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Is Canadian Health Care a Good Model for the U.S. to Follow?

Americans Have an Idealized Vision of the Canadian Health Care System

AUGUST 01, 1994 by MICHAEL WALKER

Dr. Walker is Executive Director at The Fraser Institute in Vancouver, Canada.

As usual, I continue to have the most interesting job in the world. On February 9, it took me to Washington, D.C., where I had been invited by the Ways and Means Committee of the U.S. House of Representatives. The Committee is in the process of considering which one of the health care reform proposals it will back or how it will combine them to come up with its own proposal. It is a foregone conclusion that they will come up with a variant of reform which involves sweeping changes to the U.S. health care system. As becomes apparent when you listen to the evidence presented to the Committee and hear the questions they pose, it is far from clear what the real motivation is.

One thing which is crystal clear is that those who propose it as an alternative have an entirely idealized vision of the Canadian health care system. They imagine that in our system access is equal, free, and unlimited. They are certain that merely adopting it will solve the problems of high infant mortality and shortened life expectancy amongst low-income members of their communities. And they think they will be able to accomplish all of this while saving money because the Canadian system is cheaper. No evidence presented to the Committee seemed to deter them in any way in their enthusiasm. But the evidence they heard should at least have made them think twice.

First, let me say that I think that the Canadian health care system has been one of the best in the world. We have been able to provide a very good quality of health care to the vast majority of Canadians. However, it is just as important to note that the quality of the system is changing and that there are definite signs of deterioration. The main point is that these signs of deterioration are traceable to structural characteristics of the Canadian system which also are embedded in the proposals for reform in the United States.

Premium Capping

The silver bullet in the plan proposed by President Clinton is premium capping—that is, the provision that the premium for the standard required health care package will be allowed to increase only by the rate of inflation and the rate of population growth. In other words, the plan freezes the quantity of health care resources at the present per-capita level in real terms. There will be no increase in the real cost per person from 1995.

The silver bullet that controls the costs of the (ten) Canadian health care system(s) is the fact that the provincial governments have acted gradually to cap the budget allocations for health care. The methods differ by province, but essentially the attempt has been made to cap the budgets of hospitals for operating expenses, for special surgical procedures such as by-pass surgeries and hip replacements, and for the acquisition of technology. Meanwhile province after province has adopted a form of cap for the incomes of physicians thus controlling the overall cost of health care. These controls have not prevented health care expenditures from escalating from 5.5 percent of GDP in 1960 to about 9.5 percent at the moment. In fact Canadian costs look good only by comparison with the United States, which is now spending 13.5 percent of GDP—up from the same 5.5 percent as Canada in 1960.

In economics we say that there is no such thing as a free lunch. The question is: how has Canada been able to save the four percentage points of GDP? What have we done without? The Democrats on the House Ways and Means Committee believe, along with many Canadians, that we have sacrificed nothing, simply controlled the excesses of private enterprise medicine.

To cast it in sharp relief, it is interesting to restate what this belief implies. “The replacement of the dollar-focused, profit-driven judgment of the competitive market by the socially focused, well-meaning judgment of government bureaucrats has been successful in producing a better quality health service, for more people at a lower cost.” The first clue that something may be awry is provided by substituting the word “automobile,” or “postal service,” or “airline,” or “gasoline,” or “bubble gum,” or “architecture,” or “movies,” or anything else for “health service,” in the sentence. In fact, based on a tremendous amount of evidence and direct experience it is now possible to say the sentence would not be true for any other product or service. And there is evidence, which others and I provided to the U.S. Congress, that Canadian health care has not succeeded where all these other attempts at government coordination have failed.

The Fraser Institute survey of hospital waiting lists, which I presented to the Ways and Means Committee of the House of Representatives, shows that nearly one percent of our population is waiting for surgery. That survey also shows that, unlike the myth, access is not uniform across the country but varies enormously by province. That is not surprising, of course, because health spending also varies by province. One would expect the more a province spends, the closer it would come to the U.S. experience of no or very short waiting lists. The shortest waiting times are measured in Ontario which spends $7,200 per family of four on health care, nearly double the amount spent in Prince Edward Island, which has the lowest-cost care at $4,800 and the longest waiting times.

Technology Gap

A comparison of technologies shows that many Canadians do not have access to the latest diagnostic machinery and enough treatment facilities at their disposal. To pick a topical example, we have one-tenth the number of nuclear magnetic resonance imaging machines per capita as the United States. While there will always be the question (with no definitive answer) of how many is enough, the fact that private NMRI facilities are opening in Alberta and British Columbia, and that Canadians are going into the United States to get such diagnostic imaging done, suggests that we have not kept pace in this area.

The Congress learned from Dr. William Mackillop of the Kingston Regional Cancer Centre that cancer patients are now getting less radiation therapy for specific cancers than they were getting ten years ago, to their detriment. Less radiation therapy means more surgery, more disfigurement, and less longevity than otherwise would be achieved. Dr. Mackillop pointed out that there was a shortage of radiation therapy units, a shortage of people to operate them, and a shortage of people to train people to operate them. This, he noted, in spite of the fact that the current increasing demand for cancer therapy had been well forecast as early as 1975 because the incidence of cancer is age dependent and the average age of our population is increasing in a very predictable way. The bureaucrats had simply not reacted to the foreseeable need, he pointed out.

Perhaps the most important comment he made to the Congress concerned a comparison he had made of waiting times for radiation therapy between Canada and the United States. The comparison he offered was based on a comprehensive survey of cancer centers in Canada and the United States. Dr. Mackillop asked the centers to provide the number of weeks that a patient could expect to wait for therapy for cancers of specific types. He found that in every case Canadian patients were waiting longer than American patients. In the case of some cancers, the median wait was three times as long in Canada as it was in the United States.

While Dr. Mackillop had many nice things to say about the Canadian system, about how unnecessary surgeries and treatment were kept to a minimum, he betrayed a concern about whether the system of bureaucracies in government was capable of anticipating and reacting to the health care needs of the population in the way that it should. He in particular thinks that cancer patients are not receiving the treatment they need and should be getting.

Our testimony was given some real-life impact by the testimony of Lisa Priest of the Toronto Star newspaper. Ms. Priest has been doing a series of articles on how waiting lists affect particular patients in Ontario. Her stories are both heart-wrenching and effective in pointing to the specific problems which beset our health care system. Ms. Priest surprised observers, however, by coming to the paradoxical conclusion that faults and all, she would choose the Canadian health care system over the American system, because, she noted, there are two things Canadians fear when they go to the United States: that they will get shot or get sick. Evidently those who go there to get the health care—including the cancer therapies about which Ms. Priest writes—are not included in this assessment.

ASSOCIATED ISSUE

August 1994

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