In two previous posts (here and here), I talked about the costs associated with the health care systems in Canada--mainly in Ontario and Quebec--and the U.S. (and of course in America I mean what we're charged by the health insurance company that covers me and my family.) In these posts, I showed that the Ontario and Quebec governments spend about $3,100 per year per person for Universal health care, which accounts for about 45% of the entire operational budget of these two provinces. The effective amount is actually larger, however, when we include the transfer of funds from the federal government to the provincial governments (see updated values in my latest post - Dec, 2009). But since the income tax in Canada is progressive (it is in the U.S. as well), not everyone actually pays $3,100 in income tax in order to get 'free' health care. Low income earners pay less, while higher income individuals make up the difference--meaning that they pay more than $3,100 in taxes.
(You might be interested to know that the cost of health care in France is approximately $3,986 U.S. per person.)
If we translate this $3,100 per person from Canada to the U.S., and if we assume that we'd get the same service as in Ontario or Quebec for that amount (which isn't a given and which I discuss below), the entire health care budget for the U.S. would be approximately $942,400,000,000 or close to a trillion dollars (recall that about 304 million people live in the U.S., versus about 35 million in Canada). Although this value is extremely large, the health care cost per capita is still much better than the current situation, as discussed here and here. In fact, the U.S. health care system is apparently on the verge of bankruptcy.
If the entire private health care system in America were replaced by Universal health care, taxes would go up. (And I mean income or any other types of taxes--note that now politicians tend to use the word 'fees' instead, because it's not the dreaded 'T' word). On the other hand, no one would be smacked with hefty fees if they became seriously ill or disabled. Many people would even see a reduction in costs (see links above), if they paid taxes for Universal health care instead of fees to private companies; some people (very few?)--namely those who aren't insured and don't use medical services a lot (a risky behavior)--would probably see a cost increase. Of course this is obviously a simplification, as other factors influence the costs of health care in the U.S. and in Canada.
I'm going to interrupt myself here to define a couple of things to help you navigate the rough and troubled waters of the U.S. private health insurance system. First, a 'co-pay', which I mention later, is the fee above and beyond what your health insurance provider is required to cover. This means that all--yes, all--medical offices charge you at the door, $25.00 for a general practitioner and $45.00 for a specialist. The 'network' refers to hospitals, doctors, specialists and other medical practitioners under the aegis of a particular health insurance company. Dr. Blog in Snook might be in network, for example (so you only have to shell out a co-pay of $25.00), whereas Dr. Doe in Cut 'n' Shoot might not be, in which case you could have to pay for the entire visit yourself.
And while I'm here, I should point out that when I talk about 'health care', I'm not talking about coverage for dental or vision. In the U.S., there is separate insurance for those, and separate insurance companies to deal with them. This can result in a fun game of 'find the right card in your wallet' depending on which office you're at. My wife once managed to give our son's eye doctor the wrong card three times. This can also result in some people not having any dental or vision coverage at all, because they simply can't afford it.
In Quebec and Ontario, the provincial governments only covers medical costs. They might also cover dental and vision, but only if it is medically related, such as an injury or birth defect. I'm almost certain that Ontario will pay for annual vision checks and eyeglass lenses for everyone, and Quebec will for children, but I may be wrong. Let me get back to you on that. I am certain, however, that the Quebec Government stopped paying for vision tests and teeth cleaning for adults, to save on health care costs.
Now, I'm going to continue my comparison analysis based on my experience as a user and observer for both systems. I could have written a book about this, but decided to be as brief as possible, though this post is still pretty long (it certainly was to write).
Coverage and Insurance Plans
It is important to point out first that private insurance coverage varies greatly in the U.S. You can get excellent coverage (or a plan), but you usually have to pay more for it. Health plans here charge by the month, and you'll recall that I pay about $7,000 per year for three people--me, my wife and our preschooler son. You can also get very bad coverage. We have a friend, for example, whose 'plan' basically consisted of putting a portion of his monthly paycheck (pre-taxed, which is known here as a payflex account) into an account exclusively earmarked for health care. (This is similar to what John McCain and the GOP proposed, by the way). Having this account allowed him to save a whopping 25% on prescription drugs. That's it. He and his family didn't have any actual medical coverage per-se, since he had to pay the full costs of any medical visit or treatment directly from his payflex account. He told me that it would have been better to just keep the money in his paycheck, since there was also a fee associated with the special account.
For my family's health insurance plan, I selected the most expensive one. This was mainly because this plan was the closest we could get to the Universal health care back in Canada (though believe me, it is not!). This plan also covers us when we travel within the U.S., Canada and many other countries, including non-emergency medical visits. Most of the other plans I was offered via my employer only have limited coverage outside the state or where I live, let alone internationally. At least one only covered the county where I live. Less expensive medical plans like these also limit which medical professionals you can select or which hospital you can go to for elective surgeries, even if these hospitals are far away from where you live. You're of course allowed to seek treatment or, if necessary, go to any hospital's emergency room outside the insurance company's network, but these visits are considered 'out-of-network' and will either have a much higher associated cost, or not be covered at all.
One important limitation of the Ontario and Quebec health systems is that they offer limited coverage outside Canada. This means the provincial governments will pay only what they would normally pay for the medical professional or service inside the province. So if you get hit by a bus in Topeka, Kansas, you're responsible for all other costs above what OHIP in Ontario and RAMQ in Quebec will cover (a lot of Canadian buy private health insurance specifically for travelling). Further, you only get this coverage if you're a resident of either province, and don't live outside these provinces for more than six months per year. The last proviso was instituted when the 'snowbird' phenomenon started--that is, retirees who would spend eight to ten months in Florida or other parts of the southern U.S., but still use the health benefits from Quebec or Ontario. (No more key lime pie for you, sneaky baby-boomers.)
Health insurance in the U.S. is usually provided through your work, and your employer pays part of the monthly costs. (You can also buy health insurance it as a private citizen, but the costs will be higher because you're responsible for the entire monthly fee. It was interesting listening to our real estate agent lamenting about this.) Depending upon the contractual agreement between the employer and the insurance company, the insurance company cannot reject insuring employees with serious pre-existing medical conditions. Again, if you're a private citizen you're on your own. I wish any self-employed American with a preexisting medical condition who needs health insurance luck. They're going to need it.
I know that a lot of different medical insurance plans exist, and that what I've talked about above doesn't describe all of them. Please feel free to fill me in if you know something I don't.
Accessibility and Wait Times
I think it's fair to say this is one of the biggest bones of contention in Canada when it comes to comparing my homeland's health system to that of the U.S. It certainly came up time and time again after the recent, tragic death of Natasha Richardson. You might recall the comments I posted from the Toronto Star website--all of them from Canadians (I assume), and many claiming that Ms. Richardson was moved to the U.S. because she was forced to wait too long in a Montreal emergency room. In actuality, Ms. Richardson was flown to New York because her family wanted her to be in her home state when she died. The Quebec hospital had nothing to do with that.
It's easy to see from that there is a Canadian myth that the biggest benefit of the U.S. private health insurance system is the ability of wealthy Americans to sail through waiting rooms on to their practitioners. The reality's a little bit different.
For us down here in a small city in the South, the time spent kicking around the waiting room for our general practitioner is exactly the same as it's ever been in the much larger cities of Montreal or Toronto. My wife says it's actually worse. The time between making an appointment and being seen by a GP is mainly governed but how busy the practice is, which can be anywhere between a few hours if it's urgent to a few weeks for non-critical things such as flu shots or vaccines.
Medical specialists, however, are another matter. In Quebec and Ontario, the wait times can be measured in months, depending on the specialist, with four to six months being usual. Here, the wait is usually measured in weeks, but I have a feeling that's dependent as much on where I live in the U.S., rather than the entire country in general. That said, there was even one occasion when I was able to see a specialist within one hour of making the appointment--during his lunch break to be exact, people in the South are just nice like that--but I'm sure that's pretty rare. Of course, just like visiting a general practitioner, I have to fork over a co-pay for each visit. For a specialist it's $45.00. It used to be $25.00 when we moved here, but the cost went up. Having to spend that kind of money when I'm already paying for insurance is extremely annoying, and it also serves to make me think twice before I see specialist (occasionally until my wife makes me go to one).
The question of course is, why do we have to wait so much longer in Canada? I can think of two possible reasons for this, though I'm certain others exist. First, in Quebec and Ontario the provincial government caps the salaries of medical doctors (see here). Makes sense, since the governments have to pay them. Because medical specialists make more money than GPs (this is true of the U.S. as well, which is why no one wants to be a GP anymore), these specialists can't (or won't) see as many patients per day or years as they can in the U.S. because they don't get paid for it.
Here's an example: one of my old girlfriend's dad back in Quebec was an ophthalmologist. He only worked four days a week in the winter and three days a week during the summer, plus several weeks vacation. Apparently this was because of the salary cap, which prevented him from seeing as many patients as he otherwise might.
The salary cap might reduce health care costs, but at the price of longer wait times to see a specialist. As discussed below, doctor shopping can also affect wait time and increase in overhead costs. This happens more frequently in Universal health care system, as seen in this publication.
The second reason is one of those things that make you go, 'hm.' Where I live now, in the sun-drenched land of capitalist hegemony, if I want to see a specialist I just call one and make an appointment. After, of course, I've made very sure they're in my insurance company's network. Wouldn't want to make a mistake about that.
Back in Canada, if I wanted to see a specialist, I'd need a referral from my GP. This isn't so bad if you're actually at your GP's office when you find out that you need one, but if you're not, it means you have to wait to see your GP for the referral, and then wait for the specialist. This is where the months start ticking by.
One line of thought about the 'two lines, all waiting' process Quebec and Ontario is that it prevents people from abusing the system. If you have to wait half a year to see a specialist, you might think twice about it before wasting everyone's time. The problem with this is that, as I was told by one of my former supervisors and a well-known medical doctor in Quebec, the use of the referral system is really used to give the specialists more money. You see, without a referral the provincial governments will only pay the equivalent of the fee for a general practitioner. And if the specialist insists on a referral from a GP, the GP also gets more money from seeing the patient. Win-win, as long as you're on the right end of the stethoscope.
Maybe other people in Ontario and Quebec will have different views on this subject I am sure.
As I mentioned above, a bit hot point is the wait times at hospitals. Based on my own experiences and the experiences from people I know, it is true that in Quebec and Ontario, the wait times in emergency rooms for non life-threatening conditions (such as tests, MRIs and CAT Scans and non-elective surgeries) are much longer. In light of what happened to Ms. Richardson, I can't state more unequivocally that if it is an actual emergency, the person will be helped immediately. My wife waited five hours as a teen to have her cracked wrist casted in the only hospital in her town, and my niece had to wait that long to have her broken arm casted in one of the many hospitals in Toronto, but I know from the day-to-day experiences of my brother in law who is an Emergency Medical Technician in Ontario (that is, an extremely highly-skilled paramedic), that patients in dire need are rushed off the ambulance and into care as fast as they can park.
But if your bronchitis is acting up again and it's midnight on a Wednesday, bring a book. Maybe some DVDs.
Here's why: In Quebec and Ontario, because there isn't a co-pay, if it's midnight on Wednesday and you've got the flu, you might just haul your butt to the hospital. In America, where an emergency room visit costs $500, you're going to swig NyQuill and tough it out until you can see your much, much cheaper GP in the morning.
Recognizing this problem, the Quebec Government briefly considered instigating a $5.00 co-pay (called ticket modérateur or "moderation ticket") for everyone showing up at the emergency room, in the hope that even such a modest fee would get some people to cool their jets before hopping on the Metro. They didn't do that, but they did create a series of public medical clinics (known as CLSC) for minor illnesses or non-serious injuries. (Ontario has many 'walk-in clinics' as well). As far as I know, however, these CLSCs haven't put a damper on the number of people showing up at hospital emergency rooms for things that aren't emergencies.
You might be thinking that the $500 for going to the emergency room, or even $25.00 to go to the clinic leads to rough-tough Americans, as opposed to whiny Canucks who run to the hospital every time junior has a runny nose. The drawback, however, is obvious. Where people will hesitate to go to the doctor, you get sicker people, something we've witnessed firsthand. One of our good friends who consistently avoids seeing a GP because of the co-pay has ended up in a local emergency room twice, transported there by ambulance, which adds another $500; if you do not have medical insurance, add another $300 or $400 for the ambulance ride. A trip to emergency, even with insurance, can be extremely expensive. As a friend told me before I moved to the U.S., regardless of your medical insurance, you don't want to go to the hospital very often.
Even after you've gotten that elusive appointment with a specialist, getting access to medical equipment like MRI machines for non-emergencies can also be very difficult in Quebec and Ontario. My same Ontario Paramedica brother-in-law had to wait two months for an appointment with a specialist and have an injury scanned by an MRI machine. He needed the scan to see if he needed surgery. In the meantime, he wasn't able to work and in pain.
I'm certain that long wait times to use this kind of equipment are also related to the salary cap I discussed above. I'm sure that there aren't as many MRI machines either, since the provincial governments are the ones paying for them. Here where I live in the States, I know I could get an MRI scan within a few days if I wanted it. Of course I'd have to pay the deductible costs my insurance company didn't cover (about $500, of course).
Again, the small city where I live probably doesn't represent the entirety of the U.S.
Cost Issues and Management
As far as I've been able to tell, three major and different issues affect health care costs in the U.S. and in Canada.
The first is the subtle but very real difference in the philosophical approach to health care between the two countries. Simply put, Canadian doctors aren't generally as proactive as American ones. In Canada, the philosophy is, 'if it ain't broke, don't fix it', which--and this is a guess--probably comes either from the fact that they won't necessarily be paid for that extra series of tests, or from the fact that they know the patient will have to wait several more weeks or months before the tests can even be done.
In the U.S., however, the thought is generally, 'it ain't broke yet, but it might break later, so let's look at it right this second.' This can be equally annoying. In Canada, you have to specifically ask for a doctor to do more than the obvious, most likely to minimize wasteful spending if the test is not warranted. In the U.S., you have to ask them not to freak you out over nothing. I've even seen this medical hyper-vigilance at our vet's office: whenever we take one of our moggies for a checkup, it seems our cats are always about to drop dead if we don't do any given procedure immediately. My wife's dentist seems to be in a constant state of near-panic over a dental procedure he insists has to be done now, which is the same procedure that that her dentist back in Toronto never worried about. I've personally been asked by a particular specialist to have some (expensive) tests done just to be on the safe side.
This particularly American penchant for nipping things before the bud has formed certainly has benefits--nothing like being able to cure the disease before you have symptoms--but on the other hand, medical procedures you don't strictly need are also costly and time-consuming. I've also read comments elsewhere saying that medical doctors sometimes order medical tests to lower the risk of lawsuits over missing anything.
(Granted, nothing's universal. My wife was speaking with a neighbor last week, who said that it took her over two years to convince her GP to do a particular test that it turned out she desperately needed. Apparently the GP just thought it wasn't necessary, and that was that.)
The second issue is the administrative costs for the different health care systems. In the U.S., almost every hospital has at least an entire building that is entirely devoted to administer insurance claims from various different private companies (and the government, in the case of Medicare for seniors), and things like billing patients for insurance deductibles, co-pays, etc. If the patient doesn't pay quickly enough the hospital needs to give the file to a collection agency, which also adds to the overall administrative costs. And there are a lot of people here who don't pay their medical bills, whether they have collection agencies after them or not. Every time an American goes to a hospital, a clinic or a private medical practice, they always get a statement sent by regular mail detailing all the medical costs associated with your visit. And yes, the first question the receptionist asks really is, 'Which insurance company are you using?'
In Canada, the costs are dealt with directly between the hospital and the government, which I am certain significantly reduces overhead and administrative costs. I wouldn't be surprised to learn that the department managing medical claims in a typical Canadian hospital only has a few employees.
In the same way that Canadians have no financial constraints against going to hospital emergency rooms, when I lived in Quebec I had family and friends who would go to different specialists to get a second or third opinion on the same problem. Why not? It was free as long as they were willing to wait for an appointment. In the medical profession, this is known as doctor shopping.The hidden problem with this is that medical professionals in Quebec and Ontario are paid by the number of patients seen and by what has to be done for the patient (surgery earns more than a checkup). What this means is that the government could be paying several times over for the same service for the same patient. I couldn't find what the costs might be for these doubled specialist appointments, because of the lack of co-pays. There is some literature on and the reader is referred here as an example.
Obviously it would be possible to do this doctor-shopping around here, but when you have to pay $45.00 out of pocket each time it's probably less tempting. We certainly don't know anyone who's done it.
This is interesting: According to my neighbor who comes from France, under the French health care system, the patient pays upfront for the medical visit, and then gets reimbursed later by submitting the receipt to the government. I am certain that this approach puts a damper on the over use of medical services, and probably their accessibility as well. According to other French folks I know (this includes my neighbor), they still believe their system is much better than the ones from Canada (discussed further below).
Where I live, I often read in the media about how terrified some people are about having their health care managed by the government (I assume each state would manage their own health care system, the way each province does in Canada). They don't want a faceless bureaucrat telling them what they can or cannot do. What they don't seem to realize is that with private health care, their choices are being dictated by a faceless corporate peon. Ultimately, it will always come down to a human being who doesn't know you personally making the decision about what will and won't be covered.
Both OHIP (in Ontario) and RAMQ (in Quebec) won't pay for some treatments. Examples of this can be found here and here. And down here in the southern U.S., my wife and I had to fight for coverage as well. Our private medical insurance flat-out refused to pay for a genetic test to make sure my wife wasn't a carrier for a rare but serious disorder which I happen to have. The thing is, the test is expensive ($650) and there is only one lab in the entire United States equipped to do it. This lab, of course, was 'out of network', and our insurance company therefore decided they weren't going to help us.
Leaving aside that the fact that there was only one lab in the entire U.S. that would even do the test, which should have automatically put it 'in network', in my opinion, if we hadn't had the test done, and our then sproglet-in-planning ended up being inflicted with the disorder, the costs for specific medical care for the child would have not only been far, far more expensive than the $600+ our insurance company was unwilling to pay, but would have lasted for the duration for child's life. Hundreds of dollars wise, thousands of dollars foolish. I actually wrote an entire post about this frustrating experience.
When our insurance company realized that were serious enough about this to fight them over it, they suddenly changed their mind and paid for the test.
In my opinion, whether it is a privatized or public health care system, you are bound to find services that will not be covered or may not be to your standards. This is usually for extreme cases, but may be more common that we believe.
Where Do We Go From Here?
As you know, health coverage in the U.S. is most often bought via your employment and your employer pays half the monthly cost. When someone loses their job, they are limited to two choices: They can go under the COBRA system, which allows the individual to continue using the same insurance company, but requires them to pay not only what they were previously paying out of their salary, but also what their employer had been paying on their behalf, effectively doubling the cost. This means that the person has to pay for his or her initial portion of the monthly payments as well as the portion the former employer was paying. Or they can lose their health coverage entirely. I've heard from a lot of people about the injustices of this system, especially if they're low-income or independent/contractual workers. It's not uncommon to see people here with medical conditions that they never get treated because they can't afford it. Which of course can lead to even more serious health problems and perhaps premature death. I can assure you that one would never see this in Canada.
Ultimately, I think the biggest differences in the systems of the two countries can be summed up like this: In America, the health care is great as long as you can afford it. In Canada, the health care is great as long as you can wait for it. Personally, I'd prefer to have to wait a few weeks or months than not be able to see a doctor at all.
Given my experiences with both systems, I strongly believe that everyone should be covered by some type of health insurance that's not tied to employment. In addition to making the overall work force in the U.S. more competitive (as I heard on the Today Show recently and corroborated here), no one would not have to worry about getting badly hurt or very sick. Living with uncertainty is stressful and can cause health problems. And health insurance is supposed to cover for catastrophic events (see Cindy Ross' blog post). Under the current U.S. system, it does not.
Now, is a Universal health care system the answer? The answer is yes (to some degree), especially compared to the current system. As described above, universal health care is however expensive enough to chew up almost half of the entire operational budget of a province (or state) (let's leave the government take over crap aside). Similar to what's happening in America (and probably elsewhere in the world), health care costs keep increasing and provincial governments in Canada keep trying to reduce costs by cutting down on services.
I believe a health care system that allows both private and public options would be the best solution. They do that in France, and according to every French person I know it's considered to be the best health care system in the world. In France, everyone is covered under the public system (though not for 100% of the costs except in the case of a long-term illness or very costly procedure - this is when the full public system kicks in). But if someone wants more personalized service and is willing to pay for it, they still have the option of using a private medical facility, which is often located in a private hospital.
A colleague of mine recently told me that the philosophy of the French Government is this: by providing good health care to all its citizens, people will become more productive members of the society, which in the end will benefit everyone. Interestingly, France has just been listed as the best place to live in the world. This ranking is primarily attributed to its health care system. I just wish Americans would think this way.
Creating a 'two-tiered' system such as this has been suggested a few times in Canada, but was rejected vehemently for being elitist. In other words, being able to pay to jump the queue went against the values associated--rightly or wrongly--with the Socialist Democracy Canada still likes to think it is. Note that the Supreme Court of Canada recently struck down the private medical ban in the province of Quebec, as it went against the Quebec's Charter of Human Rights and Freedom. This decision, which only applies to Quebec, made a lot of folks unhappy.
In 2006, the Quebec Government introduced Bill 33 that allows private clinics and private health insurance in order to comply with the Supreme Court ruling for a limited number of medical procedures. More than two years after the introduction of this Bill, the private medical insurance companies have yet to sell a single policy (note: who would pay for private medical insurance when they already pay via taxes for the same procedures?). In the words of the current health minister: "We have such a good access to the surgeries in Quebec that the industry knows they won't be able to sell any insurance to anybody." I think the minister is overenthusiastic about the efficiency of the system in Quebec in my humble opinion.
Amusingly, the idea of having a 'socialist' Universal health care system freaks a lot of Americans the heck out. It's like the grass is always browner on the other side of the fence.
For those interested (here is my academic side coming out!), I found this publication, in which the author noted that after the Universal health care was introduced in Canada, the number of medical visits per person(usually to treat the same illness) increased significantly, which actually adds to the cost of health care. More details can be found here: Danzon P.M. (1992) Hidden overhead costs: is Canada’s system really less expensive? Health Affairs. Vol. 11 No. 1, pp. 21–43.
It should be pointed out that this study has been critized by others (e.g., Aaron, H.J. (2003) The Costs of Health Care Administration in the United States and Canada - Questionable Answers to a Questionable Question. New England Journal of Medicine, Vol. 349, No. 8, pp. 801-803) in terms of cost estimates and for the methodology used by the researcher. The point I wanted to make in the paragraph above is that the introduction of a Universal health care system would obviously increase usage by people who are covered with a private insurance and those who aren't (these folks still use the system, but often wait until it becomes almost catastrophic and end up at hospital emergency ward; hence increasing the total health care costs). (see also McDonald, A. D., J. C. McDonald, et al. (1974). Effects of Quebec Medicare on Physician Consultation for Selected Symptoms. New England Journal of Medicine, Vol. 291(13), pp. 649-652)
I thank my lovely wife for her thorough review of this manuscript. All errors are mine, if any…
Note: This post has been updated to account for the latest information available about the health care systems in both countries (Feb 21, 2010).
Update (May 15th, 2009)
I wrote another short article that describes a comparison analysis between the Universal and Privatized health care systems related to out-of-pocket user costs. You can find the article here.
Update (May 21st, 2009)
Again, here's another article I wrote on health care and spreading the risk. You can find the article here.
Update (Sept. 3rd, 2009)
This post is a response to Whole Foods CEO John Mackey about personal responsibility. In a few words, it won't help us saving our health care system: Advocating personal responsibility in health: Bullshit! The article was extremely well received.
Update (Dec. 9th, 2009)
This new post shows how the United States arrives dead last for health care delivery, even though expenditures per capita are twice as much as in Canada:
Update (March 1st, 2010)
This latest post summarizes the key issues I have been discussing over the last year. I also included a detailed example to support the discussion points.
Update (Aug. 17, 2010)
Very interesting and relevant report about the Swedish Health Care system:
Health Systems in Transition (2005)
"The health status of the Swedish population is one of the best in the world. The main strengths of the Swedish health care system include a provision of health care services for all based on need, democratic control and local accountability, control over total expenditures and effective management of clinical activities."