Access to Healthcare in Canada and the U.S.

The media often suggests that Canada has superior healthcare to the States; however, on closer analysis, each country’s system has various pros and cons. With approximately 90% of Canada’s population living within 100 miles of the U.S. border, cross-border healthcare has become increasingly prevalent. Having attended the University of Western Ontario’s Medical school, the University of Toronto’s Surgery Residency Program, and Fellowship training in the U.S., over the past 17 years Dr. Zvi Margaliot has practiced both in Canada and the U.S. With extensive experience on both sides of the border, he has a sophisticated understanding of the factors that play a role in the ease or hindrance of access to care.

Cost

One of the most significant factors to take into account is the cost associated with access to medical care. Despite being geographically close, healthcare is practiced starkly differently in both countries. Canada’s healthcare coverage is publicly funded by a single payer, the government, and it is also Universal Healthcare, which means, theoretically, equal access to medical services for all citizens and permanent residents.

In the U.S, healthcare is accessed primarily through private insurance or self-pay; however, children, disabled patients, and the elderly may be able to qualify for publicly funded healthcare through Medicaid and Medicare. Dr. Zvi Margaliot notes that most Americans take ownership of their own care without the assistance of the U.S. government, and because of that U.S. patients are often better informed of their healthcare choices.  

While basic healthcare is available to Canadians, dental, vision care, physiotherapy and prescription drugs are not universally covered, and private insurance is often needed to supplement the costs of these uninsured services. Private insurance in the U.S., on the other hand, usually broadly covers all of these areas, but the depth of coverage varies with the cost of the insurance plan.

Americans pay directly for their healthcare:  They pay insurance premiums which are deducted from their monthly paychecks or self-employment income, and they pay deductibles and co-pays on almost every service or product.  Some deductibles run to several $1000’s per year. While working in the US, I’ve encountered many unfortunate patients who postpone or decline necessary surgery because they couldn’t afford the deductible, even though they were formally insured.  

Americans also pay in-directly for their healthcare, as employers make hefty contributions to health insurance premiums for their employees, which come out of their profits and compete for money that could be spend on research, development, or expansion. Americans also pay indirectly for healthcare through their tax dollars that go toward funding Medicare and Medicaid for those who quality.  In the U.S. businesses bear the brunt of funding healthcare, since the tax rate on business, up until recently, was higher than on individuals. All things being equal, this makes US businesses less competitive than their counterparts in Canada and Europe, where healthcare is funded by the government, and not by employers.

Insured/Uninsured

Uninsured Americans pay out of pocket for every healthcare service they require.  This means that at times they must settle for the cheapest and least effective form of treatment, or forgo necessary treatment altogether.   I’ve seen many, many cases where lower and middle class families must choose between paying rent that month or receiving proper treatment for an injury.  I’ve seen patients choose not to have a cut tendon and nerve fixed, and accept a permanent disability because they can’t afford the cost of surgery. I’ve seen patients choose to accept a permanent limb deformity because they couldn’t afford surgery to fix a broken bone.  These are the kinds of scenarios we imagine happen in the developing world, and not in the “richest” country in the world. Untreated sick people are unable to work, cannot earn an income, cannot feed and support their families, cannot send their children to university, and, in the ultimate irony, cannot afford healthcare.  It’s a vicious cycle, where poor health can lead to poverty, and poverty exacerbates poor health.

In Canada, patients mostly pay only indirectly for their healthcare, through tax dollars collected by the government, which in-turn, is the single-payer that funds the healthcare system.  Both the Federal Government and the Provincial Governments contribute to each Province’s health insurance plan, but it’s all done through tax dollars. In Canada, private citizens pay significantly more taxes than businesses, so that, unlike in the US, business bears a much smaller load of the healthcare costs.  Canadians do not pay deductibles or copays for any insured services. However, many individuals as well as businesses purchase 3rd party supplemental insurance to cover many services that are not covered by the government insurance plan, including physiotherapy, dental care, prescription eyeglasses, prescription medications (for patients over 25 and under 65), and others.

Big Problems

By far the biggest problem facing the US healthcare system is COST.  The American healthcare system is the most expensive in the world. That means the US economy spends more than any other country, in total or per capita, on healthcare services.  In return, Americans get worse than average healthcare. It is a complete fallacy, perpetuated by those with vested interests, that the US has the best healthcare. In most studies of national health outcomes, the US ranks below average for critical metrics of healthcare, including infant mortality, perinatal morbidity and mortality, chronic disease prevention, and life expectancy, especially when compared to countries with Universal healthcare.  

Having said that, Universal Healthcare, in isolation, is also not the answer.  Universal Health Care will bankrupt segments of the US economy, if not the government itself, unless it is implement hand-in-hand with cost containment and cost transparency.  Americans pay unnecessary and unreasonable fees for medical services, as documented in endless studies (for example, I strongly recommend the excellent and eye-opening Time Magazine article by Steven Brill, “Bitter Pill: Why Medical Bills Are Killing Us”, February 2013).

In a true free-market (Capital market), consumers are informed of the costs of products and services they are planning to purchase, they understand what they are getting, and are able to shop around and compare to get the best product they can afford.  This is not the US healthcare system. Most of the time patients don’t know how much the treatment or parts of the treatment will cost until they’ve already received it, or they have no access to shop around and compare, because their insurance plan limits where they can “shop” for healthcare.  As an example, a total knee replacement surgery may cost $12,500 in Buffalo, NY, but the same surgery, using the same implant, will cost $50,000-$80,000 in Los Angeles, CA, even though the surgeons have the same level of training, and the same instruments are used in the operating room. In a true free-market economy, such a price discrepancy would never exist, since most patients would have access to and choose the equal but cheaper option, and the expensive hospitals would lose patients, and be forced to reduce their prices.  The argument that expensive hospitals have much better “reputation” or better outcomes and therefore are worth the extra cost can easily be tested by publishing outcomes and complications rates, and then allowing the patients to make their choice.

Why do some hospitals charge $50,000 for a total knee replacement? – Because they can and no one challenges them on it.

I recently performed tendon reconstruction surgery on a patient’s hand in the US.  I had to order a medical device called a “Hunter Tendon Rod” which is essentially a piece of medical-grade silicone rubber, about the length, shape and size of one piece of Linguine.  The manufacturer charged the surgery center $2000 for the product. This product – nothing more than a string of silicone rubber – has been in use for over 50 years, and any “research and development” costs (for a piece of rubber) have long-ago been recovered.  I find it very hard to think how $2000 is even remotely justifiable.

I have performed over 50 total wrist replacement surgeries in the last 6 years.  In Canada, the manufacturer of the wrist replacement prosthesis (the metal and plastic joint parts) bills the hospital around $5000 (Canadian) for the implant.  In the US, the exact same implant is billed to the hospitals at more than $16,000 USD (or around $20,000 Canadian). Why? – Because U.S. healthcare consumers, and probably their insurance companies, don’t know that such a huge price discrepancy exists.

Examples

Examples abound:  The average cost of an MRI scan in the US (across all States) is $2600.  Some centers in the US may bill twice that. A similar MRI costs around $250 in a Canadian hospital (when done as an insured service.)  A visit to the emergency department to suture a hand laceration will cost the Canadian system a few hundred dollars, but over $5000 – $8000 in some US hospitals.  Why are the costs so different? Because the hospitals and manufacturers charge what they can get away with.

In the US, the product manufacturers, the insurance companies and the hospitals (even the non-profit hospitals run by charities) all make very healthy profits on their services and products, at the expense of the individuals who require healthcare and the people who pay the insurance premiums.  There’s nothing wrong with profits, except when there is a huge disconnect between costs and profits, and when there is complete lack of real transparency to the consumers. This lack of transparency is a significant factor in inflating the cost of healthcare in the U.S. The system does not serve the needs of a large portion of the population, and it has become unsustainable.  

In Canada, the insurance company- the Government – makes no profit from administrating the health insurance system, and the hospitals do not profit from providing insured services.  Costs of devices, pharmaceuticals and products are much lower because they are regulated by the single payer (the government) which has great bargaining leverage with all the suppliers.  A Canadian who required medical care will receive it, without having to make the choice about paying the rent and treating an injury. They will also not be bankrupted by medical bills and debt, and, if the illness is treatable, will be able to continue to contribute to society and the economy.

So what’s the downside of the Canadian system?  That’s the next section.

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