Does Canada ‘s publicly-funded and single-payer wellness attention system control wellness outgo rising prices better, distribute wellness services more equitably, and present better quality of attention than the private-dominated and multi-payer system of the United States?
Although practically joined at the hip geographically, the wellness attention systems of the U.S. and Canada could non be more disparate. In comparing which theoretical account of funding wellness attention is more effectual, the two states are ever bases for comparing. Due to the lifting unemployment and the addition in the degree of economic uncertainness brought approximately by the recent planetary fiscal crisis, wellness attention as a resource has been a contentiously debated one. Then newly-installed President Barack Obama and his Democratic Alliess in Congress to a great extent campaigned for cosmopolitan wellness coverage and caused a monolithic splash. However, the thought of cosmopolitan wellness coverage had already been floated since the terminal of the Second World War. Until now, among the most advanced economic systems in the universe, the U.S. remains the lone state without cosmopolitan wellness coverage. It besides has the most dearly-won wellness attention in the full universe. On the other manus, its North American neighbour has followed the equity theoretical account in wellness attention proviso of Western European states. Aside from cosmopolitan wellness attention coverage, Canada is said to hold one of the best-performing wellness attention systems in the universe.
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The planetary economic state of affairs calls for another expression at wellness attention. With the recent economic challenges confronting advanced economic systems, states are trying to efficaciously pull off their wellness outgo rising prices as they at the same time try to recognize their wellness attention aims. Not all wellness attention theoretical accounts are created equal, though. Each is developed with its ain set of premises and precedences. Countries design different attacks in the funding, organisation, payment, and ordinance of wellness attention. This basically outputs besides unequal results for all.
But while they may differ in attack, states by and large have three primary aims in head. The first aim is equal entree. With the exclusion of the U.S. , all advanced economic systems today struggle hard to accomplish cosmopolitan coverage. The World Bank recognizes that equal wellness attention is a basic right of peoples ; because wellness is indispensable for endurance and the proper operation of economic systems, most states put a premier on equal entree to quality wellness attention. The 2nd aim of wellness attention systems is cost containment. Pull offing the public costs of wellness attention is another aim of states and a major mark in the overall wellness reform procedure. As the population and its demands grow, the costs of wellness attention take up a bigger ball of the national income. Hence, states must plan policy that will set up effectual budget restraints for wellness by restricting every bit much as possible the authorities ‘s outgos for wellness. The 3rd aim of wellness attention systems is to supply high quality wellness attention. Policy sing the efficient bringing of wellness services involves a inquiry of how the wellness attention system is organized and construction in order to obtain maximal quality of attention ( Hsiao 45 ) .
In comparing the public presentation of a wellness attention system of the U.S. and Canada, this paper uses Hsiao ‘s three aims as a model. First, entree in the wellness attention systems of the U.S. and Canada are examined. Second, the cost containment of both states is investigated with the usage of official statistics to compare wellness outgos and rising prices. Third, a reappraisal of surveies will be made in order to measure the degree of quality of attention for both states. This paper argues that in footings of supplying equal entree, pull offing wellness outgo rising prices, and presenting high-quality attention, Canada has established a better-performing wellness attention theoretical account which the U.S. can larn from.
2. Models of Public Financing
What influences expenditures in the wellness attention systems in states is the theoretical account or purpose of public policy. Governments exist as entities that levy revenue enhancements on houses and persons, spend revenue enhancements, and modulate several domains of economic activity. Governments intervene in economic activities because of two chief motivations: 1 ) efficiency, and 2 ) equity ( Hyman 54 ) . In the field of economic sciences, efficiency has a clearer significance. There is efficient allotment of resources ( termed Pareto-efficient ) if “ there is no rearrangement of resources ( no possible alteration in production or ingestion ) such that person can be made better off without at the same clip, doing person else worse off ” ( Stiglitz 14 ) . On the other manus, equity is a instead obscure term which has no common definition. The thought of equity is for authoritiess to be able to aggregate the different visions of equity in the population and supply a solution agreeable to all. To most economic experts, the realisation of efficiency is easier than equity. However, equity remains a end for public policy in many states.
The function of the authorities in economic activity has ever been a debated issue. Previously, laissez faire economic sciences dominated public finance discourse, reasoning that authoritiess must hold a limited function. However, in the aftermath of the Asiatic miracle, many states took a paradigm displacement. Some attributed the growing of the Asiatic markets to a mix of heavy authorities intercession and an every bit heavy trust on the markets. The point is, authoritiess have ever differed on what the precise function of authoritiess should be in the proviso of goods and services. In many ways, it reflected the values that states have ( Rosen 33 ) more than the belief on cardinal economic premises underpinning laissez faire or socialist economic sciences. However, economic experts who are against authorities intercession in economic activity usage mathematical analysis to turn out their point. They contend that it is possible, under sufficient conditions, for competitory markets to take to efficient results. If these conditions exist, there is no demand for authorities intercession. This belief is embodied in the “ Two Cardinal Theorems of Welfare Economics. ” The first theorem provinces that “ under certain conditions, competitory markets produce an efficient allotment of resources ” ( Stiglitz 121 ) . The 2nd theorem provinces that “ under certain conditions, any efficient allotment of resources can be achieved with competitory markets ” ( 122 ) . Therefore, failure in accomplishing either 1 ) certain conditions and 2 ) competitory markets can bring forth inefficiency. When this happens, authorities intercession becomes necessary.
Efficiency is non the lone standard used to measure resource allotment. Many citizens argue that result should besides be evaluated in footings of equity ; that is in footings of the sensed equity of an result. The job involved with using standards of equity is that individuals differ in their thoughts about equity. Economists normally confine their analyses of inquiries of equity to findings of the impact of alternate policies on such groups as the hapless, the aged, or the kids. In the field of public finance, analysis normally try to find the effects of authorities actions on both resource allotment and the distribution of wellbeing, therefore supplying utile information that citizens can utilize to judge the equity of alternate policies in their ain impressions of equity ( Hyman 69 ) .
The precise function that the authorities undertook in different states has differed. Some states, like the United States, have a cardinal belief in the market and choose efficiency as the purpose of public policy. Other states, like Canada, every bit good as other European and Latin-american states, have valued equity more and seek to apportion resources to give entree to all.
3. The American Health Care System
This subdivision examines the voluntary insurance wellness attention theoretical account of the United States in footings of entree, wellness attention expenditures, and quality.
Unlike other states, the U.S. does non see wellness attention a right guaranteed to all ( Hyman 354 ) . Because it values single freedom and pick, the proviso of wellness attention does non peculiarly value equity ( Hsiao 45 ) . Health insurance coverage in the U.S. is normally based on employment. Those who do non straight receive insurance benefits from employers or do non measure up for either Medicaid or Medicare may take non to acquire insurance. Peoples decide non to be insured because they do non desire to bear the load of the costs of insurance or because the insurance available is non low-cost ( Hyman 354 ) . To forestall hazard that arises from inauspicious choice, private wellness insurance companies sell insurance to employers for workers in the formal sector. This marginalizes those unemployed, the aged, and the hapless – which are the groups that need wellness care the most. The authorities has had to finance these uninsured groups: federal Medicare coverage is available for the aged, and the provinces fund Medicaid to cover the hapless. The voluntary wellness insurance system of the U.S. leaves an estimated 50.7 million Americans in 2009 uninsured, composing about 16.7 % of the population ( Kaiser Fund ) .
3.2 Health outgos
Health attention in the United States is paid through a mixture of private and public monies. Private financess come from insurance, out-of-pocket financess, and financess given through charities and philanthropic organisations. Public financess originate from Medicare, Medicaid, province and local authoritiess ‘ plans, State Child Healthcare Insurance Program ( SCHIP ) , workers ‘ compensation plans and seasoned plans. All these monies from private and public beginnings representation the national wellness outgos of the US ( Center for Medicare and Medicaid Services [ CMS ] 2 ) .
Figure 1. Health Expenditures as a Percentage of the Gross Domestic Product 1960-2009
Beginning: Centers for Disease Control and Prevention, 2011
Health attention outgos have been at a consistent rise since the 1960s. In fact, the US offers the most expensive wellness attention in the universe ( Pearson 1 ) . In 1960, the authorities allocated merely 5.3 per centum of the entire value of national wellness merchandises ( GDP ) to wellness attention. In 2009, national disbursement, including infirmary attention, professional services, drugs, and a assortment of other wellness services including research and the building of medical installations, amounted to 17.6 per centum of GDP. The portion of GDP has about tripled since 1960 ( 5.7 % ) . Entire wellness outgos rose to $ 2.5 trillion, which is tantamount to a per capita outgo of $ 8,086 per individual ( Centers for Disease Control and Prevention [ CDC ] 32 ) .
The rapid rise of wellness outgos in the US has been a topic of involvement for policy shapers. Health attention expenditures cover infirmary services ; professional services ; drugs ; wellness attention equipment ; administrative costs, and research ( CDC 34 ) .
Figure 2. Health Care Expenditures By Service
Beginning: Centers for Medicare & A ; Medicaid Services, Office of the Actuary, National Health Statistics Group, 2011.
For the twelvemonth 2009, the greatest ball of wellness attention expenditures belonged to hospital attention ( 31 % ) , doctors and clinics ( 20 % ) , others ( 14 % ) , prescription drugs ( 10 % ) , dental services and other professionals ( 7 % ) , administrative costs ( 7 % ) , investing ( 6 % ) , and nursing attention installations ( 6 % ) . CDC figures indicate that hospital disbursement increased by 5.1 % to $ 759.1 billion in 2009 ( vs. 5.2 % growing, 2008 ) . Physician and clinical services increased by 4 % in 2009 to $ 505.9 billion. Among the most outstanding additions in disbursement over a 10-year period include prescription drugs which have been increasing by an norm of 10 % yearly. Another outstanding subscriber to wellness attention disbursement is the high administrative costs of 7 % which have since increased steadily since 1995. Some accounts for the lifting costs of wellness attention in the U.S. vary. Some attribute it to the application of new engineering, longer and more intensive visits taking to higher disposal costs, and increase usage of in-office prescription drugs ( Clemitt 291 ) . Two other factors that affect U.S. wellness outgo growing over long periods are 1 ) the state ‘s rate of growing of gross domestic merchandise and 2 ) alterations in the age construction of the population. Due to increasing growing of the GDP and the aging population, wellness outgos have besides been at a rise ( Fuchs 75 ) .
However, economic experts say that the increasing rising prices in wellness outgos is due to the pluralistic system itself. There are excessively many private wellness insurance companies which weaken the programs ‘ dickering power with wellness attention suppliers. This puts medical suppliers at an advantageous place to gain monopolistic net incomes. Managed competition has non proven to be sufficient in equilibrating the power of buyer and marketer ; in fact, it has contributed to intensifying disposal costs ( Hsiao 46 ) .
Furthermore, despite the dominant function of the private sector in the American wellness attention system, the populace sector shoulders a greater weight of duty in insurance coverage. In fact, the populace sector ‘s function has been critical in funding, forming and supplying wellness attention. The province authoritiess besides finance wellness insurance and wellness attention to hapless households and this, largely through Medicaid, which is a co-financed plan with the federal authorities. Much like the federal authorities, the province authoritiess offer insurance to their employees and their dependants. The local authoritiess are more involved in financing “ safety net suppliers ” and in keeping exigency response services ( Hyman 355 ) .
Figure 3 illustrates the dislocation of funding of wellness insurance for 2009.
Figure 3. Financing Health Expenditures in the United States, 2009
Beginning: Centers of Medicare and Medicaid Services, 2011.
Even though 60 per centum of the American population in 2009 was enrolled in private employment-based wellness insurance programs ( CDC 32 ) , these programs absorbed merely 34 % of entire wellness attention costs. This is because many of those enrolled in such programs are comparatively immature and healthy members of the work force. Merely 13 per centum of Americans ‘ wellness attention measures are paid for straight by the persons as out-of-pocket family costs. Of the entire sum spent, 49 per centum was paid for by authoritiess, with the federal authorities accounting for the largest of entire authorities disbursement in wellness attention. The strong authorities presence in the market for these services has been turning at a rapid rate as has the overall rate of increased disbursement on wellness attention in the state ( CDC 33 ) . However, outgos by authoritiess in the US are low compared to wellness attention disbursement by authoritiess in other industrialised states. Most European states have authoritiess picking 70 to 90 per centum of wellness attention measures but taking up a lower ball from the GDP ; for illustration Norway pays for 97.6 % of all wellness attention through revenue enhancements while apportioning merely 10.3 % of its GDP ( Pearson 2 ) .
3.3 Quality of Care
Despite disbursement more for wellness attention than any other state in the universe, the U.S. lags behind its OECD opposite numbers in footings of life anticipation and in other steps such as infant mortality conformable mortality, and doctors per 1,000 people. This has caused critics to propose that the state ‘s highest-in-the-world wellness disbursement is non needfully purchasing the highest-quality wellness attention. Furthermore, the US is ranked thirty-seventh by the World Health Organization ( WHO ) in supplying overall quality attention. It besides ranks 24th among industrialised states in life anticipation ( Clemitt 292 ) . The quality of attention is besides unevenly distributed across income categories. Because of the voluntary nature of wellness insurance, Americans will purchase better insurance every bit long as they can afford it. Therefore, the quality of attention is lower in provinces and socio-economic categories that spend less or hold lower buying power ( Clemitt 292 ) .
However, the OECD besides recognizes that there are many positive things in the U.S. wellness attention system. The bringing of attention is seasonably ; there are zero waiting times, unlike in many OECD states. Americans have a assortment of picks they can do in the system in footings of wellness insurance bundles and in their medical suppliers. The U.S. besides ranks highest in footings of invention in the field of processs and medical merchandises and provides new merchandises to consumers the quickest among OECD states ( Pearson 4 ) .
4. The Canadian Health Care System
Canada gives precedence to universal and equal entree to wellness attention ( Hyman 365 ) . This is accomplished through a publicly-funded Medicare system which offers citizens free medical services ( dental and outpatient drugs are excluded ) . The federal authorities and states jointly fund the cost of national wellness insurance but the plan is established and administered by the states. The provincial wellness insurance program must run into certain criterions set by the federal authorities: coverage must be cosmopolitan, comprehensive, portable, and include “ all medically needed services. ” Patients are free to take doctors and infirmaries but must see a general practician to be referred to specializers. Doctors are paid on a fee-for-service footing. Canada ‘s wellness attention system is besides known as a individual remunerator system where private doctors are paid on a fee-for-service footing at the same rate as authorities physicians.
4.2 Health Outgos
Canadians have been passing more on wellness attention since 1975 until 2009. Entire wellness attention disbursement in Canada reached $ 191.6 billion in 2010, a 5.2 % addition from 2009. Most of the addition in disbursement has been shouldered by public financess. Most of the money spend on wellness attention have gone to infirmaries, pharmaceuticals, and doctors in falling order. In 2009, entire wellness outgos for Canada claimed 10.1 % of the state ‘s GDP ( CIHI 2 ) . This per centum is somewhat higher than the OECD norm but lesser than the U.S. outgo as a portion of GDP.
Figure 4. Health Expenditure in Canada from 1975-2010
Beginning: Canadian Institute for Health Information, 2011.
The National Health Expenditure Trends, 1975 to 2010 besides placed per capita disbursement for Canadians to hold increased by $ 216. Excluding factors such as rising prices and population growing, Canadians are forecasted to pass 1.4 % more on wellness attention for 2010 and 2011 ( CIHI 3 ) .
Unlike the United States which does non implement cost containment policies, outgo rising prices is managed in Canada by set uping planetary budgets for infirmaries and for doctors ‘ services. Physicians ‘ fees are set by the provincial medical associations through an internal bargaining procedure. This procedure is designed to fulfill the planetary budget cap. To pull off the volume of services, each state monitors the measure of services delivered by each doctor. Because all claim payments are made through one centralised bureau, the states maintain a pattern profile on each doctor and infirmary. Medical associations are responsible for monitoring and training deviant doctors ( Hsiao 46 )
Figure5. Share of Health Care Expenditures, 2009.
Beginning: CIHI, 2010.
Health outgos in 2009 were highest in three countries: infirmaries ( 28.7 % ) , drugs ( 16.3 % ) , and doctors ( 13.3 % ) ( see Figure 5 ) . One of the most noteworthy alterations in the wellness attention disbursement has been the lifting portion of wellness dollars for doctors. In 2010, the CIHI estimates that passing on doctors will make $ 23.6 % Hospitals, drugs and doctor services, in that order, continue to account for the largest portion of wellness dollars.
In footings of funding, Canada ‘s public sector foots most of the measure. In 2009, the Canadian authorities paid 70 % of Canadian ‘s disbursals on wellness attention, excepting alveolar consonant and pharmaceutical services which are separately paid. The balance 30 % is shouldered by the private sector ( private insurance and out-of-pocket monies ) . Spending by the private sector normally covers those non or are merely partly covered by Medicare, including prescription drugs, optometry, and dental medicine. Around 75 % of Canadians besides receive extra private wellness insurance largely based on their employment. About all of authorities funding is covered by the states ( 94 % ) . To control rising prices, states negotiate with medical associations annually in order to put physician costs while pharmaceutical costs are controlled by authorities at a planetary median.
Figure 5. Beginning of Health Care Financing in Canada, 2009
Beginning: CIHI, 2011.
Spending nevertheless varies across districts. Per capita disbursement is highest in Alberta ( $ 6,266 ) and Manitoba ( $ 6,249 ) while the lowest disbursement is seen at British Columbia ( $ 5,355 ) and Quebec ( $ 5,096 ) .
4.3 Quality of Care
Canada fares comparatively at par with OECD states and comparatively higher than the U.S. in footings of wellness indexs such as infant mortality ( 4.5 ) , life anticipation ( 81.3 ) , physicians per 1,000 people ( 2.2 ) and nurses per 1,000 people ( 9.0 ) . However, Canada ‘s quality of attention is without critics. The alleged “ concealed costs ” of the publically funded wellness attention system include 1 ) hapless quality of services, and 2 ) longer delay times ( Fraser Institute ) . In response to the longer delay times that Canadians experience, the Canadian authorities spent more than $ 5.5 billion in order to cut down delay times. Reforms were besides made in all states and districts to prioritise malignant neoplastic disease attention, diagnostic imagination, cataract surgeries, hip and articulatio genus surgery, and primary attention.
5. Comparison of U.S. and Canadian Health Care Models
After reexamining the specialnesss of both the U.S. and Canadian wellness attention systems, a proper comparing can be made based on the informations on:
1 ) entree
2 ) cost containment, and
3 ) quality of attention
Entree: Clearly, in footings of entree, Canada has a much better wellness attention system because it provides cosmopolitan coverage through a single-payer and publicly-funded system. The U.S. does non set a premium in equity so entree is voluntary and authorities coverage is available to the unemployed, aged, and the hapless – still go forthing 50.7 million or 16.7 % of the population uninsured ( see Table 1 ) .
Table 1. United States and Canada: Health Expenditure and Results
Per Capita GNP, on 2009 Palatopharyngoplasty
Percent GDP Spent on Health
Level of Health Status
( % /Per capita )
Infant Mortality Rate ( per 1,000 unrecorded births )
Doctors per 1,000 people
39 ( $ 4213 )
16.7 % of population uninsured
70 ( $ 2863 )
Cost containment: From the information, both the U.S. and Canada have lifting degrees of disbursement in wellness attention at changing grades. U.S. disbursement on wellness attention has tripled in footings of GDP portion since 1960. In 2010, wellness outgos as per centum of the GDP has reached 17.6 % while Canada has modestly increased to 10.1 of the GDP portion. This is where the basic disparity lies in cost containment. The U.S. has been unable to forestall outgo rising prices efficaciously. Due to the pluralistic and voluntary nature of the wellness attention system, there has been no proper rationing of medical services ( Drew and Levitt 3 ) . Because private wellness insurance overwhelms the wellness attention market, there has been a decreased degree of monetary value consciousness among the populace. The mean consumer of medical attention pays less than fifth part of the services they consume. Meanwhile, because better insurance bundles are offered and better medical merchandises are being advertised, Americans spend more and wellness attention disbursement rises. Furthermore, the disposal costs of the U.S. wellness attention system are higher ( 7 % ) than in Canada ( 3.4 % ) . Spending on prescription drugs is besides higher.
As the U.S. allocates an increasing sum of its GDP to wellness, there are negative deductions for the economic system. Government borrowing to finance public wellness attention outgo fuels rising prices. Governments faced with higher heath attention costs cut down investing, in substructure and instruction. Furthermore, if workers bear the incidence of higher wellness attention disbursement, they have less income to pass on other goods and services ( Assistant Secretary for Planning and Evaluation 5 ) . High wellness attention costs could cut down entree to wellness attention, belly-up consumers and consume retirement nest eggs. On the other manus, Canada is able to incorporate rising prices because of cost containment steps. Government monetary value controls set a cap on pharmaceuticals and physician costs. Bargaining and dialogues are performed on a regular basis between the provincial authoritiess and medical associations.
Quality of attention: The informations presented does non adequately paint a realistic image of the quality of attention for both states. Some research workers have alleged that U.S. rise in wellness attention disbursement has produced higher quality attention ( Bodenheimer and Fernandez 26 ) . The WHO indexs were used because they are recognized to be criterions for guiding policy. Canada fares comparatively higher in footings of life anticipation, infant mortality rate, doctors and nurses per 1,000 people. However, as the literature suggests, the U.S. leads in invention, is more consumer-friendly, has zero delay times, and provides the consumer a assortment of picks in medical attention and processs.
Table 2 provides a sum-up of the public presentation of both wellness attention systems.
Table 2. Comparison of Performance
Cost-effectiveness in bring forthing better wellness and risk-protection
Outgo rising prices control
Level of Health Status
Equal Access to Service
Degree of Risk-Protection
Schemes and Consequences
Schemes and Consequences
F: Employment-based insurance for working population ; General gross finance for the hapless ( Medicaid ) and the aged ( Medicare )
Unequal degree of wellness position between the uninsured and insured and by income categories
F: Ration by monetary value and pick of suppliers
Uninsured deficiency equal entree
Multiple grades of quality
Modest: 16.7 % of dad. Uninsured but they have some protection from unsalaried attention
High disbursement ( high dealing costs ) , below norm in wellness result, 16.7 % of population has no at-risk protection
Correct market failures by structuring powerful buyer groups. Create viing Managed Care plans
Effective in the earlier old ages but uneffective in the long-run
F: General gross financed national wellness insurance
Modest difference in degree of wellness by provinces and by part
F: Implicit ration through conservative medical patterns
Equal entree to equal quality of services
High: cosmopolitan insurance coverage
Medium disbursement, good wellness result, and cosmopolitan coverage
Federal gov’t makes provincial gov’t wage medical coverage
Provincial gov’t negotiates planetary budget with infirmaries and medical associations
Effective in pull offing rising prices
*H – high ; L-low ; M-moderate
The comparing between the two states ‘ several wellness attention system has presented cognition about the differences in footings of the purpose of public policy, coverage and entree, monetary value and the quality of health care. The statistical informations presented and the literature proves that authorities engagement plays a major function in health care as authoritiess have direct supervising, control, and ordinance of the wellness attention industry. Public policies addressed towards the demand for cosmopolitan entree and coverage of health care differed in U.S. and Canada, bring forthing different results. Relative to the U.S. wellness attention system, Canada provides cosmopolitan entree, is effectual in controling rising prices, and produces more than mean quality of attention.