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Single-Payer – Good, Bad, and Ugly of the Canadian System

October 6, 2018

Written by Clay Smith

Why talk about this?

Universal healthcare coverage is a hot topic but one that many of us know surprisingly little about, beyond surface level slogans from campaign signs or bumper stickers.  I’m hoping to learn more with this JAMA Internal Medicine article about the Canadian single-payer system.  What little I know about Canadian healthcare comes from this article.  I am summarizing what these authors have written and make it clear when I am speaking my own opinion.  My interpretation or understanding may not be correct.  Feel free to comment at the bottom and set the record straight publicly, but please put your real name on it when you do.  I also don’t mean this to be political, although that may be inescapable.  I want to understand more about what it means when we say “single-payer” and to be a little better informed as a citizen and physician.  And I hope this will help you as well.

Healthcare Financing – Canadian Style

Satisfaction over Time
There was initial patient enthusiasm for the single-payer model begun in Canada.  Since, 2000 satisfaction has fallen in the rankings, still above the U.S., but third from last in 2016.

The Good
Every Canadian with legal status has healthcare covered.  The process is simple with very low administrative costs.  “Physicians are paid promptly and fully, with low collection costs and almost no preapproval, adjudication, or other barriers that patients and physicians often face in the United States.”  Patients may choose any physician or hospital, usually have no copay, and don’t get a complex bill.  This allows them to seek care earlier without fear of being unable to pay or facing bankruptcy for medical bills.  Health outcomes are generally very good.  Almost all Canadians have a primary care doctor.  Overall healthcare quality ranking is still among the best in the world, beats the U.S., and does so with 10.3% of gross domestic product (GDP) compared to 17.8% of the U.S. GDP.

The Bad
Hospital closures and physician income caps have led to some physicians leaving, an increase in wait times, and decrease in access for some patients.  They summarized it best by saying Canada is single-payer – but not a system.  It is still primarily designed to cover acute care payment to hospitals and physicians but does not cover chronic disease management or prescriptions as effectively.  It is still essentially fee-for-service for physicians, and hospitals get a lump sum to cover their global budgets.  This incentivizes provision of less care by hospitals and perhaps excessive care by doctors.  Authors stated, “the Canadian health system typically runs at full capacity but with little resiliency.”  Long wait times to see specialists, often over 2 months, are common, and hospitals are overcrowded.  There is no national electronic health record (EHR) to help with countrywide continuity of care.  Outpatient medications may not be covered for children and working-age adults in most provinces, though that is evolving.  They note the Canadian system is, “undermanaged…a series of independently operating institutions and professionals, representing predominantly ‘private’ delivery of care, regulated and paid by a single government insurer.”

The Ugly
It is unlikely the system will change.  Most people who actually vote are happy that major illness is covered and are less concerned about chronic care.  Physicians like the simplicity of getting paid and fee-for-service.  Most Canadians are content that they may not be the best in the world, but at least they’re better than the U.S.  In reality, it is not a single-payer.  Canada’s constitution demands the payments come from the provinces.  Healthcare makes up 40% of provincial spending.  Leaders of provinces don’t want to give up cost control in the form of lump sum hospital payments, or they risk increasing cost and losing power by being voted out.  Even if the federal government increased provincial payment, there is little incentive to spend on health infrastructure, like a provincial or national EHR.  Rather, increasing physician or nurse salaries goes a long way toward keeping peace and getting votes.

Canadian single-payer healthcare covers every person with legal status, and it does so with a lower percentage of GDP than the U.S. and has good overall health outcomes.  It is not without its problems, and the authors’ main point was that making significant changes seems unlikely given the current system.

My Thoughts

I now leave the confines of the JAMA Internal Medicine article.  These thoughts reflect my opinion. You know the drill – this doesn’t reflect the opinion of other JournalFeed authors, my employer, or anyone else.

Absolute power…
There are pros and cons to a single-payer model.  More people get coverage, but the government then owns healthcare.  The U.S. already owns two-thirds of it.  My biggest concern when imagining a single-payer system in the U.S. is that this would give an even greater amount of power to the Federal government, particularly the Executive branch.  I’d like to think the U.S. would not abuse this, but I get concerned when power becomes concentrated and unchecked.  Imagine your least favorite candidate is running for president and gets elected. Suddenly, checks and balances sound like a really good idea.  I think many of us in the U.S. are quite thankful for the prescient wisdom of the founders for the current limits on Executive power.

Simply put – whoever pays the bills is in charge.  Having checks and balances on this kind of power seems wise.  It’s not hypothetical that the Federal government might abuse its purse-string power.  It’s already happening.  Consider adherence to SEP-1 CMS sepsis care mandates.  The government penalizes hospitals for “omissions in sepsis care” that have no impact on quality or mortality.  So, why are we scrambling to perform meaningless repeat lactates and bolusing everyone 30mL/kg?  Because Medicare requires it in order to get paid.  Whoever pays the bills is in charge.

…Corrupts absolutely.
I recently learned of a hospital that sees a large proportion of Medicaid patients.  They are beholden to Medicaid as a major payer, which gives Medicaid a lot of power over them.  Recently, Medicaid fined this hospital for spending more than their peer institutions on pediatric UTI antibiotics – for using cefixime rather than cefdinir or TMP/SMX.  The problem is, cefidinir is not FDA-approved for the indication of UTI; cefixime is, and happens to be more expensive.  Resistance of urinary E. coli to TMP/SMX is high at that institution, compared with 3rd generation cephalosporins.  Not to mention, the hospital was never told this was a problem nor given an opportunity to explain, defend, or change their practice prior to being fined.  So, they were penalized
for doing what was right for patients.  There was no appeal, no concern for the non-existent profit margin of the hospital.  They were forced to pay and to play along.  Whoever pays the bills is in charge.  In this case, it means this hospital has been coerced by the Federal government into doing something for the patient that may not be in their best interest.  Medicaid pays the bills, and they are in charge.  This is just one example of an abuse of power on a micro-scale.  Yet we are assured that single-payer Medicare for All will be, “a health care system that works for patients and providers.”  I fear it could be the other way around without protections from government overreach.

In the UK (which is, of course, different than the Canadian system), one patient said, after learning his surgery would be deferred a third time, “This is a disgrace. We injure ourselves while working to pay our taxes, and the government just leaves us to suffer.”  The same NYT article noted that over, “nine million people at emergency wards in the 2016-17 fiscal year were sent home after receiving only guidance that in many cases could have been obtained from a pharmacist.”  When the government owns all of healthcare, they have total control over how it is delivered.  Too bad if you don’t like it.  The voice of the patient and physician is lost.

Finger on the pulse?
Not only do I have concerns about the abuse of power worsening under a U.S. single-payer model, the current performance of the Federal government does not inspire confidence.  My in-laws lived with us for 6 months after their house flooded in 2010.  They did an address change, and mail from Medicare was redirected to our home.  They then moved into a new home.  After 8 years of phone calls, snail mails, government forms, and multiple other communications to change the address to their new home, we still get their mail from Medicare at our address.  Small wonder that Medicare fraud and waste cost taxpayers $60 billion in 2015; 10% of the Medicare budget.  To put that in perspective, that is almost twice what the U.S. spent on all NIH funding that same year.  In defense of the U.S., efforts to reduce fraud have ramped up.  Medicare improper payments were down to a mere $51.9 billion in 2017.  However, Medicaid improper payments were $36.7 billion in 2017.  So we are still wasting $88.6 billion per year in U.S. government spending on healthcare alone.  Do we really think the U.S. will succeed with “Medicare for All” if they are unable to manage the current system of “Medicare for Some?”

Single Payer Sum-Up
I want every American to have healthcare.  This affects many of us on a deeply personal level.  My brother, an innovative small business owner and incredibly hard worker, doesn’t have health insurance for himself or his family.  He can’t afford it under the, ironically named, Affordable Care Act.  Is single-payer the right answer for the U.S.?  I have concerns.  If we did this, we would need protections, checks and balances, so that the payer doesn’t hold all the power; patients and physicians must have a seat at the table.  It also would need to be done with a level of excellence I don’t currently see from our Federal government.  And it would have to be financially sustainable and not burden our children and grandchildren with an unpayable debt.  I don’t know if single-payer is the best solution for the U.S., though I feel torn and would very much like to see all our citizens have healthcare coverage.  Some may argue that it would be better than the current system.  In many ways, I agree.  But with a price tag of $32.6 trillion over the first ten years, we need to consider how that will affect the people it is trying to help.  What’s the best way to achieve universal coverage?  Maybe we need to consider the Singapore model.

At the very least, I’ve learned a little more from our highly esteemed northern neighbor about the pros and cons of single-payer health insurance.  I would be interested in what others think.  Please comment if I don’t have my facts straight or you would like to share your thoughts.


Thanks to Thomas Davis for reviewing this and making helpful suggestions.

P.S. – Where’s the Weekly Quiz?

It was clear from the JournalFeed community that you don’t want only a quiz on the weekend.  I know this because the emails weren’t opened as
often.  However, quizzes are a great way to retain this info long-term.  And I got feedback that many of you really liked them!  So, we plan to do a monthly quiz rather than weekly and will resume weekend features that offer a little variety, like this one.

13 thoughts on “Single-Payer – Good, Bad, and Ugly of the Canadian System

  • Certainly I understand the concerns given the current executive branch. However I wonder why we should feel any better about having power be in the hands of privately owned corporations which are beholden to profit not patient care. There are large areas of the US were there are only one or two insurers that have monopoly power, people living there can’t vote on what their private insurers do. If you get your insurance through your employer you are locked into what your employer negotiated with insurance companies. A single payer system could be constructed in a number of ways and financed a number of ways, the peculiarities of the Canadian or British system are not necessarily inherent in any system

    • A fair point. I certainly don’t get the sense that insurance companies have the patient’s best interest at their core. But I’m skeptical as to whether the government would either. That’s where we come in as physicians. The interests of patients and physicians would need to be equally represented (accompanied by real authority) with the interests of the single-payer for it to work. Also, I worry about how we would pay for a M4A scenario. It would be an enormous expense that could have its own unintended economic effects. Another thing to consider in support of your comment, overhead tends to be much higher with commercial insurers. Medicare administrative costs are 2.2% http://annals.org/aim/fullarticle/2605414 ; private insurers are 13% on average, ranging from 11-20% (see on page 27, CBO document) https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51130-Health_Insurance_Premiums.pdf. Thanks for your comment.

      • I am a Canadian living in the US. Canadian healthcare is unique and different than socialized healthcare systems like in the UK where the federal government literally owns the hospitals, runs them, and dictates to the doctors who work in them.

        In Canada, the federal government does not control health care. They give lump sum payments to each province (the Canadian equivalent of states) every year to fund provincial health care insurance. Provinces then budget that money to provide universal coverage to their citizens in a manner unique to the needs of their population. Hospitals/clinics are essentially private companies that bill to one insurer. The government does not control your practice. If you open your own clinic, or are the CEO of a hospital, you have freedom to choose patients, hire your staff, everything, literally the only difference is you are not billing to a million insurance companies (and thus do not need a whole administrateive wing to sort that out) you are just billing to the provincial insurance plan in a fee-for-service manner. The government does have a say on reimbursement caps which are negotiated with physician groups/other groups every few years and right now are fairly reasonable (physician average salaries are similar to the US for many specialties).
        The system does have it’s flaws (hard to find specialists in some areas, slightly longer wait times for elective procedures), but it is efficient and effective in providing medically-necessary health care to it’s population.

  • Healthcare costs money and development of new healthcare cost us doubly so. Yes, I would love to see that every person was covered for all illnesses, but I would also like to see those same illnesses eradicated. The cost from conception to acceptance for a new drug is in the order of two and a half billion dollars. This doesn’t include the literally thousands of other medications that don’t get to acceptance. There are new technologies that are being developed that most single payer systems won’t see in use in their countries years after they’re mainstream in America.

    Let’s look at one single machine, Proton Therapy. It has been in use in the United States for about forty years, yet the first system came online in June of 2018 in the UK. In short Proton Therapy is the use of radiation delivered in a penciled sized beam that causes the radiation to come to rest inside of a tumor thus minimizing peripheral organ damage. Each machine has a particle accelerator that takes a hydrogen atom up to about two-thirds of the speed of light stripping it of its neutron. Then it is zigzagged down to a precise speed where it is introduced into the patient and kills the tumor. This system cost billions to develop, and a new machine isn’t cheap, but if America were on a single payer system it likely would never have been invented.

    There are consequences to actions, and if I were a big-time investor, I wouldn’t invest in a drug or new machine to save lives if I’m not going to see a return on my investment. With the laws in place to develop medical devices and drugs, the cost without including the labs and personnel is far above what most single payer systems can handle. Yes, everyone gets free medicine but when the new disease pops up who is going to come to the rescue to put a stop to it? Once you’ve shut those laboratories down and all of those people have found new jobs getting them back will be next to impossible. Yes, we’ve seen the movies where a crew works in a small laboratory and finds the cure to a disease in under the two hours it takes to watch the film. In reality, it takes about ten years for a drug to make it to the pharmacy after it is approved. So, the drug company spent two and a half billion dollars ten years ago before patient one gets to pop one of these pills. In reality, money is a lubricant, and if you take that away, things will come to a halt.

  • AA made some good points. I studied a satisfaction survey done by the Canadian government and noticed that it was the more rural areas that expressed more dissatisfaction with the system. Rural hospitals and healthcare is a huge issue in the U.S. too. In the U.S. there isn’t enough profit involved so some patients have little or no access to emergency and other services.

    "What the Study Found
    –From 2007 to 2014, prices for hospital inpatient care grew 42 percent, compared to 18 percent for physician prices for inpatient hospital-based care.
    –For hospital-based outpatient care, hospital prices rose 25 percent, compared to 6 percent for physician prices.
    –There were no differences in results between hospitals that directly employed physicians and those that had outside physicians work in their facilities.
    –Hospital prices typically accounted for over 60 percent of the total price of hospital-based care.
    –Hospital prices accounted for most of the cost of the four high-volume services included in the study. When the costs of physician and hospital care were combined, the hospital component ranged from 61 percent for vaginal deliveries to 84 percent for knee replacements. "

    Link: https://www.commonwealthfund.org/publications/journal-article/2019/feb/hospital-care-prices-rose-faster-cost-physician-services

    Something has to change…

  • thanks for the article, i’m trying to learn about medicare for all. you note a price tag of $32.6 trillion over 10 years but…

    Blahous estimates the additional cost to the federal government in 2031 would be about $4.2 trillion, or "nearly 12.7 percent of GDP." But in 2016, the US spent $3.3 trillion on healthcare, or around 18 percent of the country’s GDP. As Axios put it: All told, Medicare for All would actually slightly reduce the total amount we pay for health care.

    • The single greatest omission in the Medicare for All argument is that their numbers (which are an estimation…and we all know how government "estimates" go) assume all practicing doctors and facilities would accept the Medicare reimbursement rate which is generally about $0.70 on the dollar of what they need. Providers rely on the private market, which reimburses 200% – 500% of medicare, to balance their books.

      If they were all forced to take that Medicare pay cut, you would have many of them bailing out of the public system reducing the number of qualified medical professionals that are IN the Medicare for All system at the same moment where (theoretically) demand would skyrocket. This ‘lack of supply’ would take the place of ‘cost’ as the major barrier to care for those at the bottom of the income scale.

      Ultimately, you have a system that is just as expensive, but inefficiently delivered and a supply that cannot keep pace with demand. The gap between the ‘haves’ and have nots’ would widen as a robust private medical network would explode staffed by the very providers Medicare for All pushed out.

  • Heather Bast

    Had severe issues caused in hospitals twice in 11 years in canada. The reasoning was a story being told behind my back by going that was inaccurate and unchecked by other health care providers. He said she said world as I know that person. No diagnostic looked into even though it was run. Later mistakes recognized by public bodies and covered up. With no records given to me I could not see what was done to me until I became suspicious and started pulling all of my records in which at that time was abused in hospital again?????? You would think anyone else could see the rest of the problem. But as you say money does not go to fix systematic problems, I also feel that in canada the doctors are not easily held under the criminal justice system. Has not changed regardless of political leadership. if you are breathing and have a pulse they have met their requirements. "Status Quo"

  • We need coverage for all but there will be flaws in any system. I see elderly poor loose services they need under medicade because they don’t pay claims they make excuses for not paying. United healthcare under medicade is horrible for playing games I delt with them myself. However I am thankful that I had medicade when I had a heart attach and if my medications were not covered i would probably die quickly. I have seen an elderly man with diabetes loose feet and die months later because he couldn’t afford his injections. The red tape was too difficult for him to deal with and he was a veteran and was pushed aside until it was too late. This happens way too often and now with Trump I live in fear that medicade will be gone and that I will die and not be able to raise my son that is only 11. This constant stress is horrible I honestly have trouble sleeping out of worry. So even though healthcare for all won’t be perfect it is better than this constant fear and the death of so many that have been dieing without there medications.

  • Patient care should start from preventative care at the primary care centers. When patients are redirected to go to ER for medication refills, when patients on potent medication are not monitor? Why do Canadians have so much Nurse Practitioners trained and they are not allow to practice?

  • Canadian government/healthcare leaves us to suffer, too. I think we’re just generally quieter about it than the UK. Canadians, I think, have this social stigma against complaining that I did not see when I was on a work visa in the UK. And 2 months is not a long wait time in our system. I’d be thrilled if I saw a specialist in that time. More like 8 months to talk to a specialist, and a year by the time you actually get the tests they ordered.

  • US health care:
    The Good – The US is first at best preventing deaths due to cancer.
    The Bad – In deaths due to accidents, stroke, heart attacks, COPD, US lags behind other countries.
    The Ugly – Leading cause of family bankruptcies in the US is medical debt.
    – Enormous opioid problem precipitated by big Pharma and unscrupulous doctors.
    – US health care is the most expensive compared to other industrialized nations.
    – US health care is often described as mediocre compared to other industrialized nations.
    – Many have no health care coverage and rely on emergency rooms.
    – Corporate interests, from the health insurance industry to the private equity practices, dominate health
    care. Their interest is shareholder profit not health care outcomes.

    My understanding is that only official Singapore residents have access to its health care. A large number of workers in Singapore come from other parts of China and are not eligible for its health care. Not a good model.

What are your thoughts?