The Quick and Dirty Primer On Canadian Healthcare

Canada’s socialized health insurance system seems to be one of the great boogeymen of the healthcare reform debate next door. A quick sample of the debate shows that a lot of people point at our system as a reason not to dramatically reform the US system. The same sample shows that most of those people seem to have little to know idea how our system even works.

So it’s time I help enlighten you fine folks.

I’m not going to go into depth on the origins of Canada’s universal healthcare. Similarly I won’t go into too much detail about the systems in place to address Canada’s complex fiscal imbalance problems, except when I get into the impact of the efforts to balance the federal government budget in the 1990s.

What I will say is that there was a fight and it seems to parallel the struggle now unfolding in the US. Though without so much propaganda and corporate media influence I think.

So how’s it work? Every Canadian citizen and permanent resident who ordinarily resides in Canada is covered by a health insurance plan run by their provincial government. Each province runs its plans a little differently, but they must all comply with federal legislation called the Canada Health Act which sets out the basic pillars of the system.  They’re pretty straightforward: public administration, comprehensiveness, universality, portability, and accessibility.

Basically – the systems are run publicly by the provinces on a not-for-profit basis, it covers a broad range of services, it treats everyone the same,  covers you in every province, and should provide reasonable access to services.  This is the most contentious aspect of the system, where a lot of the of the noise in US propaganda comes.

The reality of the system is that there are waits for some services. It’s a recognized, well-publicized issue. Most provinces take it seriously enough that they publish a lot of statistics on wait times. Those wait times as published are for routine cases, and there’s a prioritization system. A while back an American conservative tried, gloating, to tell me how bad our system was, which amused me since she clearly had no idea what she was talking about. In fact, she told me about a friend of hers who was diagnosed with breast cancer and about how she was in for surgery within a few weeks. I don’t remember the whole story, but a quick trip to the Ontario Ministry of Health’s wait times site suggested that her friend could actually have been treated faster at Princess Margaret Hospital…

So what’s the story on wait times? Well, the problem seems to have some roots in the 1990s when Jean Chretien was elected Prime Minister. His Liberal Party was determined to slay the dragon of deficit, which was accomplished by massive spending cuts. A major cut was made to the Canada Health and Social Transfer, the money that is transferred to provincial governments to fund social programs and health care.

See, provinces administer their own health insurance systems, but they get money from the federal government to do so – it’s part of the process which allows the federal government to address Canada’s rather significant fiscal imbalance. During the 1990s, each province was left to figure out how to cope with the cuts. Each took different routes. During that time, I lived in Ontario, the most populous province. My mother worked as an RN at that time too, and healthcare was a huge dinner table topic.

Ontario had borne the burden of a left-wing government which was elected more by accident than anything else, which ushered in a strong majority government for the Progressive Conservative Party of Ontario, led by Mike Harris. Harris’ platform was called the Common Sense Revolution – a dramatic budget balancing act (it was also partly deception, we later learned). Hospitals faced huge budget cuts, nurses were laid off, new doctors weren’t trained, and many left the province for greener pastures. Some of the changes made sense, like amalgamating hospital adminstrations, but the lack of investment meant that there weren’t enough MRI machines being installed or operators being trained. That’s the sort of thing that caused the problems we have now and that are being addressed. New hospitals are being built, medical schools expanded, and programs being added to recognize foreign credentials.

As an aside, one of Harris’ other master strokes was using Paul Martin’s trick of pushing responsibilty down (it was called “downloading”) to a lower level of government. They did this with the highway system… with the wonderful result that maps of Ontario make little sense anymore, because a lot of provincial highways became county/municipal roads. So Ontario Highway 7 stops and starts at random, for example, becoming county road stretches from place to place – and there’s many other roads like that.  I can’t imagine how someone who didn’t live there would figure it out.

How do the systems work? Well, some provinces have a premium system, some have a sliding scale user fee, or some just use their tax system. No one here has any delusion about the system being “free”, we know it’s not – but the thing is that everyone has insurance, period. No one worries about co-pays, deductibles, pre-existing conditions. In fact, I had no idea what a “co-pay” was until I took healthcare economics in university and started to learn about the USA’s bizarre system.

The other thing that people don’t seem to get about Canada’s system is that it’s socialized insurance – not socialized care.  Most people’s main contact with the health care system is their family doctor (or GP). Those doctors generally are self-employed, owning their own clinics (most of which are organized as a special class of corporation). They have a single payer that they bill, so the overhead is substantially lower than an American doctor who has to interact with a variety of insurers. On top of that, the rules on what pays and rates are clear and well set out – so no chasing down non-payers or risking insurers getting out of paying.

The net result is that administrative costs are a much smaller portion of total healthcare expenditure – which is why we suspect that a universal healthcare system will actually be cheaper in the long run for the USA. On top of that, employers have a steady set of costs and don’t have to face spiralling benefit costs or having to consider discontinuing benefits altogether. This is a competitive advantage for universal healthcare nations.

The last ridiculous point – rationing. Basic economics tell you that any scarce resources are rationed in one way or another. In the USA, insurers effect that rationing by making decisions on what to pay for. They will often claim “we don’t deny care, we deny payment”. The implication is that if an insurer denies a claim it doesn’t mean that the patient can’t get the care. This of course is nonsense, because for most people, they simply don’t have the resources to get the care – that’s why they bought insurance! For all the bullshit of “death panels”, to the extent such a thing is possible, it’s insurers doing so.

One of the best illustrations of the propaganda is the case of Shona Holmes, the Canadian who appeared in anti-reform ads bemoaning the horror of the Canadian healthcare system she claimed would have killed her because she had to wait for surgery on a tumour.

The ads left out the fact that tumour was benign and not life-threatening, a fact that was exposed when a Canadian doctor found her story on the Mayo Clinic’s website. She required an extremely specialized procedure that entailed a wait. Amazingly, there is a process by which she could have applied to go abroad for treatment and get it paid for by public insurance anyhow… but that’s a complex issue I can’t really get into.

I guess that’s a start. The thing is it comes down to what I heard Obama saying on a promo clip on the BBC – about how the debate should be a debate about facts and reality, not made up stuff like “death panels” and that kind of nonsense. Debate healthcare all you want to, Americans, but debate the facts, not the crap that you’re fed by lobbyists.

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5 comments so far

  1. Heidi on

    Nicely explained! Thanks! Any chance you can do something similar re: he reasoning and economic pros and cons of the building of the mega hospitals in Montreal?

    • warriorbanker on

      I’m afraid I know nothing about that issue and don’t really have the time to research it – though you have piqued my interest. What, if you don’t mind my asking, is a Belgian’s interest in the issue? I’m curious.

      And thank you to Belgium, incidentally, for inventing moules & frites, and Hoegaarden.

  2. Heidi on

    Am a Canadian expat in Belgium.
    Hoegaarden, wow, you really know your Belgian inventions!
    Bedankt for your reply and I look forward to reading more of your blog.

    • warriorbanker on

      I put that together when I saw the last name – Howard didn’t strike me as particularly Belgian. I haven’t been there yet but it’s somewhere I’d like to see sooner rather than later, probably on a battlefield tour as it’s likely not surprising that I’m quite interested in military history, something in which Belgium is quite rich!

      • HC on

        Belgium is a really under-rated country. Flanders (the dutch speaking part) is really wonderful… well, if you like medieval towns, history, the North sea, bike-friendly paths, fries, steak, beer, chocolate… and art. It has everything really!


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