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Canadian and U.S. Health Care Systems Have the Same Ailment


Fear-mongering about the American health care system is a popular attack on proposals to overhaul Canada's medicare. The author argues that, in fact, the two health care systems are more similar than people think and suffer from the same fundamental problems: consumer overindulgence and excessive government intervention. The article originally appeared in the Financial Post. 696 words.


David Gratzer

 Author Notes

Student at the Faculty of Medicine, University of Manitoba, where he served on the university's Board of Governors for four years. Author of a weekly column for the Halifax Herald and contributor to over a dozen newspapers and magazines including the National Post, the Calgary Herald, the Ottawa Citizen, and the Toronto Star. Author of Code Blue (1999), winner of the Donnor Prize for outstanding books on public policy.

Book by David Gratzer
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Code Blue: Reviving Canada's Health Care System
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 Essay - 6/12/1997

Canadians are familiar with the message: Yes, our health care system has problems, but reforms such as user fees and private insurance will only lead to an Americanization of medicare. This, we are told again and again, would be a disaster because the U.S. health care system is more expensive than ours, yet inaccessible to millions.

During the recent federal election, the Liberals played this "America card" against the Reform party -- a move that probably contributed to saving their majority.

Fear-mongering about medicare is a powerful political tool. Sooner or later, we all need medical care and in Canada that means sooner or later we need medicare. And we fear that if the system is significantly changed, it may not be there in our hour of need.

The truth is, however, the U.S. health care system is very similar to ours. And while politicians and social activists continue to play the "America card," Canadians should realize the two systems suffer from the same fundamental problem -- consumer overindulgence coupled with excessive government intervention.

In the 1960s and 1970s, citizens enjoyed high-quality care although the two countries had different methods of paying the medical bills -- private insurance in the U.S., public in Canada. But for the past two decades, both systems have moved toward cost-containment. Here, this has taken the form of reduced quality of care through limited availability of state-of-the-art equipment and lengthy waiting lists for surgeries. South of the border, insurance companies limit benefits and coverage.

Despite all the political rhetoric, the basic impetus for this change is the same. In Canada, the introduction of "free" health care resulted in an explosion of demand. Without any connection between usage and direct cost, Canadians discovered a good deal. A scratchy throat was suddenly cause to see the ear-nose-throat specialist; a common cold became reason enough to drive to the local walk-in clinic; a stress headache now warranted a battery of tests; the aches and pains of old age instantly needed to be checked out by the geriatrician; and a sprained ankle became an "urgent" medical problem treated at the emergency room.

The overconsumption can be measured. The California-based think tank Rand, in one of the largest and longest-running social science research projects ever completed, found free health care results in costs 40% higher than systems with user fees -- but practically no change in health outcomes. At first, this huge surge in demand was affordable. But times have changed. Technological and pharmaceutical advances have introduced new financial burdens on the system. Likewise, the aging of the population has meant health care is used more frequently.

The same is true in the U.S. And while health care is not "free" in the U.S., direct costs are not borne by the consumer. Americans pay only 5 out of pocket for every dollar spent on hospitals and 19 for every dollar on physicians' services. The rest of the tab is covered by public programs (Medicare for the elderly, Medicaid for the poor) or private insurances (usually employers' plans).

Thus, in both countries, health care has evolved into a Sunday brunch where consumers can feast on expensive items without concern for cost. There is no incentive to economize.

Government actions have only served to worsen the problems. In Canada, the federal government took a hard line in 1984 and passed the Canada Health Act. This not only prevents any experimentation on a provincial level, but hopelessly limits the role of the private sector and, thus, competition. In the U.S., state legislators have worked hard to regulate the insurance companies by requiring them to cover expensive procedures. Faced with the costs of covering hair-pieces (Minnesota), pastoral counselling (Vermont) and sperm bank deposits (Massachusetts), premiums for even the simplest catastrophic medical insurances have risen and, thus, forced more young Americans into the ranks of the uninsured.

But the Liberals continue to deny this reality. They vilify U.S. health care and, with re-election under their belts, are content to maintain the status quo with a system that has been dying for two decades.

No wonder Canadians are beginning to view the political system as their American neighbors do -- with cynicism.

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