Canadian And American Health Care Systems Compared

Government and private health and public policy analysts have compared the health care systems of Canada and the United States.Szick S, Angus DE, Nichol G, Harrison MB, Page J, Moher D. "Health Care Delivery in Canada and the United States: Are There Relevant Differences in Health Care Outcomes?" Toronto: Institute for Clinical Evaluative Sciences, June 1999. (Publication no. 99-04-TR.)Esmail N, Walker M. "How good is Canadian Healthcare?: 2005 Report." Fraser Institute July 2005, Vancouver BC.Nair C, Karim R, Nyers C. "Health care and health status. A Canada--United States statistical comparison." ''Health Rep.'' 1992;4(2):175-83. PMID 1421020. "Canadian health care quality comparable to other rich countries". In 2004, per-capita spending for health care in the U.S. was more than double that in Canada: in the U.S., it totaled US$6,096; in Canada, US$3,038. Studies have come to different conclusions about the result of this disparity in spending. A 2007 review of all studies comparing health outcomes in Canada and the U.S., in a Canadian peer-reviewed medical journal, found that "health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent." Medicine, Vol 1, No 1 (2007), Research: A systematic review of studies comparing health outcomes in Canada and the United States, Gordon H. Guyatt, et al. Life expectancy is longer in Canada, and its infant mortality rate is lower than that of the U.S., but there is debate about the underlying causes of these differences. The World Health Organization's ratings of health care system performance among 191 member nations, published in 2000, ranked Canada 30th and the U.S. 37th, and the overall health of Canadians 35th to the American 72nd.[http://www.who.int/whr/2000/en/annex01_en.pdf Health system attainment and performance in all Member States, ranked by eight measures, estimates for 1997

The Health Care System In Canada is largely government-funded, with most services provided by private enterprises. Waiting times for major non-emergency surgery have been longer in Canada, and Canada has been slightly slower to adopt expensive technology and medicines. Consequently, Canada has had higher mortality rates for some conditions, such as heart attacks. Long-term mortality of patients with acute myocardial infarction in the United States and Canada: comparison of patients enrolled in Global Utilization of Streptokinase and t-PA for Occluded Coronary Arteries (GUSTO)-I. Kaul P, et al., Circulation. 2004 Sep 28;110(13):1754-60. PMID15381645 Canadian health administrators say that these problems are improving.
Wall Street Journal, Letters to the Editor, Canadian and U.S. Health Services -- Let's Compare the Two, Robert S. Bell, July 9, 2007

Through all entities in , "Health Problems and Bankruptcy--Are 50% of Bankruptcies Health Related?" , 2005-02-16, accessed 2007-07-10Todd Zywicki, "An Economic Analysis of the Consumer Bankruptcy Crisis" , 99 NWU L. Rev. 1463 (2005)]

As both countries consider changes to their systems, there is debate over whether resources should be added to the public or private sector. Although Canadians and Americans have each looked to the other for ways to improve their respective health system is seen by different sides of the ideological spectrum as either a model to be followed or avoided.¹ ²

GOVERNMENT INVOLVEMENT

Canada and the United States had similar health care systems in the early countries not to have some form of universal health coverage; the other two being Turkey and Mexico.³

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, the federal government is committed to providing funding support to its provincial governments for health care expenditures as long as the province in question abides by accessibility guarantees as set out in the Canada Health Act , which explicitly prohibits billing end users for procedures that are covered by Medicare . While some label Canada's system as "socialized medicine," the term is controversial. Princeton University health economist Uwe E. Reinhardt says that single-payer systems are not "socialized medicine" but "social insurance" systems, because doctors are in the private sector.[http://online.wsj.com/article/SB118411829790962883.html Letters: For Children's Sake, This 'Schip' Needs to Be Relaunched, Wall Street Journal, July 11, 2007, Uwe E. Reinhardt and others.

In the U.S., direct federal and state government funding of health care needs of its citizens is limited to Medicare , Medicaid , the VA (Veterans Administration) hospital system, and the State Children's Health Insurance Program (SCHIP) insurance programs for eligible senior citizens, very poor, disabled persons, and children. One study estimates that about 25 percent of the uninsured in the U.S. are eligible for these programs but unenrolled, but extending coverage to all who are eligible remains a fiscal and political challenge.⁴ The federal government also runs the Veterans Administration , which provides care to veterans, their families, and survivors through medical centers and clinics. For everyone else, health insurance must be paid for privately. Just under 60% of U.S. residents have access to health care insurance through employers, although this figure is decreasing, and the workers' expected contribution to such plans varies widely.⁵ Those whose employer does not offer health insurance, as well as those who are self-employed or unemployed, must purchase it on their own. More than 27 million of the 47 million U.S. uninsured worked at least part-time in 2006, and more than a third are in households that earned more than $50,000/year. Despite the greater role of private business in the U.S., federal and state agencies are increasingly involved in U.S. health care spending, paying about 45% of the $2.2 trillion the nation spent on medical care in 2004.⁶ Beyond its direct spending, the U.S. government is also highly involved in health care through regulation and legislation. For example, the Health Maintenance Organization Act Of 1973 provided grants and loans to subsidize Health Maintenance Organizations and contained provisions to stimulate their popularity. HMOs had been declining before the law; by 2002 there were 500 such plans enrolling 76 million people.⁷

The Canadian system has been 69-75% Publicly Funded ,⁸ though a substantial portion of services are provided by private corporations, namely the privately incorporated medical practices of most physicians (however, despite the fact that many doctors will refer to their "private clinics", these are in fact merely private corporations that derive nearly all their revenue through government billings). Although some doctors work on a purely fee-for-service basis (usually family physicians), some family physicians and most specialists are paid through a combination of fee-for-service and fixed contracts with hospitals or health service management organizations.

Canada's universal health plan does not cover certain services. Non-cosmetic 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.

According to Dr. Albert Schumacher, former president of the Canadian Medical Association, an estimated 75 percent of Canadian health care services are delivered privately, but funded publicly.

"Frontline practitioners whether they're GPs or specialists by and large are not salaried. They're small hardware stores. Same thing with labs and radiology clinics …The situation we are seeing now are more services around not being funded publicly but people having to pay for them, or their insurance companies. We have sort of a passive privatization."http://www.cbc.ca/news/background/healthcare/public_vs_private.html

Why these two countries' health systems diverged over the last 40 years is subject to historical debate. One 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 invest. By the time the Cold War had eased, consensus on government involvement in the economy had broken down, so it was all but impossible to introduce new spending programs on the scale of a national health plan. As it is, the U.S. government spends more on health care than on Social Security and national defense combined, according to the Brookings Institute .¹¹

Another explanation is that Canada's Parliamentary System makes the passage of legislation easier. Bill Clinton did have a plan for universal coverage, but his plan did not come to a vote in either house of Congress , let alone win a majority or survive a Filibuster . It is difficult to imagine parliament similarly dismissing the centerpiece of a prime minister's agenda because the government would otherwise fall due to the principle of Responsible Government ; in a Majority Government , that would mean party members voting against its own Cabinet, in contrast to the rarer Minority Government where failure to gain support of other parties would fell the government. The appointed Senate very rarely vetoes a bill, serving as a "house of sober second thought" and simply tables amendments if needed. Additionally, most bills come from the government itself, in contrast to the American Presidential system. The Canada Health Act was passed under a Majority Government In 1984 .

COVERAGE AND ACCESS

In Canada, every citizen has coverage, but access can still be a problem. Based on 2003 data from the Canadian Community Health Survey, Canadian Community Health Survey , 04-06-15 an estimated 1.2 million Canadians do not have a regular doctor because they "cannot find" one, and just over twice that number do not have one because they "haven't looked". Those without a regular doctor are 3.5 times more likely to visit an emergency room for treatment.

In the U.S., the federal government does not guarantee Universal Health Care to all its citizens, but Publicly Funded Health Care programs help to provide for the elderly, disabled, the poor, and children.¹² The Emergency Medical Treatment And Active Labor Act also ensures public access to Emergency Services regardless of ability to pay. Centers for Medicare & Medicaid Services: Emergency Medical Treatment & Labor Act

According to the United States Census Bureau , just under 60% of U.S. citizens have Health Insurance related to employment, 27% have government-provided health-insurance; another 9% purchase health insurance directly (there is some overlap in these figures), and 15.9% (46.6 million) were uninsured in 2005. An estimated 25 percent of the uninsured are eligible for government programs but unenrolled. About a third of the uninsured are in households earning more than $50,000 annually, who presumably could afford insurance.http://www.businessandmedia.org/articles/2007/20070718153509.aspx A 2003 report by the Congressional Budget office found that many people lack health insurance only temporarily, such as between job changes. The number of chronically uninsured (uninsured all year) was estimated at between 21 and 31 million in 1998.¹³ Another study, by the Kaiser Commission on Medicaid and the Uninsured, estimated that 59 percent of uninsured adults have been uninsured for at least two years.¹⁴

A number of Free Clinic s provide free or low-cost non-emergency care to poor, uninsured patients. The National Association of Free Clinics claims that its member clinics provide $3 billion in services to some 3.5 million patients annually.¹⁵

A peer-reviewed comparison study of health care access in the two countries published in 2006 concluded that U.S. residents are one third less likely to have a regular medical doctor, one fourth more likely to have unmet health care needs, and are more than twice as likely to forgo needed medicines. The study noted that access problems "were particularly dire for the US uninsured." Those who lack insurance in the U.S. were 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.

According to President George W. Bush, "people have access to health care in America. After all, you just go to an emergency room. The question is, will we be wise about how we pay for health care. I believe the best way to do so is to enable more people to have private insurance. And the reason I emphasize private insurance, the best health care plan -- the best health care policy is one that emphasizes private health. In other words, the opposite of that would be government control of health care." Office of the Press Secretary, July 10, 2007, President Bush Visits Cleveland, Ohio, Intercontinental Hotel Cleveland, Cleveland, Ohio

WAIT TIMES

One of the major complaints about the Canadian health care system is waiting times, whether for a specialist, major elective surgery, such as hip replacement, or specialized treatments, such as radiation for breast cancer. Studies by the Commonwealth Fund found that 24% of Canadians waited 4 hours or more in the emergency room, vs. 12% in the U.S.; 57% waited 4 weeks or more to see a specialist, vs. 23% in the U.S.Commonwealth Fund, Mirror, Mirror on the Wall: An International update on the comparative performance of American health care, Karen Davis et al., May 15, 2007.

In a 2003 survey of hospital administrators conducted in Canada, the U.S., and three other countries, 21% of Canadian hospital administrators, but less than 1% of American administrators, said that it would take over three weeks to do a biopsy for possible breast cancer on a 50-year-old woman; 50% of Canadian administrators versus none of their American counterparts said that it would take over six months for a 65-year-old to undergo a routine hip replacement surgery. Yet U.S. administrators were the most negative about their country's health care system. Hospital executives in all five countries expressed concerns about staffing shortages and emergency department waiting times and quality.[http://seattletimes.nwsource.com/html/opinion/2001977834_cihak13.html Guest columnist: The truth about Canada's ailing health-care system,] By Robert J. Cihak, Seattle Times, July 13, 2004 Confronting competing demands to improve quality: a five-country hospital survey. Blendon RJ, et al. Health Aff (Millwood). 2004 May-Jun;23(3):119-35. [PMID15160810

In the Canadian Supreme Court case of Chaoulli V. Quebec , Chaoulli argued that the long waits were life-threatening and violated human rights, and that doctors and patients had a right to contract for private health care, despite the prohibitions on those medical services.

Canadians concede that waiting time is a problem that stems from the country's lower costs and commitment to universal coverage. In a letter to the Wall Street Journal, Robert S. Bell, M.D., President and CEO of University Health Network, Toronto, said that Michael Moore's film '' Sicko '' "exaggerated the performance of the Canadian health system — there is no doubt that too many patients still stay in our emergency departments waiting for admission to scarce hospital beds." However, "Canadians spend about 55% of what Americans spend on health care and have longer life expectancy, and lower infant mortality rates. Many Americans have access to quality health care. All Canadians have access to similar care at a considerably lower cost." Canadians pay 9% of GDP to insure 100% of citizens, compared with 14% of GDP to insure 85% of Americans. The Kaiser Family Foundation found that 63% of Americans were worried about not being able to afford health-care services. There is "no question" that the lower cost has come at the cost of "restriction of supply with sub-optimal access to services," said Bell. A new approach is targeting waiting times, which are reported on public web sites "Canadian and U.S. Health Services -- Let's Compare the Two," Letters, Wall Street Journal, July 9, 2007; Page A13

In the U.S., patients on Medicaid, the low-income government programs, can wait three months or more to see specialists. Because Medicaid payments are so low, doctors don't want to see Medicaid patients. In Benton Harbor, Michigan, specialists agreed to spend one afternoon every week or two at a Medicaid clinic, which meant that Medicaid patients had to make appointments not at the doctor's office, but at the clinic, where appointments had to be booked months in advance.[http://online.wsj.com/article/SB118480165648770935.html?mod=todays_us_page_one LOCKED OUT: Note to Medicaid Patients: The Doctor Won't See You; As Program Cuts Fees, MDs Drop Out; Hurdle For Expansion of Care, By VANESSA FUHRMANS, Wall Street Journal, July 19, 2007

PRICE OF HEALTH CARE

Health care is one of the most expensive items of both nations’ budgets. The U.S. government spends more per capita on health care than the government does in Canada. In 2004, the government of Canada spent $2,120 (in US Dollars ) per person on health care, while the United States government spent $2,724.¹⁶

However, U.S. government spending covers less than half of all health care costs. Private spending for health care is also far greater in the U.S. than in Canada. In Canada, an average of $917 was spent annually by individuals or private insurance companies for health care, including dental, eye care, and drugs. In the U.S., this number is $3,372. In 2004, health care consumed 15.4% of U.S. annual GDP . In Canada, only 9.8% of 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%.

The health share of gross domestic product (GDP) in America is expected to hold steady in 2006 before resuming its historical upward trend, reaching 19.6 percent of GDP by 2016. "The Not So Short Introduction to Health Care in US" , by Nainil C. Chheda, published in February 2007, ''Accessed February 26, 2007''.

Some advocating against socialized health care have asserted that the difference in health care costs between the two nations is partially explained by the differences in their demographics.Sheldon L. Richman. "A Free Market for Health Care." From ''The Dangers of Socialized Medicine'', edited by Jacob G. Hornberger and Richard M. Ebeling. Future of Freedom Foundation (February 1994). ISBN 0-9640447-0-6. Retrieved September 8, 2006. Police-reported s and war wounded, also somewhat increasing cost.

The mixed system in the United States has become more similar to the Canadian system. In recent decades, Managed Care has become prevalent in the United States, with some 90% of privately insured Americans belonging to plans with some form of managed care.¹⁸ 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 or by denying coverage for expensive treatments not considered worth their cost.

Administrative costs for health care are also higher in the United States than in Canada.Woolhandler S, Campbell T, Himmelstein DU. "Costs of health care administration in the United States and Canada." ''N Engl J Med.'' 2003 August 21;349(8):768-75. PMID 12930930.

Medical professionals

Some of the extra money spent in the United States goes to Doctors , Nurse s, and other medical professionals, all of whom receive higher compensation than their counterparts north of the border. According to health data collected by the OECD , average income for physicians in the United States in 1996 was nearly twice that for physicians in Canada. {Link without Title}

The causes of these differences are complex. Factors such as higher cost of living in the United States, lower private cost of medical training in Canada, and high costs of medical malpractice insurance in the United States, contribute to the differences. Which entities exercise market power in each country also influences the differences in compensation. Canadian billing rates for each procedure are set through negotiations between the provincial governments and the physicians' organizations. In the U.S., physicians have greater freedom to set rates according to the local market. Anti-trust regulations prohibit the formation of uniform rates for procedures. Actual compensation to medical professionals in the U.S. is also highly influenced by the discounted rates that publicly funded insurance programs, Medicaid and Medicare, and major health insurance companies, are able to negotiate through the exercise of their market power. Private insurance companies often set their own reimbursement rates as a percentage of the Medicare reimbursement rate for all procedures though details are kept secret via confidentiality agreements that are a condition for participating in their panels of physicians.

Some economists have argued that, in highly technical matters like health care, the free market fails due to the problem of asymmetric information. According to this argument, one group, the doctors, have much greater knowledge about the true value of their services, and, therefore, are at an advantage vis-a-vis health care consumers when it comes to setting rates. In Canada, professionals working for the government are also experts in the field and thus, the argument goes, fairer rates are set. This argument also does not fully account for the disparity in pay for medical professionals in the two countries.

Canada has fewer doctors per capita than the United States. In the U.S, there were 2.4 doctors per 1,000 people in 2005; in Canada, there were 2.2.¹⁹ Some doctors leave Canada to pursue career goals or higher pay in the U.S. Many Canadian physicians and new medical graduates also go to the U.S. for post-graduate training in medical residencies. Often new and cutting-edge sub-specialties are more widely available in the U.S. as opposed to Canada. However, statistics published in 2005 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 returned to Canada than moved abroad.²⁰

Drugs

Both Canada and the United States have limited programs to provide prescription drugs to those in need. In the U.S., the introduction of Medicare Part D has extended partial coverage for pharmaceuticals to Medicare beneficiaries. In Canada all drugs given in hospitals fall under Medicare, but other prescriptions do not. The provinces all have some programs to help the poor and seniors have access to drugs, but while there have been calls to create one, no national program exists. CBC.ca - Premiers propose drug plan paid for by Ottawa About two thirds of Canadians have private prescription drug coverage, mostly through their employers.Valérie Paris and Elizabeth Docteur. Pharmaceutical Pricing and Reimbursement Policies in Canada OECD Health Working Papers In both countries, there is a significant population not fully covered by these programs. A 2005 study found that 20% of Canada's and 40% of America's sicker adults did not fulfill a prescription because of cost."Taking The Pulse Of Health Care Systems: Experiences Of Patients With Health Problems In Six Countries" Cathy Schoen, ''Health Affairs.'' Chevy Chase: Jul-Dec 2005. Vol. 24 pg. 509, 17 pgs

One of the most important differences between the two countries is the much higher cost of drugs in the United States. In the U.S., $728 per capita is spent each year on drugs, while in Canada it is $509. At the same time, consumption is higher in Canada, with about 12 prescriptions being filled per person each year in Canada and 10.6 in the United States.Valérie Paris and Elizabeth Docteur. Pharmaceutical Pricing and Reimbursement Policies in Canada OECD Health Working Papers pg. 49 The main difference is that patented drug prices in Canada average between 35% and 45% lower than in the United States.Valérie Paris and Elizabeth Docteur. Pharmaceutical Pricing and Reimbursement Policies in Canada OECD Health Working Papers pg. 52 The price differential for brand-name drugs between the two countries has led Americans to purchase upward of US$1 billion in drugs per year from Canadian pharmacies.²¹

There are several reasons for the disparity. The Canadian system takes advantage of centralized buying by the provincial governments that have more market heft and buy in bulk, lowering prices. By contrast, the U.S. has explicit laws that prohibit s are thus available on Canadian shelves sooner.²²

The pharmaceutical industry is important in both countries, though both are net importers of drugs. Both countries spend about the same amount of their GDP on pharmaceutical research, about 0.1% annually Valérie Paris and Elizabeth Docteur. Pharmaceutical Pricing and Reimbursement Policies in Canada OECD Health Working Papers pg. 57

Technology

The United States spends more on technology than Canada. The study Medical Imaging in Canada, 2004 Medical Imaging in Canada, 2004 reported that in 2004, Canada had 4.6 MRI scanners per million population while the U.S. had 19.5 per million. Canada's 10.3 CT Scanners per million also ranked behind the U.S., which had 29.5 per million.[http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=media_13jan2005_e Press release: CIHI Report shows increase in MRI and CT scanners, up more than 75% in the last decade The study did not attempt to assess whether the difference in the number of MRI and CT scanners had any effect on the medical outcomes.http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=PG_328_E&cw_topic=328&cw_rel=AR_1043_E#full Medical Imaging in Canada, 2004

Malpractice litigation

The extra cost of consumes up to 9% of American healthcare expenses. Testimony of Mark McClellan, MD, Ph.D., Administrator, Centers for Medicare & Medicaid Services, before the Joint Economic Committee Hearing on Malpractice Liability Reform, April 28, 2005 Kessler, Daniel and Mark McClellan. "Do Doctors Practice Defense Medicine?," Quarterly Journal of Economics, 1996, v111(2,May), 353-390. Towards a More Effective Monetary Policy, Kuroda, Twao, ed.,: Macmillan, 1997, pp. 137-164. In the same year in Canada, the total burden of malpractice suits was $237 million, or 0.27% of total health spending.

Ancillary expenses

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Canadian And American Health Care Systems Compared