Unbiased Analysis of Today's Healthcare Issues

Health Care System Grudge Match: Canada vs. U.S.

Written By: Jason Shafrin - Oct• 02•07

Who has a better health care system: Canada or the U.S. Michael Moore would vote for Canada. Libertarians would side with the U.S. A new NBER working paper by June O’Neill and Dave O’Neill concludes that the two systems may produce more similar health outcomes than was previously believed.

History of the Canadian System

The paper reviews some of the major developments in the Canadian health care system during the last half century.

Since the late 1960s Canada essentially has had a universal health insurance system covering all services provided by physicians and hospitals. To implement universal coverage the federal and provincial governments took over full funding of both hospital and physician services, setting physician fees and hospital budgets. During the 70’s physicians, dissatisfied with the official fee amounts, chose to work outside the system and bill patients at higher amounts. But with the passage of the Canadian Health Act of 1984 Canada outlawed extra billing and became a rigid one-tier system which restricted the provision of any “core” services outside the public’s so-called “Medicare” system (Irvine, Ferguson and Cackett).

Since all hospital and physician services are free, demand surged in Canada leading to skyrocketing costs. This lead to government spending cuts in the 1990s; shortages and waiting lines resulted.

The condition for shortages was enhanced because of the provision in the 1984 Act that decreed that any service that the single payer provides, no matter how much in short supply it may be, cannot be privately insured or produced and sold in Canada. Relief came, however, in 2005 when the 1984 Act was struck down as unconstitutional by Canada’s highest court {Chaoulli v.Quebec (Attorney General), 2005, IS.C.R. 791, 2005 SCC 35}. A slim 4/3 majority ruled that the government’s argument—that allowing a private sector, would undermine their public system—was not supported by the actual experience of other countries (U.K., France and Germany) that had converted from single payer to dual systems.

Data

The authors’ main data set used is The Joint Canada/U.S. Survey of Health (JCUSH). Collected between the fall of 2002 and spring of 2003, this data set includes 3,505 Canadian and 5,183 American individuals.

Basic Statistics

U.S. Canada
Life Expectancy (Male) 74.8 77.4
Life Expectancy (Female) 80.1 82.4
Infant Mortality/1000 live births 6.8 5.3
Obesity Rate (Male) 31.1 17.0
Obesity Rate (Female) 32.2 19.0
HC spending as % of GDP (2005) 16.0% 10.4%

We can readily see that the U.S. has worse life expectancy, infant mortality rates, and obesity rates that Canada, yet pays more for for these relatively poorer outcomes. Canada is clearly better…right?

Investigating Infant Mortality

It turns out that once we condition on infant birthweight–a significant predictor of infant health–the U.S. has equivalent infant mortality rates. In fact U.S. infant mortality is lower for low-birthweight babies than Canadian infant mortality for low birthweight babies. Overall infant mortality, however, is higher in the U.S. because the incidence of babies with low birthweight is higher than in Canada. This may be due to demographic or epidemiological factors, or it may be the case that the U.S. is better at having a live birth for a low birthweight baby.

Birthweight Distribution Birthweight-specific Infant Mortality

U.S. Canada U.S. Canada
<1500 1.4 0.9 247.3 262.2
1500-1999 1.5 1.1 29.3 36.6
2000-2499 4.6 3.7 12.2 12.9
2500-2999 16.6 15.0 4.8 4.4
≥3000 75.9 78.9 2.1 2.0
<2500 7.5 5.7 60.4 58.0

Overall Mortality Differences

Why do Canadians live longer. One reason is due to the excess number of accidents and homicides in the U.S. compared to Canada. In fact 50%-85% of the mortality gap between American and Canadian adults in their twenties can be explained by the increased American accident/homicide rates. For people over 50, 30-50% of the difference in age-specific mortality rates can be attributed to the excess number of heart disease patients in the U.S. These heart disease findings are more likely driven by American lifestyle choices rather than the efficacy of the U.S. medical system.

Access to Care

Well, the medical efficiency of the two systems may not be so different but access to care must vary greatly, right? Canada has an egalitarian, socialist system while the U.S. relies (somewhat) on free-market capitalism to allocate medical services.

Below we see that Canada general has a lower disease incidence rate, but treatment rates are generally higher in the U.S. Further, these difference decrease even more if we only look at Caucasians in each country. The authors state “the composition of the non-white group differs by country—predominantly black in the U.S., but Asian in Canada; and racial differences in health outcomes may differ in the two countries.” See CensusScope for more details on the U.S. racial composition.

Canada U.S.
% with condition % gets treatment % with condition % gets treatment
All
Asthma 6.6 80.3 7.8 78.8
High blood pressure 8.8 84.1 13.1 88.3
Heart Disease 2.4 67.2 2.6 69.6
Angina 0.9 74.6 1.1 61.0
Whites Asthma 6.9 82.7 7.7 77.6
High blood pressure 9.1 83.2 12.5 87.3
Heart Disease 2.7 69.4 2.4 73.2
Angina 0.9 70.7 0.8 75.1

In Canada, the main reason for an unmet need was because the wait was too long or the treatment was unavailable. In the U.S., most people who do not receive treatment fail to do so because of cost considerations.

Preventive Services

Probably the most surprising discovery of the paper was that Americans partake in more preventive care than Canadians.

  • Mammograms: 88.6% of American females 40-69 had ever had a mammogram compared to 72.3% of Canadians.
  • PAP smear: 86.3% of American females 20-69 had a PAP smear in the last 3 years compared to 75.1% of Canadians.
  • Prostate screening: 54.2% of American men 40-69 had ever had a PSA test compared to 16.4% of Canadians.

As an economist, I attributed this finding to moral hazard: Canadians know that if they would get a disease that their government will pay for their care. Thus, they may be less motivated to ask for preventive services. One of my medical school colleagues noted, however, that physician recommendations also play a large part in the amount of care given. Further, most patients strongly wish to avoid disease, not simply due to cost considerations, but because of the physical and mental impact the disease would have on their life.

Conclusion

American are less healthy than Canadians. What this paper finds, however, is that this is mainly due to the fact that the U.S. has a higher incidence of disease. It turns out that Americans may have slightly higher access to treatment than Canadians. The paper is not the most smoothly written piece I have read, but the data is revealing. The small-ish sample size of the JCUSH mean that the results should not be taken as definative. Since the data set uses the same survey for both countries, however, the authors present convincing evidence that this cross-country comparison is of a high quality.

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23 Comments

  1. Diora says:

    Interesting post. However your conclusions on screening don’t account for the difference in guidelines.

    Canadian guidelines only recommend mammograms staring at age 50, US – at age 40. There is a considerable controversy as to benefits vs risks of screening at 40, and American College of Family Physicians recently revised the guidelines to recommend discussing risks/benefits with patients. This is not likely to happen in the US given the enthusiasm for screening.

    PSA testing hasn’t been proven to be effective in reducing mortality, and screening carries a considerable proven risk of overdiagnosis. But even though USPSTF guidelines recommend discussing pro- and con- with patients, few American doctors do it because of liability concerns. This is probably not the case in Canada.

    Pap smear funding is interesting. However, there was a study that showed that sometimes in the US the test is done on women who had hysterectomies for benign conditions. In these women test is not recommended (Against recommendation from USPSTF), yet American doctors continue to perform it.

    So until you account for these differences, you cannot make any conclusions about screening utilization in US vs Canada. Overall mortality from this cancers in US vs Canada (per population, not as a percentage from those diagnosed to account for overdiagnosis) would be more interesting.

  2. Why do Canadians live longer?…

    An excellent post by Jason Shafrin at the Healthcare Economist: Why do Canadians live longer. One reason is due to the excess number of accidents and homicides in the U.S. compared to Canada. In fact 50%-85% of the mortality gap…

  3. Bimodal Posterior says:

    1) I find it rather suspicious that O’Neill and O’Neill do not report the JCUSH self-reported rates of insurance coverage and whether they matched Census estimates. It would be the very first thing I checked to see whether the sample was truly representative of the U.S. population.

    2) Sad that the authors don’t know the difference between prevalence and incidence.

    3) It’s “preventive” – not “preventative.”

    4) Completely agree with Diora re: PSA testing. Lower use in Canada is a sign of higher health care quality.

  4. May I point out that the choice of PSA is less than ideal since universal screening is not recommended and has not been shown to be cost-effective.

    Screening of select populations, especially African-Americans and people with a family history of prostate cancer remains the state of the art, although this may change.

  5. [...] Globe: Jason Shafrin takes a look on The Health Economist at the “grudge match” between Canada and the US–who’s healthier. For all the U.S. spending on health care and a higher level of access to care, it’s not [...]

  6. [...] Healthcare Economist · Health Care System Grudge Match: Canada vs. U.S. It turns out that once we condition on infant birthweight–a significant predictor of infant health–the U.S. has equivalent infant mortality rates. In fact U.S. infant mortality is lower for low-birthweight babies than Canadian infant mortality for low birthweight babies. Overall infant mortality, however, is higher in the U.S. because the incidence of babies with low birthweight is higher than in Canada. This may be due to demographic or epidemiological factors, or it may be the case that the U.S. is better at having a live birth for a low birthweight baby. … In fact 50%-85% of the mortality gap between American and Canadian adults in their twenties can be explained by the increased American accident/homicide rates. For people over 50, 30-50% of the difference in age-specific mortality rates can be attributed to the excess number of heart disease patients in the U.S. These heart disease findings are more likely driven by American lifestyle choices rather than the efficacy of the U.S. medical system. … Probably the most surprising discovery of the paper was that Americans partake in more preventive care than Canadians. Mammograms: 88.6% of American females 40-69 had ever had a mammogram compared to 72.3% of Canadians. PAP smear: 86.3% of American females 20-69 had a PAP smear in the last 3 years compared to 75.1% of Canadians. Prostate screening: 54.2% of American men 40-69 had ever had a PSA test compared to 16.4% of Canadians. [...]

  7. [...] Recently, June O’Neill and Dave O’Neill submitted a new working paper to NBER (National Bureau of Economic Research), comparing the U.S. and Canadian healthcare systems. Their results may surprise you. [...]

  8. [...] Jason Shafrin wrote a fantastic post today on “Health Care System Grudge Match: Canada vs. US”Here’s ONLY a quick extractWe can readily see that the US has worse life expectancy, infant mortality rates, and obesity rates that Canada, yet pays more for for these relatively poorer outcomes. Canada is clearly better…right? Investigating Infant Mortality … [...]

  9. Charles says:

    There is no other better comparison, no better example than MY OWN experience with the healthcare system in Canada. October 16, 2007, I got diagnosed with acute appendicitis that required surgery. Assuming I was an American living in the US, I asked my cousin what would happen to me cost-wise and treatment wise. He said, granting you have the same job, same age and insured in the US, YOU will pay a percentage for the doctor’s professional fee and approx $600 of share daily for confinement excluding medicines. Now listen folks, I am not even a citizen YET, been a permanent resident of British Columbia for less than 2 years, employed and paying taxes. All I did was went to St Paul’s hospital in Vancouver which is 3 blocks away, checked in the ER at 4pm, presented my BC Care Card underwent examination like ultra sound, blood tests and CT scan The diagnosis was that I had a ruptured apendicitis, At exactly 12 midnight I was operated in the surgery room. Stayed in the hospital for 3 days and walked away without paying a single DIME of cash! Hey Amercans!!! LISTEN up! If I was there, will I get the same, worry-free treatment? NOPE and NOPE! Zero! Im scheduled for a visit to the doctor next week and that too is FREE! Hey! Nothing can be better than that. Match it and you can not! Proud to be here and happy being here for GOOD! I bet even the author envies that!

  10. [...] Sicko by Michael Moore Interesting read. Healthcare Economist · Health Care System Grudge Match: Canada vs. U.S. __________________ Best Regards, Jeff Rogers "Those who cannot remember the past are [...]

  11. [...] If you are interested on more information about the Canadian health care system, see my October 2, 2007 post. [...]

  12. Bruce says:

    Charles, your taxes pay for your healthcare. Nothing your government provides to you is free. The costs your friend quoted you would be expected if you had no insurance (or else the worst insurance ever). Assuming you had no insurance, you wouldn’t be paying for your healthcare in taxes the rest of the year as you do in Canada.

  13. [...] of a centralized, universal health care system have been discussed previously on this blog (see Oct 2, 2007 and Apr 25, 2008).  One benefit of a government-run program is that there are no uninsured; [...]

  14. [...] this blog, I have frequently discussed the merits of Canadian and American health care systems (see Health Care Grudge Match).  One thing most people can agree with is that mental health care is subpar in both countries. [...]

  15. [...] I can’t point to data on the former. I erred. But if Canada had our teen pregnancy rate, its low birthweight numbers would be higher than ours (thanks, Wikipedia!). This is a side effect, in my opinion, of our unfortunate attitudes about [...]

  16. [...] on more information about the Canadian health care system, see Tanner’s October 2, 2007 post in The Healthcare [...]

  17. [...] Healthcare Economist · Health Care System Grudge Match: Canada vs … – Who has a better health care system: Canada or the U.S. Michael Moore would vote for Canada. Libertarians would side with the U.S. A new NBER working paper by June O’Neill and Dave O’Neill concludes that the two systems may produce more … [...]

  18. [...] more excerpts see this article at Healthcare Economist, 2 October [...]

  19. [...] would be foolish to try to replicate this series of three posts at the Healthcare Economist, where Jason Shafrin does a wonderful job of collecting [...]

  20. [...] ahoy Thanatos144, i didn't mean to steer yer thread off topic, so i'll just end with this; Healthcare Economist Health Care System Grudge Match: Canada vs. U.S. the results (and thats what matters, aye?) between the United States and Canada be pretty similar, [...]