Who has a better health care system: Canada or the U.S. Michael Moore would vote for Canada. Libertarians would side with the U.S. A new NBER working paper by June O’Neill and Dave O’Neill concludes that the two systems may produce more similar health outcomes than was previously believed.

History of the Canadian System

The paper reviews some of the major developments in the Canadian health care system during the last half century.

Since the late 1960s Canada essentially has had a universal health insurance system covering all services provided by physicians and hospitals. To implement universal coverage the federal and provincial governments took over full funding of both hospital and physician services, setting physician fees and hospital budgets. During the 70’s physicians, dissatisfied with the official fee amounts, chose to work outside the system and bill patients at higher amounts. But with the passage of the Canadian Health Act of 1984 Canada outlawed extra billing and became a rigid one-tier system which restricted the provision of any “core” services outside the public’s so-called “Medicare” system (Irvine, Ferguson and Cackett).

Since all hospital and physician services are free, demand surged in Canada leading to skyrocketing costs. This lead to government spending cuts in the 1990s; shortages and waiting lines resulted.

The condition for shortages was enhanced because of the provision in the 1984 Act that decreed that any service that the single payer provides, no matter how much in short supply it may be, cannot be privately insured or produced and sold in Canada. Relief came, however, in 2005 when the 1984 Act was struck down as unconstitutional by Canada’s highest court {Chaoulli v.Quebec (Attorney General), 2005, IS.C.R. 791, 2005 SCC 35}. A slim 4/3 majority ruled that the government’s argument—that allowing a private sector, would undermine their public system—was not supported by the actual experience of other countries (U.K., France and Germany) that had converted from single payer to dual systems.

Data

The authors’ main data set used is The Joint Canada/U.S. Survey of Health (JCUSH). Collected between the fall of 2002 and spring of 2003, this data set includes 3,505 Canadian and 5,183 American individuals.

Basic Statistics

U.S. Canada Life Expectancy (Male) 74.8 77.4 Life Expectancy (Female) 80.1 82.4 Infant Mortality/1000 live births 6.8 5.3 Obesity Rate (Male) 31.1 17.0 Obesity Rate (Female) 32.2 19.0 HC spending as % of GDP (2005) 16.0% 10.4%

We can readily see that the U.S. has worse life expectancy, infant mortality rates, and obesity rates that Canada, yet pays more for for these relatively poorer outcomes. Canada is clearly better…right?

Investigating Infant Mortality

It turns out that once we condition on infant birthweight–a significant predictor of infant health–the U.S. has equivalent infant mortality rates. In fact U.S. infant mortality is lower for low-birthweight babies than Canadian infant mortality for low birthweight babies. Overall infant mortality, however, is higher in the U.S. because the incidence of babies with low birthweight is higher than in Canada. This may be due to demographic or epidemiological factors, or it may be the case that the U.S. is better at having a live birth for a low birthweight baby.

Birthweight Distribution Birthweight-specific Infant Mortality

U.S. Canada U.S. Canada <1500 1.4 0.9 247.3 262.2 1500-1999 1.5 1.1 29.3 36.6 2000-2499 4.6 3.7 12.2 12.9 2500-2999 16.6 15.0 4.8 4.4 ≥3000 75.9 78.9 2.1 2.0 <2500 7.5 5.7 60.4 58.0

Overall Mortality Differences

Why do Canadians live longer. One reason is due to the excess number of accidents and homicides in the U.S. compared to Canada. In fact 50%-85% of the mortality gap between American and Canadian adults in their twenties can be explained by the increased American accident/homicide rates. For people over 50, 30-50% of the difference in age-specific mortality rates can be attributed to the excess number of heart disease patients in the U.S. These heart disease findings are more likely driven by American lifestyle choices rather than the efficacy of the U.S. medical system.

Access to Care



Well, the medical efficiency of the two systems may not be so different but access to care must vary greatly, right? Canada has an egalitarian, socialist system while the U.S. relies (somewhat) on free-market capitalism to allocate medical services.

Below we see that Canada general has a lower disease incidence rate, but treatment rates are generally higher in the U.S. Further, these difference decrease even more if we only look at Caucasians in each country. The authors state “the composition of the non-white group differs by country—predominantly black in the U.S., but Asian in Canada; and racial differences in health outcomes may differ in the two countries.” See CensusScope for more details on the U.S. racial composition.

Canada U.S. % with condition % gets treatment % with condition % gets treatment All

Asthma 6.6 80.3 7.8 78.8 High blood pressure 8.8 84.1 13.1 88.3 Heart Disease 2.4 67.2 2.6 69.6 Angina 0.9 74.6 1.1 61.0 Whites Asthma 6.9 82.7 7.7 77.6 High blood pressure 9.1 83.2 12.5 87.3 Heart Disease 2.7 69.4 2.4 73.2 Angina 0.9 70.7 0.8 75.1

In Canada, the main reason for an unmet need was because the wait was too long or the treatment was unavailable. In the U.S., most people who do not receive treatment fail to do so because of cost considerations.

Preventive Services



Probably the most surprising discovery of the paper was that Americans partake in more preventive care than Canadians.

Mammograms: 88.6% of American females 40-69 had ever had a mammogram compared to 72.3% of Canadians.

PAP smear: 86.3% of American females 20-69 had a PAP smear in the last 3 years compared to 75.1% of Canadians.

Prostate screening: 54.2% of American men 40-69 had ever had a PSA test compared to 16.4% of Canadians.

As an economist, I attributed this finding to moral hazard: Canadians know that if they would get a disease that their government will pay for their care. Thus, they may be less motivated to ask for preventive services. One of my medical school colleagues noted, however, that physician recommendations also play a large part in the amount of care given. Further, most patients strongly wish to avoid disease, not simply due to cost considerations, but because of the physical and mental impact the disease would have on their life.

Conclusion

American are less healthy than Canadians. What this paper finds, however, is that this is mainly due to the fact that the U.S. has a higher incidence of disease. It turns out that Americans may have slightly higher access to treatment than Canadians. The paper is not the most smoothly written piece I have read, but the data is revealing. The small-ish sample size of the JCUSH mean that the results should not be taken as definative. Since the data set uses the same survey for both countries, however, the authors present convincing evidence that this cross-country comparison is of a high quality.