Comparing Us and Canadian Healthcare Systems

Abstract

This paper presents an in-depth analysis of the US and Canadian Healthcare systems. The main focus is on the differences narrowed down to the financing structure adopted by the two governments. An evaluation of the effectiveness of the systems and the major points of convergence are also pointed out. The conclusion endorses the Canadian system and proposes its implementation in the American system.

Introduction

Healthcare is a critical social service in any economy. Clearly the productivity of a nation’s workforce is hinged not only on the level of skills attained but also on the overall well-being of the bodies of the workers. Poor health hinders the productivity of workers and affects the overall welfare of the population. Indeed, healthcare has evolved to become a basic necessity for human beings. Globally, national governments strive to achieve better healthcare for their citizenry; in fact, healthcare has been adopted as a key indicator of economic development in the world.

According to Ida (2001), “A sound healthcare system ensures good health, is responsive to people expectation and exudes fairness in financing. It ensures good health by making the health status of the people as good as possible. It should be responsive and should be able to meet the expectations of the people in terms of what they consider as a respectful treatment” (p2).

Healthcare provision can be executed in two main ways. First, is through the government. Here the government takes responsibility for availing affordable healthcare to the citizens using taxes. If well-executed, this model avails healthcare services cheaply and to the widest population as it is not driven by the profit motive. Secondly, is through private practitioners. Here, private hospitals and clinics are the main outlets for healthcare facilities. This model is however widely considered as more expensive and less accessible to some members in nations where it is used.

Numerous comparisons of American and Canadian healthcare systems have been made mainly because the two countries have many similar characteristics ranging from the level of economic development, close trade and diplomatic relations as well as the sharing of geographic boundaries. Indeed, before 1960s, the two countries had very similar healthcare systems. Healthcare in both countries was largely provided by the government. In late 1960s and 1970s divergences started to emerge. Canada took the root towards enlarging the government’s role in provision of the services. United States on the other hand continued to encourage provision of the services privately. This was the origin of the many disparities observed today.

Profile of care systems

As has been mentioned above American healthcare system is run by private physicians and private hospitals. Most patients pay for the medical service as and when they receive it and have freedom to choose preferred practitioners. To supplement the efforts of the patients, the government encourages health insurance through a combination of private and public arrangements involving employers and individuals. Canadians on the other hand have developed functional insurance coverage for all. The covers are financed jointly by the provincial and federal authorities. Existing private insurance companies are not allowed to intrude into the services offered under provincial plans. Patients can choose their preferred physicians but they do not pay them when they receive insured healthcare services. The practitioners are paid by public insurance entities located in each of the provinces.

In the US, there are several categories of insurance schemes. First, the employer may offer insurance coverage contracted out with third parties. Here, the employer pays the insurance premium on behalf of the employee. Still, the employers may directly take the burden of covering their employees. This is an arrangement whereby, the employer pays for the medical bills incurred by the employees in obtaining certain agreed healthcare services. Some employers have gone to the extent of running their own hospitals and health facilities. In addition, third-party insurers namely Home Maintenance Organisations (HMOs) and Preferred Provider Organisations (PPOs) are available. HMOs have double roles. They combine insurance and healthcare service provision. People who buy their premiums are can only access health services from the facilities run by their insurer. PPOs on the other hand focus on offering insurance covers while allowing patients to choose their preferred provider from a group of medical care facilities. A Wider range of choices is available here. People not covered by the employers can also purchase covers directly from HMOs and PPOs (Odette, 1992, Para 3-7).

Healthcare Financing

Financing healthcare is perhaps the most crucial aspect of healthcare provision. Healthcare may be accessible or not depending on the model or structure of financing adopted by a nation. This being the case, a financing system that allows easy access to services will undoubtedly lead to better availability of basic primary care services and hence improve adult longevity.

As described above the Canadian healthcare system is run by the government as opposed to the American system. Government involvement in healthcare provision has evoked heated debates. The publicly run system is not subject to market forces and the profiteering goals of entrepreneurs. In America, the government only finances the healthcare for those in need. They argue is that market forces ensure efficiency, cost control, and quality due to competition (Odette, 1992, Para 2).

Current Status

The US is known to spend much more on healthcare globally. On a per-capita basis a 2006 analysis showed the average spending to be $6714 while in Canada it stood at $3678, close to half that of the US. Indeed, the U.S spent 15.3% of the GDP while Canada spent only 10% of the GDP on healthcare. These are very striking disparities considering that only 46% of healthcare spending was financed by the government while government financing in Canada stood at over 70% of healthcare expenditure (OECD Health Data 2009 p1).

The US government insures the public selectively in two main programs. They are Medicaid and Medicare. Medicare covers the elderly (those above 65 years), people with certain disabilities and others who may have permanent kidney failure. Medicaid covers low-income earners of all ages. Medicare is run by the federal government and the rules applied are the same countrywide. Medicaid is run differently by each state government. The rest of the population is expected to be insured through employers or privately (Joseph, & Dorothy, 2009, Para 5).

In the year 1990 the disparities were as shown by the table below.

Health Care Financing by Source of Funds, 1990:

Canada United States
Percentage of Total
Federal Government 28 30
Provincial/State and Local Governments 44 13
Out-of-Pocket Spending and Private Insurance 27 52
Others 1 5
Total 100 100

As can be seen; over half of the financing was done by individuals in the US while only 27% of the financing was out of pocket in Canada.

Figures for the year 2005 indicate that per capital expenditure on health in the US stood at $6350 while that of Canada stood at $3419.

Access

Access to healthcare is fundamental to the effectiveness of the entire healthcare system. The two main indicators of the level of access are the cost and the availability of medical practitioners. The cost is assed in relation to the purchasing power parity of the population. Availability of medical practitioners is assessed in terms of the number of doctors, nurses and other medical personnel in relation to the entire population.

In Canada, healthcare is universally accessible. The country has a ‘single-payer system as the government is the sole financier of healthcare. Everyone residing in any of the ten provinces is insured publicly and is thus entitled to medical services provided by the government on equal terms and conditions. There is no discrimination in age income level or disability. Services offered to a person on a visit to another province are covered by the active cover back home though the period of visit should not be more than 3 months. Therefore there is 100% medical cover.

American system on the other hand is heterogeneous. People access healthcare in varying degrees. Accessibility of healthcare is largely hinged on the economic background of the citizens. The degree of health insurance coverage varies from comprehensive insurance which takes care of all medical needs to no coverage at all. The main reason is that while almost all large companies can ensure their workers, smaller companies are unable to meet these costs. The result is that a significant portion of the population is left uninsured. In the year 2007, the number of uninsured Americans was estimated to be 46.1 million. This was about 18% of the total population. The number of uninsured children was 7.3 million. During this time, the number of people insured was 255.1 million. Of these 201 Million people were insured privately while the rest were insured by the government (U S CENSUS BUREAU, 2008, Para 3).

Most disturbing is the fact that these percentage figures have been on the rise.

The table below shows the figures collected in 1991. Insurance plans both public and private left out 14% with no insurance.

Health Insurance Coverage in the United States, 1991:

Type of Coverage Number of Persons
(millions)
Covered by privately operated medical insurance plan 156
Covered under Medicare 35
Covered under Medicaid 27
No coverage at all 35
Total U.S. Population 253

The indication is that with the rising population, more and more people continue to be left out of the insurance schemes.

A disturbing observation is that there is a racial twist to the coverage. Over 32% of the unsecured were Native American Indians and Alaskans. Blacks also had a higher ratio of the uninsured taking into consideration the demographics (Joseph, Matthews, & Dorothy, 2009 p2).

Cost

As described above Canada and the United States spend very differently on healthcare. Researchers estimate that the US spends about $1.9 Trillion annually on healthcare. The per capita spending is about 44% more than that of Switzerland, the country with the second-highest spending. It is actually 134% more than the median for member states (Danap, &Elizabeth, 2004, para4).

Canada on the other hand operates a relatively cheaper healthcare system. The main reason is government control. The profit motive by the private practitioners in the US has continually pushed the medical bills up. It is estimated that over 60% of bankruptcies in the US are related to medical bills.

Other causes of increases in medical costs include the rising costs of medical technology. This is because equipment and research personnel are increasingly becoming expensive. The price of prescription drugs has also been on the rise. However, due to the multiple players involved in providing insurance, administrative costs are very high in the US as compared to those in Canada. The Canadian system takes advantage of economies of scale by centrally managing health insurance. This makes the administrative costs negligible (Gordon, Devereaux, Joel, Samuel, Armine, David,… Neera, 2007, Para 2-5).

In addition, the high proportion of uninsured population also poses some challenges. They take more time reporting ailments. The implication is that conditions that could otherwise be cheaply treated deteriorate requiring huge costs to treat. The increasing aging population has also largely contributed to the rising cost of healthcare.

Quality Analysis

The quality of healthcare is mainly viewed in the effectiveness of the system in keeping people healthy and lowering mortality rates. The “care for all” system adopted by the Canadian authorities has proved more effective than the American mixed system. History proves that poorer people get ill more often and even die in lower age brackets. The Canadian system eliminates the association between incomes and mortality rates.

An analysis of income and mortality rates in Canada and the US done in 1990 s showed that income inequality and mortality relationship depends on the government healthcare policies. In the US, slight increases in income had a tremendous effect in reducing mortality. The best proof to the observations was that Canada shared similar results with the US in the 1970s, why are the differences now? (Holly, 2006, Para 4).

Infant mortality rate in Canada is 4.7 per 1000 births ranking 23rd out of 225 nations. In the US the mortality rate is 7.1 per 1000 and is ranked 43rd, close to no other developed country (U S CENSUS BUREAU, 2008, Para 2-6).

The overall mortality rates in the US are high at 8.4 per 1000, In Canada it is 6.5 per 1000 yet the US is the richest nation in the world (U S CENSUS BUREAU, 2008, Para 3).

Conclusion

It is clear that the Canadian healthcare system is cheaper and more effective in delivery of quality health to the population. Systemic inefficiencies have hindered the full application of market forces in the US system. The result has been a highly expensive and ineffective system that largely discriminates based on income. A well-considered universal insurance scheme covering all residents seems to be the only viable solution to fix the problems experienced in providing healthcare to Americans.

Reference

Danap, G. & Elizabeth, M. (2004). U.S. HEALTH CARE Facts About Cost, Access, a Quality. RAND HEALTH. 2009. Web. 

Gordon, H., Devereaux, P., Joel, L, Samuel, B., Armine, Y., David, H.,… Neera, B., (2007). A systematic review of studies comparing health outcomes in Canada and the United States Open Medicine. 2009. Web.

Holly, D. (2006). Has Canada Got the Cure? Yes! 2009. Web.

Ida, H. (2001).The US Healthcare System: Best in the world or just the most expensive? University of Maine. 2009. Web.

Kao-Ping, C & Jack, R (2006).Canadian Healthcare System Fact Sheet. American Medical Student Association. 2009. Web. 

Odette, M. (1992).The Canadian And American Health Care Systems. Depository services Program. 2009. Web.

OECD Health Data, (2009).How Does Canada Compare? Web.

U S CENSUS BUREAU, (2008). Income, Poverty, and Health Insurance Coverage in the United States: Web.

William, L., (1992). Medicare to the Rescue. Maclean’s, Vol. 105.

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