This blog posting is unusual in that it will feature one original essay in place of a curated collection of articles from newspapers and journals.
Henry Broeska is a medical researcher who has spent most of his life in Canada and who, during the course of his career, has dealt with both the Canadian single-payer Medicare system as well as the infinitely more complex American system of medical billing and coding. The stark contrast in the complexity of the two systems has stimulated in him a passion for health policy.
To quote Henry "Little did I know ........ I would be in the thick of a fight that would be to get rid of all the deliberately-contrived administrative waste in US healthcare through reforming healthcare policy. I suppose you could say I went from helping to tie the Gordian Knot of US healthcare administration to slicing it in half to destroy it."
He has written an essay about the elephant in the room we too often ignore in comparing the Canadian and American systems - the significant differences in cultural values and history between Canada and the US, that exert such a powerful effect on the healthcare politics of the two countries. So I've decided to distribute his essay via this blog.
I'm not doing this to complicate our discussions of healthcare reform in the US, but because I believe we need to be acutely aware of and acknowledge those differences in our advocacy work.
Canadian vs. American Healthcare
by Henry Broeska - March 13, 2019
We often use Canada’s Medicare system in contrast to ours to show folks here in the US that there is a better way to do things. The Canadian healthcare system is just a few miles away from the US but it is light-years away as far as what each system values. If I can put this difference in one sentence, the US healthcare system is focused mainly on profiting on the treatment of patients, while the Canadian healthcare system’s objectives are directed toward best patient outcomes.
As this essay by Henry Broeska, a Canadian now living in the US and someone who has worked in both systems points out, Canadians believe that their healthcare system underlies their social contract with the country of Canada; that basic healthcare is an inalienable right, and that they have a guarantee of equity, access, and high standards of quality. But what Canadians seem to have understood better than Americans from the outset of their Medicare system, was that anyone who put profits ahead of what is best for patients is in conflict with those values. The thing that the American healthcare industry prizes above all else became illegal in Canada. Now in 2019, which country is better off for the values they hold?
Five Words to Remember
As a Canadian ex-pat now living in California, I have been mystified by the resistance to universal healthcare in the US. As long as I lived in Canada, the care I received under ‘Medicare’ served me and my family very well. I’m not alone. Surveys confirm that Canadians are passionately proud of their healthcare system. With the power and wealth of the United States, it’s impossible to believe that healthcare couldn’t be organized along the same lines here too. The main problem for Americans seems to be that unlike other industrialized countries, healthcare is not a public service to which Americans have a right. It’s not guaranteed under the constitution as it is in other industrialized countries. In the US, the provision of healthcare is positioned instead as a commodity. More and more Americans don’t agree with this market-based approach. As healthcare horror stories abound, there is no doubt that running healthcare the way we’ve been doing it is devastating the country. Unfortunately, The Affordable Care Act was woefully inadequate as a comprehensive solution—an ugly patch on an ugly system as Uwe Reinhardt described it.
Everywhere the indicators are flashing red: Americans are dying four years sooner than people in comparable countries; personal bankruptcies for reasons due to medical debt affects a population the size of Phoenix, AZ each year; in 2017, 276,000 more American children were added to the astounding total of 3.9 million uninsured children nationwide; key health indicators like maternal mortality and infant mortality put the US at the very bottom of the ranking of the 34 OECD countries. It goes on and on.
That’s why healthcare was the number one issue in the 2018 mid-term election and it will be the number one issue in the 2020 presidential election. Now consistently in opinion polls, over 70% of Americans want tax-funded ‘Medicare-for-all.’ Less and less a liberal or conservative issue, this demonstration of broad support indicates that the issue of healthcare cuts across party lines.
For the short number of years I’ve been involved with health policy reform advocacy in the US, the universal healthcare system ideal that everyone here is trying to achieve is one of a single payer. Canada seems to be held up as the prime example. But does that goal align to the current reality given the legislation and infrastructure that is already entrenched here in the US?
To institute single payer healthcare (also called ‘Medicare’), Canadians had to agree to a trade-off. New taxes replaced the premiums, deductibles, out-of-pocket expenses and shared costs (co-pays) that everyone was used to paying. But as each province and territory came onboard back in the early 1970s, all personal costs for basic healthcare disappeared overnight. In return, every Canadian gained access to a public healthcare system that rationalized services at a much lower cost since all of the negotiating power was in the hands of the single payer. That lower cost and equitable access to healthcare has represented Canadians’ social contract with their country ever since. Canadians went from physicians’ strikes and riots in the streets (YES…that actually happened) instigated by AMA fear-mongering, to broad consensus and unwavering popularity for their Medicare within just 2 years and ever since. Doctors said that they were better off financially under Medicare. And that, I believe, is why and where we want to go here.
The Canadian healthcare system is really 13 provincial and territorial systems governed by the federally legislated Canada Health Act of 1984. Interesting that the Act was put in place long after Medicare was already up and running. In fact the CHA strengthened and replaced legislation that was already enacted. The CHA itself was based on the over-arching premise that conditions of human need should be socialized. It finally established that healthcare would be a non-profit enterprise with service guarantees—and it’s withstood 35 years of vigorous court challenges, mostly from private companies who want to get their own piece of what is essentially the biggest business in Canada. The insurance plans administered by each province and territory must adhere to the terms and conditions of the Act in order to receive federal transfer payments under the Canada Health Transfer. This is the hammer that the federal government holds over individual provinces that are tempted to cheat by allowing extra billing or opening the door to private providers, no matter how well-intentioned their motives to shorten wait lists and expand diagnostics and therapies. So far it’s a strategy that has worked to keep the rate of healthcare inflation on par with other OECD countries. (Q: Could similar legislation in the US withstand endless court challenges given our right-leaning, 5-4 decision-making Supreme Court?)
If the US followed the Canadian model precisely, it’s possible that $1.3 trillion in wasted costs could be saved each year. But even if the administrative savings only offset the added costs at first, Americans would all do better—much better. Without coverage disruptions caused by profit-obsessed insurers or care interruptions caused by unaffordable prescription medications, Americans would be happier and healthier. The other benefits that Canadians enjoy because of their healthcare system would accrue to all Americans over time. For example, personal medical debt would be immediately eliminated just as it was in Canada. There would be lower national and state deficits, hundreds of thousands of lives saved, lower mortality rates across the board, better health outcomes for everyone, higher national life expectancies, and higher economic growth nationally (Just as an aside, I frequently knock around the idea with others that we should advocate for the concept of healthcare-for-all on the basis that it’s perhaps the most conservative of positions to take on national health policy. In Canada, even the most right-wing, conservative people I know are strongly behind Medicare for the reason that it saves money and makes Canadian industry more competitive globally).
There are two inviolable conditions that are essential for the system to work. On these this can be no equivocation or compromise. Firstly, all basic healthcare must be delivered on a non-profit basis and services provided by doctors and hospitals for basic medical care must be fully covered. To accomplish this, the single payer must assume all risks. The entire point of engaging a single payer is to avoid all intermediaries by having the payer perform adjudication and reimbursement of providers directly. Secondly, the single payer must set common rates for all medical goods and services. A true single payer plan fixes limitations or caps on what all third-party providers, pharmaceutical companies, device manufacturers, etc. can charge. Following Canada’s example, an American single payer plan must also conform to the other conditions of portability, universality, comprehensiveness, accessibility, and public administration by writing them into federal legislation. These are the tenets that were established by Tommy Douglas for Canada’s Medicare plan. The ‘public administration’ feature is particularly relevant to this discussion.
Unlike a private system in search of profits, a single payer system like Canada’s is focused on patient outcomes. The Canadian model is an important example for Americans because it symmetrically solves the three main problems inherent in the American system. Firstly, it solves the problem of universal access; there are no uninsured Canadians. Secondly, it solves the problem of runaway healthcare costs, which in the US consistently run well beyond the rate of inflation; global budgets and the ability to hold a hammer over providers in price negotiations are its main ‘under-the-hood’ features. Thirdly, it solves the problem of degraded quality, including under-insurance, now recently measured at 87 million Americans. I’ve noticed that all of the various ‘Medicare-for-all’ healthcare bills now before congress aspire to these qualities but most fall short for either ideological reasons, or for the reason that lawmakers’ opinions are corrupted by the financial influence of private companies (ie: these companies fund politicians’ re-election campaigns). Therefore the question of whether legislators can agree to establish such a system is not one of policy preferences but of politics.
The current debate in the US continues with respect to the features that define ‘Medicare-for-all.’ We are a long way from consensus. Most lawmakers assume that certain incentives will be needed so that third-party costs won’t get out of control. From the Canadian example we see that full financial control over hospitals and urgent care facilities is essential. And that full control is also enough to avoid other artificial cost-control mechanisms such as HMOs and ACOs. In the US, discussion is focused on those mechanisms that allow other third-parties to assume risks. Here’s where we get into trouble. There are no social controls over things like executive salaries, executive incentive packages and stock options paid to the CEO class, engagement with third-party suppliers, and contractors. They spend and pay themselves as they please. Nor is there a control on hospital systems that continue their ‘merger madness’ pursuits in a restriction-free financial environment. That’s a night and day difference from Canada where all hospitals are under the strict management control of the provincial health agencies and must live within their annual budget allocations (even the highest paid CEOs only make around $400k per year).
There have indeed been many recent consolidations and integrations of hospitals in Canada. But the only consideration for hospital consolidation in Canada is to enhance service distribution and prevent expensive duplications of specialized services for the benefit of taxpayers and patients alike. For example, instead of many hospitals in one region offering cardiac or orthopedic care, just one or two hospitals in any Canadian city now usually provide services in these areas. Other hospitals within that region discretely specialize in emergency care, maternity care, mental health, and so on. All residents in that region have access to any care including the specialists they need at any one of those hospitals without restriction. This consolidation/integration of services not only saves money but creates centers of excellence in those areas of care practice. The sickest and poorest patients are therefore protected by making the system both accessible and affordable. In such a scenario, American-style ‘value-based payment’ incentives through HMO or ACO middlemen are irrelevant and totally unnecessary. The answer to whether a ‘fee-for-service’ type incentive structure for physicians and hospitals is that it works very well if all of the other conditions are in place.
Unfortunately, we’re not dealing with anything close to a healthcare infrastructure that looks like Canada, nor the years of evolution it took Canada to get to what their healthcare system is now. Where once both healthcare systems were identical in almost every respect, 50 years of maturation in opposite directions has created differences between Canada and the US that can’t be easily bridged. Most of us can’t even imagine how we might get to the level of cooperative integration I’ve described. Here in the US we haven’t even agreed that conditions of human need should be socialized as part of our social contract with our country. Constitutionally-speaking, protecting our guns is far more important. Whether single or multipayer, we will end up getting resistance from every private third-party stakeholder. So let’s go through the multi-payer discussion where we’ll discover that Germany is fraught with two-tier coverage problems and not panacea by any stretch. Even they are talking about going to a more equitable system that “looks more like the Canadian healthcare system.” But whatever consensus we reach with respect to the Medicare-for-all bill we end up supporting, the alternative of not achieving universality is so much worse. Just remember the conditions that will allow the system to work; portability, universality, comprehensiveness, accessibility, and public administration. Anything less was a deal-breaker for the founder of Canadian Medicare, Tommy Douglas and these words must become our mantra too.
But whatever consensus we reach here in this working group, the alternative of not achieving universality is so much worse and that is why we do this.