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Cloning Canadian Health Care

by Robert W. Lee

On June 4th, the General Accounting Office released a draft report about Canada's 20-year-old system of nationalized health care, concluding that our own federal government could extend health care to every American (an estimated 31 million of us are said to be presently uninsured), and actually save money, by cloning major elements of the Canadian plan.

Meanwhile, news reports from Canada continue to document the deteriorating status of our northern neighbor's health regimen. On June 13th, for instance, the Washington Times revealed that increasing numbers of Canadian doctors are on the verge of moving to the United States because, according to British Columbia Medical Association Director D. Norm Finlayson, "an awful lot" of them are "totally frustrated" by red tape, waits for hospital beds, and paltry government-regulated pay increases. Dr. Finlayson contends that his country's national health system is in danger of collapse.

System in Jeopardy

On June 24th, the Reuters News Agency quoted Canadian Nurses Association President Alice Baumgart as claiming that "Canada's health care system ... is in real jeopardy." For years, she asserted, emergency rooms have been so overcrowded that patients frequently line the corridors awaiting treatment.

In recent months, according to Reuters, "hospitals in Ontario, Alberta, and Newfoundland, squeezed by funding cuts, have eliminated beds," while some facilities "are struggling to replace costly equipment that is either failing or outdated." Carol Clemenhagen, president of the Canadian Hospital Association (which represents 1,200 facilities) notes, "At a certain point the only way you can meet your budget is by cutting back on services." And Lionel Lavoie, president of the Canadian Medical Association, laments: "In every part of the country a sense of frustration, fear and anger seems to have pervaded the health-care system."

Heritage Foundation health care policy analyst Edmund F. Haislmaier contends that the pattern emerging in Canada is "eerily similar to that found in other nationalized health care systems. As governments confront the unlimited demand unleashed by 'free' health care and the resulting cost escalation, they resort to capping total health spending. These caps in turn limit ability of providers to deliver medical services, resulting in shortages and waiting lists. In the end, while all Canadians may have access to health insurance, more of them are finding it difficult to get access to medical treatments."

In May of last year, the Vancouver-based Fraser Institute published the first comprehensive, scientific survey of waiting lists in British Columbia. It found that waiting lists are even longer than was previously believed. Consider these few examples from the 53 procedures about which data was collected between November 1989 and February 1990. The average waits for these procedures were: hand surgery, 12.4 weeks; hysterectomy, 16.3 weeks; cataract removal, 18.2 weeks; hernia repair, 24.6 weeks; myringotomy/tonsillectomy/adenoidectomy (for children), 14 weeks; colonoscopy, 6.2 weeks; varicose veins, 36 weeks; disc surgery, 14 weeks; coronary artery bypass, 23.7 weeks; and other open heart surgery, 21.4 weeks.

No Comparison

Proponents of a Candian-style health-care system for the U.S. claim that, while the U.S. spends nearly 12 percent of its Gross National Product on health care (around $2,196 per capita), Canada's expenditure amounts to only about 9 percent of GNP (about $1,570 per capita). Needless to say, a country could spend 1 percent or less of its GNP on health care if the quality of the care were sufficiently sacrificed. The widely quoted U.S.-Canadian fiscal comparison fails to take into account a multitude of cultural and economic differences between the two nations which, when properly factored in, make clear that the Canadians are doing no better than we are in containing costs. The most recent data show that between 1967 and 1987, Canada's per capita health spending (when adjusted for price increases and other distorting factors) rose at an average annual rate of 4.58 percent, compared to 4.38 percent in the United States.

During that same period, Canada's GNP grew 74 percent while ours grew only 38 percent, a difference that makes Canada's health care costs seem less because they are compared to a more rapidly rising GNP.

A July 1990 study by Canadians Jacques Krasny and Ian Ferrier (directors of the health care consulting firm of Bogart Delafield Ferrier) points out that, while the elderly (those over age 65) comprise 12.2 percent of the U.S. population, they comprise only 11 percent of the Canadian census. The elderly require more health care than do other age categories. If its elderly population was proportional to that of the United States, Canada's health care spending would increase by 5.3 percent.

Canada spends less of its GNP on medical research and development. If it spent proportionally the same as the U.S., its health expenses would jump by 2.4 percent.

The U.S. is afflicted with more lawyers per capita than is any other nation, and Americans are more outrageously litigious. U.S. doctors are therefore more likely to be unjustly sued for alleged malpractice than are their Canadian counterparts. As a result, U.S. doctors pay higher malpractice insurance premiums and are more likely to practice "defensive" medicine by prescribing tests and procedures that are legally helpful for the doctor, but not medically helpful for the patient. A Canadian-style health system would do little or nothing to resolve this vexing lawyer-driven problem.

The inner-city poor population of the U.S. is significantly larger than that of Canada, as are such expensive health-related problems as high teen-pregnancy rates (2 1/2 times Canada's) and drug abuse. The impact on U.S. health care costs is disproportionately high.

Health policy analyst Edmund Haislmaier observes: "The perceived lower rate of Canadian spending results from differences in the economies and demographics of the two countries, and not from differences in the efficiency of their health care financing systems. The reality is that actual health care spending in Canada is growing as fast or faster than in the U.S., despite a generally healthier population, lower spending on medical research and development, and significantly fewer costs imposed by its legal system."

In June of last year, a study by the Health Insurance Association of America estimated that a Canadian-style health care system in the U.S. would, in 1988, have required $189 billion in additional government spending. Using a different methodology, the Dallas-based National Center for Policy Analysis concluded in February 1990 that the cost of national health insurance in 1989 would have been $339.3 billion. The study speculated that the new taxes required to fund such a system would entail raising the combined employer-employee payroll tax from 15 percent to 29 percent, or raising income tax rates for everyone by 14 percent, or imposing a new national sales tax of 10 percent. If the proportion of federal-to-state funding were the same as Canada's federal-to-province formula, state taxes would have to be increased 71 percent above present levels.

Bad Medicine

Everywhere, collectivist health care systems are imploding. Once cited as the showcase of socialized medicine, the British system is seldom mentioned by its erstwhile proponents. The horrendous problems we face here in the U.S. are in large part due to the impact of Medicare and related government-directed programs. The federal government now pays about 42 percent of all health-care costs, compared to 74 percent in Canada. In France, the government of socialist Premier Michel Rocard (who resigned on May 15th) came within five votes in parliament of being toppled last November over the imposition of a 1.1 percent income tax to help close the deficit facing the country's health services.

And in late June, the Soviet newspaper Komsomolskaya Pravda reported (while discussing the Soviet Union's rocketing abortion rate, presently 137 abortions for every 100 live births) that, while services at state-run health centers are nearly "free," conditions are so bad that women "run away by climbing out of windows" rather than stay for the required two to three days after an abortion has been performed. According to the paper, "There is no medicine, no equipment, no qualified or conscientious personnel," and as a result, "the last of the specialists are already sitting on their suitcases," waiting to emigrate.

Clearly, socialized medicine is bad medicine, wherever it is prescribed.

 

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