Oh Canada, Again

You don’t have to buy the whole Canadian package to give standards, simplicity and equity more attention.

By Ian Morrison

Across the country, state legislators frustrated by the rising costs of health care and the 45 million uninsured are proposing their own state solutions for the health care mess. One interesting twist is a proposal for mandatory catastrophic insurance purchased by individuals.

California has a bipartisan bill (AB1670) sponsored by Keith Richman, a Los Angeles Republican, and Joe Nation, a Democrat from San Rafael, that got shot down recently in committee, because big labor didn’t like any proposal in which employers were not compelled to offer benefits. A bill to do just that (SB2) was initially passed and then narrowly repealed in a special ballot measure in California’s last election. Such American-style alternatives seem to get rejected because of special interest pressure; either big labor or big business take offense and end the debate before it really starts.

Perhaps as a consequence of this failure of incrementalism, many states have their own single-payer advocates. In California the torch is being carried by State Senator Sheila Kuehl, a Democrat from Santa Monica, who has sponsored a single-payer proposal called the California Health Insurance Reliability Act (SB840). The act is estimated to save money and expand access largely through administrative simplification and the bulk purchasing power of a massive single payer system. Many opponents of Canadian-style health care who advocate market-based models worry that continued cost shifting to consumers may lead to a backlash and growing support for such state-sponsored single payer systems. (Although passage of such legislation would require a massive change in the politics and values of America as measured by opinion polls.)

At the same time, Canadians are having enough trouble keeping their own health system afloat amidst demand from sophisticated consumers who want more and better technology and specialty care and who are resisting the pressure to raise taxes that an adequately funded single payer system inevitably creates. Canadian Prime Minister Paul Martin has been forced to ally with the left-leaning NDP and pump more money into the health system to shore up political support and quell the rising tide of complaints about underfunding of the health care system.

There is no perfect health care system; every country has made an ugly compromise among quality, access and cost. But Canada still keeps popping up as an irritating comparison in that it is close, has American-style doctors and spends almost 4 percentage points of GDP less than we do.

Most Canadians believe there should be only one payer because that’s the way to get a good, equitable bargain for patients and taxpayers. I was always trained that there are three equal components to the Canadian difference in spending, each derived from the single-payer structure:

Use of high technology. Canada does not have as much high tech. It’s not that they don’t have fancy hospitals and ICUs; large teaching hospitals are pretty similar. But the typical small hospital is not as extravagantly equipped in Canada as it is in the United States. Canadians are constantly moaning about the fact that they can’t get timely access to MRI and other sophisticated technology. But, you can buy a lot of MRIs for 4 percentage points of GDP.

Incomes of health care professionals. The United States has a higher mix of high-priced specialists and pays those specialists more than in Canada. This is not just doctors, but nurses, administrators, consultants and futurists. Remember: Health care cost equals health care incomes. When you talk of containing costs, that’s someone’s income you plan to contain, and normally they don’t like it.

Administrative waste. Estimates are that 25 percent of American health care is administrative waste: armies of clerks are upcoding, downcoding, adjudicating, faxing, scribbling and kvetching over payment. In Los Angeles County alone there are 1,900 people who do nothing but fill out forms for Medicaid eligibility with a productivity target of two such forms a day. In Canada all doctors in each province are paid based on a standard simple fee schedule. There are no discounts, no pay for performance, not much utilization review and very little faxing (one would think).

While it is unlikely that we in America will give up the high technology and the high incomes without a big screaming fight, we could still learn a lot from Canada on the administrative simplicity front. Streamlining our claims systems, standardizing our forms and formats, encouraging Regional Health Information Organizations and supporting electronic health records could move us down this path. But unfortunately, many of the shifts we are seeing–including HIPPA implementation, consumer-directed health care, pay for performance and quality reporting–make the American health care system even more complex and administratively expensive. Canada may not have a practical solution but it will be a constant benchmark against which our dysfunctional pluralism will be judged.

Ian Morrison is an author, consultant and futurist. He is also a regular contributor to H&HN OnLine.