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Medical care in the USA:
By Haresh Kirpalani and Gordon Guyatt
The high cost of health care in the USA has fuelled urgent talk
of reform. These high costs are troublesome not
The Medical Reform Group believes that the underlying values of
the society will be the major determinant of the choices ultimately
made. A careful examination of the evidence regarding the effects
of alternate funding and health care delivery systems on quality,
equity, and efficiency remains crucial for making rational decisions.
The following issues are crucial when considering the system of
health care to be adopted:
Perhaps the most notorious distortion is the contention that universal-access systems of care have failed. One such system is the British. We will begin by dealing with the issue of medicine in U.K.
Great Britain has adopted a peculiar mix of policies. The pressures
responsible for this include the same features encountered in other
countries, of course combined in a unique mix. The combination of
a crumbling patchwork system, coupled with militant pressure from
the population worked towards a State system. Resistance from the
most reactionary of the medical profession and the private companies
Britain is often painted as having chosen a "socialistic"
approach. But Britain never enacted legislation forbidding competing
private health insurance plans for publicly insured services. In
addition, Britain never prevented physicians from continuing with
private practices outside of the National Health Service, and from
But the Thatcher government's extreme tight-fistedness with respect
to the National Health Service has been
In effect, a natural experiment has occurred in North America.
Two large and wealthy countries, the United States and Canada, exist
side by side. Although the United States is in population much larger,
the two countries are similar in their cultural heritage, wealth,
and the aspirations of the populace. They have gone two quite different
ways with respect to administering their health care systems. Canada
has opted for what is essentially a government run system. The provincial
governments administer the health plan, are responsible for the
hospitals, and are the sole insurers. People pay for their health
care through general taxation and, in some provinces health premiums.
Health care is free for the sick; the cost of health care is shared
by the whole population. There are virtually no charges at the point
of delivery of services. Seeing a physician and being
In the United States, in contrast, the government role is restricted
to being the third party payer for some of the
If the free-enterprise dogma regarding the greater efficiency of
a privately run health care system were true,
An overall comparison of health care in Canada and the U.S.A.
The immediate answer is no. To demonstrate this, let us examine
total health care costs in Canada versus the United States.
In the early 1960s, before the introduction of nationwide universal
health insurance in Canada, the proportion of the gross national
product devoted to health care was the same in both countries. Since
To begin with, the administrative costs of private and public health
insurance plans can be compared. The
The reduction in costs is not restricted to administration of health
insurance, but extends to hospital
The case of nursing home administrative costs is interesting. In
Canada, nursing home care is reimbursed
The result is that administrative costs are comparable to those
in the United States (10.5%) and greater than those in Canada's
acute care hospitals4. In Britain, where nursing homes are part
of the National Health Service, administrative costs are 5.7% of
total spending. This suggests that bringing nursing homes within
the provincial health service would save appreciably on administrative
These results are not surprising when one examines the administrative
systems. In Canada there are a total of 10 administrative bodies
-- one in each province. These are charged with all the paperwork
associated with health insurance in the province -- and that is
their sole responsibility. In the United States there are literally
There are, however, other major disadvantages of the American approach.
In addition to administering health
The waste of the American system extends into the hospitals. American
hospitals require a sophisticated
When one considers all these factors together, it is no wonder
public programs are so much cheaper to administer.
The American system forces higher American administrative costs to ensure that those who cannot pay don't get the same access to services as those who can pay. Thus the American administrative costs are spent enforcing the restrictions that limit access to health care by the poor.
Those who believe in the private patchwork health system argue
that for-profit hospitals must be more
In the first study, 53 investor-owned hospitals in California,
Florida, and Texas were compared with 53 closely matched nonprofit
hospitals in the same states6. Total operating expenses per admission
were 4% higher in the investor-owned hospitals, which nevertheless
managed to generate a greater net income by virtue of their higher
A second source of information is data from the Florida Hospital
Cost Containment Board comparing all proprietary and not-for-profit
hospitals in that state for the years 1980 and 19817. Again, the
private hospitals had operating expenses that were 4% higher.
A third study examined voluntary non-profit hospitals, public hospitals,
and investor-owned chain and independent hospitals in California8.
Total operating expenses per admission were 2% higher in the investor-owned
chains than in the voluntary hospitals. Interestingly, this study
demonstrated that one problem for the for-profit chains was administrative
costs, which included each hospital's share of the costs of corporate
headquarters. In addition, the for-profits conducted more tests
and used more supplies per admission as well as charging a higher
price per test or unit supply.
These figures are an underestimate of the differences because of
a cynical strategy used by private hospitals to
The success of investor-owned hospitals in the United States has
been a function of their marketing of services
Up to now, we have focused primarily on the issue of cost. The private system is unlikely to provide advantages in terms of quality. Since at the same time it undermines equity, and if costs are equal or greater than public funding -- the private option need be given no further consideration. However, it is worthwhile looking at the quality issue.
Is health care quality better in the USA than in Canada? Could
it be that American health costs are higher
Despite the lower expenditures on health care, all the conventional
indices of health, including life expectancy
Further, it is worth noting that before the introduction of universal
free access to care in Canada and Great Britain, both countries
had age-adjusted mortality rates that were higher than those in
the United States.
A final irony of the relative administrative costs of Canada and
the Untied States has been pointed out by
What is worse, these barriers, as measured by the numbers of the
population that are not covered by health
The burden of costs on the elderly affects all races. This acts
as a major barrier to care and is rising rapidly,
See Graph 4 from New York Times on next page.12.
From the physician's point of view, an ethical practice of medicine
is difficult, if not impossible, in the American
It is not surprising that the Canadian population is very happy
about their health service in contrast to the
Prefer Canadian system 61% 66%
The American Medical Association has long argued that universal-care
systems restrict free choice. They argue that they cannot deliver
ethical care under a universal-access system, as the system will
constrain costs to the point where legitimate needs cannot be fulfilled.
Fortunately, studies are at hand demonstrating that on the whole
physicians in Canada support the universal-access system. Thus the
following table comes from a survey of physician satisfaction under
the Ontario Health Insurance Plan.
Canadian physicians are on the whole happy with the system and feel that they can deliver quality care. The very few that make the noise as they emigrate to the South are after very big bucks and their gloom about the Canadian system should be discounted.
From what we have argued, it is clear that patchwork reform will
not solve the American health care crisis. If
The ability to perform quality of care assessments will also be compromised where there is no single payer system. In addition, programs targeted for the disadvantaged are easily attacked in times of financial stringency, as the poor and indigent are not perceived as politically important. Furthermore, simply extending the present government schemes will not address the issue of the under-insured. This includes all those with high co-payment schemes and deductibles who are still spending high amounts (on average 18% of their income) upon medical bills. Finally, we have pointed out the effects of private-public mixes in both the UK and in Canada. Where there was a loophole for profit to be made out of health care, this distorted the actual delivery of care. To not deal with this in any reform will effectively hostage the future.
Of course Canada is not Utopia. But in comparing the health care
delivery to that in the USA, it could be argued that it is close!
The problems that exist in Canada have been exploited by the American
Medical Association, and generally have been vastly exaggerated.
Thus the perennial issue comes up about rationing and waiting lists.
It seems forgotten that there are waiting lists in the USA!
There is doubt that there is rationing of health care. However,
this does not translate into a poorer health
Where restricted service becomes a problem, the government is forced
to respond quickly. One recent example concerned the availability
of cardiac bypass surgery. After a public outcry about waiting lists
for open-heart surgery, additional money was targeted specifically
for cardiac surgery facilities. In addition, through a concerted
effort that involved government and physicians, guidelines were
evolved that allowed those most at medical need, and most likely
to respond, to obtain treatment ("Waiting list for surgery
cut by third". Globe and Mail, 23.3.91). As one cardiac
surgeon said about the government response to the
It is crucial to note that where it is demonstrated that there
are defects in the health care system, the
Perhaps the biggest problem for the Canadian system are threats
to universal access. These are a result the
Ultimately, discussion about being able or unable to afford a societal
health care system revolve around notions of a progressive tax system.
It has been argued that there is still a lot of room for improvement
in this regard in Canada. For instance, at a time of national deficit
and talk about cutbacks, the federal government has introduced a
tax windfall for the wealthy -Release No. 91-018. This potentially
amounts to billions16.
These are issues that will have to be fought. It is a battle that
requires progressives of all stripes to come
A successful conclusion for a universal health care single payer
system in the USA will help the Canadian
It is clear from the data that the oft-quoted relative efficiency
of free market, free enterprise, capitalist
1. "Banking on illness." Commercial medicine in Britain
and the USA. Griffith B., Illiffe S., and Raynor G. Lawrence and
Wishart, London, 1987.
Subject Headings: Abortion
Health Centres Drug
Care Budgets Health
Care Cost Containment Health
Care Costs Health
Care Delivery Health
Care Finance & Fund-Raising Health
Care in Canada Health
Care in Ontario Health
Care in the U.K. Health
Care in the U.S. Health
Care Myths Health
Care Reform Health
Care Resources Health
Care Services Health
Care Workers Health
Service Organizations Health/Social
Justice Issues Health
Human Resources Medical
Research Funding Medicare
Health & Safety Patients'
Human Resources Pro-Choice