Canadian Health Care: Myths and Realities

There is much misunderstanding in the United States about the health care system in Canada.  This article will briefly describe the nature of the system that serves our neighbors to the north, and attempt to address some of the most prevalent myths circulating in the media about Canadian health care.

In Canada each resident is issued a health insurance card – similar to a Social Security card in the U.S. – which entitles them to go to any doctor, anywhere, anytime and receive any covered service, for which there are no deductibles, co-payments, or dollar limits.  Covered services are defined as “all medically necessary services,” and are defined below.  A 1999 survey showed that almost 85% of Canadians said the medical care they and their families received in the last year was good, very good or excellent.  This follows the pattern of earlier surveys.

Overall, the Canadian health care system, called “Medicare,” is a system in which the federal government sets national standards for health care and assists in the financing of the system.  The management and delivery of health care services is the responsibility of each individual province (equivalent to our states).  Canada does NOT have a system of “socialized medicine,” with doctors employed by the government.  What they have is a national health insurance system — a “single payer” — which pays for most services delivered by doctors, most of whom are private practitioners who work in independent or group practices and have a high degree of autonomy.  The system is referred to as a “national” health care plan in that all provincial and territorial hospital and medical insurance plans are linked through adherence to national principles set at the federal level.

The five principles of Canadian Medicare are:

Public Administration- The health insurance plan of a province must be administered and operated on a non-profit basis by a public authority accountable to the provincial government.

Comprehensiveness – The plan must insure all medically necessary services provided by hospitals and physicians. Insured hospital services include in-patient care at the ward level (unless private or semi-private rooms are medically necessary) and all necessary drugs, supplies and diagnostic tests, as well as a broad range of out-patient services. Chronic care services are also insured, although some payment in respect of accommodation costs may be required by patients who more or less permanently reside in the institution.

Universality- The plan must entitle 100 percent of the insured population (i.e., eligible residents) to insured health services on uniform terms and conditions.

Accessibility – The plan must provide, on uniform terms and conditions, reasonable access to insured hospital and physician services without barriers. Additional charges to insured patients for insured services are not allowed. No one may be discriminated against on the basis of income, age, health status, etc.

Portability – Residents are entitled to coverage when they move to another province within Canada or when they travel within Canada or abroad.

The principles of Medicare have the support of an overwhelming majority of Canadians. Myths About Canadian Health Care:

The Canadian health care system does not work as well as the U.S. system.

ABC News recently referred to Canadian health care in general as facing “a very serious situation.”  Statistics do not back this up.  Canadians live longer than Americans, have a lower infant mortality rate, have more nursing home beds, and more nurses.  Canadians have higher survival rates for most cancers.  The United Nations Human Development Index, which ranks countries according to their citizens’ education, access to health care, and average income, has ranked Canada at the top of the list for the past seven years.

Long Waits for Care

There are no waits for urgent care or primary care in Canada.  There are waits for specialist care and elective surgery, stories of which are widely reported in the U.S. press.  In fact, there is no reliable data that would allow us to assess whether the problem is system-wide and prevalent, or merely anecdotal.

Health Care is Rationed in Canada

Health care is rationed in every nation of the world, since no nation provides unlimited resources for health care.  The difference is in how those resources are allocated.  In the United States health care is rationed by ability to pay, with decisions often made by private entities such as insurance companies or HMOs.  In Canada, every province manages its own health care spending based on a democratic process that assesses both the system’s ability to pay and the citizens’ needs for care.  Decisions about the acquisition and distribution of expensive high-tech equipment, for example, are based on demonstrated need balanced against desires to avoid unnecessary duplication or under-utilization.

Taxes in Canada Are Too High

Personal income taxes are higher in some classes in Canada than in the U.S., and lower in others.  Canadian Social Security taxes are lower than the U.S.  Overall, tax revenues as a percentage of the national income are higher in Canada than in the U.S.  However, this fails to take into account the value of social benefits, such as family allowances, tax credits, and health care.  When those are factored in, the average after-tax and after-transfer income of Canadian workers actually about 0.1% higher than in the United States. A recent study by Standard and Poor concluded that if the costs of private-sector health and education services, which are principally publicly-funded in Canada, are added to the US tax bill, there is no difference in the overall tax burden.

Canadians Are Pouring Over the Border to Get Health Care

Fewer than 0.1% of Canadians surveyed in 1998/99 reported receiving health care in the United States.  Studies suggest that many of those treated were long-term visitors, such as “snowbirds” ages 65 and over who spend winters in the U.S.

Doctors Are Fleeing Canada to Practice in the U.S.

Doctors are a highly mobile group of professionals, but there is no mass exodus of Canadian doctors.  Approximately 569 physicians left the country in 1998 compared to 659 in 1997, a drop of 14%. While the total number of physicians leaving fluctuates from year to year, the proportion of those leaving to the total physician supply has remained stable at approximately one to two per cent since the 1980s.  The number of physicians returning to practice in Canada increased by 41% from 227 in 1997 to 321 in 1998. The 321 returning physicians represented 0.6% of the total physician supply for 1998.

The Canadian Health Bureaucracy is Inefficient

Despite the overall better health outcomes in Canada, Canadians spend less on health care than the United States.  Per capita, Canada spends about $1,785 per year on health care, compared to $4,178 in the U.S.  As a nation, Canada devotes 9.5. of its Gross Domestic Product to health care, while the U.S. spends 13.6%.  In both cases, the United States spends more than any other nation in the world.  Insurance overhead costs in the U.S. run between 10% and 15% of total system costs; in Canada that number is about 1%.  Total administrative costs in Canada –  including hospital administration and physician’s office costs — is about 14% of total spending in Canada, as compared to about 25% in the U.S.

The Canadian System is Going Broke

As in the United States, budget cutbacks were the norm in Canada in the early 1990s, and health care was no exception.  With the return of a balanced budget in 1998, the Canadian government increased funding for national health care by $11.5 billion, the largest single new investment ever made by the government.

Many Canadians Come to the U.S. for Health Care

One of the ways that Canada keeps their health care costs down is by running their hospitals at near capacity.  When there are unexpected demands, patients are sometimes sent across the border to U.S. hospitals.  Costs are paid by the Canadian provincial government.  If someone goes to the U.S. for care and it isn’t paid for by the province, there is no way to track that care.  Americans also travel to Canada and borrow health care cards so they can take advantage of free Canadian health care.  Again, it’s impossible to know how many people do this, but Ontario recently went through the expense of making everyone get picture IDs in an attempt to reduce the problem.

The Health System is a Drag on Canada’s Economy

A 1999 study by KPMG, the international business advisors, comparing business costs in North America, Europe and Japan found that Canada has the lowest business costs.  A significant advantage was Canada’s lower labor costs resulting from lower employee-sponsored benefits, especially medical insurance.

The Canadian health care system has some significant problems, including fights over fiscal control between the states and the federal government and sometimes-disorganized methods of allocating resources.  Canadians will be quick to point out that similar problems exist in the United States.  And while the Canadian system provides coverage to every one of its citizens, 45 million Americans–including 11 million children-are now without any health insurance at all, with unknown numbers more underinsured.  Despite the restructuring of Canadian health care in recent years, surveys show that over 90% of Canadians prefer their health care system to the U.S. model.