Healthcare: The Canadian Fiscal Crisis that America Would Love to Have

By Keith Edmund White

Editor-in-Chief

Canada's provinces are beginning to rein in healthcare spending, which means they are putting the breaks on near-double digit percent annual increases.  Sure, this is the beginning of a decade-delayed 'new reality' regarding raising healthcare spending.  But, as Keith White reports, if Canadian spending on healthcare constitutes a crisis, it's a crisis the United States would love to catch.

Jeffrey Simpson at The Globe & Mail highlights a big shift in how provinces are dealing with healthcare spending, and the possibility that provinces may need to start coming to gripes with containing healthcare spending.

After a decade allowing healthcare budgets to increase, all provinces, save one (i.e. Quebec), are holding back on healthcare spending.  Why?   Budgets are shrinking; healthcare costs are raising; and, after years of avoidance, provincial debts have to be reckoned with.

But the lurking sense of 'doom and gloom' in Simpson's article could easily bemuse an American observer.

From Jeffery Simpson's article:

Now things are worse. Revenues have slumped courtesy of a weak internal economy and slow growth in export markets. The Conservative government had promised to balance the books in 2014-1015. Now it would appear a balanced budget might not arrive until 2016-2017.

With freezing the health-care budget came increases in corporate and personal income taxes, along with a continuing downsizing of departmental budgets and personnel.

As for health care, New Brunswick Finance Minister Blaine Higgs said this: “The right to universal health care is one of the defining characteristics of being Canada. The average citizen believes that health care in our country is free. But that … is a myth. … Our medicare card is a credit card for which we never get a bill. The bill gets sent to the people of New Brunswick and I’m sorry to say that we’re spending way beyond our credit limits.”

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This shuddering halt to huge annual health-care increases comes about a decade after the Romanow commission recommended big infusions of additional cash to “buy change.” The result will be quite salutary (at least for a while) because, instead of governments and health-care providers believing more money will solve systemic challenges, it’s now known that such a beguilingly false option won’t be available.

Creative thinking about real change in health care is under way across the country. We learned in the post-Romanow years what not to do. More real change will happen in today’s lean times than in the fat ones.

Sure Canada is going to have to rein in healthcare costs. But provincial leaders, when they look South, probably breathe easy knowing that healthcare spending is relatively straight forward in Canada.

The United States, putting aside the possibly manifold benefits of its federalized public-private approach to healthcare, does not excel at centralized healthcare decision-making or containing its healthcare costs.

Oh, and Canada's healthcare spending problem is paradise compared to what the United States is facing. From Steven Reidberg's U.S News and World Report article Using Canada's Health System as Model Might Cut U.S. Costs: Study:

"Canada's Medicare program has been much more successful in controlling costs than the U.S. Medicare program," said Dr. Steffie Woolhandler, a professor in CUNY's School of Public Health.

Many factors play into the difference, Woolhandler said.

"Canada's system is a real single-payer system -- our system is single-payer for only a portion of the population," she said.

This results in higher administrative costs in the United States compared to Canada, Woolhandler said. "In the U.S., administrative costs are about 31 percent of health care costs and it's about 16 percent in Canada," she said.

In addition, hospitals in Canada are paid less than in the United States. Also, the Canadian government negotiates drug prices to get the lowest cost, while the U.S. government is prohibited by law from negotiating drug costs for Medicare patients, Woolhandler said.

Medical malpractice costs also are lower in Canada, she noted.

Even though costs are lower in Canada, health outcomes are akin to the those for the United States, Woolhandler said.

 Whatever your position on healthcare reform, one thing's for sure:  From a strictly dollars and cents viewpoint,  America would love to catch Canada's healthcare woes.