The Fraser Institute: Sustained by Rationing, Wait Lists, and High Taxes, the Canadian Health Insurance System is an Example of What America Should Avoid

As America grapples with reforming health care with an eye to introducing a public option, a new book published by the Fraser Institute, one of Canada's leading economic think tanks, details the failures of Canada's government-run health care system and serves as a warning to U.S. policy-makers.

"The Canadian health care system is a textbook case of government failure in medical insurance and medical services. All available evidence indicates that Canadians are paying more but getting less from our government-run health insurance system," said Dr. Brett Skinner, Fraser Institute director of bio-pharma and health policy and author of Canadian Health Policy Failures: What's wrong? Who gets hurt? Why nothing changes.

The peer-reviewed book paints a troubling picture of a country whose public health expenditures have persistently grown at unsustainable rates, while the health insurance system has failed to provide the access to and quality of medical services available elsewhere in the world.

"No other developed country in the world has adopted the Canadian approach to health care where governments effectively ban private-sector funding of hospital and physician services and prohibit competitive provision of publicly funded services," Skinner said.

"Most other developed nations have chosen a pluralistic health care system that involves a mix of public- and private-sector involvement in medical insurance and delivery of medical goods and services."

Skinner concludes that government should not be in the business of directly providing health or drug insurance at all. Universal coverage could be achieved by requiring individuals to purchase comprehensive health insurance in a minimally regulated pluralistic private-sector market. Access to health insurance for low-income people could be facilitated more efficiently through a publicly funded means-tested subsidy that varies according to the income and assets of the insured person. He argues that this approach would introduce economic incentives that would better serve the public interest by improving access to and quality of health care, minimizing the burden on taxpayers, and achieving universal coverage.

In Canadian Health Policy Failures: What's wrong? Who gets hurt? Why nothing changes, Skinner details the hidden costs buried within the Canadian system, including:

-- Significant unfunded liabilities and a financial sustainability crisis facing governments because of the uncontrolled growth of public health care spending;

-- Significant numbers of people who lack actual effective access to publicly insured and medically necessary health care;

-- Shortages of medical resources, especially for high technology and the most advanced medical treatments;

-- Significantly delayed access to the relatively fewer medically necessary goods and services that are available;

-- Government-imposed restrictions on the incomes and supply of health professionals; and

-- Serious disincentives for medical innovation.

In challenging several myths about the Canadian health insurance system, the book finds that the Canadian system does not perform much better than the United States when it comes to actually delivering effective access to "insured" medical care.

"Access to a wait list is not the same thing as access to health care. When Canadians can't get access to health care because they can't find a physician or wait so long that they are effectively uninsured, they are no better off than uninsured Americans," Skinner said.

Skinner concludes that a private, competitive market for health insurance and medical services, combined with a regulatory-subsidization role for the state, could ensure that everyone has access to medically necessary services, while still giving people the advantages of consumer empowerment and competition among insurers and providers.

"This approach is similar in principle to the health insurance models in Switzerland and the Netherlands and would maximize consumer choice and introduce the economic benefits of price and competition," he said.