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Tilting at Windmills

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December 6, 2007
By: Kevin Drum

HEALTHCARE CAGE MATCH....Canada's healthcare system has both good and bad points, but overall it does about as serviceable a job as America's healthcare system. And it does it for a whole lot less money.

But there's more! As this EPI snapshot shows, Canada's universal healthcare system also controls the growth of healthcare costs better than our jury-rigged quasi-private-public-mishmash of a system. Since 1993, the per capita cost of healthcare in Canada has increased 67%. That's a lot. But it's nothing compared to U.S. healthcare costs, which started out higher but even so skyrocketed a stunning 92%. Kinda makes you think we could learn a thing or two, doesn't it?

Kevin Drum 1:28 AM Permalink | Trackbacks | Comments (35)

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If the basis for comparison is purchasing power parity, wouldn't a lot of that difference in health care inflation be the result of a falling dollar?

Posted by: TW on December 6, 2007 at 1:32 AM | PERMALINK

TW: No. The whole point of PPP is to avoid the pitfalls of exchange rate fluctuations. It's the right way to make the comparison.

(Also, the comparison is only through 2005, so the recent fall in the dollar wouldn't affect it much anyway.)

Posted by: Kevin Drum on December 6, 2007 at 1:41 AM | PERMALINK

Link not working for me!?

"Canada's healthcare system...overall...does about as serviceable a job as America's healthcare system..."

Well, Kevin, again, no.

Within the USA, ask the 46 million uninsured, the innumerated underinsured, and the unnumbered families and individuals who do not fill their prescriptions or use insurance because they cannot afford the co-pays and deductibles.

All these people would have a better quality of life under the Canadian system. What's that? A third of the nation? Half?

Everybody else could keep their private insurance. Why not? They can afford it.

Posted by: notthere on December 6, 2007 at 2:27 AM | PERMALINK

Oh, and you might want to remember that the mid-late 90s included the Clinton health plan threat years when, for some extraordinary reason, US health care costs rose at a lower rate than any other time in the last 25 years.

Posted by: notthere on December 6, 2007 at 2:35 AM | PERMALINK

Shame on you. Don't you know that it's unpatriotic for any American to learn anything from anyone outside the USA? Unconstitutional, too.

Posted by: JohnTh on December 6, 2007 at 4:59 AM | PERMALINK

Kevin, you write, "Kinda makes you think we could learn a thing or two, doesn't it?"

Absolutely not. Check out Robert Samuelson's column in the latest Newsweek! In it, he analyzes the US health care system without once mentioning any other country. Not even a hint that every other advanced nation manages to cover everybody. For less cost (and cost is the focus of his "thoughts").

But, hey. We're America. We're history's actors. We create our own reality. Or something like that.

Posted by: CMcC on December 6, 2007 at 5:03 AM | PERMALINK

I thought that interview with the British doctor in the movie "Sicko" was telling.

The doctor observed that the American health care system is incentivized to maximize profit for all the companies involved -- insurance, pharmaceutical, hospital, manufacturers, doctors, nurses, therapists. To maximize profits you have three basic options: a) raise prices; b) cut the cost of service per person; and c) cut service to poor, sick people who hurt profits.

In England, as the movie pointed out, insurance coverage is universal and doctors receive year-end bonuses based on the health of the people they treat.

What a novel concept - making the customer happy. We ought to try that.

Posted by: pj in jesusland on December 6, 2007 at 5:15 AM | PERMALINK

Our health care system is The Best In The World In Every Way.

There is nothing we can learn from other countries. Nothing. Period. Now shut up.


Posted by: low-tech cyclist on December 6, 2007 at 5:47 AM | PERMALINK

I learned my favorite healthcare stat from The Economist a year or two ago.

If you count tax breaks as spending (which is logical), the United States government spends more money per person on healthcare than the British government. For their smaller amount of money, they cover everybody. For our larger amount of money, we cover very few people--the comparison did not include money spent by citizens on insurance, co-pays, out of pocket expenses, etc.

Posted by: reino on December 6, 2007 at 6:34 AM | PERMALINK

As horrible as the American system is, to my knowledge it's essentially undisputed that it does offer a lot of high quality, highly expensive care which only rich people (from around the globe) can afford.
Given that, any cost comparison which doesn't account for these rather special items seems incomplete. Not that a complete comparison isn't necessary as well, but if e.g. one wants to compare the development of mean income, and there's anecdotal evidence of skyrocketing CEO-pay, it makes sense to factor them out for at least some of the comparisons.

Posted by: markus on December 6, 2007 at 7:36 AM | PERMALINK

Yeah, but those numbers don't take into consideration the loss of freedom.

I am struck, on my occasional trips to New Brunswick, by the spectacle of Canadians huddled on street corners around fires burning in old herring barrels, or stumbling zombie-like through the streets of St John, or Moncton, robbed of any initiative or drive through battening on the teat of state socialism for so many years. It looks like a cross between the old East Berlin and parts of Camden, New Jersey.


Posted by: Davis X. Machina on December 6, 2007 at 7:58 AM | PERMALINK

Do not forget, besides costing loads more, and not covering everyone, we also manage to live (on average) shorter, sicker lives, with a higher infant mortality rate. That could just be all the uninsured people, but if so, that makes it all the more immoral that they don't get the care that they need.

Posted by: dr2chase on December 6, 2007 at 8:07 AM | PERMALINK

The American for-profit health care system is a racket designed by crooks. It is the best kind of racket because it functions like a monopoly. It doesn't matter how many people get access, the more the better, it will always deliver less for more.

Ehrlichman: “Edgar Kaiser is running his Permanente deal for profit. And the reason that he can … the reason he can do it … I had Edgar Kaiser come in … talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because …”
President Nixon: [Unclear.]
Ehrlichman: “… the less care they give them, the more money they make.”
President Nixon: “Fine.” [Unclear.]
Ehrlichman: [Unclear] “… and the incentives run the right way.”
President Nixon: “Not bad.”

Posted by: bellumregio on December 6, 2007 at 8:15 AM | PERMALINK

Of for god sake David X. Machina..... go take a walk in downtown Washington DC on any winters day (like I did last night) and count the number of homeless crowded around the steam grates.....your kind of comment reaks to high heaven of the kind of nonsense to many ultra-right wingnuts have been spouting for years. Shut up...

Oh yes, those 45 million uninsured really have a lot of freedom don't they?

Gag me with a spoon a..h....

Posted by: Roger on December 6, 2007 at 8:28 AM | PERMALINK

Ah but you see Kevin "we" -- meaning those in power -- HAVE learned a thing or two. High healthcare costs are a feature for them, not a bug.

Posted by: Junius Brutus on December 6, 2007 at 8:30 AM | PERMALINK

has anyone looked at the number of people that the US side employees/supports. there are all those medical billing firms and others that make the pie so much more filling and absorbs so much of the cost as middlemen. Also, what are the relative compensation levels for doctors and more essential workers like nurses ?

it would make an interesting picture to see that doctors are paid 3 times more than canadians, or that for every patient, there are more than double the number of health-care industry "employees".

Just a thought. Oooo. Dont forget the relative prices of the medicines and the over-prescribing in this country.

Posted by: reader42 on December 6, 2007 at 8:49 AM | PERMALINK

@Roger, re: Davis X. Machina's comment--ever heard of sarcasm? His comment reeks of it. (I hope!)

Posted by: EV on December 6, 2007 at 8:55 AM | PERMALINK

I tell my students I never use sarcasm, because it takes a keen and penetrating intellect just to recognize it.

Posted by: Davis X. Machina on December 6, 2007 at 9:27 AM | PERMALINK

I was going to say you crack me up, Davis (the burning herring barrels were my fave), but after I read Roger's comment I was laughing even harder. And you still have the best handle evah.

Posted by: shortstop on December 6, 2007 at 10:05 AM | PERMALINK

Maybe Davis so many people take this issue seriously that they can't quite live up to your intellectual standards. Give em a break. 50 MILION UNINSURED.

Posted by: Gandalf on December 6, 2007 at 10:09 AM | PERMALINK

Perhaps the data suggest this: the Canadians want to control their health care costs, and we don't.

Posted by: Alan Vanneman on December 6, 2007 at 10:11 AM | PERMALINK

Well David X. Machina, if that was sarcasm you sure had me fooled...the damnest thing, regardless of whether your comments were sarcasm, is that there are too darn many of us who think like that.

Posted by: Roger on December 6, 2007 at 10:23 AM | PERMALINK

storm stayed are you, Davis?

but that's not New Brunswick, that's either Scarborough or Burlington.

too funny, altogether, eh? beauty...

Posted by: uncle rameau on December 6, 2007 at 10:25 AM | PERMALINK

All the differences can be attributed to so many immigrants that the liberals welcome with open arms.

If we were a society that cares only for its own citizens, there would be no health care crisis.

I think that just like the Jajia in the IslamoFascist countries that the liberals love so much, we should institute a Liberalia tax designed to pay for all these hair-brained schemes of the mentally challenged.

Posted by: gregor on December 6, 2007 at 10:49 AM | PERMALINK

Folks, the American people -- in poll after poll -- support universal coverage for health insurance. Let's win this.

Posted by: Tracer Hand on December 6, 2007 at 11:27 AM | PERMALINK


So you'd favor a war tax for the idiots who got us into that mess?

Posted by: jharp on December 6, 2007 at 11:51 AM | PERMALINK

gregor: we should institute a Liberalia tax designed to pay for all these hair-brained schemes of the mentally challenged

Like the Iraq war? Yeah, I don't want to pick up the $20k tab for my family of four (not to mention all those dead people).

Posted by: alex on December 6, 2007 at 12:23 PM | PERMALINK

Oh, definitely not. You see, somewhere along the line someone had to wait on a list in Canada and that anecdote proves that their health care system sucks compared to the mighty awesomeness of our system.

Posted by: IdahoEv on December 6, 2007 at 1:52 PM | PERMALINK

Kevin, the key to controlling health care costs, at bottom, comes down to saying no to people for many treatments that they would like -- often that they would like because they've been fed marketing guff telling them that they should get drug X or treatment Y. Americans can't stand the idea of the government telling them "No, you can't have that treatment." Corporations can, for whatever reason, sort of get away with it. Thus, for reasons of political culture, I'm not sure that this is really an apples-to-apples comparison. As bad as HMOs are at controlling health care costs in the US, I suspect that the USG might be even worse.

Posted by: Nils Gilman on December 6, 2007 at 2:40 PM | PERMALINK

As a Brit, I feel compelled to chip in at this point. I think the true success of the NHS is that neither or nor my loved ones have ever had to think about healthcare, not once. Yes it's socialised medicine but we also have socialised education and roads, because all of these things we can do more efficiently through govt by pooling our resources. Friends on the Continent would call this solidarity, but whatever you call it it's about being part of society and should the philosophical argument not convince then as a previous commenter pointed out perhaps the economic one will.

And it's worth pointing out that if you want private healthcare either as a substitute or supplement to NHS coverage then there is nothing to prevent you from doing so. Though not many take this option even in the UK which is probably not the best universal model.

Posted by: Nick on December 6, 2007 at 6:47 PM | PERMALINK

Nils said:
'Kevin, the key to controlling health care costs, at bottom, comes down to saying no to people for many treatments that they would like '

As a Canadian and a physician who has worked in the US, I can say that this is not entirely true. The major difference in the Canadian system is that there is a single payer, eliminating both bureaucratic waste at the level of service providers and insurance companies and their pointless costs and profits. Canadians get the treatment that they need, sometimes with a delay. Those delays are sometimes attributable to physician shortages, caused by large losses to the USA in the last decade. That loss of manpower may have served to help keep our costs down, since, as in the US, physicians tend to match their workload to desired standard of living, providing unnecessary services at the margin.

Posted by: David on December 6, 2007 at 9:23 PM | PERMALINK

Its worth recalling that in Ontario, the first public medical insurance plan (OSAP) did involve private insurance companies with the government picking up the tab for all who were not otherwise privately insured. Even the CONSERVATIVE government of the day was struck by the inherent waste and inefficiency involved in sustaining multiple redundant and often conflicted private insurance bureaucracies. This system was soon swept aside by a single payer government-run universal system (OHIP) which has been in turn been subsequently part paid for with federal government transfers from income tax and value added tax revenues.

So it is possible to build a good system incrementally. It has been done.

Once having established a public single payer system, it is then possible to contract out the actual payment and information system if so desired. One very significant part of this information system is the reduction of fraud through command of a single statistical system which can detect abnormal patterns of billing. Another significant cost reduction factor is the unified formulary of medications which enables bulk pricing practices both for drugs dispensed free of charge through hospitals, for seniors who pay minimal amounts for retail purchases of prescription drugs, and for others qualifying by means test for medication subsidies. Even unsubsidized medication buyers enjoy lower prices than would otherwise be the case as many American drug purchasers have noted to their obvious benefit.

On the whole, all the provincial medical insurance schemes have been very successful, though they have been put under unnecessary cost pressure by a long-departed federal conservative government which unduly extended patent protection for name brand pharmaceuticals. There is a thriving generic drug manufacturing industry in Canada.

Is this a perfect system? By no means... any rationing system will induce anxiety and queue jumping by the rich, the famous and the well connected. But where is this not the case under any other system?

This plan of services is highly prized by most Canadians. It means that personal savings need not be set aside for catastrophic illness and though personal taxes are higher than would be the case without the plan, its clear this is an acceptable bargain for most people. There is value for money, something one might not be able to say for military expenditures for instance?

Wouldn't trade this system for the world. A big heartfelt thanks to the late lamented Tommy Douglas for getting the ball rolling and smashing the first doctors' strike. Bless him, he was a socialist saint even if he was an ordained minister of religion in his early years. Some things like this can be overlooked in the cooperative commonwealth can they not?

Posted by: anon on December 7, 2007 at 3:40 AM | PERMALINK


Interesting summary.

I think though that OSAP was Ontario Student Aid Programme (speaking as a former recipient): student loans for university students.

Don't know about private insurance in Ontario. That would have been 1965?

So either John Robarts 1961-1971, or Bill Davis 1971-1983 as Premier.

Both were 'Progressive Conservatives'. The Ontario Tories were an interesting amalgam of populist political parties (originally called the Liberal Conservative Party): their key local group was actually (no joke) the Ontario Good Roads Association, which paved the rural roads of Ontario after WWII, and was a key to Tory power.


The Party was originally the Liberal-Conservative Party, a merger in 1854 of Sir John A MacDonald's Conservative Party from Upper Canada (Ontario) and Etienne Cartier's Liberal Party of Lower Canada (Quebec).

So the PCs have always had a not very right wing slant as a 'conservative' political party. The modern Canadian Conservative party (which was the Alliance of Reform and the rump of the conservatives) led by the Prime Minister, Stephen Harper, is much more like the American Republicans (global warming denial, evangelical Christianity etc.) and has its roots in the West, particularly Alberta.

*they* would dismantle healthcare, on ideological grounds, if it were not political suicide.

Posted by: Canuck on December 7, 2007 at 4:56 PM | PERMALINK

Sorry for the typo. The original plan was called OMSIP.

"Ontario's first government-run health plan was known as OMSIP (Ontario Medical Services Insurance Plan), established and enacted on 1 July 1966. On 1 October 1969, it was replaced by OHSIP, the Ontario Health Services Insurance Plan, as a provincially run and federally assisted plan under the federal Medical Care Insurance Act for establishment of a national medicare plan. At some time in the 1970s or 1980s, the plan name was shortened to simply OHIP."

As to the progressiveness of the Ontario PC government, it ran as an extraordinarily efficient patronage machine. Corrupt doesn't quite capture the reality. If you wanted a bar license, you had to use the right lawyer, buy your equipment from company A, your carpet from company B, etc. etc.

Posted by: anon on December 7, 2007 at 6:01 PM | PERMALINK

We have to admit. Canadians were always more organized than us! I dont know how come, but U.S. looks like the most unorganized country, lately: you would discover we need to learn a lot if you would compare U.S with UK or France! We always liked to consider ourselves the best, and forgot we should still develop.

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