National Health Care in Canada: Lessons in Rationing Talking Points: Executive Summary MEDIA INQUIRIES:

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1 IWF Policy Brief Cutting-edge analysis of the news of the day from the Independent Women s Forum July 22, 2009 National Health Care in Canada: Lessons in Rationing By Carrie Lukas Brief #24 Executive Summary President Obama and the Democratic leaders in Congress intend to greatly expand government's involvement in the U.S. health care sector by creating a public option for health insurance. This would move the country toward the liberal goal of a single-payer, government-run health insurance system. The American public wants reform of the health care sector and is concerned about the millions of Americans who do not currently have insurance. Yet before Congress moves ahead with dramatic changes that would expand government's control over health care, the public should consider the experiences that other countries have had with government-run health care. Talking Points: Before expanding government programs to create universal health insurance, policymakers should consider other countries' experiences with similar efforts. Canadians have to wait weeks sometimes months for critical tests and treatments. Canadians sometimes face explicit rationing that prevents groups of individuals from receiving tests and treatment. There are better ways to improve the U.S. health care system to reduce the number of uninsured and control health care costs. MEDIA INQUIRIES: One place to look is to Canada. While many champions of single-payer systems point to Canada as a model for making health services available to all, Canada also exposes the downsides of government- 1

2 run health care, which is rationing resulting in long wait times. In 2008, the average waiting time for surgical or another therapeutic treatment after receiving a referral from a general practitioner was about four months (more than 17 weeks). i In addition, some Canadians are denied services that they feel are medically necessary. There are better ways to improve the American health care system than to follow the Canadian model of turning more control of health care to the government. Instead of allowing policymakers to make the government the health insurance provider for most Americans, the American people should urge Congress to adopt reforms that encourage a more robust health care marketplace and give individuals greater ability to purchase private health insurance or to pay for health care on their own. Introduction There are better ways to improve the American health care system than to follow the Canadian model of turning more control of health care to the government. The President and Democratic leaders in Congress are working on legislation to reform the U.S. health care system. Among their stated goals are to decrease the number of uninsured, give all Americans access to quality health care, and to reduce overall health care costs. The President and many Congressional leaders believe that one important initiative for achieving those goals is to create a public option for health insurance. The public option would mean that the federal government would offer health insurance to all Americans. It would compete with private insurance, but would enjoy many competitive advantages that many analysts predict would lead to a significant crowd-out of private insurance, moving the U.S. toward a single-payer system, in which the federal government is the insurer of the majority of Americans. Before moving in that direction, the public should consider the experience of those in other countries who have placed control of the health care sector with the government. This paper focuses specifically on Canada, and the challenges that many Canadians face in receiving timely care. Background on Canadian Health Care In Canada, the provinces are charged with creating health systems that must meet the principles outlined in the Canada Health Act. The guidelines for provinces include that the health plan must be administered on a non-profit basis by the government; all medically necessary services must be covered and provided by hospitals and doctors; insurance must be universal so that everyone in the province or territory has the same coverage; services must be portable so that the individual remains covered if moving within Canada or traveling within or outside of the country; and, there must be reasonable access to medically necessary services. The Canada Health Act also forbids doctors and hospitals working in the insurance plan from charging extra for their services. ii As a result, nearly all health services in Canada are free to users and paid for by taxpayers. While there are benefits to this system of coverage, for example, everyone at least in theory has equal access to 2

3 medical services and does not face a potential financial burden for treatment, there are also significant drawbacks. As the Canadian non-profit organization The Fraser Institute observes: There are also great disadvantages to the Canadian system, such as a lack of responsiveness to changes in demand, a lack of user-determined investment as the system is governed largely by the political process, and a lack of choice and information for patients searching for the best provider. iii Long waiting times also plague the Canadian health system, and the government s determinations about what is medically necessary can result in individuals being denied care. Waiting Times The Fraser Institute annually surveys medical professionals throughout Canada to estimate the waiting times that Canadians can expect when seeking medical treatment. While in 2008 they found that the average waiting time had decreased compared to 2007, their findings still confirm that thousands of Canadians have to wait too long to receive necessary treatment: Total waiting times from first seeing a general practitioner to receiving treatment was about four months (17.3 weeks) in iv The average waiting time between referral from a general practitioner and a consultation from a specialist was about two months (8.5 weeks) in v As patients are routinely told, timely discovery of many illnesses and treatment can be critical for preventing adverse outcomes, such as permanent loss of function or even death. The average waiting time between seeing the specialist and receiving treatment was another two months (8.7 weeks) in vi Canadians also have to wait to make use of important medical technologies. For example, the median wait for a computed tomography (CT) scan was more than a month (4.9 weeks) and the median wait for a magnetic resonance imaging (MRI) scan was more than two months (9.7 weeks). vii What Rationing Means for Individuals As patients are routinely told, timely discovery of many illnesses and treatment can be critical for preventing adverse outcomes, such as permanent loss of function or even death. In addition to increasing the likelihood of adverse outcomes, waiting times increase suffering. There is actual physical suffering when someone has to wait about 21 weeks for a hip replacement. There is also mental anguish, waiting a month or more to receive a CT scan or MRI that will tell whether or not you have a serious illness or condition. 3

4 In Canada, there are numerous examples of individuals who have suffered as a result of the rationing of care. After more than a year of waiting to see a specialist, a 57-year-old man living in Alberta, Canada finally was told that he needed a hip resurfacing operation to address his arthritic hip. Yet the government officials in charge of Alberta's health system declared that he was too old to warrant such a procedure. viii An Ontario woman diagnosed with Stage IV colon cancer was told that the drug her doctor recommended for her treatment standard treatment in the U.S. was not considered appropriate treatment by the Ontario government. ix Other Canadians suffering from headaches and seizures have faced long waits to see specialists and receive treatment. Some ultimately seek treatment outside of the country, fearing that their lives were in jeopardy as a result of the wait. x In Canada, there are numerous examples of individuals who have suffered as a result of the rationing of care. Undoubtedly, there are stories in the United States of those who have been denied care from an insurance provider or who have been unable to receive the care they needed in a timely manner. Yet Americans who believe that those problems would be solved by moving toward a single-payer, government-run insurance system should be warned that in fact those problems could become worse. When the health insurance system is in private hands, at least one can seek treatment through an alternative provider. If the government controls the whole health care system, there is no alternative. Government will have the final say over who gets what treatments and what treatments are simply off limits. There Are Better Ways to Reform U.S. Health Care The United States health care system needs to be reformed. But there are better ways to achieve the goals that President Obama and Congressional leaders have claimed are the purpose of their health care reform efforts. Instead of growing government's role in providing and rationing health care services, policymakers should focus on how to bolster the market for private insurance, making it more affordable and responsive to individual needs. Policies deserving consideration include: Create a tax credit for health insurance: Instead of encouraging people to participate in the government-run health insurance program, qualifying individuals and families could receive a refundable tax credit to purchase health insurance. This would give them the freedom to choose a plan that makes the most sense for their individual needs. Reform the tax treatment of health insurance: Currently our tax code is biased in favor of employer-provided health insurance and against those who purchase health care from the individual market. Congress should extend the tax treatment of employer-provided health 4

5 insurance to individual health insurance. This would make individual insurance more affordable. Enable individuals to purchase health insurance from any state: State regulations can greatly raise the cost of health insurance. Instead of being limited to policies issued in their state, individuals should be able to purchase insurance from anywhere in the country. A more robust private health insurance market can reduce the number of uninsured, encourage better use of health care resources, and bring down the overall costs of health care, without discouraging innovation and putting government in charge of rationing care. Conclusion Canada's experience with government-run health care provides useful lessons for the United States. The American public should be aware of the long waiting lines for seeing specialists, receiving treatment, and accessing medical technologies that plague Canada's health system and that would likely be a feature of American health care if we embrace a public option and move toward a single-payer system. Canada's experience with government-run health care provides useful lessons for the United States. Instead of increasing government control, policymakers should seek other ways to make health insurance more accessible and affordable by ending the bias in favor of employer-provided health insurance, eliminating regulations that raise the cost of insurance and price people out of the insurance market, and creating refundable tax credits for the purchase of private insurance. Endnotes i Canada, 18 th Edition, Fraser Institute, October 7, 2008, p. 4. ii Michael Walker and Nadeem Esmail, How Good Is Canadian Health Care? 2008 Report, Fraser Institute, December 1, 2008, pp iii Michael Walker and Nadeem Esmail, How Good Is Canadian Health Care? 2008 Report, Fraser Institute, December 1, 2008, p. 14. iv Canada, 18 th Edition, Fraser Institute, October 7, 2008, p. 4. v Ibid. vi Ibid. vii Canada, 18 th Edition, Fraser Institute, October 7, 2008, p. 6. viii Nadeem Esmail, 'Too Old' for Hip Surgery, Fraser Forum, June ix x David Gratzer, The Ugly Truth About Canadian Health Care, City Journal, Summer Nadeem Esmail, 'Too Old' for Hip Surgery, Fraser Forum, June