US Healthcare system
vs. Canada Healthcare system
HealthCare In the USA
By Keum Joo Lee
How to reform the US Healthcare system
• The Canadian system is often held up as a possible model for the
U.S. The two countries' health care systems are very differentCanada has a single-payer, mostly publicly-funded system, while
the U.S. has a multi-payer, heavily private system-but the countries
appear to be culturally similar, suggesting that it might be possible
for the U.S. to adopt the Canadian system.
• Canadian system is 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. Canada spends far less of
its GDP on health care (10.4 percent, versus 16 percent in the U.S.)
yet performs better than the U.S. on two commonly cited health
outcome measures, the infant mortality rate and life expectancy.
Canadians Healthcare is “free...?”
• Many Canadians and commentators in other countries lauding
Canada's government-dominated approach to health care refer to
Canadian health care as "free." If health care actually were free, the
relatively poor performance of the health care system might not
seem all that bad. But the reality is that the Canadian health care
system is not free -- in fact, Canadian families
• Pay heavily for healthcare through the tax system.
• That high price paints the long wait times and lack of medical
technologies in Canada in a very different light.
• According to the research, Canadians strongly support the health
system's public rather than for-profit private basis, and a 2009 poll
by Nanos Research found 86.2% of Canadians surveyed supported
or strongly supported "public solutions to make our public health
care stronger.” A Strategic Counsel survey found 91% of Canadians
prefer their healthcare system instead of a U.S. style system. Plus
70% of Canadians rated their system as working either "well" or
• According to the research, a 2003 Gallup poll found 25% of
Americans are either "very" or "somewhat" satisfied with "the
availability of affordable healthcare in the nation", versus 50% of
those in the UK and 57% of Canadians. Those "very dissatisfied"
made up 44% of Americans, 25% of respondents of Britons, and 17%
of Canadians. Regarding quality, 48% of Americans, 52% of
Canadians, and 42% of Britons say they are satisfied.
THE CANADIAN HEALTH CARE SYSTEM:
Why the interest?
• There have been rapid increases in U.S. health care costs and
growing concern over the large number of uninsured.
• Is Canada's health system a possible model for reform in this
• There is a widespread perception in the U.S. is that Canada
has successfully developed a comprehensive and universal
national health insurance program that is cost effective and
•Key Facts about Canada & the US
Canada is geographically larger than the United States but has
slightly more than one-tenth the U.S. population.
• The Canadian health care system is often
• Compared to the US system. The US system spends the most
in the world per capita, and was ranked 37 th in the world by the
World Health Organization in 2000, while Canada’s health
system was ranked 30 th. The relatively low Canadian WHO
ranking has been criticized by some for its choice of ranking
criteria and statistical methods, and the WHO is currently
revising its methodology and withholding new rankings until the
issue are addressed.
• Canada spent approximately 10.0% of GDP on health care in
2006, more than one percentage point higher than the average
of 8.9% in
• According to the Canadian institute for Health
information, spending is expected to reach $160 billion, or
10.6% of GDP, in 2007. this translates to $4,867 per person.
The Uninsured: At Serious Risk(US)
• The uninsured in the U.S. face huge obstacles when
attempting to access health care:
• Many private providers will not accept them
• The burden is placed on community health centers, public hospitals, and
• Difficult to find medical home
• Some are considered uninsurable due to pre-existing
conditions, but cannot qualify for Medicaid
• Cannot afford full cost of visits
• This can lead to medical bankruptcies and foreclosures
• There is some evidence that cost-shifting has resulted in the uninsured
being billed for full charge, even higher than commercially insured
The U.S. also faces problems related to:
• Health Care Disparities
• Racial/Ethnic, Language, and Gender differences in outcomes and access
• These differences persist even with insurance coverage
• Medical Errors
• 44,000 to 98,000 preventable deaths
• Emergency Room overcrowding
• Waiting Times
• Throughput, Discharge Planning, Staffed Bed Supply
• Some areas do not have appropriate numbers of primary care
and specialty physicians (i.e. physician maldistribution)
• Hospital Re-Admission Rates
• The extraordinary U.S. interest in Canada's approach is attributable
to the fact that Canada and the United States share a long border
and similar heritage in terms of language, culture, and economic
o Although a wealthy country, its GDP per capita is
only about 80 percent of the U.S. level.
o Canada has a relatively high level of social
services, with public expenditures representing 42
percent of GDP compared to 34 percent for the
Health Care Spending per Capita,1980-2004
- adjusted for cost of living differences -
o With a national health system providing
universal coverage, public funds account for
more 70% of total health spending while it’s
45% in the U.S.
o However, not all services are covered
(e.g., vision, dental, prescription
drugs, semiprivate and private
rooms), meaning that private funds account
for nearly a one-third share that has grown in
o Canada has maintained lower health spending
and share of GDP per capita than the United
States, despite its higher bed-population ratio
and longer lengths of stay.
o Canada's physician-population ratio is 12
percent lower and its nurse staffing level 27
percent higher than the U.S. level.
o Americans spend 82 percent more per capita
on health care ($5,267 vs. $2,931), although
about 15 percent of the U.S. population goes
without insurance coverage at any time.
o Despite lower spending, health status
indicators-such as life expectancy (about 2 1/2
years longer for both men and women in
o Public opinion polls indicate that Canadians
support their system more than Americans
support theirs and are concerned about any
threats to it.
• The Canadian system of financing and delivering health care is
known as Medicare
• Each of the 10 provinces and 3 territories administers a
comprehensive and universal program that is partially supported by
grants from the federal government.
Various criteria established by the federal government
with respect to coverage must be met.
1. Coverage must be universal, comprehensive, and
portable, meaning that individuals can transfer
their coverage to other provinces as they migrate
across the country.
2. There are no financial barriers to access
3. Patients must have free choice in the selection of
providers. (i.e. usually no out- of-pocket charges)
• Hospitals are also private institutions, although their
budgets are approved and largely funded by the
• The Canadian system originated in the 1930s when
compulsory health insurance programs were introduced
by some provinces.
• Since 1972, every province and territory has provided
universal coverage for hospital and physician care.
Health researchers have focused on the sources
of the savings under the Canadian plan.
U.S. fees were considerably higher in each category. The net
incomes of U.S. doctors were also substantially higher than
were their Canadian counterparts.
Fuchs and Hahn
• disparity in spending on physician services it was 72 percent
higher in the United States
• 178 percent higher for the procedures component. (The
relative ratios of Iowa to Manitoba were slightly lower.)
Fuchs and Hahn (1990)
• Because spending is the product of prices and
quantities, it seems logical to pursue differences in
fees (prices) and utilization per capita (quantities).
• Overall, fees were 239 percent higher in the United
States for 1985. U.S. fees were considerably higher in
• The net incomes of U.S. doctors were also
substantially higher than were their Canadian
Fuchs and Hahn (1990)
• Perhaps more surprising than the fee
differentials are estimates of the service
• Despite the much higher spending per capita for
physician care, the quantity of care per capita
was considerably lower in the United States.
• Thus, the savings in Canada, at least for
physician care, do not come from reduced
volume of care.
WHY ARE FEES AND HOSPITAL COSTS LOWER IN
• Patients in Canada have longer lengths of stay, in
part because of the greater use of Canadian hospitals
for chronic long-term care.
• Nonetheless, after adjusting for differences in case
mix between the two countries, the cost per casemix adjusted unit was roughly 50 percent higher in
the United States. Several reasons can be proposed
for this phenomenon.
• Single purchaser of medical services keeps
prices below market rates.
• In Canada, unlike the United States, physician
fees result from negotiation between
physicians' organizations and the provincial
governments, as well as from other limits on
• Physicians cannot evade the fee controls by
charging extra (sometimes called balance
billing) to patients who can afford it.
• Hospital costs are similarly regulated by the
provinces through approval of hospital budgets.
• Hospitals and provinces negotiate operating
budgets financed by the provincial governments.
The capital budget may include other sources of
funding, but provinces still must approve capital
• Thus, a centralized mechanism allocates resources
to the hospital sector and determines the
distribution of resources among hospitals.
• Occupancy rates are higher in Canadian hospitals.
• The provinces have limited the capital costs
associated with expensive new technologies.
• One study provides comparisons on the availability of
several relatively recent and expensive technologies
among Canada, the United States, Germany, and
South Korea, with some other OECD countries
available for comparison.
• Although analyses from the 1980s indicated that the
United States has greater availability of many of the
technologies, data for 2002 suggest that other
countries are catching up.
• The centralized system of health care control in
Canada has led to theories about the possible
economies associated with administrative and other
• Administrative costs in the United States increased
account for about 31 percent of health care spending.
• Similar costs in Canada are about 14 percent. (If we
could get to this percent, the savings are estimated
at about $160 billion.)
• Canadian system appears to be more effective than
the U.S. system in several respects.
• Costs are lower, more services are provided, financial
barriers do not exist, and health status as measured
by mortality rates is superior. Canadians have longer
life expectancies and lower infant mortality rates
than do U.S. residents.
• However, the comparisons do not tell necessarily
imply that the United States should adopt the
• Many Canadians are no longer confident that the
provinces will be able to afford their current systems.
• As a result of unprecedented federal deficits, the
Canadian government has reduced substantially its
cash transfers to the provinces.
The provinces are thus faced with the following options
to cope with their increased burdens:
• find new sources of tax revenue,
• impose more stringent fee and budgetary controls on
• find ways to increase efficiency in health care delivery,
• scale back on benefits by no longer insuring some
previously covered services, and
• impose user fees.
(Similar to the shift we have seen for the U.S., the
provinces have forced large reductions in
hospital capacity with a corresponding
substitution of outpatient care for inpatient
US vs. Canada(1)
A similar argument may be made for life expectancy. The gap in life
expectancy among young adults is mostly explained by the higher rate of
mortality in the U.S. from accidents and homicides. At older ages much
of the gap is due to a higher rate of heart disease-related mortality in the
U.S. While this could be related to better treatment of heart disease in
Canada, factors such as the U.S.'s higher obesity rate (33 percent of U.S.
women are obese, vs. 19 percent in Canada) surely play a role.
To compare how the countries perform on other health outcome
measures, Canada/U.S. Survey of Health, a survey of about 9,000
residents of the two countries conducted in 2002-2003. While this
measure is subjective and may be influenced by factors outside the
health care system, it is widely used by researchers. They find that selfreported health status is similar in the two countries-if anything, more
people report themselves to be in excellent health in the U.S.
US vs. Canada(3)
Next, the examine three other outcome measures: an index of
overall health, a depression index, and a pain indicator. Focusing
on whites (to sidestep differences in the racial composition of the
two populations and the problem of racial disparities in health
outcomes), they find that the two countries score similarly on the
overall health index and pain indicator, while the U.S. has a slightly
higher incidence of depression.
assures: an index of overall health, a depression index, and a pain
indicator. Focusing on whites (to sidestep differences in the racial
composition of the two populations and the problem of racial
disparities in health outcomes), they find that the two countries
score similarly on the overall health index and pain indicator, while
the U.S. has a slightly higher incidence of depression.
• Overall, we could consider several measures of the success of the two health care
systems. The first and perhaps simplest measure is the level of satisfaction reported by
patients. Americans are more likely to report that they are fully satisfied with the
health services they have received and to rank the quality of care as excellent.
• Also, we’d examine whether Canada has a more equitable distribution of health
outcomes, as might be expected in a single-payer system with universal coverage. To
do so, they estimate the correlation across individuals in their personal income and
personal health status and compare this for the two countries. Surprisingly, they find
that the health-income gradient is actually more prominent in Canada than in the U.S.
• Finally, while it is commonly supposed that a single-payer, publicly-funded system
would deliver better health out-comes and distribute health resources more fairly than
a multi-payer system with a large private component, their study does not provide
support for this view. They suggest that further comparisons of the U.S. and Canadian
health care systems would be useful, for example to explore whether the higher
expenditures in the U.S. yield benefits that are worth their cost.
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