Learning About Canadian Health Policy…
from an American?

Canadians want to repair their health care system. In one recent poll, 79 percent said that Canada should either make “fundamental changes” or “completely rebuild” the system; in another, 57 percent advocated either “major repairs” or “complete rebuilding.” Meanwhile, Paul Martin performs budget fiddles, which don’t change or rebuild anything, while health care consumers continue to suffer.

If Canadian politicians weren’t so politically timid, what might they do instead? One demonized alternative is “American” health care—purportedly ruthless, profit-grabbing hospitals, HMOs, and doctors who leave millions of plague-ridden, uninsured poor moaning in the streets. It turns out, though, that there’s more to American health care than meets the eye.

Consider British Columbia’s virtual neighbour, Oregon. Ten years ago, it launched new legislation, designed by its current governor, John Kitzhaber, to extend health insurance coverage to low-income residents beyond those who already qualified for government-funded insurance. In order to finance this push towards universality for this subset of Oregonians, Kitzhaber (himself a physician) realized that the number of treatments that could be covered for the entire group would have to be limited. A commission deliberated for 3 years, periodically holding community forums, before issuing a prioritized ranking of 745 different treatments. Higher places on the list were accorded on the basis of the expected effects of treatment in preventing death and illness. Currently, Oregon covers around 580 of these treatments for qualifying residents.

Oregon’s endeavour, the Oregon Health Plan (OHP), is unusual in the American landscape, although a few states have subsequently launched similar programs. And OHP did reduce the uninsured portion of Oregon’s population from 18 to 11 percent; at the same time, the percent uninsured in the US as a whole rose from 14 to 15 percent.

But expanding coverage toward universality has created increasing financial pressure on Oregon’s budget. Here, the story begins to sound even more familiar to Canadians. Can studying the Oregon experience enlighten us as to how “fundamental change” or “complete rebuilding” should occur in Canada?

One clear message from Oregon is that financially prudent health care providers, whether public or private, will limit care to those procedures which clearly benefit the patient more than they cost the provider. Oregon, like almost all US states, is legally obligated to balance its annual budget. In contrast, Canadian provinces can, and do, incur substantial deficits. The consequence of this difference is that health expenses not covered by tax revenues (plus premiums, in British Columbia and Alberta) can be lumped into the deficit, which eventually must be paid by higher taxes.

Budgetary discipline means that Oregon draws a line, covering many but not all treatments under the OHP. Canada, not surprisingly, appears to be less disciplined. For example, the British Columbia Medical Services Plan covers arthroscopic knee repair, uncomplicated hernia repair, tonsillectomy, and hemorrhoid removal; Oregon’s OHP does not. Furthermore, Canadian health care covers all citizens, whereas the OHP only covers those low-income residents not already receiving govern- ment-funded insurance.

The Canadian system draws a line, of course, but in a different way. It imposes lengthy waiting times for many life-saving and pain-relieving procedures. The Fraser Institute’s 1997 survey reveals that patients waited 5.1 weeks on average to see a specialist. After that, patients waited again for an average of 6.8 weeks before receiving treatment.

In contrast, when asked how long a patient would wait for a hip replacement or a cardiac bypass under the OHP, Governor Kitzhaber responded that they would be treated without any significant wait.¹ Some of the motivation for the OHP arose from the realization that the means to provide prompt treatment even for the limited number of individuals covered by the plan was to limit the number of conditions covered. A system where people pay for tonsillectomies but don’t wait for bypasses—Oregon’s system —might well be an improvement over the current Canadian system. Of course, Oregon would be even more of a model for Canada were it to fund medical savings accounts (MSAs) for its indigent citizens, allowing individuals, rather than bureaucrats, to decide how health care money is spent.

It may be heresy to suggest that Canadians should take health policy advice from an American, but if they did, Governor Kitzhaber is certainly a compelling choice. If we listen, we might live better lives.

Note

1Dr. John Kitzhaber spoke to a Fraser Institute Round Table luncheon on March 4 in Vancouver. The text of his remarks will appear in a subsequent edition of Fraser Forum.