Heritage Foundation Leadership for America

883 February 19,1992 PROBLEMS IN PARADISE: CANADIANS COMPLm.

ABOUT THEIR HEALTH CARE SYSTEM INTRODUCTION Health care costs are escalating out of controi. Families are finding it.-harder .to obtain needed medical care. Spending on health care is taking a huge and growing bite out of federal and local government budgets, and the recession has made those budgets tighter. The spread of AIDS, the need for beper treatment of drug and alcohol diction, a chronic shortage of doctors in rural areas and an aging population are imposing further burdens on the nation's health system calls for. health care reform thus are growing. Faced with demands for more government spending on health care, but with limited or dec1iningjimi.v to meet those demad, a number of governmerq commissions are busy stu

ing the mounting health care proble Both in and out of government, critics complain there is too much waste in the system. They say it is too bureaucratic; that doctors llzake too much money; that they perform to' many ,unnecessary tests and procedures eee A snapshot of America's health care crisis? No, it is a description of the heath c*.i debate in Canada-the very same Canada to which some American IayqiakeG l&k r for a solution to America's health care problems; Just when some voices, on $2a

&i-:7 i Hill urge the United States to import Canada's universal, government-nin health. Sy tem, that system itself is sinking deeper into trouble and debt mid Cana&nfing pointing and recriminations gree of crisis as in the U.S. But that day may not be far off. And while thee are maj differences between the U.S. and Canadian systems, there is &I eerie similarity in sdme of the problems on both sides of the border. This similarity'should induce maie sober reflection by U.S. policy m'akers, particularly thoseinclined to advocate the adoption of a health system resembhg Canada's Eerie Similarity. To be sure, the Canadian health system'has not .yet re&hed the In present day Canada unlimited demand for free, government-funded medical are has collided headlong with limited public resources. As such Canadas health system is plagued by soaring costs, with spending in mnt years escalating at rates as great or greater than those of the U.S. system.

The Canadian federal government, burdened with large budget deficits, is steadily reducing its share of funding for provincial health plans.

Provincial health ministers are struggling to control their hemorrhaging bud gets by closing hospital beds, laying off health workers, capping doctors in comes, and limiting entry to medical schools.

Provincial governments, including those headed by socialists, are trying to shift more health care costs to consumers by reducing or eliminating cover age for optional benefits and imposing user fees. Quebecs government is even considering adding to the taxable incomes of its citizens the value of the medical Services they consume each year.

Waiting lists are now endemic in Canadas health system, and a aent study estimates 260,000 Canadians are currently waiting for major surgery In British Columbia, one of two provinces that charge citizens a monthly pre mium to help fmance its health plan, between 2 percent. and 5 percent of the population do not pay their premiums and thus technically are uninsured.

These uninsmd must pay doctors out of pocket for treatment or rely on char ity care from physicians.

When Robert Bourassa, the Premier of Quebec, needed cancer treatment, he crossed into the U.S. and obtained it at his own expense. Such actions by more affluent or politically well-connected Canadians raise the question of whether a two-tiered health system, of the kind Canadians long sought to avoid, is now emerging As Canadians incxtasingly debate the future of their health system and wonder how long it can survive in its present structure, the lesson for America should be clear. The 2xistence of an ideal health system that offers unlimited, free government-funded medical care, while simultaneously limiting health spending without restricting patient hoice or provider decision making, is a myth. If it ever did exist in Canada, it does not any more. Pursuing the ephemeral mirage of a government-run health care Utopia never will lead to a high quality, low cost health system in America or anywhere else 2 THE CANADIAN HEALTH SYSTEM Known colloquially as "medicare Canada's universal, government-funded health system actually is a collection of similar systems operated by the provinces. Each of Canada's ten provinces and two tenitories administers its own universal health plan and pays for most of its costs. The main role of the Canadian federal government is to provide partial financing of the provincial health systems and to establish broad struc tural guidelines to which the provincial plans must adhere if they are to receive federal financial Canadians take great pride in the fact that their health system gives all citizens ac cess to care from hospitals and physicians that is free of charge to the patient at the point of service. While Canadians pay high taxes to fund this system, it is a price which, at least until now, the vast majority of Canadians have been willing to pay.

Since their country, moreover, is increasingly questioning its very existence as a single nation, many Canadians view their medicare system as a unifying institution. And many Canadians are proud that, at least in health care, their nation of 26 million is widely regarded as superior to its overbearing southern neighbor.

A growing number of Americans, including many members of Congress, look with envy at Canada's health system. Conscious of the 35 million Americans who lack health insurance, and the U.S. health system's dubious status as the world's most ex pensive, they see in their neighbor to the north a health system that provides universal coverage at a lower cost.

But all is not well in what some Americans view as Canada's health care paradise.

While it is still all but unheard of for a Canadian to call publicly for scrapping or pri vatizing medicare, complaints are becoming louder and proposed reforms ma sweep ing in their scope. The major cause for Canada's growing health care debate: Soaring health care costs THE REALITY: ESCALATING HEALTH CARE COSTS The Canadian press now routinely carries news stories and columns describing the escalating costs and funding crisis afflicting Canada's health system. The irony of this given U.S. fascination with the Canadian system, is not lost on some Caniidian com 1 Each province administen its own universal health plan. While each of those provincial plans has its own proper official name, Canadians often use the name "medicare" when referring to the entire, nationwide health system, and particularly when discussing federal funding or regulation of the provincial plans. This use of the name "medim should not be confused with the U.S. federal government's pgmn for providing health care to elderly Americans the proper name of which is also Medicare. Henceforth, when it appears in this study the term "medicare" will refer to its Canadian usage, unless otherwise specified hption vs. Reality: Taking a Second Look at Canadian Health Care," Heritage Foundation Eackgroundcr No 807, Janua~y 31,1991, and Edward Neuschler Canadian Health Care: Ihe Implications of Public Health Insurance washington, D.C.,Ihe Health Insmce Association of America, June 1990 2 Far a more detailed discussion of the SErUcture of the Canadian health care system, see: Edmund F. Haislmaier 3 mentam. In the November 22,1991, edition of The Vancouver Sun (British Colum bia for example, columnist Geoffrey Stevens wrote The irony is that at the very moment American politicians and health care professionals are asking whether the U.S. can afford not to adopt Canadian-style medicare, Canadians are asking whether we can afford to keep it There isn't a p~vince that is not struggling, not to make medicare better but to cut back The= isn't a province that is not desperately worried about health costs An editorial in TheToronto Star expressed similar sentiments last summer, noting that We, the taxpayers of Canada, are not willing to pay for the level of service that we, the users of medicare want. After 25 years of congratulating ourselves on having one of the finest health-care qgrams in the world we have begun to wonder whether we can afford it Last May 18, in an article on the debate over the future direction of Canadian medi cine, Paul Benedetti, a reporter for The Burlington Spectator (Ontario observed Not only is our health system, considered by many to be the finest in the world, teetering under enormous financial strain, but the very assumptions upon whic that system was created more than 30 years ago axe crumbling beneath it. 9 Writing also last May, reporter Joan Ramsay of the Southam News syndicate com plained about the soaring cost of the system The weight on the shoulders of Canada's health care system is becoming unbearable. The problem, experts say, is that you can't have virtually unlimited advanced care on a limited budget Medicare has become a black hole, s ckin tax dollars indiscriminately and, too often, inefficiently bg And just last month, reporting on the results of a meeting of Canadian provincial health ministers called to map a joint health care reform strategy, an article in The Van couver Sun noted that, "The system has grown to be the biggest cost item in provincial budgets and fu? estimates clearly show the limits of health care spending are rapidly approaching In a related editorial the same day, the Sun comments that 3 Geoffrey Stevens Medicare Irony Mounting The Vancouver Sun (British Columbia), November 22,1991, p. A19 4 Thc Toronto Star 85 quoted in, Clyde H. Famsworth Recession Forcing Canada to Reexamine Health Care 5 Pad Benedetti Health Care Faces Significant Change: System Needs New Approach May 18,1991, The 6 From syndicated stories by Joan Ramsey of Southam News Service which were published on May 11,1991 under the The New YorkTims, November 24,1991, p. A2Q Burlington Spectator (Ontario p. Al headlines Costs and Demands Build a Health Care Pressure Cooker and "Hard Choices Ahead on Medical Funding in The Hamilton Spectator (Ontario 7 "Doctanr' Bfl-Cuts Signal New Health Seavices TheVancouver Sun, January 30,1992, p. A6 4 The governments' past successes at administering health care have been dubious and are declining in number. Provincial health ministries win few fights with.doctm and have failed to use billing numbers or payment methods to create nual/urban balance in health care delivery.

But there is in this, one indisputable truth: if the provinces do nothing health care costs will continue to slcpxket. The best health care system in the world will spend itself to death Skyrocketing Cosk+deed, if misery loves company, then Americans and Canadi ans can find in each other good company when it comes to skyrocketing health care costs While it is still commonplace to argue on both sides of the border that, in com parison with America, Canada's health system delivers more care for less money, that comparison is increasingly misleading.

It is, of come, true that Canada gives almost all its citizens health insurance cover age, while an estimated 35 million Americans are uninsured for at least some period in any year. It is also true that Canada spends less than the U.S. on health care, as mea sured in per capita terms or as a percentage of each country's respective gross Pmes tic product (GDP)-even though that difference has been greatly exaggerated.

But broader comparisons show that the margin of difference in health spending be tween the U.S. and Canada offers little reason for American envy or Canadian pride.

The simple fact is: America may have the most expensive health system in the world but Canada has the world's second most expensive system payers are grimly aware of it. Explains Dr. Martin Barkin former deputy health minis ter for Ontario, who argues that the current woes of Canadian health care cannot be blamed on underfunding Canada is now the highest per-capita spender on health caxe of any country While most Americans are ignorant of this budget fact, more and more Canadian tax with a national health system. Amongst industrialized nations, only the United States, which doesn't have a govevent-run system covering all citizens, spends more-with worse results.

Similarly, Diane Francis, a columnist for Muclean's, Canada's leading news maga zine, states flatly Proponents of Canada's medical myth should contemplate the fact that our costs m growing exponentially and are now the second-highest per capita in the world, after the United States Bleak Future. When health care spending trends m analyzed, the future of the Ca nadian health system is as bleak as that of its U.S. counterpart. In both countries, the rates of growth in health care costs are outstripping general inflation rates by wide mar gins. Indeed, comparative data show that, during the past two decades, the rates of 8 "Praise and Questions for Health Ministers The Vancouver Sun, January 30,1992, p. A16 9 Haislmaier, op.cit 10 Dr. Martin Barkin, as quoted in: Charlotte Gray Wcare Under the Knife: Is Ottawa Quietly Destroying Our Most 11 Diane Francis, "Expensive and Dangernus Myths Muclean's, September 2,1991, p. 13.

Precious Social hgramme Saturday Night, Septembr 1991, p. 12 5 growth in real (inflation adjusted) per capita health spending in the two countries have been virtually identical. In fact, real r capita health spending has grown faster in Can ada than in the U.S. in recent years care costs under control will require a far better solution than simply adopting a na tional health system modeled on Canadas experience IF The lesson for America should be clear. Genuine success in bringing soaring health RUNAWAY BUDGETS The most visible side-effect of escalating health care costs in the U.S. has been a growing population of uninsured Americans who cannot afford to buy coverage. In Canada the most visible effect has been a growing fiscal crisis in federal and provin cial government budgets. The three factors that aggravate the health care financing problems resulting from high demand in Canada for free health care are 1) The Canadian recession. As in the U.S this is reducing Canadian govern ment tax receipts at federal and local levels. In Canada the recession also puts an added dhxt strain on the health system because 74 percent of health spending is funded out of tax revenues. In contrast, only 42 percent of the U.S. health spending is taxpayer-funded 2) Huge budget deficits that Canadas federal and provincial governments have been labaring to close. Indeed, the net budget deficit for all levels of gov mment is ater in Canada than in the U.S. when measured as a percent age of GDP. T3 3) Canadas on-again, off-again constitutional crisis, which is fueled by sepa ratist movements in Quebec. Canada is attempting to redefme the respec tive roles of its federal and provincial governments. The funding and future of Canadas health system are inexorably intertwined with Canadas politi cal and constitutional structure. This is because although the health system is operated separately in each province, over one-third of its funding comes from the federal government, as do the rules dictating the basic structu~e of the system. Thus, any major change in Canadas political structure means a major change, in the financing or control of Canadas health system-and vice versa.

Hardest hit by the recession and budget crunch have been the Canadian provincial governments. Typically, health spending now accounts for 30 percent to 40 percent of a provinces budget. Health spending not only consumes a greater share of provincial budgets than other social spending items, such as welfm and education, but is also growing at a faster rate 12 Far more detailed discussion and analysis of the relative rates of health care spending growth in the U.S. and Canada see: Haislmaier, op. cit pp.6-12, and Neuschler, op. cif pp. 37-46 13 Neuschler, op. cit pp. 55-56 6 Reduced Federal Funding. Compounding the problem for provincial lawmakers is the fact that the financially-strapped federal government in Ottawa is reducing steadily its share of funding for the provincial health plans. Originally, under the Medical Care Act, which created the framework for a national system in 1966, the federal govern ment contributed matching funds to the provincial health plans on a 50-50 basis.14 However, concerned that such generosity gave little incentive for the provinces to man age their plans efficiently, and faced with its own large budget deficits, since 1977 the federal government has steadily curbed its funding of provincial health plans Canada3 federalgovernment now.contributes an average of 38 percent of medicare funds. And under a new law passed in February 1991, the federal contribution could decline to zero by the year 2004, and sooner for some mm affluent provinces. While the federal government has eased the provincial budget burden somewhat by transfer ring certain taxing authority to the provinces, it still imposes mandates on the prov inces that dictate the basic structure of the system and levels of benefits provinces must guarantee parts north of the border. As U.S. states grapple with budget deficits, diminished tax revenues, runaway state Medicaid budgets, new federal Medicaid mandates, and at tempts by Washington to limit Medicaid payments to the states, some state lawmakers believe adoption of a Canadian-style national system would spell relief. But if the Ca nadian provinces' experience is any guide, the result would be more and bigger head aches for states of the kind they shady face with Medicaid Governors and state legislators in the U.S. should take a warning from their counter Breaklng Up Is Not Hard To Do Canadian critics charge that if Ottawa backs out of funding Canada's health system entirely, then it will lose all leverage over the provincial health plans. The eventual re sult, critics predict, will be the breakup of Canada's national health system. Without a federal mechanism for enforcing basic uniformity, each province could discard most or all of the unifying elements of the system.

Portability of benefits, for example, could be lost. Currently Canadians can seek medical treatment anywhere in the country, and their home province will pay the bill.

But if the federal support of the provincial plans erodes, a province could refuse to pay, in whole or in part, for treatments its citizens obtain in other provinces. Con versely, a province could refuse to treat citizens from other provinces unless the pa tients or their provinces provided payment in advance. Nor would a province any longer be prevented by federal law from imposing user fees for medical services on its own citizens, from means testing its health plan, or from privatizing its health plan in whole or in part 14 Implementation of the Medical Care Act of 1966 was delayed until 19

68. By 1971, all ten Canadian provinces had established plans that complied with the terms of the Act. and the two territories (Yukon and Northwest Territories followed a year later. Thus, the present form of Canada's national health system actually dates from 19

71. See Neuschler, op. cif pp. 10-1 1, and Gordon H. Hatcher, Peter R. Hatcher and Eleanor C. Hatcher Health Services in Canada in Marshall W. Raffel, ed Comparative Health Systems University Park, The Pennsylvania State University Press, 1984 7 A number of Canadian critics are even suggesting that absent the powerfu1,unifying farce of a popular national health plan, moves toward separatism would accelerate leading to the eventual breakup of Canada itself HOW CANADA IS CUTTING HEALTH SERVICES Responding to soaring health care costs, the Canadian provincial governments have been taking or proposing measures to cut costs, limit services, or discourage or restrain patient demand. NotesCanadiancolumnist Geoffrey Stevens Everywhere in the country them is talk (and, in many places, action) of closing hospital beds. A British Columbia rare commission wants to limit doctors' incomes and restrict the number of physicians."

As an example, The New YorkTimes reported last year that Ontario, the richest and most populous province, where mm than a third of Canadians live, has lost nearly 5,000 hospital jobs and 3,500 beds over the last two years. In Tmnto, the provincial capital, 2,900 of 15,000 acute-cm beds have been taken out of service.

Hospital Employees Union of British Columbia said, and with 30 percent of the province's hospitals saying they w# be short of money next year the pressm for cuts is likely to continue More than 300 bedshave been closed in-British Columbia this year, the In another example, the Canadian Press Service reported last April that in the prov ince of Saskatchewan The Wascana Rehabilitation Centre, the province's showpiece health care project, announced last month that it would close 30 beds. Regina General Hospital also announced bed closyj and layoffs, and hospitals in Moose Jaw and Yorkton have closed beds.

Provinces also have been looking for ways to shift costs onto patients without rais ing taxes. Last year Ontario's socialist New Democratic Party (NDP) government cut the payments for those residents who obtain care outside of Canada, usually in the U.S. Payments for those services had risen from $100 million" annually in the province's 1988-1989 budget to a staggering $225 million annually in the 1990-1991 budget, as Canadians tired of waiting in line for care simply headed for U.S. hospitals and sent the bill home to OntariO.lg The cuts are expected to save $40 million to $60 million a year. v b w 20 15 Geoffrey Stevens Medicare Irony Mounting The Vancouver Sun, November 22,1991, p. A19 16 "Recession Forcing Canada to Re-examine Health Care The New York Times, November 24,1991, p. A20 17 Chris Wattie Medicare Resurfaces as Major Issue Once Again Moose Jav Times-Herald (Saskatchewan April 18 "hese and all subsequent cost or spending figures are in Canadian dollars, not U.S. dollan 19 Prior to last year's changes, Ontario paid 100 percent of the cost of emergency care outside Canada, 100 percent for seMces unavailable in Ontario, and 75 percent of the cost of elective treatment outside Canada. A common practice for Canadians waiting for treatment at home is conveniently to need "emergency" care while vacationing abroad 30,1991 8 Increased Premiums. Alberta and British Columbia are the only two provinces in Canada that charge premiums to their residents to help fund their health plans. Both provinces increased these premiums last yew, British Columbia by 11.5 percent and Alberta by 13 percent. The annual premiums in British Columbia are now $420 for sin gle individuals 744 for couples, and $840 for families?l While Canadian federal law prohibits the provincial plans from charging patients for basic hospital and physician services, that restriction does not apply to optional bene fits. Consequently, these benefits are prime targets for health care budget cutters in the provincial governments. Some examples British Columbia's socialist NDP government, last spring, increaq2the de ductible for its prescription drug program from $50 a year to $375 At the same time Alberta's government announced plans to reduce benefits to its senior citizens. It eliminated coverage for most non-prescription drugs cut subsidies for eyeglasses, dentures and dental care by 20 percent, and began to charge patients needing home oxygen services 25 perc nt of the Quebec's health minister last December proposed a package of changes which call for, among other things, charging'for some hannaceutical prod ucts and scrapping free dental and optometry services cost of their oxygen tanks, up to an annual maximum of $500. 2f B Tempting Target. Not surprisingly, payments to doctors are another very tempting target for budget cutters, as they have been in the U.S. Medicaid and Medicare sys tems. Although all of the provincial plans set payment limits for each of the thousands of diffenxt procedures performed by physicians, payments to physicians continue to escalate. This is because when doctors in a fee-for-service payment system (like Canada's or much of the U.S. system) are hit with fee freezes or fee cuts, they simply usually in the U.S. Also, much of the "elective" treatments abroad are for drug and alcohol abuse-tmment services which are in chronic short supply in Canada. Some U.S. drug and alcohol abuse clinics advertise for Canadian patients and charge top rates, knowing that most of the cost will be picked up by provincial health plans. Under the new rules, Ontario will only pay for emergency and elective care abroad the amounts it pays its own doctors and hospitals. The patients must now pay the mt of the bill themselves. Also, Ontario will now pay 100 percent of the cost of treatment abroad for services not available in "a timely fashion" in Ontario, but only if the patient obtains prior approval from the health ministry and is treated by one of the "prefemd providers" designated by the ministry.

See: Betsy Powell, Canadian Press Service Ontario to Curb Out-of-Province Payments in the London Free Press Ontario May 3,1991 Chatham, Ontario May 7,1991 20 IM., and Yvonne Bendo Local Health Officials Cautious Regarding Laughreds Budget The Daily News 21 Ian Austin Higher Health Premiums Help Cure Debt The Province (Vancouver, British Columbia May 22,1991 22 Ian Austin Higher Health Premiums Help Cure Debt The Province (Vancouver, British Columbia May 22,1991 23 Tom Korski and Kevin Martin Seniors Face New Charge for Air Tanks Calgary Sun (Alberta April 28,1991 24 Tu Thanh Ha and Carolyn Adolf Health Care Fees Meet Resistance in Ottawa The Gazette (Montreal December Gordon Cope What Price Health Care The Calgary Herald (Alberta April 28,1991 19,1991, p. Al 9 increase the volume of services they provide to recoup the lost revenues. Some exam ples A 1991 study by the Congressional Budget Office (CBO) of the U.S. Medi care program finds that, Growth in volume of physician services completely offset the 1984-1986 fee free~e Technology Review, ajournal published by the Massachusetts Institute of Technology, in writing about the Canadian health care system, noted Pro vincial attempts to control health budgets by restricting doctors fees have failed. From 1972 to 1984, the provinces cut fees by 18 percent in real terms but by an amazing coincidence, doctors total billing claims rose by 17 per cent. Similarly, when Quebec froze doctors fees in the early 197Os, and their real-dollar value dropped 9 percent from 1972 to 1976, doctors in creased their billings by almost the same amount, 8.3 percent. Alberta froze medical fees in 1984, bu doctors upped their gross incomes that year by more than 12 percent. 26 Wanting Out. In response, Quebec has since the mid-1970s set limits on the total billings individual physicians can charge to its plan each calendar quarter. In addition to providing their own income, physicians must also cover their office and practice costs such as rent, staff salaries, and supplies, out of the billings they submit to the pro vincial plans. The provinces general practitioner association n w estimates that 20 per cent of its members exceed the limit one or more times a year! Last year the prov inces of Ontario and Newfoundland adopted similar measures; other provinces now also are considering introducing such limits. The result is likely to be a future shortage of doctors. Two weeks aftex Ontarios government reached agreement with the Ontario Medical Association (OMA) on the new billing limits, for example, the Canadian Press Association reported A U.S. companys job fair to lure Canadian doctors south drew a flood of Toronto physicians who say they cant afford to practice medicine here anymore I think theres a better future in the States than here, said ophthalmologist Dr. Sheldon Herzig. What broughpe here is the recent OMA agmement with the province. Its disastrous.

Not only, moreover, can doctors respond to government cuts in fees by seeing more patients faster or by doing mm procedures. Increasing the number of doctors also fails to cut costs through competition as it would in a normal market where patients pay directly. Instead, more doctors mean more services and higher costs for the govern 25 Heulfh Policy Week, vol. 20, No. 10, Match 11,1991, p. 4 24 MiltonTerris, Zessons from Canadas Health Program. Technology Review, February-March, 1990, p. 31 27 G. Pierre Goad, Canada Seems Satisfied With a Medical System That Covers Everyone, The Wall Street Journal 28 Canadian Press Service, Flood of Canadian DoctorsTum Out for U.S. Job Fair. The Evening Telegram (St. Johns December 3,1991, p. Al Newfoundland May 23,1991 10 nent. Consequently, Canadas provincial health ministers are considering steps to hit the number of doctors and to stop paying doctors on a fee-for-service basis.

Expanding Control. The most recent moves to expand government control over hysicians came this January 28, when nine of Canadas ten provincial health minis ms signed an agreement on a unified, national strategy for curbing soaring health care mts. According to the Southam News Service report, the key changes proposed in the tgreement include Anationwide 10 percentreduction in medical school admissions in the 1993 academic year to bring future expansion of the medical profession in line with population growth A shift toward either a salary-type compensation [rather than fee-for-service payments an overall community clinic grant [in other words, giving each clinic a fixed budget each year or a bulk fee for long-term treatment [paying doctors a fmed, annual amount per patient moving away for fee-for-service payments to doctors.

Elimination of exclusive medical fields of practice in provincial legislation in other words, lifting some licensing restrictions] to permit expansion of such skills as midwifery and nurse-practitioners Wgh a A commitment to establish predictable medical care expenditures combination of global, regional and individual practitioner budgets.

The clear implication of the January 28th agreement is that Canadian doctors soon will lose their independence-a feature that currently distinguishes the Canadian sys tem from many other national health systems. Eventually, doctors in effect would be come salaried employees of government, as are their colleagues in other national health systems like Britains or Swedens.

Probably the most controversial health reform proposals of 1991 came from Marc Yvan Cote, the Liberal Party health minister of Quebec. After a lengthy and heated de bate, he gained passage last August of a bill authorizing the provincial plan to charge user fees for unnecessary visits to hospital emergency moms. The amount dis cussed was $5, although this was not actually specified in the law.

Violation of Principle. Such a fee violates one of the basic federal principles in the Canadian system: that patients not be charged anything for their care at the point of ser vice. When the province of Alberta imposed user fees in 1982, the federal government withheld its payments to Alberta until the fees were dropped. Immediately following last years approval of the user fee by Quebecs legislature, the federal health minister threatened that if Quebec actually imposed the fees, federal payments to Quebec would be cut by the amount the province collected in fees 29 Pa

ick Nagle, Southam News Service Health Ministers Agree to Curtail the Number of Graduating Docton, The Gazette (Montreal January 29,1992, p. B 1 11 Polls, however, find that a majority of Canadians support user fees to deter wasteful or unnecessary use of health services. An April 1991 poll, for instance, found 71 per cent support for the idea nationwide, with 80 percent support in Quebec and 75 percent support in Alberta. Several months after Quebec enacted its user fee measure, a poll still found 56 pe ent support nationwide, with the highest level of support (69 per cent in Quebec.

Quebecs government clearly has popular support for its proposed action, but numer ous critics have decried user fees as the thin edge of the wedge undermining the funda mentally egalitarian structure of Canadas health system.They predicted that once the practice of charging user fees becomes accepted, however small the fees might be, the inevitable result would be creation of a health system based on ability to pay.

While Quebecs Cote has yet to impose the fees, he already has confirmed the critics fears by announcing even more sweeping reform proposals. Last December 18 he called for imposing user fees on all visits to doctors, requiring patients to pay for their hospital room and board, and addin peoples taxable income the cost of the health services they used during the year!Qn an editorial two days later, The Gazette Montreal) characterized the plan as a continuation of the ministers almost obsessive determination to make the sick pay for part of the costs of being sick. The editorial also noted, Rooms, meals and management of files do not in themselves q~stitute medical services, says the document, an astonishing view of hospital care ACCESS TO WHAT AND FOR WHOM While all Canadians have access to government health insurance, the growing ques tion is how much access to medical care-and of what kind-does that health insur ance provide.

The Wall Street Journal last December reported that at Montreals Royal Victoria Hospital tight budgets mean that the wait for a cataractflens replacement is about three months, and for a coronary bypass it is between three and six months. In addition Tight budgets put extra strain on patients and staff. The hospital saves 66O,OOO a year by using an older type of injectable dye for X-rays that is less comfortable for patients than a newer dye. It bought new beds with manual cranks instead of electric motors. That means that the Royal Vics 1,OOO nurses must work a little harder every time they have to raise or lower a bed and patients cant just push a button to do it for themselves On the maternity floor, it is strictly BYOD-bring your own diapers. The hospital stopped handing out free ones eight years ago 30 Angus Reid Poll far the Southam News Service, Bill Walker, We Love Medicare, But Favor User Fees, The Otmu Citizen, May 11,1991; CBC-Globe and Mail Poll, Kate Dunn, User FeeThreatens Medicare, The Gazette Montreal) November 8,1991, p. A5 19,1991, p. Al December 20,1991, p. B2 31 TuThanh Ha and Carolyn Adolf, Health Care Fees Meet Resistance in Ottawa, The Gazette (Montreal December 32 Editorial, Renewed Attack on Medicare: Quebec Should Drop its Plan for User Fees. The Gazette (Montreal 12 A.weekend-here.[in-the.emergency room] shows what happens .when all the problems of Canadian health cm converge. The ophthalmoscope and otoscope next to each bed that doctors use to examine patients eyes and ears dont always work. Sometimes it takes hours to get a specialist to come down from a ward fTg consultation, complains Francois Giumond an emergency room doctor.

Acwrding to The Christian Science Monitor, last November at Torontos Sun nybrook Health Science Centre A heart-disease patient categorized as an emergency case gets an operation within 48 hours. The wait lasts up to a week for urgent patients, up to six weeks for semi-urgent patients, and up to four months for elective patients patients who suddenly become emergency cases. In a few cases, though the delay has proved fatal. To avoid the wait, some Canadians cross the border and ave the operation in a U.S. hospital, where no such waiting lines exist Hospital officials are quick to point our that the system does accommodate 4 In an April 28,1991, article entitled, What Price Health Care? the Calgary Herald Alberta) led with the story of A1 Hingley, a 53-year-old resident of suburban Edmon ton One of the arteries to his heart is completely blocked and the other three are 99 percent obstruct ed If you think Hingleys condition is serious enough to warrant immediate surgery, youre wrong: he has been waiting for triple bypass surgery for the last 14 months. I started out as 57th on the list and worked down to sixth, but now theres a second list of emergency and urgent cases, and Im back to 55th; he says with a sigh.

Its very frustrating.

Then the article added While costs rise, facilities shrink. Seventy-five beds were closed and 165 staff eliminated at the Colonel Belcher Hospital for veterans. Thm hundred nursing and suppurt staff were laid off at the Calgary General Hospital. Patients may wait more than a year for surgery, and expensive operations are given yearly quotas.

And there are mm black clouds on the horizon. Hospital buildings are deteriorating, the average age of the population is rising and advanced medical treatments for cancer and other diseases are becoming more expensive and complex. At the present rate of increase in costs, Albertas health care expenses will almost equal the provinj2s entire 1991-92 budget of $12.5 billion by the middle of the next decade 33 G&,op.cir 34 Laurent Belsie, Reform Pressure in U.S. Puts Spotlight on Canada, The Christian Science Monitor, November 25 35 Gdon Cope, What Price Health Care? The Calgary Herald (Alberta April 28,1991 1991, p. 9 13 A Canadian Press Service story reported last Apdl that some senior citizens in the province of Manitoba have been waiting up to four years for knee or hip replacement operations 36 trician in suburban Montreal who was suspended by his hospital for exceeding his quota of 107 deliveries per year. Too many Canadians apparently were having babies.

After other physicians protested, the doctor was reinstated by the hospital administra tion, which had imposed and annual ceiling of 4,200 deliveries in its obstetrics ward last yeaiin an effort to reduce overcrowding and a chronic budget deficit.37 Most of the evidence of declining access and long waiting lists is anecdotal. How ever, preliminary findings of a privately sponsored survey of waiting lists in five prov inces 1 st year meal that an estimated 260,000 Canadians were waiting for major sur surgery.

What should perhaps be most disturbing to Canadians is evidence that their health system is separating into two-tiers. The widespread and strongly felt desire to avoid a two-tiered health system was the principal reason why Canadians turned to universal government financing of health care in the first place. This now seems to be changing.

Thus when Quebec Premier Robert Bourassa in August 1990 learned that he needed an operation for melanoma, a potentially fatal skin cancer, he chartered a plane at his own expense and flew to Washington, D.C for a consultation at the National Cancer Insti tute in Bethesda, Maryland. In November, he returned to Bethesda for the operation which was a success. Such treatment options are not generally available to less 40 wealthy or politically well-connected Canadians -or for that matter, to Americans Uninsured Canadians What might come as the biggest surprise to Americans is the existence of uninsured Canadian citizens. In the two provinces that charge health care premiums, Alberta and British Columbia, citizens who fail to pay technically are uninsmd. While Alberta ac tually reimburses hospitals and doctors anyway for treating uninsured patients, as do many U.S. states, in British Columbia only the hospitals get reimbursed. This is be cause, as in all Canadian provinces, the government gives each hospital a fixed, annual or global), budget, regardless of whom it treats. But the uninsured must pay for phy sician care out-of-pocket, or the doctors treating them must absorb the loss Too Many Babies. Last July, The Washington Post reported on the case of an obste gery. 34-h 35 equivalent in the U.S. would be 2.4 million Americans waiting for major 36 Canadian Press Service, Health Care Games Played, Doctor Says, The Standard (St. Catharines, Ontario April 29 37 Wiuiam Claibome, No Quick Fix, The Washington Post, July 23,1991. 38 Michael Walker, Cold Reality: Howlley Dont Do It In Canada, Reason Magazine, March 1992, p 37. The 1991 survey was conducted in the provinces of British Columbia, Manitoba, Newfoundland, Nova Scotia and New Brunswick. It was sponsared by the Fraser Institute in Vancouver, British Columbia. Walker is the institutes executive director. 39 The 1990 estimates for the Canadian and U.S. populations were 26.5 million and 250.4 million respectively. U.S.

Department of Commerce, Statistical Abstract of the United States 1991, Table 1434, pp.830,832 40 Nancy Wood, Missing But Not Forgotten, Mcleans, December 10,1990, p. 14 14 Various estimates put the uninsured population of British Columbia at between 2 percent and 5 percent, or 50,000 to l00,OOO individuals. Were this figure applied to all of Canada, some 530,000 to 1.3 million people would be uninsured. And were this fig ure then transposed to the U.S some 5 million to 12.5 million Americans would be un insured-this is still a significant one-sixth to one-third of the present U.S. uninsured population.The British Columbia Medical Association estimates that each year its mem% doctors provide $15 million to $50 million in uncompensated care to the unin Sd CANADA AT THE CROSSROADS The picm emerging from Canada is of a health system at the crossroads. Escalat ing costs and deteriorating access soon may force Canada to make a fundamental choice about the future of its health system.

One option is to introduce market-based reforms. The likely path would be a series of gradual steps such as the imposition of user fees and premiums, removal of restric tions on doctors and hospitals billing patients directly for all or part of their treatment and the reintroduction of private insurance. Eventually, the government program could be means-tested-serving only the poor-with possibly some tax relief for private care and insurance purchased by the middle class.

Robert Evans, a Canadian health economist, points out that such a development es sentially would mean the end of Canada's national health insurance experiment, and a retum to where Canada was thirty years ago. This, says Evans, is where "the Ameri cans have been all the way through.'A2 The other scenario is to introduce ever tighter controls, restrictions, and rationing throughout the system, making doctors salaried employees of the government and dras tically limiting Canadians' freedom of choice in medical care. Such a scenario would mean that Canada effectively would nationalize not only the financing of health cm but its delivery as well. The resulting system would resemble the heavily bureaucratic centralized, and unresponsive national health systems found in Britain and Sweden.

This path is the one Canada is more liiely to follow in coming years, if the provincial health ministers' joint reform plan of January 28 is any guide CONCLUSION The lessons for America in Canada's health care crisis should be clear. Ultimately a government-run health system does not hold the hope of both restraining health care costs and expanding access to health care. While such systems may provide universal access to health insurance, and may initially bring some savings, inevitably, over time they prove that they can only control costs by denying access to medical cm 41 See. Ian Mulgrew B.C. Health Premium Hike Called Threat to Universality The Toronto Star, May 26,1991 Doctors Promised Aid on Uninsured Patients The Vancouver Sun, July 8,1991, editorial Make Medical Premiums an Election Issue TheVancouver Sun, July 16,1991 42 Joan Ramsay, Southam News Service, "Medicare: Canada's Black Hole The Windsor Star (Ontario May 11,1991 15 In the final analysis, access to health insurance is meaningless if it does not also give mess to medical care. Contrary to the fond hopes of many Americans, including wme members of Congress, Canadas national health system is finding that it is no ex zeption to this rule.

Consumer Choice. If Americans are to achieve an affordable, universal, high qual ity health system, they cannot follow the Canadian path. The way to genuine refcnm of Americas health system lies in consumer choice and true market competition, coupled with mm effective government assistance for the needy and disadvantaged.

In theory, every health system in the world exists to serve patients and consumers.

But the only way to make that theory a reality is by giving consumers direct control over the finances of the system. Only when individual consumers pay the piper, will health care providers and health insurers dance to the tune of consumer demand. And only then will the providers and insurers offer the combination of low prices and high quality every health care consumer desires. It turns out that the Canadian health care paradise of unlimited, high quality, free government-funded medical care, combined with limited, controlled health care spending, is a mirage. Such a system does not and cannot exist.