The US and Canadian Health Insurance Systems

The main differences between the health care insurance policies of the United States and Canada

The health care insurance policies of the United States and Canada have been debated by many health care officials as well as medical students.

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The basic difference between the policies of both countries is that where Canada has a universal health policy that covers all citizens, the USA has a policy that covers only those who can afford it. The Canadian system is also referred to as a single-payer tax system where the healthcare facilities are paid for from a single fund which in the case of Canada is the government. In case of Canada, the system is called medicare where the legal residents of Canada and permanent residents are entitled to insured medicare services which are paid for through taxes and not privately. Although in Canada 30% of the medical services such as dental and cosmetic care are paid for privately.

Even though the US spends more than Canada on healthcare facilities, Canada boasts of a lower mortality rate. Many reasons have been cited for these differences and many studies have been made comparing the two country’s systems with advantages and disadvantages of each being elaborated in detail.

According to the OECD health care data

The U.S. spends much more on health care than Canada, both on a per-capita basis and as a percentage of GDP. In 2006, per-capita spending for health care in the U.S. was US$6,714; in Canada, US$3,678. The U.S. spent 15.3% of GDP on health care in that year; Canada spent 10.0%. (OECD Healthcare Data, 2008)

Moreover according to the Pan American Health Organization:

The source of health care in the United States for most people is through the private market place, rather than through a government insurance or health care system (though these government systems do exist in the form of public programs such as Medicare, Medicaid and the State Children’s Health Insurance Program (public programs with private sector components) and the Veterans’ Administration and military health systems (which also has private components)). (Pan American Health Organization, 2009).

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The Reason for Differing Policies

The reasons why the two countries have different policies about health insurance are rooted in history where the two countries used to have more or less the same amount of spending and mortality rates but in the recent decades these differences have increased as a result of the different policies.

The differing systems are a result of belief in differing political ideologies where the US has always been concerned with promoting the private system. This is because the US capitalist system has tried to root out as many possibilities of having government regulated industries. Hence it has never adapted the public funding system for health care insurance, while Canada has adopted

The Benefit and the Effect of the policies

The benefits of Canada’s publicly funded healthcare systems are such that it does not differentiate between the rich and the poor. In fact in a study quoted by Holly Dressel:

“In a massive study undertaken by Statistics Canada in the early 1990s, income and mortality census data were analyzed from all Canadian provinces and all U.S. states, as well as 53 Canadian and 282 American metropolitan areas.6 The study concluded that “the relationship between income inequality and mortality is not universal, but instead depends on social and political characteristics specific to place.” In other words, government health policies have an effect.

“Income inequality is strongly associated with mortality in the United States and in North America as a whole,” the study found, “but there is no relation within Canada at either the province or metropolitan area level — between income inequality and mortality.”

The same study revealed that among the poorest people in the United States, even a one percent increase in income resulted in a mortality decline of nearly 22 out of 100,000.” (Dressel, 2006).

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Thus the study gives us significant insight into the system where the living standard and mortality rates are considerably influenced by healthcare received.

Some further benefits of a universal healthcare system accrue to doctors who in a privately insured system have to pursue many different insurance companies which have lengthy procedures to claim the fees charged while in a single-payer system doctors in most cases have to pursue the government only for claims.

Moreover, even though doctors are paid less in Canada versus their US counterparts but the fact is that Canadian doctors have to merely focus their energies on their work while in the US they also have to hire help to deal with legal issues that help them in claiming their fee and as a result their overhead costs of running a practice are higher than in Canada.

Another benefit that accrues to people under a system such as medicare is that poor people too have access to specialists and expert doctors that merely the moneyed class in countries such as the US have as the masses cannot afford the fees of these experts. Furthermore many American are driven to bankruptcy if they or some family member has an illness that is expensive to treat. In Canada on the other hand, even though patients have to pay for prescription drugs and for other medications, the ambulance charges, tests and hospital fees are all covered by government insurance.

The privately insured systems too have some benefits that in retrospect serve the interests of some people. Given the fact that poor people can access specialists as much as rich people can the waiting lists are very long and to get your turn at a specialist takes a very long time and wait.

Moreover the tax rate in Canada is higher as compared to the United States, which gives a sense of unfairness to the people who pay taxes as they might perceive that they are indirectly paying even for those who do not pay taxes.

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Further in her article Holly Dressel states a study by David U. Himmelstein

“Today, over half the family bankruptcies filed every year in the United States are directly related to medical expenses, and a recent study shows that 75 percent of those are filed by people with health insurance.” (David U. Himmelstein, 2005).

Another benefit of the private insurance system that is the basis of its existence is that the private sector working for its own benefit and survival would be better able to serve the health care industry as productivity will be maximized at the same time better quality of services will be provided. Similarly in the case of US many advances have been made in the healthcare sector as they are being pushed by the profit maximizing companies. As more and more breakthroughs occur the people benefit from innovative new technology and better medication.

Even more beneficial is the fact that while initially new, innovative and improved medical care is available expensively and to a very few wealthy people who can afford it, eventually as competition within the sector increases and other companies start developing similar drugs and facilities to treat illnesses, the healthcare become cheaper and more people can afford it due to the trickle down.

As the debate continues and both countries hold to their respective systems considering it in the best interests of their people, it cannot be denied that both the systems have their respective merits and demerits. While the Canadian system boasts of a higher living standard for its entire population and the minimization of bankruptcies related to health issues, many feel that the American system is the one hat upholds the true capitalist nature and works for the betterment of the entire world.

References

  1. David U. Himmelstein, e. a. (2005). Health Affairs.
  2. Dressel, H. (2006). Has Canada Got the Cure?
  3. OECD Healthcare Data. (2008).
  4. Pan American Health Organization. (2009). Health Insurance Regulation in the United States.
  5. Robinson, S. (2008). 10 Myths About Canadian Health Care, Busted.

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