Comparing healthcare spending and financing in Canada and the United States

Candian vs. U.S. Healthcare

Many similarities exist between the Canadian and U.S. healthcare systems under both systems, citizens share the cost of healthcare with the government. In this respect, the Canadian system is much more liberal with it spending on healthcare. In the United States, The citizen must bare a majority of the healthcare. This research discusses the positive and negative affects of healthcare in the and Canada.

Economic Comparison

The Public-Private Issue 4

Access and Quality of Service

US or Canadian Healthcare System: A Comparison

The ailing healthcare system in the United States has been a topic of concern for many years. However, the recent recession brought this volatile situation to a boiling point. With many Americans now facing loss of jobs and other financial difficulties, many are left without healthcare. This is a key concern for an industrialized nation, such as the U.S., where healthcare is ranked as a basic necessity of life. Many solutions to the problem have been proposed, including plans to adopt a national healthcare system based on that, which currently exists in Canada. The verdict is still out as to which system is better. The following will present a side-by-side comparison of the Canadian and U.S. healthcare systems.

Economic Comparison

On a macro-level, the U.S. spends more on healthcare per capita than Canada (OECD, 2009). According to the OECD, the same is true when one considers it as a percentage of the GDP (OECD, 2009). In 2006, nearly 70% of all health care spending in Canada was financed by the government. In the U.S., the government only financed 46% (WHO, 2008). In 2005, health expenditures comprised 17.5% of all Canadian government spending. In the same year, expenditures on health care represented 21.8% of the total U.S. government expenditure (WHO, 2008). It appears from these statistics that as a percentage, the U.S. And Canada dedicate approximately the same amount of their total budget to healthcare. Yet, it appears that Canada is able to cover a larger portion of its needed healthcare expenditures than the United States. The reasons for this are not certain, but they do seem to indicate vast differences in the manner in which the monies are utilized.

When one compares differences in out of pocket expenditures, Americans spend 23.9% of their income on healthcare. Canadians spend more than twice that, averaging 48.7% in out of pocket expenditures (Who, 2008). These statistics paint a different picture of the economics of healthcare finance than the government expenditures would have one to believe. It appears that the Canadian government is more efficient in its use of public funds, but the private citizen must bear a greater burden than the average American citizen. It is difficult to determine which is the better method for paying for healthcare. Both the Canadian and U.S. system place a great burden on the citizens.

The economics of healthcare have differing affects in Canada and in the United States. However, the real question is not how much they spend, but whether they are getting a good value for their money. Many different methods could be used to determine the value of the healthcare system as a whole. For instance, one could look at life expectance and infant mortality as key indicators of the system's performance. If one looks at these figures, Canadians have an average life expectancy of 80.34 years, versus 78.6 for their U.S. counterparts (WHO, 2000). Infant mortality is also lower in Canada (WHO, 2000). However, it is arguable as to whether these indicators tell the entire picture of the healthcare system. Many other variables could affect these outcomes, such as lifestyle, diet, or the effectiveness of public awareness campaigns on the benefits of exercise. The World Health Organization ranks Canada 30th and the U.S. 37th in the ability of the system to respond to the needs of their citizens (WHO, 2000).

The Public-Private Issue

Until the mid 1960s, Canada and the U.S. had similar funding mechanisms for their healthcare systems (Szick, Angus, & Nichol et al., 1999). It is a misnomer that the Canadian system is "socialist." This term refers to systems such as that in the UK where 100% of the healthcare is public delivery and subsidized. The Canadian system is a single payer system where the provincial governments support funding for healthcare services, as long as the procedure is one that is covered by Medicare. They also provide assurances that private insurance is 100%, with no out of pocket co-pays or expenditures for the consumer. Eye care and dental services account for a majority of out of pocket services in Canada (Irvine, Ferguson, & Cackett, 2005).

In Canada, as in the U.S., doctors are in the private sector. Hospitals are controlled by private boards and are not considered a part of the government. One of the key differences between the U.S. And Canadian system is that the U.S. system only provides funded services for a limited segment of the population. They provide for those that are eligible for Medicare, Medicaid, State Children's Health Insurance Program (SCHIP), or those eligible for services through the Veteran's Administration. The numbers of persons who cannot afford private insurance, but that do not qualify for subsidized services is a key problem with the U.S. system. Many cannot afford healthcare at all, with only 25% of all uninsured eligible for subsidized programs (Holohan, Cook & Dubay, 2007). The amount of healthcare and the extent of government funding is a key difference between the systems of Canada and of the United States.

For those who do not qualify for government funded healthcare programs in the United States, they must pay for it themselves. Only 59% of all Americans have access to healthcare through their employer. However, the amount paid out of pocket by the employee varies greatly (U.S. Census Bureau, 2008). Those who are unemployed or self-employed must pay for it themselves. Many cannot afford to do so. This is where the U.S. And Canadian system differ, The Canadian service is 69-75% publicly funded, although most of the services are obtained through private providers (OECD, 2008). Canada does not have the huge gap in uninsured that the U.S. does.

In Canada, services are funded publicly, but delivered privately. Many of the same restrictions apply that are applicable to those insured through certain private and public insurance plans in the United States. For instance, cosmetic or optional procedures are not covered by publicly funded plans in Canada. Many private plans in the United States do not cover them either. Optometry may or may not be covered in Canada, depending on the province in which one lives (Coverme, n.d.). In the United States, the prescriber must often pay for these services in addition to basic insurance coverage.

Canada regulates prescription prices, therefore name brand drugs are cheaper in Canada (Paris & Docteur, 2006). This is not the case in the United States, where the open market still continues to drive pharmaceutical prices. In many cases, the insurers will only pay up to a certain price and the patient must make up the difference between the insured price and the actual price of the prescription, In some cases, the price can be astronomical. For certain diseases, the patient must either pay the price, or place their lives in jeopardy. This is a tough choice for many American consumers. Canadian consumers seldom have to worry about such a case.

Conclusion

Both the U.S. And the Canadian healthcare systems have positive and negative aspects. The Canadian system regulates healthcare costs by being the sole purchaser of services. It does not allow private patients or insurance companies to bid for services at a higher price. This keeps the costs down. In certain provinces, private insurance is banned altogether, creating only one potential payee for services. The system in the United States is a market driven system. In order to promote this system, the government enacted rules that allowed Americans to establish healthcare savings plans that provided for tax incentives for those who chose to participate. However, in order to qualify, these persons must higher deductibles on their insurance.

The U.S. healthcare system shifts the burden from insurance providers onto the consumer, and from the government to the consumer. Theoretically, the individual has some influence over pricing and the availability of services in the United States. However, this influence is very small. Providers are still responsible for the prices that they charge and there is a declining portion of the population that is willing to pay their price. As a result, many go without the medical services that they need. In Canada, the subsidized system assures that every person has access to medical attention regardless of their ability to pay.

Canadians spend much less than Americans on healthcare than U.S. citizens, who must bear much of the burden themselves. Canadians enjoy longer lives and lower infant mortality rates than those in the U.S. However, in many cases, they must pay the price in longer wait times for necessary services. Wait times were found to be problematic in both the U.S. And in Canada. Wait times in both countries were dependent upon the availability of services within a particular service area. However, in the U.S., the ability to pay was considered in the wait time, where in Canada it was not. In Canada, the patient received services based on their medical need and on the number of physicians in the area for the desired specialty.

Even thought Canadians tended to have longer wait times for necessary medical procedures than those in the Unites States, at least they eventually received the necessary services. In the United States, the inability to pay can mean the inability to access services at all. For some, unless the condition necessitates an emergency medical condition in which the person is expected to deteriorate if they do not receive treatment, the provider has the right to refuse services due to the inability to pay.

When healthcare providers can determine who they wish to treat and who they do not, based on the patient's ability to pay, it creates a class system based on medical care. Those that can pay for medical care are classed differently than those that cannot. Those that can afford medical care constitute the wealthy class. Those on government-subsidized programs are of a lower socioeconomic status than those that can afford private medical insurance in the United States. This is not so in Canada, where everyone has the same chances to access healthcare as the wealthy class.

The medical system in the United States creates a division between those that can afford healthcare and those that cannot. Many Medicaid/Medicare recipients in the United States are stigmatized for being dependent on the government, and hence, the American public, for their healthcare services. This is not the case in Canada, where the right to basic healthcare is considered a basic human right and the right of every Canadian citizen. This point emphasizes the differences in philosophy between these two systems. The U.S. system could be criticized for creating a system that discriminates against the poor through their inability to access needed services.

Both the Canadian and U.S. systems have positive an negative aspects. The Canadian system provides equal access to healthcare services at the expense of the providers of such services. In the market driven system of the United States, physicians and providers have the ability to set higher and higher prices through the ability to deny services to those who cannot pay. Currently, this system has set up conditions where healthcare costs are spiraling out of control. In any other commodity, the inability to pay would force providers to lower their prices. However, in the case of the healthcare industry, normal economics do not necessarily apply. This is especially true when the necessary medical treatment can mean the life or death of the patient.

It is difficult to say whether the Canadian or the U.S. healthcare system is better. However, it appears that the Canadian system at least has the ability to stabilize the provision of healthcare services for its citizens. The current U.S. system creates the situation where rising prices will mean denial of services for a growing portion of its population. Neither system is perfect, but given the current state of the U.S. medical care system, the position that favors greater government control appears to be a logical answer to the healthcare crisis.