The Pitfalls of Single-Payer Health Care: Canada’s Cautionary Tale

Candice Malcolm:

In the Netflix series House of Cards, President Frank Underwood campaigned for the White House by telling Americans, “You are entitled to nothing.” The fictional president — a Democrat, no less — was forthright with American voters about the unaffordable and unsustainable structure of America’s entitlement programs, and he was rewarded at the polls.

In real-life America, unfortunately, there is no such courageous honesty from the political class. Even many in the Republican party, once the stalwart force fighting against the growth of big government, are now resigned to contemplating a government takeover of the health-care industry in the wake of their failure to repeal and replace Obamacare. Charles Krauthammer, for example, woefully predicts that President Trump will opt for single-payer health care. F. H. Buckley, meanwhile, optimistically calls for Trump to look to the Canadian model of universal coverage.

There’s just one problem: The Canadian model of universal coverage is failing.

ASSESSING CANADA’S SINGLE-PAYER SYSTEM

The Canada Health Act (CHA), introduced in 1984, governs the complicated fiscal agreement between the provinces, who administer health services, and the feds, who manage their health-insurance monopoly and transfer funds to the local governments. Unlike in the United Kingdom, where health care is socialized and hospitals are run by the National Health Service, in Canada health care is technically delivered privately, although given the Kafkaesque regulations and restrictions that govern it, the system is by no means market-based. In fact, Canada’s government-controlled health-care system has become more restrictive than communist China’s.

Debates about health-care policy typically revolve around three key metrics: universality, affordability, and quality.

Canada passes the first test with flying colors: Every resident of the country is insured under the CHA, with covered procedures free at the point of delivery. While medical providers are independent from the federal government, they are compelled to accept CHA insurance —and nothing else — by a prohibition on accepting payments outside the national-insurance scheme so long as they wish to continue accepting federal health-transfer funds. The spigot of money from Ottawa thus ensures a de facto government monopoly in the health-insurance market.

The CHA provides and ensures universal coverage from the top down. In Canada, the government determines what procedures are medically necessary. Bureaucrats, not doctors, decide which procedures and treatments are covered under the CHA — based on data and statistics rather than on the needs of patients. While private insurance does exist — an OECD report found that 75 percent of Canadians have supplementary insurance — it applies only to procedures and services that fall outside the CHA — including dental work, optometric care, and pharmaceutical drugs.

When it comes to affordability, the Canadian system also passes, if just barely. Canadians pay for health insurance through their taxes; most never see a medical bill. But that doesn’t mean the system is affordable. Au contraire, it relies almost entirely on current taxpayers to subsidize the disproportionately large health-care needs of elderly Canadians in their final few years of life. Rather than pre-funding the system to deal with the coming tsunami of aging Baby Boomers, Canada’s provincial governments pay and borrow as they go — and rank among the most indebted sub-sovereign borrowers in the world. According to Don Drummond, an economist appointed by Ontario’s Liberal government to help fix its finances, Canada’s largest province is projected to see health-care costs soar to the point where they will consume 80 percent of the entire provincial budget by 2030, up from 46 percent in 2010.

In the meantime, to address scarcity in the health-care system, government central planners ration care and cap the number of procedures offered in a given year, leading to queues, longer wait times, and a deterioration in the quality of care. Speaking of which#…#

#…#When it comes to the final metric, quality of care, Canada lags behind most other developed Western nations. A 2014 report by the Commonwealth Fund ranked Canada tenth out of eleven wealthy countries (ahead of only the United States) in health-care quality, and dead last in timeliness of care. The report showed that 29 percent of adult Canadians who fell ill and needed to see a specialist waited two months or longer, and 18 percent waited four months or longer, compared with 6 percent and 7 percent of Americans, respectively.

Canada’s quality of care is poor, and it continues to deteriorate in the face of a looming fiscal crunch and further rationing. In Canada’s single-payer system, citizens cannot pay directly for procedures, and they cannot purchase private insurance to cover services provided by the CHA. They must instead wait in line or seek health-care services outside the country.

THE SYSTEM’S MYSTERIOUSLY ENDURING POPULARITY

Canadian health-care outcomes are relatively poor, and yet the state-controlled system is beloved by Canadians. A 2012 poll by Leger Marketing in Montreal found that 94 percent of Canadians consider universal health care “an important source of collective pride.” The reasons for this are complicated.

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