For many critics of U.S. health care, the Canadian system of universal health care has long been viewed as an alternative, superior model for the U.S. to follow. Canada’s single-payer system is mostly publicly funded, while the U.S. has a multi-payer, heavily private system. While dissatisfaction with the U.S. health care system is widespread among Americans, Canada’s health care system enjoys high levels of satisfaction among its own population.
Much of the appeal of the Canadian system comes from the fact that it seems to do more for less. Canada provides universal access to health care for its citizens, while nearly one in five non-elderly Americans is uninsured. In Canada, coverage is not tied to your job or dependent on your income; rich and poor are in the same system, and enjoy equal access. Yet last year, Canada spent far less of its GDP on health care than did the U.S. — 10.4% compared with 17.8% in the U.S. — which was the highest percentage of any nation in the world, according to the World Health Organization. For all that, Canada scored better than the U.S. on two commonly cited health outcome measures — infant mortality and life expectancy.
What, if anything, can American policy makers and the public learn from Canada’s success? Can some aspects of the Canadian system be applied to the U.S. at a time when the American public remains deeply divided about whether to replace and/or reform the Affordable Care Act?
‘A Discombobulated, Fragmented System’
Why is the U.S. system so much more expensive? As Dan Polsky, executive director of the University of Pennsylvania’s Leonard Davis Institute of Health Economics, notes, “We have this discombobulated, fragmented system that leads us to have very high administrative costs, and everything is disconnected. You have to go from one system to another when you go from one provider to another. Some health [information] gets lost with the transfer from one provider to the next. And there’s a private health care system that funds you when you are under 65, and when you’re over 65, you get funded by Medicare. And maybe most of your problems occur when you’re on Medicare, so our private health care system doesn’t have a lot of incentive to keep you healthy when you’re over 65, because they’re not on the hook for it.”
“In one sense, what Americans can learn from Canadians is nothing, because we don’t share the same views of society as they do.” –Mark Pauly
Does that mean Americans have much to learn from Canada? Not necessarily. “In one sense, what Americans can learn from Canadians is nothing, because we don’t share the same views of society as they do,” says Mark Pauly, Wharton professor of health care management. “The design of a country’s health care system and the performance of it are very dependent on a specific country’s culture, ethnicity and a whole lot of factors that have nothing to do directly with health care but have everything to do with health outcomes. It’s the old apples and oranges problem. Canada is most similar to us of any other country, so in that sense we have more of a chance of learning some things. But the literal answer to the question, ‘Why don’t we just copy the Canadians?’ is because we can’t. We’re not Canadian and we don’t share the same history or the same social ethos.’”
Polsky agrees that differing social values are the core issue. “At the end of the day, the debate is about what are our values. What is the best way we should structure a system of insuring our public? When you talk with the Canadians, there are a number of problems with their health care system that, for a lot of people in Canada, reflects their values about being in a country that has a system that provides … for all of its citizens. For the most part, they are very much in favor of their health care system. In our country, we have a mix of public and private insurance. Half of our health care is paid through Medicare and Medicaid, which are publicly sponsored health care programs, and the other half is paid through private insurance. What you end up with here is a very mixed view of the values.”
Supporters of universal health care in the U.S. don’t always understand the difference between a ‘single payer’ system and universal health coverage. Explains Polsky: “Universal coverage is [when] everyone has some health insurance. That would be my value; everyone is insured in some way. We could achieve that in this country just by filling in the holes, with a little bit of Medicare, a little bit of Medicaid, a little of employer coverage, and the individual market. [It would be] a crazy, mixed-up system, and at least we’d have everybody covered. A single payer system is what they have in Canada, which is that in each of the provinces, all health care for hospitals and mostly for doctors is paid for through the public insurance system. This is one system that pays each doctor in each hospital.”
Still, “there are some things we can learn” by studying the Canadian system, Pauly argues. “Number one, although in many ways the system looks like ours, the system has a much greater emphasis on primary care and less emphasis on specialist care and hospitalization, and on complex and costly procedures. And that probably contributes a lot to the lower spending [in Canada], because while primary care can be good for you, expensive procedures such as for cancer may add only a few months of life but cost hundreds of thousands of dollars.”
Pauly adds, “Ordinary people in Canada are healthier than in the U.S., but outcomes for cancer and very serious illnesses are less good there. It’s a great place to live as long as you don’t get too sick, as one critic put it.”
Another fact that might dissuade Americans from duplicating the Canadian model, Pauly adds, is that “Canadians have a longer waiting list for things like joint replacement, so if your hips are killing you in Canada, you may wait months for that [surgery] to happen. In the U.S., the orthopedic surgeons are calling you every day, wondering when you are going to come in for your joint replacement procedure. We probably do too many; they probably do too few. But the safety valve for Canada is that they can always come across the border, and have a procedure done here.”’
Why Canada’s System Developed Differently
Given cultural similarities between U.S. and Canadian societies, why did health care in Canada emerge so differently? “It may have something to do with the respective ages of the countries, time of settlement and who settled there,” asserts Michael Decter, a former deputy minister of health for Ontario who was responsible for managing that province’s $18 billion health system, serving its 11 million residents. “When Saskatchewan — one poor province — started the ball rolling in the 1950s by providing its people with hospital insurance, its government said they were going to pay the hospital bills for all of their citizens. And then a decade later, they said they’d pay the physician bills, which was much more contentious. A lot of your northern [U.S.] states were not far off that. Wisconsin, Minnesota were heading that way.”
“At the end of the day, the debate is about what are our values. What is the best way we should structure a system of insuring our public?” –Dan Polsky
The major difference from the United States, adds Decter, is that “the U.S. already had a fairly well developed health insurance industry, and Canada didn’t. So, when Canadian [provincial] governments got into the act in terms of paying for services, they weren’t displacing big, for-profit insurance corporations. They were, at most, displacing some voluntary Blue Cross health organizations. In some provinces, the physicians themselves operated some schemes of pre-paid insurance.”
That doesn’t mean that everyone in Canada is equally delighted with the Canadian system, Decter notes. “In Canada there is a small minority that would like us to go in the U.S. direction. There is litigation around that, because the government, in paying for health services, sort of gave itself a monopoly. A doctor can’t say, ‘I’ll take the government fee for poor people but I’d like to bill a wealthy guy a lot more to do his hip,’ [for example]. If you’re in the government scheme, it’s one price.”
In comparing the health care systems in the U.S., Canada and the U.K., many people “see the National Health Service (NHS) in the U.K. as similar to Canada’s, but we [in Canada] have a lot more similarities to the U.S., actually,” Decter says. “Medicare [in the U.S.], which clicks in at 65, is more comprehensive than Canadian Medicare; it pays for a lot of services that we don’t pay for. Medicare uses more of the model we [use]: It pays providers, but they don’t work for it. The [British] NHS is different, in that it employs a million people, who are actually employees of the NHS. In Canada, we left the hospitals as free-standing…. They get most of their money from the governments, but the governments don’t run them. The governments set policy, but the hospitals have a degree of independence. They decide whom to hire. They negotiate with their own unions, and hire their own medical staffs.”
The Canadian system has its origins in cost-sharing, Decter adds. “Some provinces started to pay their hospitals, and the federal governments said, ‘We want this to be a national plan, and a fair plan, so we’ll pay half of the hospital cost for every province if they provide the insurance.’ And then they did the same with doctors. But it was costing too much, so they capped their payments. And there’s been a whole history of arguing over that. But the dynamic that is now going on with the Affordable Care Act — where you’ve got [state] governors in the act, and there’s a back-and-forth about who should be covered, [and about] where the poverty line should be set — we don’t have that. But we do have the tension between the national government and the provinces over funding.”
Thus, notes Decter, “The provinces would like the national governments to give them more money for health care, and they fight about it. They’re just coming off a 10-year agreement where the federal government said it will increase its contribution by 6% a year. That made some sense in 2004, when it was agreed to. But now, with much slower growth and less inflation, it seemed overly generous, so the federal government has cut that growth to 3% a year, and added some additional money for home care.”
Unnecessary expenses
Despite its relative low costs, the Canadian health care system is not free of wasteful practices. An April 2017 report by the Canadian Institute for Health Information (CIHI) and Choosing Wisely Canada (CWC), a nationwide clinician-led campaign that develops recommendations about tests and procedures, found that up to 30% of tests and procedures in Canada are potentially unnecessary, waste health-system resources and increase wait times for patients in need. Highlights from the report include:
- Almost one in three low-risk patients with minor head trauma in Ontario and Alberta underwent a head scan in an emergency department, despite CWC’s recommendation that this is unnecessary and potentially harmful.
- One in 10 seniors in Canada use a benzodiazepine on a regular basis to treat insomnia, agitation or delirium. Several recommendations by CWC have highlighted the harms of long-term use of these medications.
- In Ontario, Saskatchewan and Alberta, 18% to 35% of patients undergoing low-risk surgery had a preoperative test, such as a chest X-ray, ECG or cardiac stress test. Such tests are unnecessary, potentially harmful and can delay surgery, the report notes.
- For children and youth in Manitoba, Saskatchewan and British Columbia, rates of low-dose quetiapine (likely used to treat insomnia) increased rapidly, although the use of this medication in children and youth to treat insomnia is not recommended by CWC.
“In Canada there is a small minority that would like us to go in the U.S. direction. There is litigation around that, because the government, in paying for health services, sort of gave itself a monopoly.” –Michael Decter
Building a Single-payer System
Despite such imperfections, there is growing support in the U.S. for instituting a single-payer health care system based on the Canadian model. But it is far from certain that there is enough of a social and political consensus to bring it about. Notes Pauly, “There has been more of a consciousness [lately], and probably consensus on what ought to be some social objectives here [in the U.S.] What I don’t see, though, is a consensus on how to achieve them. [U.S. Senator] Bernie Sanders believes, I guess, that you should have a right to as much health care as you and your doctor agree on, and it should be paid for by millionaires and billionaires. But I don’t think we really have a national consensus on that… The real question is ‘How much health care does an individual person have a right to; and who has the obligation to pay for it? And who should pay for that?’ Those questions are not addressed by Sanders in a way that there would be a consensus on.”
What’s the most practical way of bringing to life Sanders’ dream of a single-payer, national health care system in the U.S.? Perhaps, argues Pauly, by “letting it happen piecemeal, state by state, just as it happened piecemeal, province by province in Canada. Although there was an overarching federal plan there to get the individual provinces to coordinate and subsidize them, originally it was a provincial initiative. Maybe that’s the way that Senator Sanders ought to go. First, start back home — and see if he can get Vermont to do what he advocates for the rest of the country. And then New Hampshire should be easy and then work across the northern tier. Washington [State] should be a snap, rather than try to persuade the heart of Republican power in the South to go along with this; that’s never going to happen.”
For his part, Polsky argues, “It’s one thing to talk about the values that are consistent with the health system you want; it’s another thing to get there.” Sanders’ plan has resonated with many in terms of the values it embodies, he notes, “but the details of that plan have never been worked out…. And a lot of the challenges are in the details.”
Join The Discussion
9 Comments So Far
Thomas Coyne
Thank you for an excellent article. As someone who has lived under both the Canadian and US systems (and the UK’s too), I’d like to add a couple of points.
First, the company I ran in Canada also had a US subsidiary. What always struck me was the huge difference in time that employees on either side of the border spent on health care related issues. Even more important was the absence in Canada of the sense of dread that too many US employees felt when talking about or dealing with health insurance issues (e.g., loss of job and health insurance, complex deductibles, copays, and coinsurance calculations, pre-authorizations, etc.).
Second, it is important to keep in mind that there isn’t one Canadian systems; rather, there are multiple provincial healthcare systems, that have some significant differences. For example, while it may be the case that in some provinces there are long waits for certain types of surgery, Alberta has quite a good track record on this metric, as anyone can see from the multiple metrics the province makes available online.
I hope that you continue this series with a closer look at Australia, the UK, and other healthcare systems from which the US could learn some important lessons. Hopefully this will include interviews with people who have lived under both the US and these other systems — I never cease to be amazed by the strength of people’s opinions about systems with which they have no personal experience.
Anonymous
I would not be opposed to a single payer type system if I could trust the organization that was running it. Given the horrendous records of Medicare and Medicaid for making payments for fraudulent services, and the deplorable record of the Veterans Administration, I would not be in such a big hurry to let the Federal government run the show. There would have to be some very serious controls implemented.
Wayne Peterson
Fear of big government, past transgressions by health agencies, belief that competition brings the best results, and a lack of knowledge about health care systems in other parts of the world all lead to the discombobulated, fragmented system that the US is struggling with. I agree with Pauly that perhaps the best way to change the overall health care system is to do it piecemeal with states taking on a more Canadian approach. Evidence-based results are needed, but are there any States that are engaged with Canadian health care experts to explore such possibilities?
Al Lehmann
As with most complex systems, increasing complexity likewise raises possibilities for failures or inefficiencies. This article points out this principle well. Given the greater complexity of America’s health care delivery system, it’s unsurprising that it is unwieldy and more expensive than the Canadian.
The comment about values driving choice is apt enough as far as it goes. However, a comfortable willingness to create a health care system that is unavailable to a large fraction of the population suggests that neither sympathy nor generosity are values held very dear by the system’s creators.
Mr. Coyne’s observation (among the comments above) regarding employees’ “dread” with regard to health insurance issues highlights, surely, a weakness in the American system, at least as he experienced it. Serious illness can only be compounded by terror of bankruptcy, not ameliorated. If the overall goal of a medical care system is to promote health and combat disease, such experience of financial terror cannot bode well for achieving that goal.
As a Canadian, I would be hard-pressed to present Canada’s system as any kind of perfect solution. As the author points out, orthopedic surgeries have dreadful wait times here, for example. Nonetheless, the successes of the system (universal coverage, better overall outcomes) speak for themselves.
Financial compensation for various aspects of medical care (salaries of physicians and other medical staff), patent protections on enormously expensive pharmaceuticals, etc. are also contentious issues. It has always struck me that professionals who “profess” an overarching interest in client well-being and satisfaction but who enter a profession with the overarching purpose of getting rich are just a little hypocritical. Naturally physicians’ motivations are as various as the people who train to become them, but while a superior salary is not unreasonable to expect after the extensive and expensive training they undergo, there should be something beyond money driving medical ambition. The enormous costs of extended patent protections, grotesque kinds of profiteering, etc. provide numerous examples of the absurd flaws of an overly fragmented and privatized system.
Finally, from a financial point of view, by the author’s own statistics, what might not be accomplished with 7.4% of GDP freed up for other priorities? Recent data show US GDP at $18 trillion (!!!); 7% of that is roughly $1.25 trillion. All that spent for less salubrious outcomes! Almost unbelievable…
Thank you for an interesting article.
Lou Charles
When I lived in Seattle there was a steady stream of Canadians coming to Seattle for healthcare issues, typically surgery and cancer treatment. The reason was wait time and skill – the feeling was the good doctors go to the US. These people were not poor and could pay for the best, and their conclusion was Canada was not the best.
So if we want mediocre healthcare mimic Canada.
Richard Schaefer
Obamacare was designed to eventually force us into a single-payer, government run healthcare system totally funded by the taxpayers – period. From the start, the Obama government knew that it would eventually implode and essentially have to be bailed out by the taxpayers. It doesn’t take a rocket scientist to figure that out.
If the Canadian system is so perfect, then why do we constantly hear about Canadians heading over the border to seek treatments that are better and without long wait times to be seen or treated? History says that government-run systems are the most inefficient way to run anything and that private enterprise can do a better job.
This whole healthcare mess could have been done by simply having Congress past a law that would force healthcare companies to insure people with pre-existing conditions and to expand Medicaid to help those low-income people that truly need the help. Additionally, people would try to seek employment more aggressively for the traditional benefit of employer-supported healthcare to individuals and their families.
Just my opinions.
Mercury Max
Folks need to do a better job of taking care of themselves. Overeating leading to obesity is one of the prime factors compromising health.
So is alcohol and tobacco. Can’t have the cake and eat it too. All this jacks up costs. Plus everyone wants to make more money…………
Robert Arvanitis
Quote: “But the safety valve for Canada is that they can always come across the border, and have a procedure done here.”
And that says it all – America is the world’s safety valve, for healthcare, pharmaceutical innovation, global peacekeeping, disaster relief and all the rest.
Also note that the monopoly provider we do have – VA – kills people.
Thomas Gottlieb
Thomas Gottlieb, MD and Robert Messman, MBA
Thank you for a thought provoking Public Policy article. If I become ill anywhere in the world, I want to become ill in the US, if I have health insurance. Without health insurance (or with under-insurance) becoming ill in the US may result in financial insecurity and death. This point is suggested by the above article. Consider the following:
“It’s the economy, stupid!” (Carville/Clinton – 1992) – As you suggest, econometric studies of a multi-insurance system without regulation demonstrate the US healthcare system as “A Discombobulated, Disjointed System”. The current political system does not allow for innovation to solve this problem.
“It’s the price, stupid!” (Reinhardt – 2003) – “Since spending is a product of both the goods and services used and their prices, this implies that much higher prices are paid in the United States than in other countries. But U.S. policymakers need to reflect on what Americans are getting for their greater health spending. They could conclude: It’s the prices, stupid.”
“It’s the financing, stupid!” The Center for Study of a National Public Health Insurance [PNHI] believes that health financing is a key policy instrument in meeting the challenge of affordable cost, high quality, and healthy communities.
The article suggests that transformation of the US health system is needed and encourages us to consider a single insurer. Much attention is directed toward what is called “single payer”, however, we have not found a business plan (financial analysis) to implement this scheme, e.g. Improved and Expanded Medicare-for-All. We propose such a business plan, US Healthcare Financing Reform, The Consolidation of the Health Insurance Industry (www.hcacfoundation.org.) and demonstrate its feasibility. We challenge readers to comment and answer:
Question #1: Has a financial analysis (not an economic analysis) demonstrated the financial feasibility of a single insurer (e.g. HR 676) as a government run enterprise?
Question #2: Does the PNHI business/financial plan have merit?
Thank you for this interesting article.