Cenada, health care

The Canadian Health Care System FromDeprenyl Research Limited, Toronto, Ontario, Canada.

Martin Barkin, MD

This Kennedy Lecture was given at the Society for Academic Emergency Medicine Annual Meeting in Toronto, Ontario, Canada, May 1992.

[Barkin M: The Canadianhealth care system.Ann EmergMed October 1992;21:1245-1249.] HEALTH CARE: A M A J O R ISSUE AROUND THE WORLD Over the past four or five years, virtually every nation in the world has been intensely scrutinizing its health care systems. None has come u n d e r more pressure than the US health system. It now stands as the most expensive health care system in the world, yet the one that seems to give its people the least satisfaction. These feelings have been highlighted by the state and federal elections that will culminate in the presidential election of November 1992. These elections, combined with the cooling of the international political situation as a result of the changes in the former Soviet Union, have now focused America's attention on its domestic issues. Health care, for reasons that we shall see later, has become one of those key domestic issues. I n searching for solutions to the US health care dilemma, it is not unreasonable that Americans should look to Canada.

MANY SIMILARITIES Canada and the United States share a common history and the longest and easiest-to-cross border in the world. For more than 100 years there has been a free exchange of ideas and cultures between them. Both countries grew more from immigration than from their internal birth rates. As a result, both are m u h i c u h u r a l and multiracial societies with a significant indigenous native population. In both c o u n t r i e s , t h e health care system has its roots in insurance. Until 1957, in fact, the two health systems were scarcely distinguishable from each other. Compared with the United States, Canada appears to have far lower administrative costs (at least according to the General ACcounting Office) and costs 40% less per person, yet covers everyone to the same high standard. Just about every health status indicator in Canada is better than the same health status indicator in the United States and by a significant difference. E v e n the American business community and the American providers have begun to look to the Canadian system for some of their solutions.

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IMPORTANT DIFFERENCES Notwithstanding the many similarities between the two countries, there are several important differences. P e r h a p s the most significant is in the system of government. As we shall see later, this may be the most significant factor that allows Canada's health care system to thrive and serve its people as well as it does. There are other i m p o r t a n t differences, however. Canadians tend more toward the left-wing ideologies and have recently elected three provincial New Democratic P a r t y (socialist) governments. Health care marketing, although it is not illegal in Canada, is at the very least condemned. Canadians regard health care as an essential service, like fire and police services. They do not consider it a commodity to be m a r k e t e d or sold. Most Canadians remain critical of any h u m a n service that runs on a "for-profit" basis, especially if it is government funded. P e r h a p s the most significant cultural difference between the two peoples is found in the highest aspirations of the two countries, as reflected in their fundamental charters. The United States continues to take pride in its belief, "life, liberty and the pursuit of happiness." This is an intensely individualistic attribute. In the same place, the Canadian Charter says, "peace, o r d e r and good government." It is not that Canadians are averse to having their government do things for them; they only require that government do these things well. Canadians tend to do things collectively. This collectivity arises from Canada's sparse population scattered over a vast tract of land - the smallest n u m b e r of people in the largest country among the nations that make up the Organization of E u r o p e a n Cooperation and Development.

CANADIAN HEALTH CARE UNIVERSALLY ADMIRED Canadian health care is extremely p o p u l a r a r o u n d the world. A Louis H a r r i s poll found that more British people and Americans prefer the Canadian system than their own. Canadians, however, take intense p r i d e in their own system. When questioned in a national unity poll about the reasons for wanting to be Canadian, most Canadians responded that their health care system was an i m p o r t a n t reason for them to want to be Canadian. So we have, in Canada, a Churchillian view of health care - like democracy, it may not be perfect, but c o m p a r e d with the available alternatives, it is the one that Canadians prefer above all others.

IMPORTANT STREN6THS OF US HEALTH CARE It is important, as we study aspects of the Canadian system that might be applicable to the United States, to, at the same time, indicate the i m p o r t a n t strengths of the US system, which should in no way be compromised by the reforms that inevitably will come.


The United States has the finest centers of medical excellence found anywhere in the world. Its reputation for research and innovation makes it the preeminent winner of Nobel prizes in medicine in the world today. It has the best and most advanced training. In fact, candidates, both u n d e r g r a d u a t e and postgraduate, from everywhere in the world, if they can, would prefer to come to the United States to r o u n d out their advanced training. The United States remains the world leader in advanced technology. Finally, there is an abundance of the most advanced medical and technological services for those who can afford them.

US HEALTH CARE PROBLEMS Too many people and the most vulnerable are underinsured or uninsured. In the United States, approximately 37 million people are u n d e r i n s u r e d or uninsured, up from 29 million in 1980. This includes 15% to 20% of all those younger than age 65 years. One third of the uninsured are younger than 18 years. The plight of the uninsured has been accentuated by the job losses of the recession. The fear of losing health insurance has severely limited the ability of the American worker to change jobs or make other adjustments to the economic restructuring now taking place. The uninsured use emergency departments for their p r i m a r y care, they use less prevention, and they have almost no p r e n a t a l care. As a result, child health has been most visibly affected. F o r example, in Washington, DC, a b a b y dies every 33 hours. Washington's infant mortality of 23.8 p e r 1,000 is twice as high as Cuba's. One third of its children live in poverty, and most have not been vaccinated. Health care has now passed 12% of the gross national p r o d u c t , leaving Americans the highest per-capita spenders on health care in the world, notwithstanding that so many are without health insurance. Health care costs 40% more p e r person than in Canada, 200% more than in the United Kingdom. Yet, the United States is 15th in male life expectancy, 27th in cardiovascular health, and 20th in infant mortality. Although it may be argued that these are social consequences r a t h e r than consequences of the deficiency of health care, the degree to which health care consumes national wealth is the degree to which such wealth cannot be diverted to address the social dimension of these illnesses. US health costs tend to fall heaviest on manufacturers and employers and least on seniors and those in the service industries. In the heavy industries, such as automobile production, the price of health care has become a significant portion of the cost of the product. F o r example, the price p e r car for worker health care in the United States is greater than the price for steel for that same vehicle. In 1990, General Motors p a i d $772 p e r vehicle for health care in the United States; it paid about $200 p e r vehicle for health care in Canada. Lee Iacocca, chairman of the Chrysler Corporation, expressed it this way: "Other countries put employee health




costs into their taxes - we put them into the price of our products. That is not a healthy way to compete in the world market." The General Accounting Office and several economists have estimated that if the United States had the Canadian system, it would save huge sums in the nouhealth care dimensions of its health care systems, specifically paperwork, red tape, bureaucracy, and administrative costs. The General Accounting Office estimate was that there would be $40 billion saved in insurance costs, $15 billion saved in physician costs, and $18 billion saved in hospital costs - enough to cover all the u n i n s u r e d and have money left over. US epidemiologists provide examples that about one third 0fwhat is done is inappropriate and another one third is of doubtful usefulness. At least some of this may be accounted for by conflict of interest, self-referral, and the general tendency of the US health care system to market itself. D I S A 6 R E E M E N T OVER M E R I T S OF NATIONAL HEALTH INSURANCE Because of these factors, there has been a polarization of opinion in the United States over national health insurance. The tally now indicates that about two thirds of US citizens, about one half of Congress and Senators, and such significant influences as The New England Journal of Medicine, the General Accounting Office, the National Association of Children's Hospitals and Related Institutions, and the American College of Physicians support national health insurance. The current Republican administration, the American Medical Association, the Health Insurance Association of America, and the American Hospital Association remain opposed. ORI61NS OF THE C A N A D I A N SYSTEM The Canadian system of health care was a n a t u r a l progression for Canada. Its sparse population had already undertaken other collective actions to bring in railroads, airlines, telecommunications, and broadcasting. I n 1957, Canadians coalesced their various private hospital insurance plans to create a public and hospital insurance system. In 1966, they did the same with the private physician insurance plans to create the public physician insurance system. In 1983, both were combined into a single act - The Canada Health Act of 1983. Canadian health care is based on two powerful unwritten principles: The f i r s t - - c a r e for the few who are ill, paid for by the many who are well--established the principle of insurance as the primary mode of payment. The s e c o n d - equahty before health care, like equality before the justice system--established the single-tier,concept in Canadian health care. Canada is the only country in the world that prohibits a private sector in health care.


W R I T T E N P R I N C I P L E S OF C A N A D I A N H E A L T H CARE These unwritten principles are expressed in the written principles of Canadian health care that are enshrined in The Canada Health Act. The Act requires that insurance of essential health services be publicly administered. That is, there cannot, by law, be a secondary private health insurance system in Canada. Public administration turns out to have a n u m b e r of significant advantages: • Far lower administrative costs than the pluralistic, private-sector-run US system. • The distribution of costs, because they are from general taxation, is as fair a distribution as a society can achieve. • Expenditures on health care, because they are from the same pot as expenditures on other social support services, can be balanced with other expenditures on these items to create trade-offs that lead to a balanced approach to supporting and sustaining all the determinants of health. The net effect is that Canada is now rated as n u m b e r one in the world in terms of quality of life. • Perhaps the most significant advantage, although not yet fully realized, is that a single payer has a very significant information base and can use that information for proper epidemiological studies and monitoring of health care services. All patients are covered by virtue of their residence in the country. With a few minor exceptions, no premiums and no copayments are permitted for essential health care services. Canadians are covered at Canadian rates no matter where they travel in the world. Unfortunately, Canadian rates are insufficient to cover the full cost of health care when Canadians travel to the United States, and so the one exception to the Canadian private health insurance restrictions is the permission for supplementary private health insurance to cover the difference between Canadian costs and US costs in the event that Canadians require unexpected health care while they are traveling through the United States. Although The Canada Health Act only specified coverage for doctors and hospitals, various provincial plans have expanded on those services to include drug benefit plans; assistive devices including hearing aids, stomal devices, wheelchairs, and prosthetics; ambulance services; travel from remote areas; long-term care; attendant care; and supportive housing for discharged psychiatric patients. The Canada Health Act specified that access shall be reasonable, not necessarily unfettered or unqualified. It is a r o u n d the issue of access that the debate around the sufficiency of the Canadian health care system revolves. For example, in 1989 and 1990, during the shortage of cardiovascular resources in Canada, the ability of the Canadian system to ensure appropriate access was called into question.




One must recall, however, that the Canadian system is an insurance-based system, and if it cannot provide the services, it must pay for them wherever they are delivered. This, in fact, did happen in both Ontario and British Columbia when the resources within those provinces were insufficient to meet the requirements of their patients. But this is not dissimilar from situations that arise for insured patients in sparsely populated midwestern states who must go to other jurisdictions for highly specialized treatment. C A N A D I A N 6 0 V E R N M E N T S A N D HEALTH CARE To u n d e r s t a n d how Canadian health care operates so well it is necessary to u n d e r s t a n d the Canadian political system, because the two are intimately related. Canada is divided into ten provinces and two territories. Under the British North America Act, health care is a provincial matter. The federal government's role in health care was to impose federal standards, and it used its financial clout to get those standards simply by saying, "Provide health care according to our principles, and we will provide you with supportive funding." Each province has its own parliamentary democracy. The party that wins the most seats becomes the governing party, and its leader automatically becomes the Premier. This is not like the American system where the President or a governor has an election that is separate from the election of other representatives. When the government is formed, the Premier creates ministers from the elected members. Among those is the Minister of Health. That individual has full and total responsibility for the effective operation of the provincial health care plan. At the same time, the opposition parties appoint individuals whose sole responsibility in the legislature is to provide criticism of the work of the Minister of Health. Thus there is at least one, and usually two, official "health care critics" in every provincial parliament. Each day that Parliament sits. during question period, the health care critic can. and usually does. ask a question of the minister concerning certain failures of the health care system. This is one of the most i m p o r t a n t checks and balances within C a n a d i a n health care. The concept of ministerial responsibility is inviolate within the C a n a d i a n political system. The other effect, of course, is that each case that is raised in the house becomes a news story. Americans frequently read these news stories and interpret a health care system in distress. Canadians read these news stories and sleep a little more comfortably knowing that the vigilance of their parliamentary process is continuing to ensure a responsive health care system.


S T R U C T U R E OF C A N A D I A N H E A L T H CARE The Canadian system is very similar to that in the United States. Ninety percent of its physicians are on fee-for-service; its public hospitals are all u n d e r public governance; and there is limited private sector involvement in the areas of pharmacy, nursing homes, home care, ambulance services, and laboratories. The Canadian system is more properly characterized as

public insurance f o r private medicine--it is not socialized medicine. Canadian patients can choose their own doctor and can do so even in capitation systems. They can choose their specialist and their hospital. U n f o r t u n a t e l y , the Canadian system has certain deficiencies, particularly in the area of efficiency and streamlining patient throughput. As a result, waiting times can be particularly long. For the most part, however, these waiting lists are stable, indicating that the n u m b e r of patients coming onto the waiting list is about the same as the n u m b e r coming off. Physician income in Canada is only slightly lower than physician income in the United States, even though gross revenues are much lower. The reason for this is the much lower overhead for practicing physicians in Canada. There is a lower cost of billing, much lower cost of maintaining accounts receivable, almost no bad debts and delayed debts, a far lower cost of liability, and a very low cost of office procedures because most are carried out in hospitals. The recent Canadian recession and the high deficits at both the federal and provincial level have produced substantial government reductions in the rate of rise of health care expenditure. This rapid imposition and fiscal constraints have produced an intense debate over the preservation of Canada's health care principles, but it is also resulting in rapid reform of Canada's health care delivery systems. COMMON PROBLEMS Both countries have equal difficulty in the appropriate allocation, the numbers, distribution, and mix of health care h u m a n resources, particularly physicians and nurses. Both countries believe they could do better in the areas of health promotion and prevention, and both are working at developing standards and guidelines. The Canadian health care system is beginning to take on certain characteristics of some areas of the American health care systems, as we move to greater regional autonomy and accountability. One significant change in the Canadian health care system has been a new harmony, particularly between physicians and provincia! governments. Recently, the Ontario Medical Association signed a six-year agreement with the government of Ontario that provides for orderly establishment of fees that includes binding arbitration when negotiation fails. Moreover, the physicians have joined the government in a high-level joint management committee to manage the rate of growth of health care costs with physician cooperation, as opposed to imposing such measures on resistant physicians.



Canada has learned a n u m b e r of important lessons from its interactions with the United States. Canadians believe that they could improve their system by using some of the advanced management techniques now in use in the United States, particularly total quality management. Canadians also believe that some financial incentives would be appropriate. Although Canadians have learned these lessons from Americans, they believe that Americans have some lessons that could be learned from Canada. The most significant lesson is that there can be no reform of health care unless a health care value system is developed. Canadians believe that their value system is one that guarantees access to health care by the state and that health care is a public service and not a marketable commodity. It is clear that if the same value system were prevalent in the United States, American creativity would easily address the issues of American health care delivery. If, however, the United States does not address reform of the US health care system from a base of common values and chooses to be much more pragmatic, then Canadians offer the following lessons: First and foremost, one should begin by simplifying the maze of multiple insurance plans and multiple coverages to make interaction with the system less complex. At the same time, all individuals should be covered and this coverage should be portable. The second important lesson that Canadians believe can be learned from their experience is that the information systems of a single-payer system are important tools of accountability. The final lesson, and the one that Canadians have come to rely on, is that one cannot have a health care system unless there is a publicly accountable individual or body that takes responsibility to ensure the integrity of the system and to ensure access to health as well as access to health care. For Canadians, this body is its accountable parliamentary system of democracy. Americans will have to find a counterpart in their social and economic system that is equivalent to this.




Canadians have enjoyed a close and harmonious relationship with Americans for more than a century. We have learned and benefited greatly from our close association. We are pleased to share our experiences with the United States in the same spirit of mutual respect and support that has characterized our close relationship and opened our borders. Address for reprints: Martin Barkin, MD Deprenyf ResearchLimited 378 RoncesvallesAvenue Toronto, Ontario, Canada M6R 2M7



The Canadian health care system.

Canadians have enjoyed a close and harmonious relationship with Americans for more than a century. We have learned and benefited greatly from our clos...
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