United States vs. Canada: A Comparison of Healthcare Systems, Access and Outcomes

Abstract

The United States and Canada are two neighboring countries with starkly different health care systems.  While both countries feature health care systems that blend private and government-run insurance plans, Canada features a public insurance program that covers all residents while the United States features fragmented private and public system.  As a result, all Canadians are afforded health insurance while many Americans are left without health insurance.  An examination of the political context of health care development in both countries will reveal the legislative foundation of the healthcare systems in both countries.  Further, this report will compare and contrast the two systems to identify the advantages and disadvantages of the health care systems in the United States.  As the analysis of the two systems will reveal, that both the United States and Canada have significant weaknesses that impact the quality of life for citizens.  Also, research will reveal that the assumed gaps in health outcomes between the two health care systems have not been adequately established. 

Introduction

Though the United States is undergoing a period of healthcare reform. Its healthcare system still stands apart from the rest of the industrialized world.  While the United States features a fragmented healthcare system that is dominated by private industry, many Western countries have placed healthcare in the hands of the government.  However, neighboring Canada provides an ideal case study for reform efforts in the United States because it originally faced legal restraints to adopting nationwide healthcare that are similar to the legal restraints faced in the United States.  Canada features a healthcare system that blends privatization with public subsidization.  Yet, there are also many disadvantages to Canada’s healthcare system that must be addressed as well.  Though Canada’s healthcare system features universal coverage and decreased costs overall, waiting times and specialist shortages reduce health care access and the quality of life for Canadian residents while producing insignificant gains in healthcare outcomes.  Due to these shortcomings, reformers in the United States should reassess the efficacy of Canada’s healthcare system.

An Overview of the United States Healthcare System

It is commonly misconceived that the United States healthcare system is a purely privatized system.  As Grott (2006) notes, the United States political culture places an emphasis on capitalism and minimal government interventions in the markets (p. 336).  However, as Grott recognized, there are many features that make the healthcare sector in the United Stated distinguishable from the concept of free market economics.  First, there is an asymmetry of information it healthcare markets that prevent the free exchange of information between consumers and healthcare providers (2006, p. 336).  Second there is a lack in equity between buyer and seller; the seller of healthcare-related services holds a significant amount of power over the purchaser of healthcare services (2006, p. 336).  These factors eliminate the freedom in choice that is necessary for consumers to act as legitimate participants in the free market.

Grott further detailed the conditions that alter the healthcare market.  Because healthcare is considered to be an important good, the government heavily regulates it (2006, 337).  Since a significant asymmetry of information exists, consumers are highly dependent upon sellers for information on healthcare products, limiting their ability to make rational choices in the market (2006, p. 337).  Also, insurance companies, which act as third-party entities in the healthcare market, alter the relationship between buyers and sellers, influencing supply and demand in the healthcare market (2006, p. 337).  Finally, the healthcare market deviates from the conception of a free market because the United States government acts as the largest consumer of health care products (2006, p. 337).  In fact, the United States government spends more on healthcare services than countries with government-run healthcare systems (2006, p. 337).  Thus, from an economic point-of-view, the United States is far from a private healthcare system.

The political foundations of the United States healthcare system further describe the relationship between government and the United States healthcare markets.  As Grott noted, the federalist system in the United States provided an initial barrier to government involvement in the healthcare system (2006, p. 338).  Dividing responsibilities between the state and federal government, the federalist system placed the responsibility of providing healthcare on state governments (2006, p. 338).  During the colonial period, the healthcare system that emerged was run at the state level and primarily operated by the private sector (2006, p. 339).  Traditionally, local governments were responsible for establishing their own boards of health and health departments in order to meet the challenges presented by emerging health crises (2006, p. 339).  However, the federal government first increased its involvement in the healthcare system when it passed the 1798 Act for the Relief of Sick and Disabled Seamen (2006, p. 339).  Under the Act, seamen were required to pay a special tax in exchange for readily made healthcare services (2006, p. 339).  The provision of healthcare services for workers at sea served as the beginning of the federal government’s increased role in healthcare.

There are several 20th century milestones that expanded the federal government’s role in providing funding for healthcare services across the United States.  First, the emergence of dual federalism enabled the federal government to lead city and state government in addressing complex public health concerns (2006, p. 340).  In the early 1900s, the federal government began to increase financial aid to state governments so they could adequately cover their healthcare expenses (2006, p. 342).  Second, many legislative actions were taken to provide federal spending for healthcare.  In 1942, Congress passed the Hill Burto Act, which provided state financial aid to fund hospitals in rural areas (2006, p. 343).  Further, the 1945 McCarren Fergus Act entitled the health insurance industry to special privileges by exempting insurance companies from anti-trust regulations (2006, p. 343).  The rationale was that it was necessary for insurance companies to cooperate in order to obtain accurate actuarial data and effectively underwrite their risks (2006, p. 343). These early legislative actions set precedent for the use of federal government to address immediate healthcare concerns and regulate the medical industry.  

During the New Deal, the detachment between state and government was significantly challenged, and many reforms took place that legitimized government spending on social programs.  Yet, the most significant expansion of the federal government’s spending on medical care came in 1965 when the Social Security Act was amended in order to provide medical care to the elderly and poor through the respective programs Medicare and Medicaid (2006, p. 344).  By 1992, Congress forecasted that 18 percent of the U.S. GDP would be allocated toward healthcare costs by 2000 (2006, p. 344).  The high costs of increased government involvement in healthcare would become a priority of future policymakers.  Further, the incomplete coverage between public programs and private insurance caused gaps in coverage that policymakers needed to address.

Currently, the United States is undergoing another significant transformation in its healthcare system.  The Affordable Care Act (ACA), passed in 2010, made modifications to the United States by setting up provisions for uninsured Americans to obtain healthcare insurance. LaPierre (2012) described many of the reforms that were adopted with the passage of ACA.  First, the Act places regulations upon insurance companies by requiring that health insurance companies cover all individuals up to 26 on a parent’s health insurance plan and cover individuals with pre-existing conditions (2012, p. 3).  Further, the act established a tax credit for small businesses to obtain health insurance (2012, p. 3).  ACA is being enacted incrementally, and there are further reforms that are scheduled to take place in 2014.  By 2014, ACA will also require the expansion of Medicaid to cover all Americans under the poverty line, the provision of a tax credit for individuals to purchase private insurance plans, and the enforcement of a mandate that will require individuals to provide insurance (2012, p. 3).  Though the results of ACA have yet to be measured, these reforms are intended to significantly extend coverage in the United States and decrease the number of uninsured individuals. 

An Overview of the Canadian Healthcare System

Similar to the United States, Canada originated as a federalist system that placed health care in the hands of the local governments.  According to Storch (2005), the 1867 British North America Act, which forms the Canadian constitution, only required the federal government to provide for the basic needs of residents and citizens (p. 415).  Further, section 912 identified healthcare as a provincial responsibility and tasked the provinces and territories with funding healthcare (2005, p. 415).  However, unlike the United States, Canadian reformers effectively thwarted the restraints of federalism in order to increase the federal government’s involvement in healthcare and provide universal health care coverage.  Storch (2005) identified three main approaches that were taken to reform healthcare in Canada: 1) develop effective programs at the provincial level, 2) adopt constitutional program, and 3) enter into a cost-share program with the federal government.  Through these three approaches, a comprehensive healthcare program was eventually introduced in Canada.

Several acts passed during the late 20th century established the current Canadian healthcare system.  In 1948, the legislature developed a nation-wide hospital construction program (2005, p. 415).  By 1958, the legislature developed a hospital insurance program (2005, p. 415).  Finally, by 1968, Canada established a medical insurance program that made insurance available to all legal residents (2005, p. 415).  While Canada does not have one single insurance system, its 10 provinces and 3 territories carry insurance that covers all medical necessities (2005, p. 414).  Through the legislative authority, the federal government is able to support the provinces by providing financial aid to subsidize local health insurance plans (2005, p. 414).  In 2003, Canada re-established its commitment to strengthening its healthcare system by affirming five principles of health insurance: 1) universality, 2) comprehensiveness, 3) portability, 4) publicly administered, and 3) accessibility (2005, p. 416).  These principles serve as the guidelines for Canada’s healthcare system and the foundation for healthcare plans offered by provincial governments. 

Canada, like the United States, is also in the middle of a period of transition.  One feature of Canada’s healthcare system is that it strongly discouraged physicians from establishing private practices and practicing medicine outside of the medical system.  As O’Neill and O’Neill (2007) noted, a 2005 count decision in Canada struck down many of the provisions in federal statutes that required doctors to solely practice within the Canadian healthcare system (p. 2).  As a result, a private healthcare sector is beginning to emerge in Canada, and private spending on healthcare services increased to 30 percent of healthcare expenditures (2007, p. 2).  Yet, as LaPierre (2012) noted, the private market has yet to be competitive with the public healthcare system.  For example, the private insurance market that has resulted from the court decision primarily sells health plans to complement the medically necessary services covered by public insurance plans (2007, p. 6-7).  While the development of a two-tier system is a likely consequence of the rise in public spending, Canadians still must address the challenges posed by their commitment to deliver care though their public system.

Healthcare Access in the United States and Canada

The healthcare systems adopted by United States and Canada significantly impact the access that citizens have to healthcare services.  Both the United States and Canada face challenges when it comes to providing access to its citizens.  However, the fragmented healthcare system in the United States provides the most significant barriers to U.S. citizens seeking healthcare access.  According to Pylyphcuk and Sarpong (2013), 29 million individuals in the U.S. are uninsured and 41.3 million individuals are uninsured (p. 560).  LaPierre (2012) further evaluated the dearth of health insurance coverage among the American public.  According to his analysis of healthcare statistics, 63.9 percent of Americans are covered under private insurance, 30.6 percent of Americans are covered under government health insurance, and 16.7 percent of Americans have no insurance coverage (2012, p. 2).  Further, 55.8 percent of those with insurance have employer-based insurance (LaPierre, p. 2).  However, there are many shortcomings of employer-based insurance that need to be assessed.  

As LaPierre demonstrated, possessing private or employer-based insurance does not offer an individual stable access to the healthcare system.  As she noted, 48 percent of individuals with employer-based insurance are covered as dependents (2012, p. 2).  This means that they depend on the employment of the individual who holds the plan in order to still receive healthcare coverage.  Of those on employer-based insurance, 100 percent of those under eighteen are dependents, 32.7 percent of adults between eighteen and sixty-four are dependents, and 24.7 percent of adults sixty-five years of age and older are dependents (2012, p. 2).  Further, women are more likely than men to be dependents on the policy of a significant other (2012, p. 2).  The consequence of the high prevalence of dependents covered on employer-based health insurance plans is that a recession where jobs are lost leads to the loss of coverage that can ripple across the population.  The lack of stable coverage threatens the healthcare access of millions of Americans.

Further, research establishes that there are higher economic disparities in healthcare coverage in the United States.  According to Pylypchuk and Sarpong (2013), people in the United States who are poor, less educated, or foreign born are less likely to use healthcare services (p. 577).  Documenting the educational disparities, the researchers noted that U.S. patients who only possessed a high school degree were less likely to see a medical doctor on a regular basis (2013, p. 570).  Further, United States residents with lower levels of educational attainment were less likely than Canadians with the same level of educational attainment to visit dentists, nurses, and other medical providers (2013, p. 570).  While individuals from low socio-economic backgrounds in the United States were less likely to utilize healthcare services in the United States, while individuals from similar backgrounds in Canada are more likely to utilize healthcare services (2013, p. 577).  Further, wealthier individuals in the United States are as likely as wealthy individuals in Canada to utilize healthcare services (2013, p. 577).  As these findings suggest, the cost of healthcare in the United States prevents poorer individuals from accessing the healthcare system.

While healthcare access is lacking the United States, Canada faces significant challenges that impact the accessibility of healthcare to its residents.  As O’Neill and O’Neill (2007) noted, a main threat to access in Canada came in the form of a 1984 law that banned the provision of necessary medical services outside of the established healthcare system (p. 2).  The law attempted to prevent medical doctors from gaining additional profits by opening side practices and billing their clients at a higher rate than the prices set by the government (2007, p. 2).  However, the restrictions imposed by the act, combined with cuts in grant aid from the provinces, contributed to shortages in medical services that negatively impacted the quality of medical services in Canada (2007, p. 2).  Further, the laws created a barrier to healthcare access for Canadian residents.

The disincentive created for doctors to establish private practices still has negative ramifications in the Canadian healthcare system.  As O’Neill and O’Neill (2007) noted, 14. 4 percent of Americans and 11.3 percent of Canadians reported that they had health needs that were unmet because they were unable to visit a doctor (p. 11).  In the United States, patients cited cost as their main reason for not seeing a doctor for medical attention while Canadians cited the high wait times to see a doctor (2007, p. 11).  Though healthcare coverage is virtually costless in Canada, the high wait times can have significant consequences for patients.  In one estimate, the average wait time for knee replacement in Canada is twelve weeks, compared to five weeks in the United States (2007, p. 12).  Further, 33 percent of Americans who reported having unmet needs due to long wait times reported chronic pain that limited their mobility (2007, p. 12).  However, fewer Americans than Canadians who reported cost as their reason for not seeking medical care reported chronic pains (2007, p. 12).  As these figures demonstrate, barriers to access caused by discouraging private practices can significantly reduce the quality of life for Canadians.  Though Canadians enjoy universal coverage, cuts to service that further reduce a patient’s ability to visit a doctor in a timely manner are a legitimate cause for concern.

Patient Outcomes in the United States and Canada

Researchers often assert that the healthcare system in Canada results in better healthcare outcomes for Canadians in comparison to Americans.  As Pylypchuck and Sarpong (2013) established, Canadians are more likely that Americans to report good health (p. 569).  Further, the researchers cite the positive health statistics for Canadians in comparison to Americans.  As they note Canadians have lower levels of diabetes, asthma, high blood pressure, or arthritis that Americans (2013, p. 560).  Yet, while these figures do suggest that Americans are less healthy than Canadians, it is fallacious to attribute these health problems to the lack of healthcare access in the United States.  Through analysis, it can be demonstrated that health outcomes are in the United States are actually comparable to the outcomes of Canada, despite the incidents of chronic health conditions in American society.

O’Neill and O’Neill (2007) address the common flaws that are made when assessing the efficacy of the United States healthcare system.  First, they note that the prevalence of obesity and other chronic conditions do not necessarily address whether individuals receive quality care in the United States.  As the researchers noted, racial disparities in the United States as well as differences in lifestyle can account for many depressed figures on health status among Americans (2007, p. 5).  Further, working with a higher percentage of patients who already abuse substances, smoke, or are obese may artificially decrease the health outcomes that are reported (2007, p. 5).  For example, in the United States, 33.2 percent of the population is obese while only 19 percent of the Canadian population is obese (2007, p. 5).  Pre-existing health disparities may be the source of additional complications when a patient enters the health system.  Moreover, the ability to provide care to individuals who may be more difficult to treat should not reflect whether a healthcare system provides quality care.  

Second, the researchers challenge traditional methods of assessing the quality of healthcare systems in countries.  As the researchers note, many international organizations and governments examine infant mortality rates and longevity in order to determine whether citizens have access to quality healthcare services (2007, p. 1).  Yet, this serves as an additional case where pre-existing health factors that are independent of medical services rendered contribute to the variances between the United States and other developed countries (2007, p. 1).  Because personal lifestyle choices of citizens can reflect culture and other factors independent of their interaction with the healthcare system, these metrics are ineffective in comparing the quality of healthcare between two countries.  

When unreliable metrics are not taken into account, there is evidence that the United States delivers high quality care that is on par with the care that Canadian citizens receive from their healthcare systems.  As O’Neill and O’Neill (2007) found, the United States performs well and even better than Canada in the delivery of medical services (2007, p. 13).  For example, the United States has lower mortality rates for all forms of cancer and has more effective at cancer detection and treatment (2007, p. 13).  Additionally, U.S. patients reported in a joint survey with Canadian patients that they were satisfied with the quality of care thy received; conversely, Canadians were more likely to express dissatisfaction with the quality of care (2007, p. 12).  Thus, while access is a significant barrier that the United States must address, the quality of care produced by the healthcare system is comparable to the quality of care produced by other leading systems.

Conclusion

The United States and Canada both faced the challenge of providing health coverage for citizens within the framework of a federalist system.  The United States was less effective in providing expansive healthcare access and is still reforming a system that leaves millions of individuals without coverage.  However, Canada has taken legislative actions to create a comprehensive healthcare system that provides public insurance for all legal residents.  Because of these different approaches, United States citizens face significant challenged in accessing healthcare services while Canadians have access to essential medical services.  However, legislative actions that hindered private practice created a shortage of doctors, resulting in increased wait times for important medical procedures.  Moving forward, Canada will need to address these access barriers in order to improve the quality of life for citizens.  Further, an examination of the methods used to assess healthcare outcomes reveals that previous assumptions that the United States produces poor outcomes for patients must be reassessed.  Though United States policymakers are currently addressing healthcare access, there is no evidence to suggest that Americans cannot expert high-quality care from their health system.

References

Grott, C.J. (2006). The development of the U.S. health care system and the contemporary role of the public health department. Journal of Health & Human Services, 29(3), 336-369. Retrieved from EBSCOhost database. 

LaPierre, T.A. (2012). Comparing the Canadian and US systems of health care in an era of health care reform. Journal of Health Care Finance, 38(4), 1-18. Retrieved from EBSCOhost database.

O’Neill, J.E., & O’Neill, D.M. (2007). Health status, health care and inequality: Canada vs. the U.S. (Discussion Paper No. 13429). Cambridge, MA: National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w13429.pdf?new_window=1

Pylypchuk, Y., & Sarpong, E.M. (2013). Comparison of health care utilization: United States versus Canada. Health Services Research. Retrieved from EBSCOhost database.

Storch, J.L. (2005). Country profile: Canada’s health care system. Nursing Ethics, 12(4), 414-418. Retrieved from EBSCOhost database.