Fraser Forum

Political turmoil in U.S. turns spotlight on Canadian health care

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Canadians frequently, and with some justification, believe their American neighbours are ignorant, even indifferent, to political and social developments north of the border. A clichéd characterization is that the surest way to get a news item buried in the American media is to identify it as “a good policy proposal from Canada.”

Not so much anymore. The political chaos surrounding health-care reform in the United States has American politicians looking to the Canadian health-care system for guidance.

Recently, a group of California state senators spent their “spring break” in Canada studying Canada’s single-payer health-care system. The trip was inspired by a bill that would establish a single-payer system in California. The senators must have liked what they learned on their trip, since the California Senate passed a bill at the end of May that calls for a universal health-care system remarkably similar to the Canadian system.

Specifically, the bill calls for all California state residents, including illegal immigrants but excluding military veterans who would continue to be covered through the U.S. Department of Veterans Affairs, to be covered by a single state-run taxpayer-funded insurance plan. As in Canada, private insurers could offer coverage only for non-essential services not covered by the state plan.

Also, as in Canada, there would be first-dollar coverage, as there would be no deductibles or co-pays. Indeed, in some ways the proposed California plan would be even more comprehensive than provincial government plans as it would provide universal coverage for dental care and prescription drugs.

California is not alone in its effort to emulate the Canadian system. In mid-May, the New York State Assembly passed a single-payer proposal, which contemplates that all existing federal health-care dollars be pooled in a state trust fund that would pay for services and insulate patients from virtually all out-of-pocket costs.

Observers tend to be skeptical about the likelihood of individual states, even large states such as California and New York, actually implementing their own single-payer health-care plans.

For one thing, maintaining federal health insurance programs in some states, but not others, would make continuous insurance coverage for those moving from single-payer states more complicated. For another, the plans call for the federal government to turn over federal Medicaid and Medicare funds to the state governments to pay for health care that state residents receive under those plans. It’s implausible that a Republican administration in Washington would relinquish revenues to Democratic-controlled state governments, particularly states that are relatively wealthy.

As well, the California and New York State plans are far more generous than the federal plans from which revenues will be requested. Indeed, Medicare is characterized by deductibles and co-pays, as well as private supplemental insurance.

It’s also only available, for the most part, to people who have paid into the system, while Medicaid is a means-tested program. Hence, states would need to raise substantial additional tax revenues to implement the generous universal coverage programs being discussed.

Since it’s much easier for taxpayers, especially wealthy taxpayers, to change states than to change countries, attempts to raise additional tax revenues through higher payroll, corporate and sales tax rates might leave individual states with less overall tax revenue rather than the substantial additional revenues they need. Indeed, Vermont abandoned its experiment with single-payer coverage in 2014 when Vermont residents were faced with taxation sticker shock.

What does seem plausible is that single-payer coverage will be a major issue in U.S. political campaigns in the foreseeable future, perhaps as soon as the 2018 Congressional elections. The momentum building in the Democrat Party for a Canadian-style health-care system is almost certainly going to materialize as part of the Democrat Party’s political platform in the next presidential election.

Accordingly, Canada’s system will get a lot of attention in the U.S. media and among U.S. policymakers. Canadians should hope that this attention will bring political focus in Canada to issues plaguing the Canadian health-care system, especially wait times and a looming physician shortage.

While it’s said that imitation is the sincerest form of flattery, Canadians should know better than California state senators that improvements are both feasible and needed for Canada’s health-care system.


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