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The Trouble with Canadian Healthcare

Saturday, December 6, 2008

A single-payer system is probably the least effective way to achieve universal health insurance coverage.

Many people assume that Canadians enjoy universal healthcare coverage while receiving the same quality and quantity of medical goods and services as Americans. But the alleged superiority of single-payer health care is not consistent with the evidence. The reality is that, on average, Americans spend more of their income on healthcare than Canadians do but get faster access to more and better medical resources.

Healthcare appears to cost less in Canada than in the United States partly because Canadian government health insurance does not cover many advanced medical treatments and technologies that are commonly available to Americans. If Canadians had access to the same quality and quantity of healthcare resources that Americans enjoy, Canada’s government health insurance monopoly would cost much more than it currently does.

If Canadians had access to the same quality and quantity of healthcare resources that Americans enjoy, Canada’s government health insurance monopoly would cost much more than it currently does.

Our recent study comparing healthcare in the United States and Canada shows that the public-private U.S. system outperforms the Canadian system on almost all the key indicators of available healthcare resources. The United States even performs nearly as well as Canada in terms of providing “effective” health insurance coverage for its population.

Americans spend 55 percent more than Canadians do on healthcare as a percentage of their national economy. But consider what Americans get for the money they spend: compared to Canada, the United States has 327 percent more MRI units and 183 percent more CT scanners per million population. The United States also produces 100 percent more inpatient surgical procedures per million population, and it has 14 percent more physicians and 19 percent more nurses per million population. U.S. hospitals are newer and better equipped than Canadian hospitals, and Americans have access to more new medicines than Canadians.

Other important facts about single-payer health insurance in Canada that are seldom reported by the pundits or politicians include the following:

• In 1993, Canadian patients waited an average of 9.3 weeks between the time they saw their family physician and the time they actually received the treatment they needed. By 2007, the average wait time had almost doubled to 18.3 weeks. The median wait time in Canada is nearly double the wait time that physicians consider clinically reasonable.

• The Canadian single-payer system does not cover prescription drugs on a universal basis. Only about one-third of the Canadian population is eligible for various government-financed drug programs. The remainder of the population has private sector drug insurance coverage or pays cash for outpatient drugs, just like in the United States.

• Public drug plans in Canada often refuse to cover new drugs. On average, only 44 percent of all new drugs that were approved as safe and effective by the Canadian government in 2004 were actually covered by government drug insurance programs in October 2007. Even for the small percentage of new drugs that are covered by public drug programs, patients have to wait nearly one year, on average, after government approval for public insurance to start covering these new drugs.

The median wait time in Canada is nearly double the wait time that physicians consider clinically reasonable.

• Consumers in Canada and the United States spend roughly the same proportion of their per-capita GDP on prescription drugs (1.5 percent in Canada compared to 1.7 percent in the United States). As a percentage of per-capita, after-tax income, the cost burden of prescription drug spending is slightly higher in Canada (2.5 percent in Canada compared to 2.3 percent in the United States).

• Between the fiscal years 1997-98 and 2006-07, government spending on healthcare grew in all 10 Canadian provinces at an average annual rate of 7.3 percent, while total available provincial revenue grew at an average annual rate of 5.9 percent and provincial GDP grew at an average annual rate of 5.6 percent. This level of government healthcare spending is unsustainable over the long haul.

Supporters of the Canadian healthcare system like to point out that the American system fails to provide universal health insurance coverage. This is true. But it’s also true that Canada doesn’t do much better when it comes to actually delivering access to necessary medical care. Government data show that an estimated 1.7 million Canadians—in a country of around 33-34 million—were unable to access a regular family physician in 2007. Without access to a family doctor, a person can’t obtain regular primary care or referrals for elective specialty medical services.

Moreover, that 1.7 million estimate does not include the many Canadians who have access to a regular family doctor but are on waiting lists for specialist treatment. Access to a waiting list is not the same thing as access to healthcare. When Canadians can’t get access to healthcare, they are no better off than uninsured Americans.

For that matter, how many Americans are really uninsured? We often hear that 47 million Americans lack health insurance. Yet research in the United States has demonstrated that the actual number of “effectively” uninsured Americans is less than half that number, and that being uninsured is usually only a temporary condition. Indeed, the estimated percentage of the population that was “effectively” uninsured for non-emergency, necessary medical services in 2007 was not that different in the United States and Canada: 7.9 percent in the United States compared to at least 6 percent in Canada.

Canadian patients on waiting lists are worse off than uninsured Americans, the latter of whom are at least legally allowed to use their own money or credit to buy healthcare.

Canadian patients who want to escape the delays in the public system are also barred from paying privately for healthcare services. In practical terms, Canadian patients are unable to buy quicker access or better care than the government health program provides. In this sense, Canadian patients on waiting lists are worse off than uninsured Americans, the latter of whom are at least legally allowed to use their own money or credit to buy healthcare.

Ironically, while Canadian-style healthcare appears to be gaining support in the United States, it is losing support and legitimacy in Canada. In a 2005 case challenging Quebec’s government-run health insurance program, the Supreme Court of Canada declared the single-payer system a violation of a person’s right to preserve his or her own health. Similar cases are now underway in two other Canadian provinces.

Ultimately, a single-payer system is probably the least effective way to achieve universal health insurance coverage. Canada has proved this in spades. The U.S. healthcare model may be flawed, but the Canadian model is far worse.

Brett J. Skinner is director of bio-pharma, health, and insurance policy at the Fraser Institute. He is the principal author of “The Hidden Costs of Single-Payer Health Insurance: A Comparison of the United States and Canada” (available here).

Image by Darren Wamboldt/Bergman Group.

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