Canadian Health Care System

Worldbusiness, September/October 1995, 19

All Better Now

U.S. lobbies notwithstanding, Canada’s health care is superior

By Diane Francis

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Among the health care systems of the world’s wealthiest industrialized countries, the United States’ is the most expensive; even worse, it fails to provide health care for all Americans. Canada, on the other hand, provides excellent, comprehensive coverage to all of its citizens. Its system, administered jointly by the federal government and the twelve provincial governments, provides Canadian business with an enormous competitive advantage. And yet vested interests in the United States-including doctors, privately owned health care facilities, and insurance companies-have lobbied against government systems such as Canada’s. They say that Canadians must wait months for procedures. This is simply not the case. They would also have Americans believe that Canadian hospitals are second-rate, and that Canadian physicians are poorly trained. These are also not so.

The same type of lobbying took place in Canada in the late 1960s, when the government-run plan was first implemented. It is interesting to note that Vice President Al Gore became a fan of Canada’s health system after his seriously brain-injured son was successfully operated on in Toronto by one of the world’s best neurosurgical pediatrics teams.

A look at the facts leaves little doubt that the Canadian system is superior. An average of 6.3 out of every 1,000 babies born die before the age of 1 in Canada, as opposed to 8.3 in the United States. Life expectancies in Canada are 81 years for women and 74.5 for men, compared with 78.9 and 72.1 years, respectively, in the United States. Yet the Organization for Economic Cooperation and Development, an international monitoring group, reports that while Canada spends just 10.2 percent of its gross domestic product on health care services for all its citizens, the United States spends 14.1 percent and still has millions of citizens with inadequate or nonexistent coverage.

It isn’t just the individual that benefits from Canada’s comprehensive health program. The Canadian system affords business many advantages, including reduced employee costs and an expanded, healthier labor pool. According to a March 1995 study by KPMG Peat Marwick called “A Comparison of Business Costs in Canada and the United States,” Canadian employers spend less on employersponsored benefits than their American counterparts. “Costs for hospital, surgical, medical and major medical insurance premiums are the prime reason for the difference in costs,” the study says. “These insurance premiums represent a cost of 8.2% of gross pay in the United States compared with 1.0% in Canada.”

Unlike in the United States, Canadian health coverage is not tied to welfare benefits; unskilled workers can take low-paying entry-level jobs without fear of losing access to government-paid health care. This removes the possibility of creating an entrenched underclass with health problems who are handcuffed to welfare because of medical-cost issues.

Businesses in Canada are also able to hire workers regardless of their health history. This is particularly important when it comes to using the talents and efforts of senior citizens, or people with chronic illnesses. Canadian workers aren’t trapped in dead-end or unsatisfactory jobs because they are afraid of losing company-provided health benefits.

Reduced labor costs are not the only corporate benefit of the Canadian system. Individuals rarely file the type of highstakes personal injury lawsuits commonly seen in the United States. Because all citizens are guaranteed quality medical care, catastrophic medical expenses, generally the largest component of a settlement, are usually not sought when such suits are filed. In the United States, product liability insurance coverage costs corporations upwards of $500 million a year, and the premiums are growing by 20 percent to 30 percent annually. Insurance costs are dramatically lower in Canadaunless a manufacturer is exporting to the United States.

Canada’s government-run workers’ compensation plan is managed by the provincial governments, in contrast to the patchwork quilt of private and public systems at various levels of government in the United States. The workers’ compensation premium for a Canadian autoworker in London, Ontario, is 4.56 percent of his or her wages; for an American autoworker in Minneapolis, it is 9.07 percent, according to the KPMG comparative report.

Business should be free to conduct business, and in Canada this is so. There is no need for every company to have personnel employed just to handle the paper burden of privatesector workers’ compensation or health care.

Canada’s system is not perfect; nor is Canadian business able to outcompete American business at every turn as a result of cradle-tograve medical care for its population. But the advantages to citizen and business alike are very real. And as American health care costs outpace economic growth and the country’s population ages, a dose of Canadian medicine may cure what ails it. Failing that, the United States’ system will make its insured workers increasingly expensive to employ and its uninsured workers increasingly unable to afford proper health care.

Diane Francis is editor of Canada’s foremost business newspaper, The Financial Post, and the author of five books on business. She also writes a monthly column for Maclean’s, Canada’s national news magazine.