to any expensive treatment. Proponents assert that managed care reduces health care costs by up to 30% with no appreciable decrease in the quality of this care.

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Medical professionals

Some of the extra money spent in the United States goes to doctors, nurses, and other medical professionals, all of whom are paid higher salaries south of the border. In Canada billing rates for each procedure are set through negotiations between the provincial governments and the physicians' organizations. In the United States the free market determines the rates, but with some significant influence from the large insurance companies. This leads to much higher salaries in the United States. Some economists have argued that in highly technical matters like health care the free market fails as one group, the doctors, has far more knowledge than the patients. In Canada the government professionals are also experts in the field and thus, the argument goes, fairer rates are set. It can also be argued though that it is Canadian doctors that are underpaid relative their US counterparts.

One effect of this is a brain drain whereby skilled doctors and nurses, who have trained in Canada partially at the taxpayer's expense, emigrate to the United States to pursue higher salaries. This partly contributes to Canada having fewer doctors per capita than the United States. In the United States there were 2.8 doctors per 1000 people in 1998 while in Canada only 2.1. New statistics compiled by the Canadian Institute for Health Information (CIHI) show that for the first time since 1969 (the period for which data are available) more physicians have returned to Canada than moved abroad [1].

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Drugs

Another much higher cost in the United States is that of prescription drugs and medicines. The US has explicit laws that prohibit Medicare or Medicaid (the American health insurance system for eligible poor, senior, or disabled citizens) from negotiating drug prices. Canada has laws that impose medical patents less rigorously. Generic drugs are thus available on Canadian shelves sooner. The Canadian system also takes advantage of centralized buying by the provincial governments that have more market heft and buy in bulk, lowering prices. This typically delays the introduction of new medications into the Canadian market. However, despite this Canada continues to be a world leader in the research and development of pharmaceuticals.

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Technology

A major difference between the Canadian and American health spending is on investment in technology. This is a long-standing difference noted long before government polices on health diverged in the 1960s. American doctors and hospitals are far more likely than their Canadian counterparts to purchase new and expensive devices and technologies. Canadian doctors have a tendency to be far more skeptical and thus wait until technologies are proven and have fallen in price. The United States has far more specialists for each general practitioner than in Canada. Canada has more hospital beds per capita and Canadian patients spend more time in hospitals than Americans. An American patient is more likely to be rapidly treated by a specialist with the most up to date equipment. A Canadian one more likely to be treated by their GP and cared for over a period of time in parisons have found little difference between the effectiveness of the two styles, but the Canadian one is cheaper. The lack of the most recent technology is one of the most common causes of Canadians crossing the border to seek treatment in the United States. To a certain extent sending some patients south is cost effective for Canada. The most expensive medical equipment is also often some of the most specialized. In much of Canada it makes financial sense to occasionally pay to rent a piece of American equipment than to buy it outright and have it sit unused much of the time.

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Litigation

A third important difference is the prevalence of expensive malpractice lawsuits in the United States. These frequently award patients millions of dollars for errors made by doctors, though some states have placed limits on maximum awards (e. g., California has a $250,000 maximum payout). In Canada such lawsuits are very rare. Canadian law gives virtually nothing for pain and suffering, which in the United States is worth millions. Rather Canadian settlements cover future medical care, lost income, and other such expenses. Moreover, in Canada it is less common for lawyers to work on commission - they are usually paid their hourly rate or may work pro bono. However, Canadian law was recently changed to allow lawyers to work on a contingency fee basis, and this will likely have some effect on the situation.

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Ancillary expenses

There are a number of ancillary costs that are much higher in the United States. One of the most important of these is marketing both by insurance companies and health care providers. These costs, that are very low in Canada, are eventually born by the consumer. Administrative costs are also higher in the United States - the diversity of insurers and plans means more administrative effort. There are also more players involved in health care, with the patient, insurer, physician, HMO, and hospital all involved in most transactions. Administrative costs in the United States are about double what they are in Canada.

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Quality of health care

While Canada's health system is cheaper, it compares well on a statistical level with the American one. Life expectancy in 2002 was about two and a half years lower in the United States than in Canada, with Canadians living to an average of 79.8 years and Americans 77.3. Infant and child mortality rates are also markedly higher in the United States. This may be due in part to the different way agencies compile their statistics.

When comparisons of public satisfaction are made between the two nations' health care systems, the numbers for Canadians and insured Americans are almost identical. This holds true in average annual doctor's visits. While a good number of Canadians complained that they were unable to receive treatment due to long wait lists, overall Canadians had no greater number of people who were unable to receive treatment than insured Americans.

A much greater difference was seen, however, between uninsured Americans and Canadians. Overall the uninsured group was much less satisfied, less likely to have seen a doctor, and more likely to have been unable to receive desired care than both Canadians and insured Americans. This leads to numbers somewhat lower for Americans.

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Cancer

1997 death rates for various types of cancer can be used as a comparative example of differences between the systems. Below are the numbers of deaths per 100,000 people each year from various forms of cancer. Although the United States spends fifty percent more on each cancer patient, Canada fares slightly better statistically in the overall figures:

Females

Cancer	Canadian rate	American rate
Breast	32.6	30.2
Intestinal	19.4	21.2
Leukaemia	5.8	6.6
Lung	37.7	45.7
Non-Hodgkin lymphoma	6.9	8.1
All cancers	179.2	187.7

Males

Cancer	Canadian rate	American rate
Intestinal	22.1	21.8
Leukaemia	7.4	8.6
Lung	65.4	69.7
Non-Hodgkin lymphoma	8.2	9.4
Prostate	24.4	25.1
All cancers	212.3	214.6

Source: WHO Cancer database

Some of the differences shown above are related to lifestyle choices, and this is true of all health comparisons between the two countries. For instance, Canada has a slightly higher smoking rate than the United States while the Americans have a marginally higher rate of obesity.

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Effect of poverty

If the poorest twenty percent of Americans were excluded from health statistics, Canadian and American life expectancy and infant mortality rates would be almost identical.

There is some disagreement as to whether the poor are less likely to be healthy merely because they have reduced access to medical treatment in the United States. The fact that the poor in the United States are also generally poorer than in Canada is believed by many to contribute greatly to reduced health. In the U. S. long waits for routine care are unknown; operations are scheduled immediately.

However, the wealthy are more likely to be healthy in the United States than Canada. The better health of this smaller group cannot statistically offset the poorer health at the much larger bottom levels of the socio-economic system.

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Economic effects

Conversely, the problem could be not poverty leading to poor health, but poor health causing poverty. Over a quarter of the American poor report chronic health difficulties, a level much higher than in Canada. This can make it far harder to find and hold a job and improve one's financial well being. Better overall health of the poor encourages social mobility and may play a role in it recently being easier to climb the social ladder in Canada than in the United States.

The economic effects of the differences in the two health system are hard to judge. Canada's higher taxes to pay for health care certainly have some negative impact on its economy. There are, however, some benefits as well. Major corporations often find it cheaper to pay those taxes than provide expensive employee health plans as in the United States. This is especially true of the auto industry. Employer health care also create a condition known as "job lock" whereby workers, especially those with health concerns, are less likely to quit a job to seek other employment, reducing the overall labour mobility.

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Flexibility

One crucial advantage of the larger role of the private sector in American health care is flexibility. In Canada, increasing demands for health care, due to the aging population, must be met by either increasing taxes or reducing other government programs. Both of these are being done in Canada to great acrimony and debate, and since governments are very reluctant to raise taxes, there is a tendency to delay until a problem is critical before acting. In the United States, if the government does not act, more of the burden for health care will simply be taken up by the private sector and individuals. On the other hand, this might also mean that an increasing number of Americans will find themselves without health insurance.

The two greatest problems with the current Canadian system, waiting lists and a shortage of MRI machines, are a direct product of this lack of flexibility.

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Politics of health

Currently, the major parties in both countries support the status quo. The Democratic President Bill Clinton attempted a large reform of health care, but the effort collapsed in his first term. The 2000 U. S. election saw prescription drugs become a central issue, but although the program created by George W. Bush increased the relative cost of American health care, it did not fundamentally change the system. In the 2004 U. S. election health care proved to be an important issue to some voters, though not a primary one.

In Canada, the right-wing and now defunct Reform Party and its successor, the Conservative Party of Canada toyed with increasing the role of the private sector in the Canadian health care system. Sharp public backlash caused these plans to be quickly shelved. Public concern over the private sector playing a greater role in Canadian health care continues to haunt the right wing. In the 2004 Canadian election many pundits argue it was the specter of an alleged secret plan to change Medicare that lead to the collapse of the Conservative popularity in the last days of the campaign.

More radical solutions in both countries have come from the sub-national level. In 2000 Massachusetts held a referendum on whether to adopt universal health insurance, the measure losing, but having considerable support. Oil wealth allows Alaska to support the USA's only full health insurance system, but ironically, in Canada, it is oil rich Alberta under the conservative government of Ralph Klein that is seen to experiment most with increasing the role of the private sector in health care. These include the introduction of private clinics that are allowed to bill patients for some of the cost of a procedure. Quebec has also recently experimented with private health care under the Parti Quebecois and Liberal governments. Not only does Quebec now have the highest number of private clinics which deliver publicly funded care, but Quebec also has whole hospitals and emergency wards that have opted out of the public system.

A recent Canadian court decision has ruled that the Canadian health care system, which outlaws private health insurance, contravened the Quebec Charter of Rights guaranteeing the right to security of the person. In June 2005, the Supreme Court of Canada overturned a Quebec law preventing people from buying private health insurance to pay for medical services available through the publicly funded system. While the ruling applies only to the province of Quebec, it is believed by some that it could fundamentally change the way health care is delivered across the country.

The ruling may be read here:[2]

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See also

Health care Health care in Canada Health care in the United States Canadian and American politics compared Canadian and American economies compared

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References

Thever, Meena D. Health Care for All: Is Canada's System a Model for America? Philadelphia: Xlibris Corp., 2005. The Canadian Health Care System: Lessons for the United States. edited by Susan Brown Eve, Betty Havens, and Stanley R. Ingman. Lanham: University Press of America, 1995. Blomqvist, Åke. Canadian Health Care in a Global Context: Diagnoses and Prescriptions. Toronto: C. D. Howe Institute, 2002. International health statistics comparison International Health Statistics: What the Numbers Mean for the United States - 1994 Joint CDC/StatsCan comparison on the two health care systems - 2004 (pdf)

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