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April 20, 2005

The Health of Nations: Oh, Canada!

Next on our tour of health care systems would have to come Canada. I've been debating whether or not to do them because their setup is so well-known, on the other hand, it's also something of an anomaly that's often romanticized to a degree it shouldn't be, so it seems worth the effort. If you're new to the series, you can find France here and England here. Off we go.

Da Basics: Canada care is unapologetic, no-holds-barred single-payer. The single-payer, by the way, is not Canada as a whole, but each specific province, so it's not quite as monolithic as we think. It's financed by taxes, but the taxes vary from province to province, so there is a certain amount of variation in how the system pays its bills. But I'm going to stay away from that -- keeping you guys still for health policy is dicey enough, if I start throwing in tax policy, my blog will have tumbleweeds blowing through it (and maybe a shoot-out in the saloon, but that's another story).

Like England, Canada's insurance has nothing to do with occupation, age, citizenship, or any other variable. If you're on the grounds of our Northern neighbor, you're covered. The system covers everything, though drug benefits and long-term care vary a bit across provinces. What's interesting about Canada's incarnation of single-payer, though, is how pure it's kept. France and England, as we saw, both have a significant role for supplementary insurance beyond the government's basic offering. Not so in Canada, where add-on insurance isn't even allowed. That makes for a remarkably level playing field. Care varies only according to province (and, assumedly, individual doctors and hospitals), not according to class. Interestingly, low-income Canadians actually receive more care than do the affluent, owing to the higher rates of disease in poorer communities.

To be clear, there is a little bit of supplementary insurance floating around, but it can only be used for certain amenities, like private rooms. Hospitals are simply not allowed to bill private insurers for services covered by the provincial plans. So say nighty-night to the private sector.

Canada is a gatekeeper system, and 55% of their doctors are general practitioners playing that role. Specialists can see patients without a GP referral, but they don't receive the highest compensation from the government and so most won't do it. As that alludes to, Canada's doctors are paid on a fee-for-service basis, so there's no incentive (a la Britain) to withhold treatment. Hospitals, on the other hand, negotiate a global budget with provincial government, which is to say they get a lump sum rather than a fee-for-service. That makes adapting to changing circumstances or varying needs harder than it'd otherwise be, as the money is allocated from the start, rather than in response to circumstances.

Cost: In 1970, the year before Canada's health care system came online, Canada and the US spent about the same on health care, 7.2% and 7.4% of GDP respectively. By 1990, it was 9% and 11.9%. And by 2002, it was 9.6% and 14.6%. So while our health care spending shot up by 7.6% of GDP and still doesn't cover out citizenry, theirs had a 4.5% climb and got everyone in the goddamn country covered (remember: the first number is pre-universal health insurance). During the 90's, Canada's health care costs (as a % of GDP) actually dropped. Dropped! And these differences aren't a result of fewer services rendered. Indeed, Canadians, on average, spend more days in the hospital and have more visits with their physicians than Americans do. The lower costs are accounted for by three things:

1) Lower administrative costs. This one will blow some minds. Despite being a bureaucratic leviathan or whatever, America's administrative costs are 300% greater per capita than Canada's. So much for the vaunted efficiency of the private market.

2) When Canadians do spend a day in the hospital, it's much cheaper. Costs per patient per day are quite a bit higher on our side of the border.

3) Physician's fees and pharmaceutical prices, which are way higher on this side of the border.

The fiscal austerity of the 90's, which helped drop costs of the program, did make for a worse health care system, or at least one that netted less satisfaction. Wait times for elective surgeries increased, though it should be noted that Canadians wait, on average, less time for vital operations such as transplants. Oh, and the "hordes of Canadians rushing across the border for care thing"? Mostly myth.

The only verified cases are a) folks in the US on vacation or b) folks who don't want to wait for an elective procedure and can pay to do it out of pocket. Think about that for a second -- the primary criticism of the Canadian system is the "wait times/they come here" combo, but what's really going on is a prioritization of procedures and a few rich folks deciding not stand in line. So in Canada, it's the rich who can't get the care they want, but everybody can get the care they need. Here, the rich can get all the care they want, and many of our poor and lower-middle class can't simply wait in line for elective procedures -- they simply can't get them. It's all about priorities.

Recently, the Canadian government, In response to the drop in citizen satisfaction, substantially increased the program's funding (by $33 billion, I think) and began some restructuring. The effects of those changes aren't in yet, as they were just passed in 2003.

How Do We Stack Up? In simple ratings, Canada is 30th while we're 37th (according to the OECD). So they're a bit better, but it's not like the giant disparity we had with France, whose system takes the coveted top slot. As noted above, the Canadian system is significantly cheaper as a percentage of GDP than is the American system, despite the fact that the former covers everyone and the latter leaves a fair chunk of its population out in the cold. On the years of life lost metric, American women lose 3,836 years per 100,000 women and the men give up 6,648. The comparable Canadian figures are 2,768 and 4,698 respectively.

Canada's health care system, much more so than the others we've looked at, is a pure single-payer effort. It's really run by the government, private insurance is barred from interfering in any significant way, and so on. And despite the vaunted inefficiencies of government, they manage to cover their entire population with administration costs that're 300% less than ours per capita. Considering that 42 million of our folks aren't even in the system, the difference is even greater than that. Much of it comes from the simplicity of having the government pick up the tab rather than forcing doctors to haggle with insurers, but not all. In any case, that metric blows my mind.

In any case, Canada's got some problems. Wait times for elective surgeries can suck real bad and, according to an LA Times article from April 10th, some folks do cross the border to speed things up. But vital procedures are done quicker and, amazingly, any Canadian can get any necessary surgery done that they want. If elective, it may take some time, but there's never a question over whether they'll be treated. So next time someone goes off on Canadians-in-line to you, remember: the question they're facing is whether to allow the rich to pole vault over the poor. America looked at that calculus and chose the rich; our poor don't have mere waiting times to face, many of them simply can't get any non-emergency medical care. That doesn't happen in Canada, and it doesn't happen because their system is aimed at never letting it happen. Frankly, if our uninsured knew they could do it, it'd make much more sense for to flee to Canada for treatment than it does for the Canadian rich to cut their wait times by paying out-of-pocket here.

Sources: LA Times articles from Lexis-Nexis, Thomas Bodenheimer's Understanding Health Policy, OECD data sets, Matthew Holt.

April 20, 2005 in Health Care, Health of Nations | Permalink


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» Ezra does Canada from After School Snack
Yes, Ezra has installment number three up, and as with France and the UK, this post is a great summary of the kind of functional health care that most other developed countries have figured out how to do. [Read More]

Tracked on Apr 20, 2005 3:51:51 PM

» Health care from The Big Lowitzki
This week Ezra is going to be analyzing the healthcare systems of different nations (France, England, Germany, Australia, and Canada) around the world:There's been a lot of talk lately about the health care structures of various other countries, how th... [Read More]

Tracked on Apr 20, 2005 3:59:50 PM

» Law and Medicine: Canada from Electoral Math
Sadly, my commentary no medical malpractice will be limited to major EU countries and the US. In the mean time, check out my entries on France and the United Kingdom. [Read More]

Tracked on Apr 21, 2005 2:05:45 PM

» Health of Nations from The Talent Show
For those who haven't been following it, all week Ezra Klein has been following the healthcare systems of other countries and comparing them to our own. So far he's done France, England, Canada, and Germany.1 In today's installment he links... [Read More]

Tracked on Apr 21, 2005 9:12:08 PM

» Health of Nations from The Talent Show
For those who haven't been following it, all week Ezra Klein has been following the healthcare systems of other countries and comparing them to our own. So far he's done France, England, Canada, and Germany.1 In today's installment he links... [Read More]

Tracked on Apr 21, 2005 9:15:33 PM


Thanks for doing these reports, Ezra. It is amazing how much misconception (probably willful) there is about Canada's system among our fellow Americans.

Posted by: sprocket | Apr 20, 2005 1:09:09 PM

In Canada, prescription costs are not generally covered except for those with low incomes. Private, employer insurance plans, or individual supplemental plans, usually cover prescriptions, with some deductibles and co-payments.

Posted by: Doug | Apr 20, 2005 1:41:44 PM

Hmmm.... I do find the idea of prohibiting private care just because they think that it should be a government affair distressing. I liked it except for that.

BTW, would you consider covering the Japanese system in "The Health of Nations?" I'd be interested in learning about that. I hear it's effective, but without as much government control as most wealthy nations' systems.

Posted by: Julian Elson | Apr 20, 2005 1:47:46 PM

I'm really enjoying the series.

Per our discussion last night, the main critique of Canadian care is these "waiting lines". But see, the problem is that they are for elective procedures, and they are only months. What needs to happen here is the understanding that if the government is going to pay for you to have healthcare, then when something you want that isn't medically NECESSARY, you'll have to wait your turn. Simple as that. Now, convincing the American people of this is another matter. I'm a bit stumped.

Posted by: Kate | Apr 20, 2005 1:49:35 PM

There is a fundamental difference in thinking between the US and Canada (and the UK and France). These countries view healthcare as a basic right. The idea that rich people should get care while poor people should expect to go without is a US invention.

In the US, if you argued to a supporter of the status quo that it's not okay for them to get every medical procedure they want asap while the less fortunate go without any care at all, they would look at you funny. "But I'm rich! I deserve this! It's not my fault/responsibility/problem that some people don't have what I have."

Change that attitude, and we'll be on our way to a real healthcare system.

Posted by: Lisa | Apr 20, 2005 2:50:24 PM

A few comments to add to the mix.

First, I still have tons of relatives in Canada (from where all my grandparents emmigrated). One of my cousins lives on an island in the St Lawrence River. She had a heart attack in the middle of the night in the middle of the winter. In town they fired up the ferry, got the ambulance onboard, cut through the ice, drove across the island (in a blizzard), got her back to town, she was in the hospital and then rehab for several weeks, then had intermittant home care for a while until she was back up to speed. She said her care was stellar and had no complaints. The don't have such extreme stories to tell, but the rest of my family shares her satisfaction with their system.

The other thing is a story John Dingell told during the Hillarycare buildup. He's introduced a single-payer plan in every Congress since he took office (which will be 50 years this Fall). He drove over to Toronto about that time for tours of a couple hospitals. He asked to see the billing/administration operation, which in US hospitals typically employs scores and even hundreds of people. In the Canadian hospitals, it was usually 3 or 4 employees.

Oh, one other thing--health care costs have gotten so bad for the Big Three that, despite much higher taxes and generous wage packages to their Canadian employees, most vehicles are now cheaper to produce in Canada than in the US.

Posted by: DHinMI | Apr 20, 2005 2:52:28 PM

This will be a great series.

After this, how about a series on transition issues? For instance, large corporations have pension & benefit (mostly health care) funds. Should/would/could a portion of this be transferred to the government if the government takes over a portion of the liability?

Posted by: ESaund | Apr 20, 2005 2:55:34 PM

Worth noting:

(1) Median waiting time in Canada for elective surgery in 2003 (prior to that $33 billion infusion) was 4.3 weeks. Gosh, aren't we impatient?

(2) For-profit care is of lower quality than not-for-profit in the few studies that have been done. So not only are Canadians protecting equality of access under their system by prohibiting private insurance, they're protecting their health.

Posted by: tinman | Apr 20, 2005 3:43:47 PM

I'd link to explore a 2 layer system:

1) A full government system that provides coverage for some level of Benefit/Cost care. e.g. pays for any tratement that extends "quality" life, say 1 year/$1,000. -- Note: if any insurance company wants to cover such care, then fine, let them accept the amount it costs the government to offer it for ALL patients who want to be covered by them.

2) On top of that, optional insurance or pay for service care that covers "elective" treatment.

Note: I'd like to be able to also offer a premium service for the essentual treatment as long as it is clear it does not effect the medical quality of the service, e.g. the richer can pay more for pillows and music, but not for earlier scheduling etc.

That way the amount of required care that we want to pay for can be covered for all of us as a taxable service where as additional treatment can be covered as a benefit of wealth.

Posted by: Mike Liveright | Apr 20, 2005 4:52:45 PM

I don't have much to add to the discussion at the moment, but I wanted to drop in and leave you a quick note giving you props and thanking you for doing this series. You're going a great job!

Posted by: michael | Apr 20, 2005 5:32:57 PM

Hey Ezra

Some unsolicited criticism: I know you're trying to keep the Health Care posts from being drawn out and boring like a text book or something, but I think maybe in your attempt to keep things readable, you're sacrificing just a little wonkiness. I think it's wonderful what you're doing, and your instinct to keep people's eyes from glazing over is a good one. It just feels kind of.... half way.

Do know what I'm saying or am I way off and being a dick here?

Posted by: tbone | Apr 20, 2005 5:42:44 PM

My problem with the Canadian system (my country's system) is that like the U.S.'s system, it's essentially based on ideology rather than outcomes. That is, while the U.S.'s system is based on an ideology of "leave the government out of it," Canada's is based on an ideology of equality above everything else. Canada's ideology is better (because it incorporates a practical goal whereas the U.S.'s is pure ideology) and therefore its system is better, but the more non-ideological European systems are better still.

Part of the problem with trying to improve Canadian health care is that everybody's petrified of "Americanization," so if you suggest allowing some kind of changes to be more like the Europeans, people think that it's part of the slippery slope to an American system. The worry is understandable, but it does keep the system from improving.

Still, if the theme is "systems that suck less than the U.S.," the Canadian system fills the bill.

Posted by: M.A. | Apr 20, 2005 5:44:00 PM

And for some free market balance, please cover the Swiss system, which is the system I think conservatives should be latching on to for a universal health care proposal.

Considering the Swiss get possibly the best health care outcomes in the world, it would hardly do justice to this subject to skip it unless there was an anti-free market agenda at play.

Posted by: Adam Herman | Apr 21, 2005 3:20:44 AM

As one who often offers unsolicited recommendations, I love Adam Herman's "talk about the Swiss" or you're biased! NO ONE talks about the Swiss! Wasn't the point of this series not to stoke ideological fires--each segment notes shortcomings--but to flesh out details of the more prominent, i.e. not Swiss, systems?

As for Canada, I lived all my life in Michigan, able to watch the CBC's election coverage. Virtually every election involved fighting over their system, turning on issues that seemed so picayune in comparison to ours. The main political issue always revolved around the Right and Alberta trying to opt out of the national program, privatizing in a more American way.

The main complaint from the public seemed to be not enough orthopedic specialists. Seemingly half the time I saw him during the campaign Paul Martin was talking about hip replacement surgery. Due to a lack of surgeons, I think some operations that were most definitely not optional were delayed an embarassingly long time, as a hip or pelvis shattered in a fall would always be given priority over a degenerating joint that needs work but isn't critical. Moreover, some patients were assigned, not voluntarily, to hospitals in Michigan for procedures which the Canadian government paid for, IIRC.

Posted by: Exile in Colorado Springs | Apr 21, 2005 4:41:09 AM

Per Lisa, it's not just "the rich" that have a sense of entitlement to any procedure, no matter the cost here in the US - pretty much anyone who's employed with health insurance expects that they'll be able to get the care they want wherever they want whatever the cost. It's not until you're in the system that you learn how untrue that may be, unless you're well off.

I didn't really have anything to say about the UK, and I don't have much of an opinion on Canada. I think both have plenty of their own issues to sort out and those issues are quite different from ours (although all related to rising costs), so there's not a lot to compare.

Finally, my Mom, who's been teaching this stuff for years (until she retired recently) pointed something out to me I hadn't considered - looking at all these foreign systems is interesting, but America's problem is in large part that we don't have a system. We have a hodge podge of elemenst that do not form an adequate net to catch all people. So the question becomes do you try to keep embroidering the net to catch a few more, or start over? I don't think proponents of "start over" will get much truck as long as they're selling pie-in-the-sky single payer plans (we'll pay doctors less! we'll cover everybody under Medicare!) that can't possibly fly. The "embroider the edges" people, who can get things done, are stuck, I think, with the reality that no amount of fiddling on the edges gets to the big issues.

So, yes, I still think these concise descriptions are interesting. Still don't think they tell us much about the US, or how to fix our own problems.

Posted by: weboy | Apr 21, 2005 12:54:57 PM

It is important to note that Canadians do pay personally for some procedures. It depends on whether the procedure is "listed" by the province, which largely determines what is covered. Many things were delisted in the 1990s, which made coverage less complete, and there is more private money in the system than there used to be.

The tax/fiscal federalism dimensions are very interesting, but the new money to which Ezra refers are, I suspect, federal contributions over a number of years to provinces for health care. The numbers are much contested, but federal contributions are well below what provinces provide in terms of health funding, and the new federal money will make a difference at most at the margins.

That said, the Canadian system is much better than the American, and much more consistent with principles of liberty, properly understood. Nobody is held hostage to the demands of an HMO that is trying not to pay for procedures. Coverage resides (essentially) with the citizen (and some non-citizens), so you don't lose it with a job. And the approach, while a matter of endless debate, is very embedded in the political system as a matter of principle (the devil's always in the details), so that even right-leaning governments haven't been able to gut it. At least not yet.

Posted by: Tim | Apr 21, 2005 1:40:31 PM

Tbone -- I see your point, but I'm a student, I try to have a life, I try to write 5 non-health posts a day, I have a girlfriend, a need for food, etc -- this is about all I can do until someone starts paying me for the time.

Posted by: Ezra | Apr 21, 2005 5:00:09 PM

Tbone -- I see your point, but I'm a student, I try to have a life, I try to write 5 non-health posts a day, I have a girlfriend, a need for food, etc -- this is about all I can do until someone starts paying me for the time.

Posted by: Ezra | Apr 21, 2005 5:02:52 PM

Great series, but I have a minor nitpick: You aren't covered in Canada unless you're a Canadian citizen or have permanent residency. Even then, there's a 3 month waiting period. If you're moving from province to province, your old province's medicare system will continue to cover you until the new one kicks in. I'm Canadian, and my wife is American. When we moved back to Canada, we had to buy special short-term supplementary insurance (still dirt cheap). I then got onto OHIP (Ontario's health care plan), and my wife is covered through her university's plan.

Posted by: Terry VB | Apr 22, 2005 9:00:58 AM

Great series. I'm learning a lot.
A couple of things to add about the Canadian plan -- we started medicare here in Saskatchewan in 1964, and within four or five years every province had it. But while the Canada Health Act maintains national standards, it would not have been possible to START medicare as a national program, I don't think. There were just too many differences in various parts of the country for the federal government to be able to design a one-size-fits-all program (the feds are trying to design a national daycare program now, and having a hell of a time doing it.)
One other point -- it's been 40 years and we still argue. Over the years, we've had fierce fights in every province over things like which services are covered (chiropractic? psychologists? naturopaths? physical therapy? dental? drugs? abortions? vasectomys?) and how to pay for services (user fees? monthly premiums? taxes?) and whether private care should be allowed or not. So your US readers should be aware that we still spend a lot of time and effort on researching and talking about how to maintain and improve our medicare system.

Posted by: CathiefromCanada | Apr 23, 2005 3:31:31 AM


Not to pick nits, but you wrote:
And despite the vaunted inefficiencies of government, they manage to cover their entire population with administration costs that're 300% less than ours per capita.

"300% less" is a mathematical impossibility. I think you mean to say two-thirds less.


Posted by: CL McGhee | Jun 1, 2005 7:09:59 PM

Canada has a great health care system, and I see why many people like the health insurance in there country.

Posted by: California Health Insurance | Nov 2, 2005 4:48:47 PM

The United States does not have a free market healthcare system. If they did, I wouldn't need a prescription to buy drugs or a liscence to be a doctor. The reason administrative costs are so high is because the "free market" is so highly regulated. Why not just let people own their bodies and do whatever they want? Isn't it supposed to be a free country?

Posted by: Ilya | Sep 23, 2006 10:57:39 PM

Having lived in Germany, the USA and Canada, I can only
state that the US system is far superior. Canada has
basically adopted the Soviet style system, including
the nomenclatura. If you have connections, you get
superb treatment in no time, for nothing. If you don't
you are on some waiting list and die. Just in the province of Ontario alone two million people are without a family practioner. Wait time to see specialist 3-6 months, MRI several months, hip operation 2 years. People die every day needlessly,
as they are on some waiting list. My wife had a busted
miniscus and torn ligaments due to a fall and was on
crutches. The family doctor refused to let her see a
specialist. His explanation: The pain is not severe
enough and I refer you only if you are in a wheelchair.
I complained to the head of hospital, thinking that
somebody with pain has a right to treatment. His advice: Get yourself another doctor! I did! In Buffalo!
Two options there, Prolotherapy or operation. We tried
prolotherapy (unavailable here) and it worked great.
Case closed. Don't ever think adopting communist health
care. Only good for the comrades in charge.

Posted by: Joachim Meurer | Oct 18, 2006 5:36:30 PM


Posted by: esaudi.info | Oct 31, 2006 8:42:05 AM

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