HomeHealthHealth CareA stark contract between American and Canadian health care

A stark contract between American and Canadian health care

An excerpt from A Brief Introduction to Why Cancer Still Sucks.

The United States has the world’s most expensive health care system. It spends about twice as much on each American every year as the Canadian system spends on Canadians. Per capita, the US spends far more than Canada on drugs each year. The US also has much more capacity in the healthcare sector, with more specialists, nurses, hospital beds, CAT scanners, MRI scanners, PET scanners and radiotherapy treatment centers per capita than Canada. This higher capacity can be useful, but it costs a lot of money.

The higher health care spending in the US is mainly due to a much higher price for each medical procedure. It’s not due to more procedures being performed in the US

Having a single payer system in Canada makes the Canadian system much cheaper to run. In Canada, hospitals and doctors simply submit one monthly bill electronically to the provincial government. In the US, doctors and hospitals can’t automate sending their bills to each of the hundreds of insurers. Instead, it takes a huge amount of time and expensive paperwork. As a result, healthcare administrative costs in the US are nearly five times higher than in Canada. In this case, the government bureaucracy is surprisingly more cost efficient than the private sector.

Insurance billing is not the only expensive part of the US system. An insurance company must approve any non-emergency tests, procedures, or treatments before they can be performed. This extra administrative burden is expensive.

When we moved to Texas, my wife, who is Canadian, was incredulous at the number of people working in American doctors’ offices. The average Canadian doctor shares a receptionist and perhaps a nurse with a few other doctors. Conversely, a doctor’s office in Houston is full of staff, most of them dealing with insurance companies.

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The Canadian approach is much simpler: provincial governments build limited capacity. Canadian patients use this limited capacity as far as available resources allow. If there is insufficient capacity, healthcare providers must request permission to build up more capacity. It takes time. The net result is that there is never enough capacity. This increases waiting times, but is also very cost-efficient administratively. The bottlenecks effectively control usage, without having to call insurance companies on a daily basis.

Because US health care is so expensive, US companies have to pay a lot for employee health insurance. This is driving up labor costs in the US, while wages remain paradoxically low. It is therefore more expensive to produce something in the US than in Canada and elsewhere. This is a major driver of the shift of jobs in the US to other countries.

American doctors have a great fear of liability. An American doctor is much more likely to be sued than a Canadian doctor. These and other factors are driving up the cost of US malpractice insurance. US doctors also follow more expensive “defensive medicine” processes and order tests that may not be medically necessary but reduce the risk of a successful lawsuit.

The cost of compliance with government regulations is also likely to be higher in the U.S. When I worked at MD Anderson, I regularly received emails from the Office of Compliance that I was required to do or avoid various specific things. I could be fired and criminally prosecuted if I ignore them. For example, it was illegal to fill out forms requesting a motorized wheelchair for a patient. Such forms could only be completed by very specific professionals. I would have faced severe criminal penalties if I had completed one as I was not authorized to do so. We were also told that if we tried to provide free chemotherapy for underinsured patients, the government could accuse us of using coercion to attract patients.

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Such legal threats from the government are considerably less common in Canada. A Canadian physician must maintain a high standard of professional conduct, consistent with the standards of provincial medical licensing authorities. However, there are no constant threats from the government and an institution does not need to have an Office of Compliance.

Living in Houston, I noticed that the relationship between the American people and their government generally seemed rather uneasy. This is in line with the US prison sentence rate. It is the highest in the world (639 inmates per 100,000 population, compared to 104 per 100,000 in Canada). In the US, prisons can be highly profitable, private capitalist enterprises in which politicians and others can invest.

I suspect this American unease with the government plays at least a part in the strong support for the Second Amendment. It also likely played a role in the 2016 election of Donald Trump as president who pledged to “drain the swamp of Washington.” In the ‘frozen north’ Canadians can strongly disagree with their government. We may even despise it, but in general we are not afraid of it. In Canada, governments control health care spending largely through strategic, albeit possibly misguided, budget constraints rather than heavy-handed threats.

Life Expectancy: Despite the huge amount of money spent on US health care, American men live an average of 4.5 years shorter than Canadian men. American women live three years less than Canadian women. In fact, the US ranks 46th in the world in terms of average life expectancy.

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This is partly because many young Americans are underinsured. The average life expectancy of a country decreases if many young people die early because they have no health insurance. When we moved to Texas in 2003, we hired a company to install a swimming pool in our new home. When my wife spoke to one of the young workers, she was concerned to find that he had unrelenting, debilitating stomach pain. He told my wife that he could not afford medical care because he had no insurance. In Canada this would not have been a problem. A Canadian can always see a doctor. They could go to any walk-in clinic if they struggled to find a primary care physician. If they had a GP they might have to wait a few days or weeks for an appointment, but lack of insurance wouldn’t stop them from seeing one.

David J. Stewart is an oncologist and author of A Brief Introduction to Why Cancer Still Sucks.

Image credit: Shutterstock.com




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