CANADIAN HEALTH CARE SYSTEM

HE provincial health insurance plans of Canada, still prized by a population that relies on universal coverage of hospital care and physicians’ services, nevertheless suffered a dramatic loss of public confidence in the 1990s as a result of sharp cutbacks in the federal budget. These cutbacks have led to restricted access to specialists, longer waiting times for nonemergency surgery, and the closing or merger of many hospitals, resulting in a loss of beds. The reductions, a central feature of the federal government’s successful effort in recent years to eliminate the large annual budget deficit, are now being partially reversed, but the system remains shaken by the decline in public support, reduced morale among physicians and nurses, and increased tension between the federal government in Ottawa and Canada’s disparate provinces and territories. In this report, I revisit Canada’s health insurance system after almost a decade. In 1990, when I last discussed the subject in the Journal,1 federal and provincial health care payments accounted for 75 percent of the nation’s total expenditure for medical care. In 1997, as a consequence of the retrenchment policies, public health care expenditures ($54.1 billion Canadian) represented 69.4 percent of the total, with expenditures by private insurers and patients’ out-of-pocket expenditures for outpatient prescription drugs, dental care, rehabilitation services, extraduty nurses, and other items not covered by the provincial plans ($23.9 billion Canadian) accounting for 30.6 percent.2 (As of this writing, the exchange rate is $1.49 Canadian to $1 U.S.) Unlike other industrialized nations, Canada has no parallel private insurance system that pays for hospital care and physicians’ services, because commercial insurers are barred from selling policies that cover any item that is publicly insured. But the unsettled state of Canada’s health care system has rekindled a long-standing debate over the ban on private insurance for publicly insured services.3 With a common border, a common culture, and a common capitalist penchant for profit making, Canada and the United States have forged closer economic links than any other pair of independent nations in the world. But when it comes to their respective health care systems, the two countries are a world apart, having sharply diverged over the past three decT ades. This divergence reflects the strong U.S. belief in individualism and limited government and the great value that Canada attaches to communal obligations and a robust public sector. The difference in the two countries’ attitudes toward the role of government is illustrated by the fact that in 1996 taxes levied at all levels of government in Canada accounted for 36.8 percent of its gross domestic product, whereas the comparable figure in the United States was only 28.5 percent — one of the lowest among industrialized nations. Canada’s publicly financed provincial health insurance plans consume a substantial portion of these tax revenues and provide all of the nation’s 31 million residents direct access to hospital care and physicians’ services without cost-sharing requirements. In contrast, since 1965, when the U.S. Congress established Medicare and Medicaid to provide public financing of services for the elderly and for eligible poor persons, the United States has vacillated in deciding what obligation government has to provide coverage for persons who are not insured through their employers. One consequence of this uncertainty is that an estimated 44.3 million people in the United States remain uninsured. That number could reach 60 million by 2008.4 Over the past 30 years — during the period when the U.S. Congress has intermittently flirted with the enactment of national health insurance legislation — people in the United States have paid considerable attention to the structure, logic, and history of the Canadian system.5,6 What caught their attention was the system’s universal coverage, its lower costs, particularly its public, nonprofit administration, and the clinical autonomy that physicians enjoy, although their incomes have been appreciably constrained.7 When reform efforts in the United States failed and competition in the marketplace became the predominant model in the 1990s, the Canadian experience seemed to offer few lessons, and interest waned. But as recent statements by politicians in both countries indicate, the two health care systems remain subjects of condemnation or praise, depending on one’s perspective. For example, in articulating the official Republican response to President Bill Clinton’s State of the Union address on January 27, Senator Bill Frist of Tennessee, a surgeon, compared the administration’s new health care proposals to socialized medicine “in Canada, where patients are fleeing to the U.S. for treatment.” About two months later, another Republican senator, Slade Gorton of Washington, unnerved the pharmaceutical industry when he announced that he would introduce legislation designed to reduce price disparities that require consumers to pay much more for prescription drugs in the United States than in Canada or Mexico.8 Brian Schweitzer, the Democratic candidate for a U.S. Senate seat from Montana, has made the high cost of prescription drugs a centerpiece of his uphill