By Patricia Lynch, Maurice McGregor
Dr. Maurice McGregor, MUHC Cardiologist and founding member of Canadian Doctors for Medicare, presents the strong points of Canadian health care. Ms. Patricia Lynch, Vice-President of State Government Relations Services at Kaiser Permanente discusses what works well within the American system.
US health care conjures some very frightening images: millions of uninsured, exclusions for pre-existing conditions, people losing their homes if they get sick. These are what spring to mind when Canadians hear the words “private health care,” and the trepidation associated with these pre-conceived notions represents a significant barrier to change. Yet many Canadians head to the US each year for medical care that is unavailable here and many of our healthcare professionals have worked in the US and been impressed with the level of care. Whether dread or envy, the US effect has been so important to the Canadian debate that the MUHC-ISAI thought it necessary to have the merits of both the US and the Canadian systems presented in order to better understand how Canada might obtain some of the results we envy in the US without importing the features we most abhor.
The MUHC’s Dr. Maurice McGregor was invited to debate the issue with Ms. Patricia Lynch from Kaiser Permanente in the US. The format of the talk was more of a structured discussion than a debate. Both countries are at a point of soul-searching about how to fix the problems their systems have created. Neither participant was prepared to wholeheartedly defend their country’s system as it stands, but each had strong ideas about features of their system that are worth preserving even as necessary changes are made.
Dr. Maurice McGregor on Canada’s strengths
It is not pure chance that our two health care systems are so different. There are real differences between our values, our priorities and the role we see for the state in our affairs. After all we have developed our democracies in very different ways. In the US, through revolution and rejection of royal authority, in Canada through a process of slow evolution.
So it is not surprising that Canadians tend to look more to central authority to ensure the welfare of its citizens, while in the US rugged individualism and individual initiative get a higher rating. Both our economic systems are basically capitalist but Canadian capitalism is more regulated and has more socialistic tendencies. Indeed our health care system is almost completely socialist in its philosophy. “To each according to his needs”.
However, each country recognizes that the other has advantages, and it is ironic that at this moment there is a powerful lobby in the US advocating the Canadian system while in Canada we have a lobby advocating US type privatization. Let us consider for a moment what each country might see as enviable in its neighbour’s system.
A major advantage of the Canadian system is its economy. In the 1970s when we launched Medicare Canada and the US spent the same proportion of our respective GDPs on health care, about 7%. Today, the US spends 5.5% more of its GDP on health care than we do and the gap is increasing. Another advantage of our system is that coverage is universal, while over 47 million Americans have no coverage, and millions more have inadequate coverage. Viewed from Canada the most enviable feature of the US system is access, access to care when it is needed with no wait times (for those who can afford it).
Is there anything Canada should copy from the US system to improve our own, particularly with regard to wait time? Of course if we even fractionally copied their spending levels wait times could rapidly be abolished. But it doesn’t look as if this option will be open to us any time soon. So what else might we copy?
There is no question that market forces could bring benefits, but only to those Canadians who could afford to pay. However, at present any such benefits for those who could pay would only be realized at the expense of those who could not. Until we correct our current health manpower shortage, the private sector could only expand by hiring scarce manpower away from our public system, or even less desirably from third world countries.
But even if there were no manpower shortage, the hope that the profit motive would stimulate efficiency by minimizing costs and optimizing care is just hope, and is not supported by the evidence. For example, Woolhandler et al found in their 2005 US study that administrative costs in for-profit HMOs was 19%, compared to 13% in non-profit health care plans, (and 1% in Canadian Medicare) and in Devereaux’s 2004 meta-analysis, services in investor-owned hospitals cost 19% more than in not-for-profit hospitals. Nor does the profit motive seem to result in better health outcomes. In two studies published in 2002, Devereaux and colleagues found higher risk-adjusted mortality rates in both for-profit hospitals and for-profit dialysis units.
That they should cost more is not really surprising. Shareholder owned hospitals are meant to be profit maximizers, not cost minimizers, Also the profit motive gives private hospitals the incentive to attract relatively well, low-cost patients, and shunt the chronic expensive patients elsewhere.
Adaptability: A US advantage
However, for-profit healthcare has one enviable characteristic, and that is adaptability. The US type free market is able to react quickly to increased demand. For example, if the wait time for hip surgery is increasing, and a profit can be made, the equipment will be bought, the nurses and doctors will be obtained, and wait times will disappear, again for those who can pay.
In Canada by contrast, we have no financial incentive to respond to increased demand. Worse, we have a positive disincentive. If our hospital with its fixed budget performs 100 new expensive procedures, we go into the red and our CEO gets fired. So reacting to changing demand is extremely difficult in our system.
There is a partial cure for this. In most developed countries, including the US, fixed global hospital budgets have been abandoned, and some or all of the budget is determined by the number of medical acts performed. There are major disadvantages to this form of budgeting which I cannot discuss now, but some extension of this principle, at least for those services for which wait times are prolonged, could benefit our system.
Another advantage of the US system is that the private insurance model allows for greater emphasis on disease prevention. It actually pays for an American health plan like Kaiser Permanente to focus on prevention. By contrast , in Canada every health service including preventive health comes out of the budget.
Consider one example. Until recently in Canada we had about the right number of gastroenterologists. Then the decision was made that we should screen almost the whole population every three to five years for colonic cancer. So suddenly we have a shortage of gastroenterologists. In the more flexible US system the gastroenterologist could hire and train sufficient nursing assistants to cope with the extra load under supervision. In our more rigid system, such adaptation to demand is extremely difficult. So there is much that we could copy from our neighbours to increase the adaptability of our system to change.
In conclusion, I believe that Canadians have developed the system that suits them best and they should certainly not allow it to be eroded by expanding US type, for-profit health care. But this does not mean that we have nothing to learn from our neighbours to the south.
Patricia Lynch on what works well within the American system
Access is an area in which Canadian and US systems have made very different choices. In the US, we control access by ability to pay. There are 47 million uninsured low-income people in the US. Many millions more are underinsured. In the US there is no mandate to have coverage and no mandate to provide coverage. It is purely a matter of choice for employers to provide coverage and it is done as part of a wage package that developed during World War Two as a response to wage controls: employers provided health care coverage instead of increased wages. Most of the uninsured are either employees of companies that do not provide coverage and low-income people who cannot afford to purchase that coverage on the individual market.
In addition to employer and individual insurance, the US has a government-sponsored package for very low income people called Medicaid. On paper, this is a very rich benefit package, but it is very difficult for low-income people to find a provider for basic primary care services because Medicaid pays providers very poorly and most providers are not required to participate in Medicaid. Catastrophic services are offered through the emergency rooms which are required to be open to people regardless of ability to pay.
The health plan advantage
Adapting to current health care realities requires political leadership, and here the health plans used in the US provide a slight advantage. Health plans, which are a market product, serve as a middleman between the voters and government or payers. Health plans can do things beneath the political radar. The biggest payers are the federal, state and local governments, whose spending on Medicare, Medicaid and their own employee programs makes up 44% of total US health care spending. These programs purchase much of the coverage they provide through these programs from health plans.
Health plans are contracted to provide a certain package of benefits. The contract stipulates a number of conditions that need to be met, such as acceptable waits for medical appointments, specialist consults and surgeries, acceptable travel distances to hospitals, information on outcomes, patient satisfaction and cost. Health plans must attract a broad spectrum of providers in order to compete for consumers. They have incentives to maximize cost-effectiveness and quality.
When either the providers or consumers are dissatisfied because access is not fast enough or providers are not being paid enough, it is not government that takes the heat but the health plans. Government sets policy and goals, but the health plans are responsible for finding ways to achieve these. That drives innovation.
Although health plans are the product of a market based system, they are also used in comprehensive single-payer government sponsored systems in the Netherlands, Israel and Germany, where competing health plans deliver services under government-sponsored universal coverage. The US also uses health plans to provide services in the Medicare program for senior citizens.
Universal coverage must come
The US is at moral risk to the extent it does not provide access to medical care to all its residents. Doing so is a huge political challenge. Most people in the US agree that the current system does not work and that coverage should be universal. Currently, employer-sponsored insurance is offered to employees without medical screening. However, individuals who buy insurance directly and not through their employer are medically screened for health conditions and can be denied coverage.
Without a mandate for universal coverage, medical screening is necessary to assure that the underlying pool of people covered is balanced, protecting the affordability of that coverage. Without medical screening or a mandate to have coverage, people would make the rational economic decision to purchase coverage only when they expected to need it, which would result in a disproportionate number of sick people purchasing coverage, driving up its cost. There must be a strong incentive for everyone to have coverage.
A new administration and the cost pressures on government make me optimistic that there will be a serious effort to adopt universal coverage in the US in the next few years. I believe the US will continue to incorporate health plans as is done in Europe.
Conference delegates were polled on what they considered best and worst about US and Canadian health systems. Below are the features most commonly mentioned.
What’s best about US health care
- Cutting edge technology
- Access to good care
- Speed of change/adaptability
- Willingness to experiment
What’s worst about US health care
- Profit on sick
- Cost oversight of insurance companies
- Insurance company control over medical decisions
- Lack of universal coverage
- High cost
What’s best about Canadian health care
- Universality (ability to pay not a barrier)
- Single payer efficiencies
What’s worst about Canadian health care
- Wait lists
- Doctor shortage
- Lack of investment
- Lack of drug coverage