The Canadian health care system is in crisis. Even Claude Castonguay, the mastermind behind the government-run program, admits that something has to change. Notorious for lengthy waiting lines and rationed health care, the system has crumbled under the management of its federal government.
Stories abound of Canadians flocking to the United States seeking treatment that the Canadian government denied or delayed to the point where the patient would have died before being treated. So frequent are these instances that Canadian provinces have started paying for medical services received here.
But what lies behind the Canadian crisis and how can we avoid the same fate?
Canada’s perfect storm has been created by policies that allow the government to set reimbursement rates for health care providers, and require health services to be rendered regardless of an individual’s ability to provide additional co-payment. As a result, physicians are in short supply and patients wait months for services. At any given time, up to 800,000 Canadians are on a physician’s waiting list.
Additionally, public programs that determine the price of generic drugs have resulted in drug prices that are 118 percent more than what Americans pay. While brand name drugs are 62 percent cheaper in Canada, its public programs reimburse the pharmacy directly. The consumer never knows which drug is less expensive.
Similar public financing tactics with hospitals have lead to health care rationing and limited access to services. The Canadian government gives hospitals a pre-determined amount to cover the costs of providing health care, forcing them to limit their services in order to operate within budget.
Fortunately, the United States has not jumped on the national health care bandwagon or implemented similar policies, but the threat of an equally disastrous system taking over our nation’s health care is very real.
Expanding government programs and giving subsidies to any family for whom the cost of health care is a burden would lead to a system that is just as dependent on government funding as the national system in Canada. It would not be long before America became afflicted with health care rationing, provider shortages, and millions of patients waiting for treatment.
Senator Barack Obama’s proposal for reducing the financial burden on Americans sets us up to follow down the path toward a national health care system. Creating income-related subsidies for individuals buying a newly developed public plan would drastically increase the government’s role in health care and increase the number of people on the government’s tab, while forcing providers to rely even more heavily on government reimbursements for their income.
However, Senator Obama’s plan fails in the one area that Canada’s health care system has been effective – holding down spending. Canadian health care spending consumes only nine percent of its Gross Domestic Product. Rationed care and limited services have helped them keep total spending relatively low…at the expense of quality and patient satisfaction.
By contrast, the health care plan proposed by Senator Obama is estimated to cost $65 billion a year once fully implemented. However, the federal government has a track record of low-balling the cost estimates of its health care entitlements. For example, when Medicare was created in 1966, a “conservative” projection had it growing to $12 billion by 1990. Actual 1990 spending was nine times higher. Under Senator Obama’s health plan, Americans will see their tax burdens spiral ever higher unless we also begin rationing health care and limiting services.
A wiser approach would give consumers greater control of how they spend their health care dollars. Reducing health insurance mandates, allowing individuals to purchase health insurance in other states, and shifting the federal tax incentive from employers to individuals would make health insurance more affordable, portable, and valuable to consumers. Allowing lower cost and more convenient providers to serve patients would make health care more affordable and more accessible without requiring more government funding.
To this point, we have been successful in avoiding the pitfalls of nationalized health care. But putting more of our private health care consumers into government programs and granting the government more financial control over the health care market gets us closer to the Canadian model that even its architect says is in “crisis.”
Kalese Hammonds is a health care policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.