The Canadian Health Care System – Choices Made (Vs. U.S.) in 1947, 1957, 1964, 1984.

Posted on | February 15, 2017 | 4 Comments

Mike Magee

America’s attention is once again on health reform. Even as Republican governors preach caution, the Republican controlled Congress continues to vow to repeal the Affordable Care Act and turn Medicaid into block grants. The U.S. doesn’t exactly have a great track record when it comes to health policy decisions. Compared to Canada, we’ve consistently chosen “free enterprise” approaches that have been singularly disappointing in performance. Scientific progress has become unlinked from human progress. And the Medical-Industrial Complex continues to grow in size and appetite, while health outcomes and value for the dollar are hard to come by. In the next few weeks, we’ll take a look at our two countries to see what we can learn. We begin with an analysis of critical decisions at four moments in history – 1947, 1957, 1964, and 1984.

In 1947, in the wake of WW II, the Canadian Province of Saskatchewan launched the first provincial universal public hospital insurance plan. South of the border, the U.S. chose a very different path. With inducements in the tax code, and exemption from war time wage and salary controls, our government encouraged private employers to provide their workers with health insurance as part of what would become a standard benefit package.

A decade later in 1957,  Canada passed the Hospital Insurance and Diagnostic Services Act which provided 50/50 cost sharing between the federal government and any of 13 provinces and territories that chose to participate in universal coverage of their respective populations. In the U.S. employer based insurance had now been extended to nearly 70% of Americans, pharmaceutical profiteers were being lined up for interrogation by Senator Kafauver’s Commission, and the AMA was mapping out its strategy to defeat “socialized medicine”.

In 1964, against the opposition of the Canadian Medical Society, Canada’s Royal Commission on Health Services, recommended and soon succeeded in launching a comprehensive and universal national health program. The program, called Medicare, covered everyone but not everything (pharmaceuticals,eyeglasses, dental care, and home care were exempted). They did however include federal planning and standards to promote and maintain optimal preventive health of all Canadians. A federal governance body was in charge of standards, but the delivery of care was strictly deligated to the provinces and territories who themselves managed and prioritized annual budgets, and designed their own governance systems.

In the U.S. at the same time, President Johnson in the wake of President Kennedy’s assassination, and with some skillful maneuvering by veteran legislator Wilbur Mills, passed our own Medicare, a universal program as well, but only for citizens over 65. It was federally funded and federally directed, having proven a few years earlier that voluntary enrollment programs controlled by individual states would fail. They also passed Medicaid, which like the Canadian program included a mix of federal and state funding, and delegation of responsibility for care delivery to the states. Standard setting was weaker than in Canada, and wide variability became immediately apparent both in the definition of who qualified, what was covered, and the level of each states financial commitment to services.

The Canadian government at the time held tightly to the principle of universality and public funding with federal and territorial governments serving as “single-payers”. This decision was grounded in the philosophy that Canada’s success ultimately depended on the health of Canadians, that this health was a human right, and that excessive administration would drive up cost and complexity, placing an undue burden on their citizens. Fee schedules were standard across geography and population, and negotiations with doctors and hospitals in each province or territory, as part of the budget setting process, allowed for prioritization and full transparency. Providers submitted bills for services. Government paid the bills. And the patient was left alone.

The U.S. chose an opposite course. With full faith in capitalism and competition, they reasoned that inclusion of private insurance companies, who were already deeply entrenched in their employer based health insurance system, would through competition with each other hold costs in check. U.S. doctors as well billed fees for services, but there were no annual budgets, highly variable rules and coverage, and remarkable complexity and variability that confused everyone. It also didn’t hold down costs, as insurers, responding to their shareholders managed to remove at their peak 25 cents on the dollar for their services.

In 1984, as part of their national commitment to continuous thoughtful evolution, the Canadian government passed the Canada Health Act which combined their hospital and medical acts and refined and reinforced their administration of the program as well as four anchoring pillars – portability, accessibility, universality and comprehensiveness. The deliberations were out in the open and fully transparent.

In 1984, with U.S. health care costs careening out of control, and an AIDS epidemic gaining steam absent government leadership, the U.S. once again placed all her cards on “private enterprise”. Four years earlier, in the waning days of a one term presidency mired in recession, President Carter had reluctantly signed the Bayh-Dole Act. The legislation released 26,000 federal patents (derived from federally funded research) for private use by industry and academic health centers. The scientific progress unleashed was undeniable, but the loss of checks and balances and the realignment of values and power within premier academic health centers uncoupled entrepreneurship and scientific progress from human progress. An unholy alliance at the center of a medical-industrial complex had been consummated.

Next Week: Canadian Health Care: Facts and Fiction.

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