Universal Health Care! Are Canadians Stupid?

Government spending for health care in Canada consumes 6.9 percent of the economy (GDP). However, government spending for health care in the United States consumes only 6.6 percent of the economy. *[1]

Before deciding that the U.S. has done a slightly better job of reining in "big government" than Canada, we should examine what each country gets for its money!

1. Government health spending includes costs for a Public Health Service in both countries.

2. In the United States, government health spending also pays for health insurance that primarily covers individual hospital and doctor costs with three government programs; Medicare, Medicaid, and military health benefits. These three programs provide health care through public health spending to about 30% of our population. *[2]

3. In Canada, government health spending also pays for health insurance that primarily covers individual hospital and doctor costs. However, Canada has only one government health insurance program called Universal Health Care. This government program provides health care through public health spending to essentially 100% of the population. *[3] Before I respond to people who are thinking, "What's the catch?" or "You can't get something for nothing.": I want to deal with the people who didn't even understand what I just said. What I just said was, "In Canada government health programs provide health insurance to 100 percent of their population at only a slightly greater economic cost, than government health programs in the United States, but the U.S. programs only insure about 30 percent of our population!"

I can make a slightly simpler statement. Because Canadian Universal Health Care, unlike Medicare in the United States, has; no deductibles, no coinsurance, and only Alberta and British Columbia charge premiums, the following statement is probably accurate. *[4]

Canada, insures 100% of its population using a smaller percentage of its economic resources, than the United States uses to insure 30% of its population!

Some people may think that the catch is that the Canadian Universal Health Care system supplies poor service. I will try to provide some significant information dealing with the quality of the Canadian health care system in this section.

I have heard that Rush Limbaugh has said that "Many Canadians prefer our health care system to theirs." He apparently thought that Canadians' opinions were worth something. I think that a Gallup poll, published in "The Toronto Star" on September 13, 1993, can provide a more accurate understanding of Canadian opinion. 96% of Canadians prefer their own health care system. 2% of Canadians have no opinion.

2% of Canadians prefer the U.S. health care system. While I agree that, since there are 27 million Canadians, even 2% could be considered "many" Canadians, I think the vaster numbers represented by 96% are more significant!

The vital statistic called, “life expectancy at birth," is not a prediction of the future! It is simply the average age of death, for any specific year, after adjusting for age distribution. Adjusting for age distribution simplifies comparisons between different nations, and different years within the same nation. *[5]

Please remember that age distribution is only one of many factors, in addition to health care, that influences life expectancy, such as environment, life style, public safety, and maybe genetics.

These years appear to be representative. If you want more, my source was the internet, U.S. Bureau of the Census, "International Data Base". Safety of Surgery and Medical Care Surgery and medical care may be safer in Canada than in the United States. According to data collected by the Organization for Economic Cooperation and Development (OECD), in 1989 the incidence of abnormal reactions and misadventures during medical care in Canada was just half that of the U.S. *[6]

Infant Mortality Rate The Infant Mortality Rate (IMR) is just a measure of the number of infants that die within a year of birth. I was able to find comparative data for both Canada and the U.S. prior to the development of the Canadian Universal Health System. Hospital insurance was initiated in most provinces over a period of a few years, and was in place in all provinces by 1961. Medical (Doctors) insurance was started in the early 1970's and in all provinces by the late 1970's.

Please remember that for life expectancy rates high numbers are good and for infant mortality rates low numbers are good. My source was the Internet, U.S. Bureau of the Census, "International Data Base". Data for the earlier years come from various "Statistical Abstracts of the United States". Years of Disability Free Life, (Late 70's) both sexes *[7]

While the above statistics don't totally prove anything about the quality of the Canadian health care system, I would want to see some strong evidence before I considered it to be of poor quality.

It's not impossible! I agree that you can't get something for nothing, but human effort can increase efficiency and productivity. Canadians do this by partially substituting democratic planning to replace an unregulated free-market system. Anyone, who has studied the issue, knows that unregulated markets can be very inefficient, and unproductive. The previous section of this article, called “What’s the Catch?”, explored, to some extent, the productivity, defined as the delivery of useful services, of the U.S. and Canadian systems. This section will primarily examine the efficiency of both systems.

First: In the United States, fifteen hundred different insurance companies, along with Medicaid, Medicare, and employer-provided plans, pay hospitals, doctors, and laboratories. This multi-payer structure has spawned a complex accounting system. Each "payer"; that is - an insurance company, or government agency, has its own rules and documentation requirements, and tries to shift costs onto other payers.

The result is a stifling administrative burden for American medical professionals and hospitals, and the creation of an army of accountants and administrators to sift through billing paperwork. *[9]

Detailed Medicare records for 6,400 hospitals nationwide, obtained through the Freedom of Information Act, shows that in 1990, 24.8 percent of all hospital spending in the United States went to administration. Canadian hospitals spend little on billing and internal cost tracking, and between 9 and 11 percent of their total budgets on administration, less than half of U.S. spending. *[10]

There are no precise figures for the time and expense, devoted to administration, in physicians' offices. According to one estimate, U.S. doctors averaged spending $330 (US) per capita on billing and office expenses in 1993, or more than 2.3 times the $142 (US) spent by Canadian doctors. *[11] Nearly half of all people employed in U.S. doctors' offices (47 percent) are clerical and secretarial. Much of their time goes to tasks that do not exist in Canada. *[12]

Canadian doctors do not have to keep different kinds of records in their offices for different payers. Nor do they have to send separate bills to individual patients. Like the Canadian hospitals, Canadian doctors get paid for their medically necessary services by a public agency and only have that single agency to deal with for payment. They waste no administrative effort in doctors' offices chasing after patients or their insurance companies for payment. They require no prior approval when ordering or providing specific health care services. No time is wasted discussing with patients the potential costs of treatments and whether they can meet them.

In Canada in 1990 there was one practicing physician for every 448 people. This ratio differed little from that in the United States, where there was a practicing physician for every 432 people. However, the Canadian doctors saw more patients. The average number of physician contacts per person that year was 6.9, compared to 5.5 in the United States. *[13]

The market theory of supply and demand rests on the assumption of readily available choices and information. For the most part, people do not have a choice about when, if, where, or how to get sick or become disabled. After a car accident or a breast cancer diagnosis, few are in a position to shop around, and if they are, seldom have the expertise required to make the appropriate choice. Although competition is frequently viewed as a way of increasing efficiency, it often leads to unnecessary duplication and inefficiency. Competition encourages investment in expensive, sophisticated technologies designed to attract "customers." A 1990 study has demonstrated that hospital costs are higher in areas with more competition. *[14]

As an example, Boston's Massachusetts General Hospital recently opened a new obstetrical service, despite being within three miles of five well-established maternity programs with surplus beds. *[15]

In 1990, Canada had significantly more hospital beds for their population, (6.7 per 1,000 vs. 5.0 per 1,000) than the United States. Not surprisingly, more Canadians per capita were admitted to hospitals, and they also stayed substantially longer than in the United States. Canadian hospital patients averaged three more days of care. However, the United States still pays more per person on hospital services.

This is not only because of the reduced administrative costs of the Canadian system, but because it is the United States, not Canada, that has the most surplus beds! *[16] Besides having a surplus of three hundred thousand hospital beds, the U.S. also has at least five thousand surplus mammography machines. The excess raises the cost per mammogram since most machines are used only part-time. In facilities that operate at low volumes, quality is often lower, since staff may not perform enough mammograms to maintain their competence. Uncontrolled capital spending not only raises costs, but it can also lower quality. *[17]

The search for profit also has disadvantages in health care. It leads to waste and to inappropriate care. Profits can be derived both from reducing costs and from increasing sales. It is consequently in the interest of for-profit firms to sell as much expensive care as possible, rather than to focus on providing appropriate services as determined on the basis of health care needs. In "Health Care in the United States: The Facts and the Choices," Stephen Ayers describes the dynamic at work when payments to hospitals are tied to diagnosis related groupings (DRG's), a classification or coding system introduced in an effort to control Medicare costs.

"Certain codes paid top dollar, so every effort was made to squeeze patients into the higher paying diagnoses. Cardiac catheterization, bypass surgery, and angioplasty paid particularly well, and the number of hospitals performing these procedures increased dramatically. However, since trauma care paid poorly and many trauma patients were uninsured, the number of trauma centers in the country decreased sharply." *[18]

In Canadian hospitals however, public administration has resulted in global budgets that significantly reduce the incentives to emphasize the most complicated and expensive types of care. Under global budgeting, each hospital receives, from the province, a fixed amount that they can then allocate on the basis of patients' needs, rather than on the basis of revenue maximization. Of course the waste produced by "gaming the system" activity can also occur in a nonprofit system based on piecework incentives.

However, because physicians in Canada are paid a specific wage for their time, there is very little incentive to do so! There are, of course, other reasons that "pure" market solutions are inefficient and unproductive. In a competitive system preventive health care may not pay off for ten years, and the benefits could accrue to another insurer. Also competition means marketing, and marketing means costs.

Contrary to conventional wisdom, private insurers spend far more on bureaucracy than do government insurance programs. In 1991, more than 13 percent of every premium dollar went to overhead, such as claims processing, marketing, furnishing insurance company offices, executives' salaries, and of course, perks and profits. In contrast, Medicare spent about 2 percent, and Canada's public insurance system takes less than 1 percent of each premium dollar. *[19]

Well, basing my opinion on that Gallup Poll, published in the Toronto Star in 1993, I would say that: Yes, about 2 percent are stupid, and about 2 percent are, unlike you and me, just uneducated. NOTE: This article was extensively re-edited by the Author, July 2002.

This article was based on only a small amount of original research. The following two books cover the majority of the points made in this article - and more!

"Universal Health Care: What the United States Can Learn From the Canadian Experience," by Pat & Hugh Armstrong, The New Press, New York, 1998

"The Rational Option for a National Health Program," by John Canham-Clyne, with Steffie Woolhandler, M.D., and David Himmelstein, M.D., The Pamphleteer's Press Inc., Stoney Creek, Connecticut, 1995

Another publication produced in June 1991 by the U.S. General Accounting Office (GAO) titled "Canadian Health Insurance: Lessons for the United States" states on page 6, "[if] the United States were to shift to a system of universal coverage and a single payer, as in Canada, the savings in administration costs would be more than enough to offset the expense of universal coverage."

UHC = "Universal Health Care: What the United States Can Learn From the Canadian Experience," by Pat & Hugh Armstrong, The New Press, New York, 1998 RO = "The Rational Option for a National Health Program," by John Canham-Clyne, with Steffie Woolhandler, M.D., and David Himmelstein, M.D., The Pamphleteer's Press Inc., Stoney Creek, Connecticut, 1995

*[1] (OECD) Organization for Economic Cooperation and Development, "Health Data 97" , from UHC, p. 104 Table 6.4 Note: The actual data is from 1995.

*[2] U.S. Census Bureau, "Health Insurance Coverage, 1995" "Highlights" (Washington: U.S. Census Bureau, 1996) from, UHC p.105 footnote 8

Amounts," The Federal Register 61:214 (Nov. 1996), pp. 55002-006 from, UHC p.26 Table 2.1

*[5] Life Expectancy at Birth (for any particular year) is calculated by first, counting the total number of people who die at each year of life, such as under one year of age, and dividing that number by the total population of babies under one year of age. This will give the percentage of individuals that died at that age. As an example, in the U.S., in 1998, 6.44 children out of 1000 died under one year of age. Dividing 6.44 by 1,000 gives, 0.644 percent of children in 1998 dying before one year of age. (See: Infant Mortality Rate in the following paragraphs of my article.) Next do the same calculations for under two years of age, and add that percentage to your previous percent (0.644 in the example). When the total reaches 50 percent that is the (average) Life Expectancy at Birth, for that population or nation in that year.

Source: "Vital Statistics of the United States", Department of Health and Human Services, (National Center for Health Statistics), pub. 1996, section 6.

*[6] OECD, “OECD Health Systems: Facts and Trends 1960 - 1991” (Paris: OECD, 1993), table 3.2.13, f rom UHC, p. 82

*[7] OECD, "OECD Health Systems,” table 3.1.9 from, UHC p. 80 footnote 26 The figures for Canada are from 1978 while those for the United States are from 1980. This is thus likely to underestimate, rather than overestimate, the differences between the two countries in disability free years.

*[10] Woolhandler and Himmelstein, "Administrative Costs" p. 401 from, RO p.44 footnote 38

*[11] Himmelstein and Woodhandler, "National Health Program Book", from UHC, p. 134

*[14] Himmelstein and Woodhandler, "National Health Program Book", from UHC, p. 126

*[16] Nair, Karim, and Nyers, "Health Care and Health Status: A Canada-United States Statistical Comparison" Health Reports , 4:2 (1992), p. 176 from, UHC p. 35 & 36

*[17] Brown, Kessler, and Reuter, "Is the Supply of Mammography Machines Outstripping Need and Demand? An Economic Analysis," Annals of Internal Medicine 113 (1990), 547; Himmelstein and Woolhandler, Chartbook, p. 59 from, RO p. 23 footnote 11

*[18] Ayers, "Health Care in the United States", pp. 17-18 from, UHC p. 119 footnote 6

Having lived in both countries, I think I can offer some interesting perspective on this issue.

Most of the comparisons between Canada and the U.S. are little more than academic exercises, and while the author of this article has generally done a pretty thorough analysis, there is still no point in trying to compare the two nations. First and foremost, the United States does not have a "health care system" -- this is a silly catch-phrase used by people looking to pursue an agenda one way or another ("The U.S. health care system is in crisis," "The U.S. health care system is the best in the world," etc.). In the U.S., health care encompasses a broad area of numerous inter-related sectors of the economy. Therefore, comparisons between "their system" and "our system" are pretty pointless.

Using life expectancy statistics to compare the quality of health care between countries is also misleading, since these statistics do not account for the impact that variations in infrastructure, personal health, and social pathologies such as drug abuse, alcoholism, etc. have on these statistics.

This article also neglects to mention the most important factor in the health care cost differential between the U.S. and Canada. Health care does not cost less in Canada because Canada has a single-payer system. You can implement a single-payer system in the U.S. tomorrow, and the savings (due to reduced "overhead," paperwork, etc.) would be negligible. Health care costs less in Canada because the single payer is a government office/agency that is immune from lawsuits by the patients that are treated in the system. This is precisely why any attempt to implement a single-payer system in the United States always includes an item that receives very little attention -- indemnification for the government against lawsuits.

This is something to think about the next time someone like Ted Kennedy or Hillary Clinton claims that patients should be allowed to sue their HMOs. These people are not consistent, because they do not believe that patients should be allowed to sue their HMOs if the HMO in question is the U.S. government.

Worth posting here in full:

Can 7,700 Doctors Be Wrong About Health Care?

Posted Sep 26, 2003 by Charles W. Jarvis

Recently, a group representing some 7,700 physicians used the Journal of the American Medical Association (JAMA) to champion Canadian-style socialized medicine for America.

Could so many supposedly smart people be completely wrong about good health care policy? Yes. In this case they are dangerously wrong.

A cursory analysis of Canada's health care system shows how utterly foolish emulation of Canada would be. Maybe the Canadian newspapers will tell us what proponents of socialized medicine won't.

Claim No. 1: Canada's System of Socialized Medicine Provides Sufficient Money to Deliver Care to All.

Canada spends about 9% of its GDP on health care and provides coverage for all, while the U.S. spends 14% and has millions of people uninsured. Proponents of a Canadian model thus conclude that the federal government could cover every American for what the country is spending now -- or less.

That argument ignores the fact that there is no government-run health care system in the world that is adequately funded. And the reason is simple: health care must compete with education, welfare, defense and other valid claims on government funds. As a result, every government-run system rations care, with bureaucrats and elected officials deciding who gets what and when.

Case Study: Canadian hospitals need money. On Dec. 24, 1999, the Toronto Star reported, "The Ontario government is bailing out deficit-ridden hospitals to the tune of $196 million." This infusion marked "the second year in a row the Tory government has come to the rescue of about half of the province's hospitals." Indeed, the Ontario hospital system was forced to absorb a 10% decrease in funding between 1997 and 1999.
Case Study: The shortage of doctors. Just one day earlier, Dec. 23, 1999, the Toronto Star ran the headline: "Ontario Government Report Calls For Up To 1,000 More MDs." In response to the report, the province's health minister said the government would provide "$11 million in 'short-term' aid . . ." and try to attract more foreign doctors, according to the article.
Case Study: Shortages in the ER. Residents of Montreal can rest a little easier this summer. Doctors reached an agreement with the provincial government in Quebec so that emergency rooms will remain open, according to the Montreal Gazette (June 20, 2003). "In the summer and fall of 2002," the paper reports, "Quebec's general practitioners fought a pitched battle against Bill 114, a new law that compelled doctors to work in understaffed ERs or face $5,000 fines."

Instead of fining non-ER doctors for not working in emergency rooms, the government will be giving them a bonus if they do.

Claim No. 2: Canada Provides Universal Access to Care.

Proponents of socialized medicine argue that the uninsured typically postpone seeing a doctor and end up in the emergency room, which costs the system a lot more than it would had they just gone to see a family doctor. If everyone has government-provided coverage, then you remove that costly inefficiency and people have access to care when they need it. Or do they?
Case Study: Waiting lines in Canada. Access to a waiting line is not the same (nor as good) as access to a doctor. On Jan. 18, 2003, the Canadian Press carried the headline, "Send Cancer Patients To U.S., Alberta MDs Urge." The story begins, "Breast-cancer patients whose wait to see a specialist has jumped up to eight weeks from less than four should be sent out of province for treatment, the president of the Alberta Medical Association says."

In a story about a proposal to allow private day surgeries in Vancouver, British Columbia, to reduce waiting times, the Vancouver Province (June 11, 2003) reports, "But even when the (Richmond) hospital was at its most efficient, 40% of patients were waiting three months or more (for elective surgery)."

As bad as that is, it's better than England, where 57-year-old Peter Smith got his heart surgery a full five months after he first complained of chest pains to his general practitioner (London Observer, May 25, 2003).

Claim No. 3: The Quality of Care in Canada Is as Good as or Better than the U.S.

"Quality health care" means different things to different people. For individuals, quality health care usually means a good outcome, conveniently obtained at a reasonable price. But can you have quality health care if a patient can't see a doctor?
Case Study: The quest for quality health care. The headline in the June 16, 2003, Vancouver Sun pretty much says it all: "Doctors Demand Patient Care Guarantees." The British Columbia Medical Association has released a paper calling for "the establishment of maximum wait times, or 'care guarantees' for various medical procedures," according to the story. The report "proposes that patients not helped within the guaranteed time frame should be able to seek care out of province—in a public or private facility—at no cost to themselves."

In Canada it is against the law for a citizen to pay out of pocket for care that is provided by the government-run health care system. The only other countries that criminalize privately paying for health care are North Korea and Cuba.
Case Study: Canadians heading south. But it isn't against the law for Canadians to cross the U.S. border and pay for care they can't get in Canada. In fact, the U.S. has become the safety valve for a foreign health care system that would implode economically and politically without access to U.S. doctors, hospitals and drugs.

On Jan. 16, 2000, the New York Times titled a story, "Full Hospitals Make Canadians Wait and Look South." The article concludes: "As a result, Canada has moved informally to a two-tier, public-private system. Although private practice is limited to dentists and veterinarians, 90% of Canadians live within 100 miles of the United States, and many people are crossing the border for private care."

Claim No. 4: In Canada's System, Everyone Is Treated the Same.

The push for socialized medicine isn't just about health care; it's also a quest for social justice. Advocates don't want the rich to get better care than the poor. But the rationing that always accompanies a government-run system means that some people will not get the care they need, and it is nearly always society's marginal citizens—the poor, the very old and those with very high costs—who get substandard care, if they get care at all. Just consider some of these headlines from England:
"Am I too old to be treated?" The Sunday Times, April 17, 1994.
"Kidney patients die as costly dialysis machines lie idle," The Times, July 26, 1993.
"Too old to be cured of cancer," The Times, Aug. 16, 1993.

But there can be other perverse results from rationing. Greg Moulton of Guelph, Ontario, was in a three-month wait to get a CT scan "to learn the cause of his 'excruciating' headaches." Since York Central Hospital's radiology department was only open to the public at specified hours, the hospital decided to allow pet owners to bring in their animals in need of a CT scan after hours—for $300 a scan. "For dogs, a scan can be arranged within 24 hours," according to the Canadian Press ("Humans Wait in Pain, Dogs Don't," June 14, 1991).

Another Canadian was more resourceful. On Dec. 18, 1999, the Washington Post reported that waiting lines for MRIs in Ontario had grown so long that one Ontario resident "booked himself into a private veterinary clinic that happened to have one of the machines, listing himself as 'Fido.'"

In a socialist effort to avoid a two-tiered system where wealthy people can get health care but the poor can't, Canada has created a different kind of two-tiered system—where people can't get care, but dogs can.

That is the story we are not being told.

Mr. Jarvis is Chairman and Chief Executive of United Seniors Association.

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