Understanding Canada's Medicare Debate
By Ulli Diemer
"To Every Complex Problem there is a Simple Answer: Neat,
Plausible, and Wrong".
- H.L. Mencken
Medicare is a Canadian success story. Not perfect, but good enough
to be envied by much of the world.
Canadians now take it for granted they will receive high-quality
health care when they need it, without financial or other barriers.
In a country where we compare everything we do with what happens
south of the border, we are surprised but pleased to find we have
fashioned a health care program which delivers better care, with
better results, to a much higher proportion of the population, at
a much lower cost, than in the United States.
Confronted with these facts, policy-makers and the media have drawn
the predictable conclusion: Canada's health care system is in crisis
-- gravely ill at best, perhaps even on its death-bed.
The air is thick with prophecies of doom and prescriptions for
drastic surgery. The health care debate has become a highly ideological
battleground where pre-determined political and economic assumptions
count for more than evidence and where myth is treated as fact thanks
to uncritical media repetition.
What follows is a brief guide to 10 common health care myths:
Myth #1: Costs are out of control.
Reality: Health care costs are actually being quite tightly
controlled, to the point where spending on publicly funded health
care services is not even keeping pace with population growth. As
a percentage of GNP, health care spending has levelled off at about
In the 24 years since 1971, when medicare became a national program,
the proportion of Canada's GNP spent on health care increased from
7 1/2% to 9%. The increasing share going to health care by the 1980s
was due, not to "spiralling costs", but to a shrinking
economy caused by two major recessions in the 1980s and by the introduction
of the Free Trade Agreements. Were it not for the resulting declines
in GNP, Canada would still be spending about the same share (7 1/2%)
on health care as it did in 1971.
When discussing health care costs, it is important to remember
the public sector accounts for only 72% of total health care spending
in Canada: well below the 80% average in OECD countries. The costs
which are growing most rapidly are not those in the public sector,
but those in the private sector: for example, drugs and dental services.
Myth #2: We can't afford our current "free" system.
We have to institute user fees.
Reality: It is logically absurd, on the face of it, to suggest
that if costs are too high, the solution is to raise them even higher.
User fees don't reduce costs, they increase them.Taxes, user fees,
or insurance premiums: the money still comes out of the same pockets.
However, the real advantage of user fees, from the point of view
of those who advocate them, is that they deter the poor from seeking
medical care. If the poor can be denied medical care, then those
who are not poor can avoid helping to pay for their care.
When Saskatchewan introduced user fees under the Liberals in the
1970s, physician visits by low-income people decreased by 18%.
Despite this, overall costs rose, because of changes in "utilization
patterns" and the "mix of services." In plain English,
doctors maintained their incomes by calling back higher-income patients
for more frequent visits and more tests.
In the end, more money was being spent to provide care to fewer
Myth #3: A major cause of rising health care costs is people
abusing the system.
Reality: Patients don't write their own prescriptions, book
their own tests, schedule themselves for a series of follow-up appointments,
or admit themselves to hospital for surgery.People normally go to
the doctor because they think something is wrong, not because their
idea of fun is sitting in a waiting room for a couple of hours.
Myth #4: Government-run health care programs are bureaucratic
and inefficient. Introducing private health insurance and competition
would make the system more efficient.
Reality: The evidence from all OECD countries shows that
the private sector is far more bureaucratic and much less efficient
than the public sector when it comes to providing health care.
The United States, which has the most privatized health care system
of any OECD country, spends 14% of its GNP on health care, compared
to 9% for Canada.
The U.S. pays $911 per person per year in administrative costs.
Canada by contrast pays $270 per person.
The disproportion in insurance overhead costs is even more marked:
insurance overhead per capita comes to $212 in the U.S., $34 in
Canada. Blue Cross/Blue Shield of Massachusetts, a typical major
insurer, employs 6680 people to administer insurance for 2 1/2 million
customers, more than are employed to administer public health insurance
for all 28 million Canadians.
When Germany recently shifted dental services from the public system
to private insurance, administrative costs tripled from 5% to 15%.
Myth #5: Americans may pay more for health care, but they get
better health care as a result.
Reality: Studies show that on average, Canadians are more
likely to receive needed care quickly than Americans. Canadians
get more physicians visits per capita than Americans, more immunizations,
more hospital admissions, and more surgical procedures. A survey
of 10 OECD countries showed that Canadians were the most satisfied
with the care they received, while Americans were the least satisfied.
In fact, Canadians are more than five times as likely to be satisfied
with the health care they receive than Americans.
Infant mortality, maternal mortality, and life expectancy were
worse in Canada than in the U.S. before the introduction of medicare.
Canada's infant mortality rate is now only 70% of that in the U.S.,
while American women are almost twice as likely to die during childbirth
as their Canadian counterparts. The average Canadian now lives two
years longer than the average American.
Myth #6: Private clinics will improve access to services by
taking pressure off the public system.
Reality: Private clinics suck resources out of the public
system. Private clinics give the well-to-do preferential access
to health care, while the public picks up most of the tab.
Because they have access to additional sources of revenue in the
form of fees from well-off patients, while still being able to fully
bill the public system for the procedures they perform, physicians
are able to make significantly more money working at a private clinic.
Physicians therefore seek to maximize the number of patients they
see in their (publicly-subsidized) private clinics, while minimizing
the number of patients they see in a public facility. As physicians
withdraw their services, waiting lists at public facilities grow
longer and the motivation to seek services in the private sector
is increased for those who can afford to do so.
As long as well-off patients receive their health care through
the same system as everyone else, they continue to demand the health
care system provide excellent care. In a two-tier system, well-off
patients are no longer dependent on public facilities for their
health care and lose their vested interest in ensuring the excellence
of the public system. They demand instead that the taxes they pay
to support the public system be reduced, thereby ensuring a further
erosion of access and services.
Myth #7: We can save money by relying more on community care
and less on hospital care.
Reality: "Community care" has usually been a code
word for ceasing to provide care. When Ontario closed psychiatric
institutions in the 1980s in order to institute "communitycare"
for psychiatric patients, it simply dumped people onto the street
with no provision for proper housing or support services.
Applied to frail seniors and those with physical and mental disabilities,
"community care" is a polite way of saying that families
(especially women, of course) will be expected to provide care for
free because the health care system won't.
Real community care is not cheap. It may often be better
for people to receive care in their own homes or in a community
setting, but there is no convincing evidence that it's any cheaper
if the care is provided by qualified professionals. It may even
be more expensive. For example, a doctor can see a lot more patients
if they come to her than if she makes house calls to see them.
Myth #8: Instead of our current system of "illness care"
we should be moving to a system that emphasizes prevention and "wellness."
Reality: People tend to go to the doctor when they're sick,
not because they're feeling in the mood for a lecture about how
they should eat better, exercise more, and stop smoking.
Prevention is a fine idea, but aside from a few standard procedures
like pre-natal examinations, immunizations, eye exams, and pap smears,
most of the things that contribute to long-term good health can't
be obtained in a doctor's office.
The primary determinants of ill-health have been established by
any number of epidemiological studies. They include poor nutrition,
especially maternal nutrition, unemployment, poverty, powerlessness,
inadequate housing, and family stress. Social and economics policies
can certainly contribute to making these problems better or worse,
but it's hard to see how the health care system can do much about
them, even if it is re-labelled "the wellness system".
Myth #9: The money isn't there. Governments can no longer afford
to provide high-quality medical care to all Canadians.
Reality: Money is being drained from the system, not by
a force of nature, but by deliberate government decisions. Large-scale
reductions in federal transfer payments are indeed undermining medicare
and other social programs. Federal contributions have been systematically
cut back since the early 1980s. The cash portion of federal transfer
payments for all social programs is due to disappear entirely by
around 2005. The result is increasing financial pressure on the
provincial health care plans, leading various provincial governments
to move in the direction of dismantling universal medicare coverage
and instituting a two-tier system. If these funding cuts continue
as planned, medicare will not survive.
Myth #10: Government deficits make funding cuts inevitable.
Reality: Government deficits are the result of conscious
policy decisions. The tax reforms of the Trudeau and Mulroney governments
set in motion a dramatic reduction in the amount of taxes paid by
wealthy Canadians and by corporations. With the public treasury
deprived of billions of dollars in revenue, governments have made
up the shortfall by borrowing from the beneficiaries of the tax
holiday, at high rates of interest. If governments were serious
about eliminating deficits, they would reverse the tax giveaways
of the 1970s and 1980s.
1. Evans, Robert G., Barer, Morris L., Stoddart, Greg L., Bhatia,
Vandna. Who Are the Zombie Masters, and What Do They Want?
The Premier's Council on Health, Well-being and Social Justice.
2. Himmelstein, David U., Woolhandler, Steffie. The National
Health Program Book: A Source Guide for Advocates. Common Courage
3. Stoddart, Greg L., Barer, Morris L., Evans, Robert G., Bhatia,
Vandna. Why Not User Charges? The Real Issues. The Premier's
Council on Health, Well-being and Social Justice.
This article originally appeared in Volume 2,
Number 2 (Autumn 1995 issue) of Parliamentary
Names & Numbers, a government directory published by
Aussi disponible en français: 10
mythes des soins de santé.
También disponible en español: Diez
Mitos del Cuidado de la Salud: Entendiendo el Debate del Servicio
Medico en Canadá.
Subject Headings: Health Care Costs - Health Care in Canada - Medicare - Private Clinics - Privatization - Canadian health care system - Michael Moore Sicko - Medical Insurance - Bureaucracy - Canada Health Act - Canadian Government - United States Healthcare System - Insurance Industry - Health Insurance - Public Sector - Single-Payer System - Socialized Medicine - Universal Healthcare - Debate - Controversy - Medical Treatment - User Fees
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