Health Coverage and Care in the
United States
Comparing the U.S. and Canadian Systems
Richard N. Gottfried
Chair, NY State Assembly Health Committee
CSG-ERC Annual Meeting
August 2011
Halifax, NS
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“(T)he U.S. health system is not
delivering superior results despite
being more expensive, indicating
opportunities for cross-national
learning to improve health system
performance.”
The U.S. Health System in Perspective: A Comparison of
Twelve Industrialized Nations, David A. Squires,
Commonwealth Fund, July 2011
2
History
Early 1800s –
• U.S. decided: universal, free, public
education is part of “public agenda”
No one thought to add health care:
• Health care was leeches, doctor with a
saw, nurses to keep you comfortable
while you die.
• Not expensive.
• Why would one turn to the government?
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Then some things changed . . .
Health care became:
• Very effective
• Very expensive
Most world, including U.S.:
• Using 3rd Party Payers
• But: done very differently
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Sources of U.S. Health Coverage
Private & Public %’s overlap:
• Some have 2 or more coverages
64% = Private (mainly employer) declining
31% = Public - growing
• Medicaid: 15%
• Medicare: 15%
17% = No coverage - growing
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Source: DeNavas Walt, Carmen Bernadette D. Proctor, Jessica C. Smith: Income, Poverty and
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Health Insurance Coverage in the United States:2009, U.S. Census Bureau, 2010
Private Coverage
Insurance Co’s focus:
• Earn dividends for stockholders
• Charge as much as they can
• Pay out as little as they can
Employer’s focus:
• Earn dividends for stockholders
• Spend as little as possible
Individual coverage
• Hard to look at anything but price
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Private Coverage
Pressure = all downward:
• Say “No” whenever possible
• Pay as little as possible
• Little incentive for investing in
primary/preventive care:
When it pays off -- you’ll be
someone else’s customer
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Public Coverage -- Medicaid
“Programs for the poor tend to be poor
programs”
• Poor = not a powerful constituency
Pressure = downward
• Except perhaps for
Major institutions
Unionized
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Public Coverage -- Medicare
Covers all elderly, rich and poor
• Not “for the poor”
 Pressure = balanced
• Downward pressure – keep taxes
down
• Upward pressure:
Powerful constituency
Middle & upper income
 Medicare most popular part of system
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Growth in Spending, 1969-2005,
Medicare vs. Private Insurance
Per Enrollee
3500%
3000%
2500%
2000%
1500%
1000%
500%
0%
Medicare
Private
Insurance
Source: David Himmelstein and Steffie Woolhandler, citing
K. Levit, CMS, personal communication
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And yet . . .
“(T)he U.S. health system is not
delivering superior results despite
being more expensive, indicating
opportunities for cross-national
learning to improve health system
performance.”
The U.S. Health System in Perspective: A Comparison of Twelve
Industrialized Nations, David A. Squires, Commonwealth Fund, July 2011
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A lot more expensive . . .
Dollars
* 2007.13
Health Care Spending per Capita, 2008
Adjusted for Differences in Cost of Living
Source: OECD Health Data 2010 (Oct. 2010).
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…and the gap is widening
Spending on Health, % of GDP, 1980–2008
Source: OECD Health Data 2010 (Oct. 2010).
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Who pays?
Employers
Consumers
• Share of premium
• Out of pocket
Taxpayers – 57%
• Medicare, Medicaid & tax subsidy of
employment-based coverage
• Even more than in Canada
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Why so expensive?
Why isn’t all that downward
pressure working?
Not because we use more health
care . . .
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We use hospitals less
Average Annual Hospital Inpatient Acute Care Days per Capita, 2008
2.0
1.6
1.6
1.2
1.1
1.0
1.0
0.9
0.9
0.8
0.8
0.8
0.7
0.7
0.6
0.4
0.0
GER
SWIZ
AUS**
FR
* 2007.
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** 2006.
Source: OECD Health Data 2010 (Oct. 2010).
CAN*
OECD
Median
NOR
UK
NETH
NZ
US
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We go to the doctor less
Average Annual Number of Physician Visits per Capita, 2008
* 2007.
19
** 2006.
Source: OECD Health Data 2010 (Oct. 2010).
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You might think we’re
getting excellent results
for what we’re paying.
But we’re not.
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“(T)he U.S. health system is not
delivering superior results despite
being more expensive, indicating
opportunities for cross-national
learning to improve health system
performance.”
The U.S. Health System in Perspective: A Comparison of Twelve
Industrialized Nations, David A. Squires, Commonwealth Fund, July 2011
21
22
Years
Life Expectancy at Birth, 2008
* 2007.23
Source: OECD Health Data 2010 (Oct. 2010).
23
Years
Life Expectancy at Age 65, 2008
* 2007.
** 2006.
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Source: OECD Health Data 2010 (Oct. 2010).
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Administrative Costs
Multiple health plans, each spending on
• Marketing
• Bureaucracy for saying “No”
• Dividends to stockholders
Health care providers
• Dealing with multiple plans
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26
27
28
Medicare & Medicare HMOs,
Administration & Profit, %
Administration
16
14
12
10
8
6
4
2
0
Profit
5.1
3.6
Traditional
Medicare
9.2
Medicare
Advantage
Source: David Himmelstein and Steffie Woolhandler, citing GAO 6/24/2008 and
National Health Account data for 2005
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Needed Health Care Reforms
• Payment reform that promotes:
Primary & Preventive care
Wellness, not Volume
• Care coordination &
management
• Electronic records & systems
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Needed Health Care Reforms
Requires people with:
• Stake in making improvements
• Up-front investment
• Authority/ability to lead
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Interests are not always clear
Health care providers
• Paid fee-for-service (volume)
Insurance industry
• Raise premium 10%
• Lose 5% of customers
• Still ahead 4.5%
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Federal Health Care Reform -- ACA
Good programs to promote reform
• Grants for
Care coordination & “medical homes”
– in Medicaid
Electronic Health Records
• Insurance market reforms
No out-of-pocket for preventive care
No pre-existing condition limits
• Medicaid expansion
• Insurance exchanges & premium subsidies
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Federal Health Care Reform -- ACA
Accountable Care Organizations – ACO’s
• Integrated system of HC Providers
Using payment reform, e.g.:
Capitated payment from payer
Pooling income from payers
To shift resources to:
Primary-preventive care
Care coordination
So all providers thrive by
Controlling costs
Improving outcomes
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Still based in insurance system
Multiple, competing payers 
• Little incentive to invest in change
• No authority/ability to lead
Each payer: limited impact
Obstacles to working together
• Legal
• Business
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Everything we need to do is
much more difficult . . .
. . . because of our system.
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And don’t forget . . .
Still have
• Millions of Uninsured
• Millions of Underinsured
Grossly unfair funding
• Premiums = regressive “tax”
• Unrelated to ability to pay
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Learn from other countries . . .
“(T)he U.S. health system is not delivering
superior results despite being more
expensive, indicating opportunities for
cross-national learning to improve health
system performance.”
The U.S. Health System in Perspective: A Comparison of Twelve Industrialized
Nations, David A. Squires, Commonwealth Fund, July 2011
. . . no better place than Canada!
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Physicians for a National Health Program
pnhp.org
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Richard N. Gottfried
Gottfried@nysa.us
“The future is not a gift; it is an
achievement.”
Robert F. Kennedy
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