Revisiting Canadian Health Care

With health costs escalating and complaints mounting, politicians promise us a fresh look at health care reform. One hopes the promise will be kept. One old tale needing reexamination is the now virtually axiomatic wisdom that the failure of the Canadian health system "proves" single-payer alternatives won't work. I would argue that, to the contrary, the Canadian experience clearly demonstrates that single-payer systems remain the most equitable and efficient in the world. Their crises are due to the attacks of the privatizers rather than to their inherent limits.

Earlier this year, the New York Times ran a feature article in which it argued that "few Canadians would recommend their system as a model for export." The article suggested that the system's inefficiencies had become so great during the '90s that both the provincial and federal governments had been forced to rein in health costs.

Omitted in the Times analysis are two startling facts. Dean Baker, an economist with the Preamble Center, reports that "According to OECD data, in 1997 ... Canada spent 9.3 percent of its GDP on health care. The United States spent 14 percent. Since the United States is a wealthier country, the discrepancy in dollars spent is even larger: $2,095 per person in Canada, compared with $4,090 for the United States. Measured by health care outcomes, such as life expectancy at birth or life expectancy at age 65, Canada's system scores better than the US system."

Canadians are clearly staying healthier for fewer healthcare dollars. Lower levels of poverty in Canada are part of this story, but here in the US uncovered medical costs are a leading cause of personal bankruptcy and poverty. In addition, in a single-payer system, where government accepts responsibility for all, there is an incentive to emphasize primary and preventive care. Not only it is generally cheaper to prevent disease than to cure it, prevention of contagious diseases has enormous spillover effects.

By contrast, in the private marketplace, HMOs compete in destructive or counterproductive ways -- through the clientele, they seek to include or exclude, the amount of service delivered, or advertising. HMO incentives and the patient's need for adequate care point in opposite directions.

Not only does such a system generally deliver inadequate medical care, its purported ability to control costs has thus far proven to be illusory. When the full advertising, profits, and administrative review procedures are counted, "overhead" in our system runs at twice the Canadian level.

Extraordinary medical costs do not explain Canada's economic or healthcare problems. The world economic stagnation of the late '80s and early '90s was accompanied by growing budget deficits in both the United States and Canada. Economists debate the relationship of deficits to economic development, but in both nations, a choice was made to address deficits by cuts in government spending, even long-term investment in vital public resources like health care, rather than raising taxes. In Canada's case, the decision seemed even more imperative given the vulnerability of the much smaller nation's currency to international speculative pressures. These speculators demanded of Canada, as of many debt-strapped "Third World" nations, that they cut budgets and social services.

Health care became an especially inviting target as increasingly mobile businesses argued that taxes for health care were making Canada uncompetitive with U. S. businesses already eagerly slashing their health care benefits. Since utilization rates for such extraordinarily expensive new technologies as magnetic resonance imagers are hard to predict, provincial governments tended to make the most fiscally cautious short-term decisions. They cut back on hospital beds, trimmed capital budgets for new technologies, and even reduced admissions to Canadian medical schools. But since the deployment of new technologies and the development of appropriate supportive personnel takes time when new treatments demonstrate considerable efficacy and become widely recommended and used for common diseases, dramatic shortages not only will develop, they will be both obvious and hard to address in the short term.

Years of health system starvation have had another unforeseen effect: Canadians have demanded that provincial governments avail themselves of the best American medical facilities. Quebec has ended up paying not only hospital fees but also transportation and housing costs for some of its citizens undergoing cancer therapies in US hospitals. In such cases, costs to the Canadian government are much higher than if adequate facilities had been budgeted for in the first place.

In addition, many other affluent Canadians have simply paid for care out of their own pockets in US clinics and hospitals. Since these citizens are all "full payers," they receive the most prompt and least bureaucratized care the US system provides. Some have now become a political force in Canada arguing for such changes as user fees and/or private hospitals

Nonetheless, despite the cries from the affluent and the attacks in the US media, the concept of equal healthcare for all paid for by the government still has many defenders in Canada. Many middle and working-class Canadians recognize quite rightly that they stand to lose if the public system is replaced by a US-style alternative. In Canada, unlike the United States, the majority of the population still votes in both Federal and provincial elections. Provincial premiers are now pressuring Ottawa to restore adequate levels of funding and the Canadian Prime Minister has felt obliged to declare defense of the system a priority.

If there is a lesson in this tale, it is not the inefficiency of single-payer systems. Rather the story alerts us to the ways health care politics is connected to other fundamental issues of social equity.

No health care system works well when it is underfunded, but public systems that pool risks and resources, emphasize primary and preventive care and avoid unnecessary and counterproductive advertising and administrative costs achieve the best health outcomes per dollar of the public's money. And when the vast majority of the population must rely on such a system, they will demand its adequacy.

But when a rich neighbor to the South can become a default option for the wealthy or for the short-term needs of political leaders, confidence in and commitment to the public system will erode.

Finally, public health care, like any other major public expenditure, all too easily becomes a plaything of private business interests, with bad practices driving out good ones, as long as speculators and multinational corporate executives can run roughshod over the world economy.

Getting this story out, so that healthcare and social justice advocates on both sides of the border can draw on each other's experiences, is a vital task today.