Canadian Health Care

Some Naked Truth about Canadian Health Care System

(from my Archive: January 15, 2001)

Update: Descriptions still hold. In fact, situation has deteriorated since then.

Deteriorating medical services in Canada has made health care the most dominant issue of public policy and politics. The determination by both federal and provincial governments (with the exception of Alberta and perhaps Ontario) to restrict the role of the private sector in health care has added fuel to already heated debate. It has become a regular feature for each level of government to pass the blame of failing health care system to the other.

Lucky to be Operated © Maurizio Moro.Photo Net

Lucky to be Operated © Maurizio Moro.Photo Net

Outside politics, most commentators take extreme positions, especially on the issue of the role of the private sector. Canadians, as a result, are more confused than ever on the merit of health provision through private means, in addition to the traditional public system. They are also the ones who are paying the price in terms of long waiting lists for seeing specialists or for undergoing surgery and other required medical treatment.

The existing health care service in Canada is a classic text-book example of the economics of “rationing.” That is, receiver of the service pays a total price comprised of two elements: a nominal dollar value (paid through taxes) plus a non-pecuniary value in terms of uncertain waiting time. Unfortunately, most researchers and especially our politicians focus only on the nominal dollar value when comparing the cost of health provision in Canada with the United States (where free market enterprise run side by side to public system). In terms of simple dollar and cents, the cost of health provision is definitely significantly higher in the United States than in Canada due to multiple layers of administration in US. But Canadians fail to recognize that health care system in the United States is more efficient and advanced. Although, an average American has to pay a price for the service, it is available on demand, on-time and the quality is second to none in the world. The patient does not need to suffer an uncertain waiting game, causing disease to progress or resulting in death.

Medicine Man © Tony-Marinella.Photo Net

Medicine Man © Tony-Marinella.Photo Net

We have a choice. A Canadian model of health system where every one pays equal total price (tax dollar + waiting) or a US model (for an example), where one pays only in dollars, but does not need to wait. On the surface, the first system appears egalitarian and humane. However, it denies the patient the right to seek help when it is needed the most. The waiting may cause the health to deteriorate or even result in death. One may argue that the US system is more humane. It, at least provides a patient the opportunity to buy the service. What could be more inhumane than having the financial means to pay for a service, but not be allowed to purchase?

Moreover, Canadians should realize that most average working Americans have health insurance coverage through their employers. Those who are old and poor, receive support from the government. On per capita basis, the United States spends almost twice on its citizens on health care than Canada (US $3,900 compared to US $2,050 in Canada). The total government share of spending as a percentage of gross domestic product is also higher in the United States: 6.5 percent compared to 6.4 percent in Canada.

We should also realize that despite our self-acclaimed high standard, the UN World Health Report 2000 ranked Canada 30th on the basis of overall health system performance. Our ranking is even below that of some developing countries, such as Oman and Columbia.

Enjoy the pleasure of life © Heinz Homatsch.Photo Net

Enjoy the pleasure of life © Heinz Homatsch.Photo Net

The crux of the problem is that while other nations distinguish themselves through their unique history, culture or traditions, Canada tries to define its distinctiveness or identity (especially against the United States) through its universal health care and other social programs. Social programs need huge financial backing, which in turn is dependent on a strong economy. If the size of financial pool relative to the growing and aging population declines, the health care program becomes highly difficult to maintain. Increasing pressures to reduce taxes further erodes the financial base to support such programs. The question is: what will happen to the Canadian identity if our health care and other social programs become similar to the United States? After all, our health care standard is deteriorating due to ongoing budget crunch, while Americans are aiming to improve their health care system as is evident in the election platforms of both Republicans and Democrats.

Finally, what is the solution of on the going saga of falling Canadian health care? A popular answer will be to put additional money in the system. If money were the sole problem in our public health, Canada would have not ranked significantly below Columbia. Definitely, a major reason is not the shortage of resources, rather inefficient use. While more money may help the health care sector, in an era of increasing demand for tax cuts, a regular flow of additional money cannot be guaranteed. Do not forget that there is still a huge national debt to pay.

A long term realistic solution would need a combination of reformed public health care with a role for the private sector. In the reformed system, instead of universality, governments would have to prioritise the health services that Canadians value the most, and that could also be supported by an annual health budget. Other health services could be left to private enterprises. Those who cannot afford to buy these services in the market but find them essential for their survival, could receive financial help from a contingent budget, set up by the government. (Thorough criteria can be developed for those who want to qualify for such financial support).

Timelines © Istvan Kerekes.Photo Net

Timelines/Sad © Istvan Kerekes.Photo Net

The bottom line is that in an era of global competition and an increasing demand for tax cuts, the government alone cannot guarantee a quality health care system to an aging population. We need collaboration from the private sector. At this juncture, we have to get rid of the boogieman of “private health care” from our psyche. This would automatically pave the way for various innovative solutions in the future.

© Mahmood Iqbal and 2012


About Mahmood Iqbal

An Economist (PhD) and a Professor (Part-time) at the Carleton University, Canada. The author of "No PhDs Please: This is Canada." Besides doing research on serious economic and policy issues for the last 25 years, like to write journalistic pieces on subjects of interest. An amateur Photographer. ... Blog appears to be appropriate venue to post my wondering thoughts without any peer pressure and academic review process.
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3 Responses to Canadian Health Care

  1. I am influenced with the content you supplied. I want to thank you for this informative item. I enjoyed each aspect of it and I will be waiting for the new updates.

    • Thanks. Unfortunately I didn’t have time to update it, but I speculate that things have deteriorated since then. Reasons are simple: (a) continued worsening of fiscal or debt situation; (b) growth in elderly population; and most important (c) unflagging religious belief of Canadians that our universal socialistic health care system is the best and there is no room for improvement (even Scandinavians, father of the universal health care, have brought market many based changes to their original system to sustain it).

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