Sanders’ medicare plan not Canadian-style
Former U. S. vice- president Joe Biden’s overall victory in this week’s Democratic party primaries will ostensibly slow down momentum in favour of “Medicare for all.” Still, it’s hard not to argue that it’s experienced an extraordinary trajectory in U. S. politics. Socialized medicine has gone from a fringe idea to a fashionable slogan to a major campaign issue in short order.
The Canadian experience has played a part in this rise. Presidential candidates such as Bernie Sanders have regularly pointed to Canadian medicare as an exemplar for the United States to follow. And Canadian intellectuals have been pleased to affirm this comparison.
There’s just one problem: it’s wrong. Or at minimum these comparisons with Canada do more to confuse than clarify the debate about the future of health care in the United States.
It’s worth starting with some basics. Canadian medicare covers “medically necessary” services that are narrowly defined as those provided by a physician or in a hospital. When the medicare model was established in the late 1960s, these services represented the vast majority of health-care expenditures. The founders of medicare were, for all intents and purposes, proposing to publicly insure the totality of healthcare spending in Canada.
But herein lies the problem for those who aim to derive lessons for American policy- makers. Canadian medicare’s coverage has consistently shrunk as a share of overall health- care expenditures.
It’s no one’s fault, per se. The single- payer model couldn’t have anticipated the explosion of spending in new and emerging health-related areas in the ensuing 55 years or so. The growth of modern pharmaceuticals, for instance, has fundamentally reshaped the drivers of health- care spending. Physicians and hospital spending have gone from representing close to 100 per cent of health- care expenditures in the 1960s to less than half in two generations.
It’s worth emphasizing this point: Canada’s medicare model provides compulsory, single- payer coverage for roughly 45 per cent of health- care expenditures and relies on a mix of employer- provided insurance, targeted public spending on the poor and elderly, and out- of- pocket spending to cover the other 55 per cent.
Another way to think of it as follows: Canada has socialized medicine for physician and hospital services and a broadly free- market model for the majority of health-care spending such as drugs, dental and home care.
We basically have a two- tier system — it’s just tiered according to the type of services rather than according to one’s means.
And, on the current trajectory, the publicly insured share of Canadian healthcare spending is likely to fall even further. Spending on drugs surpassed doctors as the second- largest expenditure in the ’ 90s and has generally grown faster than the rest of the system ( hospital spending is still the largest single expenditure, while doctors are now third). If left to its own devices, the Canadian health- care system is likely to become more free market and less socialized simply due to a combination of medicare’s design, healthcare consumption patterns and the power of arithmetic.
This reality can be bracing for Canadians who assume that medicare is shorthand for the full public financing of our health care and for American progressives who have come to lazily depend on Canada for intellectual affirmation of fully nationalizing the system.
“Medicare for all,” as advanced by Sanders and others, is actually, by design, more ambitious than Canadian medicare. It wouldn’t just extend compulsory public insurance across a minority share of health- care spending. It would establish single- payer insurance across the full breadth of 21st-century medicine.
The cost is necessarily astronomical. Just think about it in the Canadian context. Total health-care spending here in 2019 was $ 264.4 billion. The public share was about $ 184 billion. A Sanderian- style approach would thus bring about $80 billion in annual private spending — namely, private insurance and out- of- pocket spending — on to government balance sheets. The overall and relative figures would be much higher in the United States.
The upshot is two- fold: first, Medicare for all may be a popular slogan among leftwing activists in the U.S., but it’s a radical proposal that’s both unaffordable and goes far beyond the public insurance model in Canada and elsewhere; and second, Canada’s own health-care debate would benefit from a clearer understanding of the relative role of government and the market.
A caricatured understanding of the Canadian and U. S. models creates a false binary and in turn undermines policy debate in both jurisdictions. The truth is both are hybrids of public and private insurance. Both have their weaknesses. Both require reform to control costs, extend coverage and improve outcomes. And both will only achieve a democratic consensus in favour of reform if we’re honest and clear about how the systems actually work.