Canadian Health Care System:
A National Health Insurance Proposal
Canada Health Act
• Passed by Parliament in 1984
• Aims to ensure that all residents of Canada have
•
access to necessary hospital and physician
services on a prepaid basis
*Provides the provinces and territories with
criteria and conditions that they must satisfy in
order to qualify for their full share of federal
transfer (Canada Health and Social Transfer)
Five Criteria of the Canada Health
Act
• Public Administration: administration of the health care
•
•
•
•
insurance plan must carried out non-profit basis by
public authority
Comprehensiveness: all medically necessary services
provided by hospitals and doctors must be insured
Universality: all insured persons in the province or
territory must be entitled to public health insurance
coverage on uniform terms and conditions
Portability: insured services maintain when moved within
Canada or travels out of country
Accessibility: Reasonable access to hospital and
physician services
Characteristics of the Canadian System
“Single Payer”
• Entire population to be covered
• Benefits would be all uniform
• *Private Insurance for hospital and medical
•
•
services not permitted* (No buy out)
No out-of-pocket price (“zero” price) for basic
medical service
Expenditure limits would be imposed on
hospitals and physicians to prevent expenditures
from rising rapidly
Setbacks of the Canadian Health
System
Health System
Issue of Choice
Administrative Costs
Efficiency
Issue of Choice
• Reduce administrative cost
• People “worse off” since everyone
(including the poor) are required to
purchase benefit
• Coverage can be expensive and many may
prefer to self-insure
Administrative Costs
• Between US and Canadian health care
systems are inappropriate to measure
relative efficiency
• Because US have variety of insurance
plans, marketing, and administrative costs
• Offer greater variety of different premiums
• Choices are costly but can be beneficial
• No incentive to design creative benefits or
coverage if there is only one system
Efficiency
• No incentive to use the least costly mix of
•
•
•
•
•
medical services
No incentive to produce them efficiently
No incentive to innovate in new delivery
system, since not reward for risk-taking
Patients tend to “overuse” service
US more efficient in introducing new delivery
systems and manage care techniques than
Canada
Raise necessary capital for the risks of
innovations
More Setbacks…
• Rate of growth in GNP would limit growth
in health expenditures
• Ideally: should be determined by the
amount which people are willing to pay
• When expenditures are below, it can lead
to shortage of services, technology, and
reduced access to care (like in Canada)
• Few resources can lead to non-price
rationing
Non-Price Rationing
• Resources allocated away from prevention
toward acute care services
• The rate of mammograms among women
50+ lower in Ontario, Canada than US
• Increased waiting times to receive
services
• Less access to technology
• Some even travel to US for services
Nonprice rationing
inefficient
Inefficiencies:
• Time spent in waiting is lost
• There can be discomforts in waiting for a
procedure (hip replacements)
• Even elderly patients are made to wait
long time and may even be denied some
services
• Some even die waiting! (heart operations)
Example of inefficiency:
One such account of a typical visit to the doctor:
¾ Had to leave work for an appointment that ran four
hours late
¾ Had parked in a two-hour limit spot but had no idea
when she would be seen or even if she could go out to
move her car without losing her spot in line
¾ When she asked when she could expect to be seen after
her four-hour wait a receptionist said, “You are talking
as if you are some sort of customer”
¾ Patient has no power in way they’re treated or when
they’ll be seen
Some comparisons between
Canada and US
US is superior because…
Competitive health care market
(vs. government-controlled system)
achieves a rate of growth in
expenditures that are appropriate:
Benefits
=
Amount customers willing to spend to
receive benefits
Evidence that Canada lacks technology
Both Canada and the US have the most limited publicly
funded extended care coverage in the OECD countries
But US medical and health care expenditures
exceed that of Canada…
…and yet we still underperform in comparison.
Strengths
Limitations
US:
Quality-free choice of
doctor and service
Introducing delivery
system and medical
techniques
Risk of innovation
US:
Competing-incapable of
controlling cost
Large Spending (wasted
administrative cost)
Shifting cost to patients
and greater out-of-pocket
cost
Canada:
Health Insurance dollar
go directly to patient
Universal, therefore never
lose coverage due to
unemployed or retirement
Low administrative cost
Canada:
Limited Choice
No incentive for
improvement
Time Waiting