Health Care. Canada Vs. U.S.A.

As the battle for Health Care reform rages in Washington D.C., the media and public argue the virtues of a private funded health care system verses public funded health care system. Often the comparison boils down to Canada and the United States, one country offering "Universal" coverage and the other individual insurance solutions. So which system works better to address their nations health care concerns.

First, lets look at the basic philosophies of the two ideas. The goal of universal coverage is to ensure the citizens of the country that they will be treated regardless of wealth, age, and social standing. The system is payed for through taxation, so the government gets the bills and not the patient. It is often falsely characterized as a "free health care" system, although that is true for some, that is not the case for the majority tax payer. Self insured insurance expects the individual to purchase coverage for themselves and their dependents, through private sector insurance companies. This gives the policy owner more freedom on choosing the level of care and to shop for competitive rates. Insurance companies decide rates based on a criteria of age and general health, whereas, the universal system looks at overall costs and divides it up through a progressive tax system.

It is a shame to burst anyone's bubble but both the U.S. and Canada have government funded forms of health care with universal coverage and neither country uses a single payer system. The difference is in the amount federal funding that the health care systems receive. The government of Canada contributes 70% to the total cost of health care, leaving 30% to be covered by other sources. ( Private insurance, ect) The U.S. government contributes 47% and leaves 53% to be funded by other sources. Another difference is the level of care that the government systems provide. The United States government provides just the most basic and necessary care and expects that its citizens to cover better levels of care. Where the Canadian government strives for a more mediocre level of care, and allows for its citizens to pay for higher levels of care. Both governments regulate the health care industry, but the Canadian government also runs the bulk of the industry, where the U.S. government runs very little of it. Here lies the root of the debate, socialism or free market, which is better capable to run health care.

Let us look at the costs of health care in each country. In Canada the average cost per person is approximately $5200, compared with $7700 in the U.S. That's right. Health care cost the average American more then the average Canadian. In terms of GDP, the U.S. spends about 16% on health care where Canada is at 10%. Why such a difference, shouldn't a competitive free market system be more cost effective? Yes of course it should. One problem is that it is not as competitive as it should be. Insurance companies are not allowed to sell insurance outside of the state of residency, this lower the amount of competitive companies selling insurance per area. A couple other problems that plague the U.S. system that does not effect the Canadian system are predatory lawsuits and a high cooperate income tax.

The filing of malpractice lawsuits in the U.S. is 350% higher then in Canada. Now consider that 40% of those lawsuits filed are 'groundless'. Effective Tort reform could save the industry billions of dollars a year. Although that may only account for 0.5% to 1% of the total health care cost, it would be a long term saving.

The main difference in cost is the average cooperate income rate between the two nations. Canada's cooperate tax rate sits at about 18%, where as the U.S. cooperate tax rate is around 38%. Since for profit business pass on their cost to the consumer, the same applies to clinic, hospitals and insurance companies. It doesn't stop there, companies that manufacturer and design medical supplies and equipment pass on their cost to their customers, which pass the costs onto the patients. Even lowing the tax rate to 30% would cause dramatic cost reductions in U.S. health care. If the Canadian and U.S. tax rates were the same, it is certain that the health care costs in the U.S. would be lower then Canada's.

Since cheaper doesn't mean better, how do these systems compare in quality of care? Both countries have similar wait times to be admitted into the Emergency Room at hospitals. The average time is about 1.5-2 hours. Larger urban hospitals have longer times, smaller hospitals shorter. Both Emergency Rooms provide the necessary care patients require. No difference there. So one must conclude that Canada has a superior system due to it's lower costs. Not so fast. In Canada if person requires specialized care, additional procedures or tests, the waiting time is on average 17 weeks. In the U.S. a person would wait on average 3 weeks, right there is a difference that many people would gladly pay more for. To put that in to context, a Canadian who requires a MRI to determine if surgery is needed may wait 4 months for the MRI, then if determined surgery is required, may wait another 4 months, 8 months from first diagnoses to treatment. In the U.S. the total time would be 1.5 months.

So overall, which system is better? The answer, neither. Both systems are broken, and are need of reform. The advantage the U.S. has is their system is more dynamic, they can keep the things that works successfully and improve on the failings much easier and quicker. Allowing for increased competition, lowering some tax rates, adding tax incentives for people to insure themselves and passing regulations that make it easier for the general public to get insured would have a immediate result. As Canada would have to find a way to untangle the government bureaucracy from system, build infrastructure that can provide for more then the status quo and overcome resistance for a portion of the populous. It would take a great amount of time, quality of care would temporarily diminish then improve and a competitive market would have to establish itself. In both cases more government is not the solution.