COMPARING U.S. AND CANADIAN HEALTH CARE SYSTEMS

Comparing U.S. and Canadian Health Care Systems



Comparing U.S. and Canadian Health Care Systems

Introduction

The United States is currently studying various proposals to reform its health care system and that of Canada is often cited as a possible model. Curiously, Canadians sometimes look to the United States for ways to improve their system. This search for improved health care has led to abundant but conflicting documentation about the relative merits of the two systems. The available literature emphasizes the relative efficiencies of public versus private intervention. While many maintain that Canada's public system is both better and cheaper, still many others contend that the privately-oriented American system provides more efficient and better quality services. This paper presents a comparative description of the Canadian and American health care systems and reviews the most recent literature. The first part briefly examines the reasons for and against government involvement in health care; the second part compares both systems in terms of access, financial barriers to care, extent of benefits, and administration; the third section deals with cost containment. Finally comparisons are made in terms of the quality of care(Danzon, 1992).

Discussion

Role of Government and Private Sector

Both Canada and the United States devote a high proportion of their national wealth to health care. Estimates for 1990 show that Canada spent more than 9% of its GDP, or $60 billion dollars on health care,(1) while the United States contributed $660 billion or 12% of its GDP.(2) The health care system in Canada is characterized by strong government intervention. Government intervention in the health care field is a source of controversy, with solidly based arguments both for and against. In Canada, health care is treated as a public service, which Canadians believe should not be subject to the laws of the marketplace and the mechanism of price and profit. By contrast, Americans favour limiting government assistance to those in need and allowing the private sector to have a great portion of the market. They contend that market mechanisms, the motive force of classical economics, can ensure cost control, efficiency, and top-quality services through effective competition(Deber, 1991).

Canadian government intervention in health care is generally explained with reference to certain market failures. In the private sector, resources are generally allocated according to the law of supply and demand. The resulting price levels ensure optimal allocation of resources, provided certain conditions relating to supply and demand are met. These conditions do not always prevail in the area of health care, however. First, it is difficult for the market system to ensure an adequate supply of health services because the very nature of these services implies costs and benefits that the market system does not take into account. Furthermore, consumers cannot make informed decisions, because there is always uncertainty about illness and the future state of one's health. Consumers are often unable to determine for themselves the type of health services they need and must delegate the decision-making process to those who provide the ...