Public Health Care Provision in the Canadian Provinces and
American States
Gerard W. Boychuk
Department of Political Science
University of Waterloo
gboychuk@watarts.uwaterloo.ca
Paper prepared for submission to Canadian Public Administration, July 2001.
ABSTRACT
Both American states and Canadian provinces play a key role in health care policy in their
respective countries. While there are important, broad differences between the health care
systems of the two countries, sub-national variation is significant both across provinces and,
more markedly, across states. Although this variation is rarely considered in comparisons of
health care policy in Canada and the US, it undermines several of the conventional
characterizations of the American system as well as softens some of the stark
characterizations of the differences between the two countries which are evident in Canadian
debates.
INTRODUCTION
The recent re-emergence of health care as a central focus in Canadian public policy
debates will undoubtedly spur a fresh round of comparisons of health care in Canada and the
United States. In discussing American health care reform debates almost a decade ago, Barer
and Evans noted that “[m]any American commentaries on the Canadian experience are, in
fact, discussions of an imaginary Canada that resembles in name only the reality in which
Canadians live.”1 In the contemporary context, both popular debates as well as scholarly
policy analysis in Canada appear to be similarly marked by various myths and
misunderstandings regarding both the Canadian and American “models” of health care
provision.
While there are a number of well-known differences between the two countries in
regard to public health care provision, comparisons are complicated by the significant role of
the states and provinces. As Boase notes: “Any discussion of reform of the health care
system in Canada is complicated by the shared federal-provincial nature of social policy.
…the provinces have considerable freedom in the development of social policy, and the
decentralized nature of Canadian federalism ensures that, within the broad federal standards,
ten discrete provincial health care systems have evolved.”2 Similar complexity marks the
American side of such comparisons: “Rarely heard in the debate over health care reform is a
discussion of health care politics at the state level. This lack of analysis is surprising. Not
only do state treasuries fund a large share of the nation’s health care bills, but also state
officials play a key policy role.”3 Even as of the mid-1990s, “[s]tate policy and politics
matter enormously in how and if Americans…have access to affordable health care” and,
since the, “[s]tate governments are increasingly taking responsibility for health and welfare
programs.”4
Despite this, much of the health care policy analysis in Canada relies on very broad
generalizations regarding health care provision in the US.5 Consideration of differences
among the American states as well as among Canadian provinces have tended not to enter
into analyses of national differences in health care in the two countries. As a result,
conventional characterizations of national-level differences have sometimes proven partial
and, at worst, problematic. Policy analysis of health care provision in Canada which draws
on the comparative example of health care in the United States must be careful to take these
differences into account – especially the significant differences among American states.
The paper begins by outlining the differences in the national systems of health care
provision in Canada and the United States and argues that, in both cases, stereotypes of these
national-level systems tend to understate the differences among jurisdictions within each
2
country. Secondly, the paper examines variation among Canadian provinces and among
American states. The paper then undertakes some initial comparisons of public health care
provision in the two countries and argues that some of the starker characterizations of the
differences between the two countries may be more applicable to health care provision in
particular states and provinces than in others. Finally, the paper gives some examples of how
incorporating a consideration of sub-national differences might contribute to the debate on
health care reform in Canada.
THE STRUCTURE OF PUBLIC HEALTH CARE PROVISION
IN CANADA AND THE UNITED STATES
The Structure of the Canadian System
Provinces are granted sole jurisdictional authority for health care by virtue of S.93 of
the Canadian Constitution, 1982 and the central government has no constitutional
jurisdictional authority over the provision of health care. However, the federal government
has involved itself in the provision of health care primarily through the use of the federal
spending power which allows the federal government to make transfers to the provinces
attaching whatever conditions it wishes so long as it does not undertake to legislate directly
within a field of provincial jurisdiction.
There are five federally-defined standards comprising the core of the Canada Health
Act (CHA) which is the legislative basis for the Canadian health care system: public
administration (each provincial plan must be run by a nonprofit, public authority accountable
to the provincial government); comprehensiveness (provinces must provide coverage for all
necessary physician and hospital services); universality (insured services must be universally
available to all residents of the province under uniform terms and conditions with waiting
periods for new entrants being limited to a maximum of three months); portability (each
provincial plan must be portable so that eligible residents are covered while they are
temporarily out of the province); and accessibility (reasonable access to insured services is
not to be impaired by charges or other mechanisms and reasonable compensation must be
made to physicians for providing insured services).6 As a result of the CHA, public
intervention in health care provision in Canada is not limited to the public provision of
hospital and physician care insurance but also the legislative proscription of the private
provision of insurance for services which are covered under the public plan. This may, in
fact, be the most significant element of public intervention into health care provision in
Canada.
While Canada is widely portrayed as having a universal public health care system,
Canada has, in actuality, a public system of universal hospital and physician care insurance.
First, the Canadian system is predicated upon public health insurance which is distinct from
public provision of health services: “Our physicians are predominantly in self-employed fee
practice and our hospitals are not-for-profit organizations under more or less independent
Boards of Trustees. This system is virtually identical to that in the United States…”7
Secondly, publicly-provided health insurance in Canada is limited to hospital and physician
services. As public universal first-dollar coverage is limited to hospital and physician care,
Canada does not have a universal system of health care; rather it has a universal insurance
coverage for hospital and physician care which together comprise (at least in terms of
expenditures) less than half of the Canadian health care system. (See Figure 1.)
Other sectors of the Canadian health care system are characterized by various types
and levels of government involvement:
3
…drugs prescribed during the medical encounter (outside the hospital) are not
covered by the universal public plans, nor are dental services or long-term care
outside the hospital system. Individual provinces have their own partial plans for
these products/services, with widely varying coverage and terms; most drug and
dental coverage is private. The mixed funding system in these sectors is much like
the “traditional” American approach…8
Moreover, the relative importance of sectors under universal public insurance and
those not (e.g. prescription drugs, long-term care, home care) is shifting in favour of the
latter. For example, expenditures on drugs has “outpaced other components of health care
expenditures in Canada for many years.”9 Thus, those sectors without universal public
insurance are becoming relatively more and more important allowing increasingly greater
scope for provincial variation. Thus, in reality, there is greater scope for provincial variation
(especially in those services not provided for under the rubric of the CHA) than is suggested
by the imagery of a nationally-uniform, universally-available set of comprehensive health
services.
The Structure of the American System – An Overview
Primary responsibility for publicly provided health care resides with the states by
virtue of the 10th Amendment which states that any powers that are not constitutionally
delegated to the federal government are reserved for the states. However, a central role for
the federal government in health care provision has evolved through its taxing power (e.g.
providing tax subsidies for employer-sponsored health insurance coverage), spending power
(e.g. making conditional transfers to the states such as Medicaid), and power to regulate
interstate commerce (e.g. prohibiting states from regulating health insurance provided by
self-insuring employers.)10
A major form of federal intervention in health care is through the public provision of
health insurance for seniors (under Medicare) and for low-income persons (under Medicaid).
Together, the two programs cover approximately a quarter of the population. Under these two
programs and other public expenditures for health, public expenditures represent
approximately half of total health care expenditures in the United States. In fact, public
health expenditures per capita are now greater in the United States than in Canada.
Medicare provides universal hospital and physician care insurance to people over 65
and the disabled.11 While Medicare provides universal coverage for hospital insurance and
universal eligibility for contributory public insurance for physician services, it does not
provide first-dollar coverage as is the case in Canada and patients must make certain out-ofpocket payments.12
The Medicaid program provides health insurance for medical services and long-term
care for low-income persons. Medicaid is a federal-state cost-shared program with the
federal share based on state per capita income and ranging from 50 percent to 83 percent.13
In terms of eligible beneficiaries, “Medicaid is the largest health insurer in the United States”
and has been expanding so that “Medicaid now provides health insurance to a larger
population of poor persons than ever before[.]” The Medicaid program grants considerable
discretion to the states in providing health insurance: “Following broad national guidelines
established by Congress and monitored by HCFA [Health Care Financing Administration],
the states set their own standards of eligibility; determine the type, amount, duration, and
scope of covered services; establish the rate of payment for services; and administer their
own programs.” 14 The fact that the states set their own standards of eligibility (within federal
guidelines) has resulted in large variations in coverage.15 Thus, Inglehart notes, “Indeed, it is
no exaggeration to say that there are actually more than 50 Medicaid programs…because the
4
rules under which they operate vary so enormously.”16 In addition to a range of benefits
which receive federally-mandated coverage, states have the option to cover additional
services under the rubric of Medicaid’s matching funding such as prescription drugs and
dental care.17
State governments also regulate the private insurance system subject to certain
federally-imposed limits.18 As a result of those limits, states do not possess the legislative
authority to enact universal single-payer health care: “…current federal law preempts their
authority to reform the self-insured portion of the market, which accounts for about half of all
insured workers. A single-payer system would have to be national, or at least it would
require the lifting of federal constraints from the states.”19 Within these limits, there is wide
scope for state variation in regulation of private insurance.
The Structure of the Canadian and American Health Care Systems – Conclusions
Despite the significant roles for the American states and Canadian provinces in health
care, there are two distinct national systems. The Canadian system is strongly shaped by the
use of the federal spending power to effectively mandate a system of relatively uniform
universal, comprehensive, first-dollar coverage public insurance for hospital and physician
services. The US system is framed by the use of the federal spending power in the provision
of Medicare (for the elderly) and Medicaid (for low-income families) and the federal
government’s taxing powers in subsidizing employer-sponsored insurance.20 However, a
central element of the US system is the federal legislation limiting states from pursuing
public single-payer systems. Within the parameters of these broad system-level
characterizations, differences among Canadian provinces and among American states require
greater attention than often paid in comparisons of the two systems.
COMPARING HEALTH CARE PROVISION IN THE AMERICAN STATES AND
CANADIAN PROVINCES
DIFFERENCES AMONG CANADIAN PROVINCES
While provincial governments retain sole jurisdictional authority in the provision of
health care, the CHA mandates certain standards for the provision of health insurance in
regards to hospital care and physician services. As such, differences between provinces in
regards to comprehensiveness of coverage appear to be limited and occur at the margins of a
central core of publicly provided health care services. In areas falling under the strictures of
the CHA, there are some differences between provinces. For example, fee differentials for
particular services across provinces have been reported to be as high as 50%.21 Across
provinces differences in public sector health expenditures per capita are moderate although
they are nearly one-third higher in Manitoba than in PEI or Quebec.22 Most of the
differences among provinces lie in areas of health care provision outside those governed by
the CHA including pharmacare programs, coverage of health services (dental), alternative
health services such as chiropractic services, as well as long-term and home care.23
While the proportion of total health care funding comprised by public funds has
generally been decreasing, there are moderate differences among provinces in the percent of
health care expenditures comprised by the public and private sectors. Public sector health
expenditures range from 77% of total health expenditures in Newfoundland to 66% of total
health expenditures in Ontario.24
It has been widely argued that the most important explanation of these differences
(and, indeed of the increasing proportion of private spending in the Canadian system more
generally) is the delisting of medical services from public health plans.25 This raises the
specter of growing interprovincial disparities in provincial definitions of “medically
5
necessary” services as some provinces delist a greater range of services or as provinces delist
different services. However, there is virtually no evidence offered to suggest that delisting
occurs except at the very margins of the health care system (e.g. eye exams) or that delisting
is leading to considerable differences in health care coverage across provinces. There
appears to be little evidence in the data on public expenditure trends of any significant
delisting of medical services.26 Rather, passive privatization (the growing significance of
those health care sectors which do not have universal public coverage) appears to be a much
more significant trend in terms of explaining decreasing proportions of public funding across
the Canadian health care system.
For example, prescription drugs are one of the fastest growing elements of the
Canadian health care system and provincial policies covering drugs vary widely. British
Columbia, Saskatchewan, Manitoba and Quebec have ostensibly “universal” drug insurance
programs. All other provinces offer categorical drug insurance programs:
While only a few provinces have universal drug plans, most provide prescription
drugs for the poor, the disabled, and the elderly. Some do so without any charge to
the patient, while others require user fees. These targeted Canadian drug plans
resemble the drug coverage provided in the United States through Medicare and
Medicaid. Individuals must meet income, disability, or age criteria to be covered.
Thus, those on welfare must pass a means test to become eligible. In the case of the
elderly in Canada, only one province bases eligibility for drug payments on economic
need. The others provide universal coverage, albeit usually with user charges.27
Provinces vary widely in their levels of public spending on drugs. Public drug
expenditures in high-spending provinces (Quebec and Ontario) are over 60% higher than
expenditures in provinces such as PEI and New Brunswick. Provinces also vary widely in
the proportion of total drug expenditures that are comprised of public expenditures – with
public expenditures in New Brunswick comprising less than 20% of total drug expenditures
in that province while public expenditures make up more than 40% of total drug expenditures
in British Columbia. (See Figure 2.)
DIFFERENCES AMONG AMERICAN STATES
States vary widely in public health expenditures, 28 public health insurance, and state
regulation of private insurance. There is considerable cross-state variation in the level of
public provision of health insurance through Medicare and Medicaid. Medicaid expenditures
per recipient in 1995 were nearly four times higher in the highest spending state (New York)
than those in the lowest spending state (Tennessee). Interstate variation in recipiency rates
are also striking with recipiency rate in the most expansive state (Mississippi, 19.9%) being
nearly four times as high as in the least expansive state (Nevada, 5.3%) As a result, there are
wide differences among states in the proportion of total personal health care expenditures
comprised by these two programs. (See Figure 3.)
Similarly, variations in the proportion of the population that is uninsured also varies
widely by state.29 Rates of uninsurance range from 5.4 % of all children (Missouri) and 6.9%
of all persons (Rhode Island) to 27.7% of all children (New Mexico) and 25.8% of all persons
(New Mexico). Thus, depending on the category under examination, some states have four to
five times the proportion of uninsured persons than others. (See Figure 4.) From 1997/98 to
1998/199, total numbers of all uninsured persons fell in some states (Arizona, Arkansas,
California, Connecticut, Iowa, Maine, Massachusetts, Mississippi, Missouri, New Jersey,
New York, North Dakota, Rhode Island, Tennessee and Texas) while they rose in others
(Hawaii, Illinois, Louisiana, Nevada, New Mexico, Vermont, Washington, and Wisconsin.)
As some of the states with the lowest rates of uninsurance are in the former group (Missouri,
Rhode Island) and some of the states with the highest rates of uninsurance are in the latter
6
(New Mexico, Louisiana), variation among states is not diminishing as a result of these
trends.
State intervention in private third-party insurance varies considerably. 30 States have
enacted a variety of regulations including those mandating community rating (prohibiting the
use of age, sex, previous health, etc. in rate setting), guaranteed issue (mandating insurers to
provide all or specific products to any eligible group), guaranteed renewal (prohibiting
insurers from refusing to offer insurance to groups or individuals on the basis of past claims),
limits on the length of time insurers can deny insurance to individuals with pre-existing
conditions, and mandatory loss ratios (specifying the ratio of benefits that must be paid out as
a proportion of total premiums collected). However, states have varied considerably in the
extent to which they have used such regulatory tools to intervene in the private health
insurance market ranging from those states with virtually no regulation of private insurance
to those implementing a considerable range of regulations. (See Table 1.) Well-worn stories
about people losing their insurance coverage, being denied insurance coverage, or facing
exorbitant premiums based on their health or risk category may accurately depict private
insurance market conditions in some states but certainly are not accurate depictions of
conditions in other states.
Uncompensated care by hospitals and physicians, which also play a significant role in
the American system especially for the uninsured, also varies widely by state. Most
uncompensated care is hospital care: “Though uninsured, most of the 38-40 million are able
to get needed medical care through hospital emergency departments, which, by law, are not
permitted to deny care.”31 Medicaid rates and state grants to public hospitals (uncompensated
care pools) may help to offset the cost of uncompensated care although these both vary
widely across states. “Although far from perfect,” uncompensated care “…has become a
standard measure for tracking provision of care for the medically indigent.”32 Table 3
presents a rough indication of levels of uncompensated care (as a proportion of total hospital
charges) in selected states as well as an indication of the wide variation across states.
Finally, while there are virtually no private for-profit hospitals in Canada, control of
hospitals varies widely among American states. In Florida, for example, for-profit hospitals
comprise nearly half of the total while in other states like Delaware, Rhode Island and
Vermont private hospitals do not exist at all or, as in other states like Michigan, New Jersey
and Wisconsin, not to any significant extent. (See Figure 5.) Private, for-profit hospitals – a
central element in popular Canadian imagery of the US health system – are not a central
element of the US “model” as it exists in many American states. The mix of hospital control
between voluntary not-for-profits and public hospitals (directly owned and controlled by
state or local governments) also varies widely across states. In a handful of states,
government hospitals comprise over half of all hospitals and nearly two-thirds in Wyoming.
In other states like South Dakota, Delaware, Rhode Island and Vermont, both private forprofit and government hospitals are non-existent with voluntary not-for-profits controlling the
entire hospital sector closely in keeping with the Canadian model of hospital control.
AMERICAN STATES AND CANADIAN PROVINCES
Despite broad differences among national systems, there are also aspects of American
state and Canadian provincial health care provision systems along which national clustering
breaks down – where states and provinces do not group into nationally-distinct clusters and
where certain states may look more like some provinces than other states and vice versa.
Such patterns significantly soften and alter the conventional distinctions drawn between the
two national systems. The axes of comparison along which these patterns emerge are the
exception; however, in some cases, they occur in important indicators of health care
provision and demonstrate the degree to which policy analysts must be sensitive to the wide
7
differences among American states. The following section discusses the examples of public
health care expenditures and public drug insurance programs.
American federal and state governments undertake considerable expenditures in the
provision of health care. Public expenditures on health care by all levels of government in
the Canadian provinces are comparable to public expenditures in a range of states but stand in
contrast to expenditures in both high and low expenditure states. (See Figure 6.)
Comparisons of health care expenditures are complicated by the existence of widely
divergent rates of medical inflation in Canada and the Unites States. Figure 7 provides a
comparison of the amount of health services that can be publicly provided given the different
levels of public health care expenditures in American states and Canadian provinces.33 Thus,
while Canadian governments do not spend more on health care provision than American
governments, they do provide a uniformly higher level of publicly-funded services than their
American counterparts. However, the differences between provinces and high-provision
states are less significant than the differences between high and low-provision states.
Both provinces and states vary in their provision of public drug insurance programs.
While all states make some provision for public drug coverage for low-income families under
Medicaid, fourteen states also have programs to provide public insurance for prescription
drugs in addition to Medicaid coverage. Most of these plans are restricted to seniors with the
exception of Maine, Maryland, and Wyoming. Some state programs have very strict income
eligibility requirements or restrict coverage in other ways (e.g. specifying for which
conditions drug coverage is available.) Others, however, such as New York provide
relatively broad coverage (though not universal) entailing substantial per recipient costs (e.g.
$1235 per recipient in the case of New York.)
Public expenditures on drug coverage programs in the Canadian provinces tends to be
more heavily skewed towards the elderly than is the case in the US where a majority of
expenditures are under Medicaid. While more detailed analysis of public drug insurance
programs is required, public drug coverage for seniors in Canada appears both more
extensive (in terms of coverage) and more generous (in terms of limited deductibility and copayments) than programs in any American states. However, public drug expenditures for
non-elderly people in the Canadian provinces are likely to prove much more comparable to
public drug expenditures in American states.34
CONTRIBUTING TO THE DEBATE
Current debates regarding the future of health care provision in Canada will be shaped
to some significant extent by popular perceptions of the differences in health care provision
in Canada and the United States. Canadian debates to date (for example regarding user fees
and privatization) have drawn heavily on the US example. Policy analysis comparing health
care provision in the two countries will continue to contribute to these debates. However, it
is crucial that both strands of this debate are grounded in solid understandings of the
differences between the Canadian and American systems as well as an appreciation of the
important differences among sub-national jurisdictions – especially American states. A
number of erroneous conclusions may result from analysis which does not take these
differences into account. By way of conclusion, this section briefly considers three examples.
A common argument in Canada draws the conclusion, based on the fact that the
uninsured population has grown in the US, that growth in the uninsured population is
inevitable in a system incorporating private actuarially-based insurance schemes.35 However,
several states saw marked declines in their uninsured populations from 1997 to 1999
including Arkansas (40%), Missouri (32%), Rhode Island (32%), Iowa (31%). This
evidence, suggesting that the proportion of uninsured Americans is more a function of
political acceptability than of structural imperatives of the public-private system, tends to be
8
lost in national-level characterizations. Certainly, state-level analysis belies the claim that
characterizes “…every effort to enhance access for the uninsured and underinsured [as] a
resounding failure.”36
A second example is the “traditional myth” in Canadian debates on health care that
“…Canadians will have to be prepared to pay a level of taxes higher than their neighbours in
the United States, because that is what allows us to define the public system and in particular,
the health care system, as something unique and distinct.”37 The serious problems with this
argument are manifestly evident when viewed from the state and provincial level as some
states have higher public health expenditures than some provinces – even if those provinces
manage to purchase more health care services with those expenditures.
It is tempting, in light of this latter fact, to conclude that the major difference between
the two countries is the contribution of Canada’s single-payer system (as opposed to a multipayer system) and universal public health care coverage (as opposed to multi-tier insurance
coverage) to leveraging public health care dollars: “Numerous studies have compared the cost
containment performance of the Canadian and US systems. Nearly all agree that the
Canadian single-payer approach has produced a lower spending growth than the American
multiple-payer system.”38 Again, the major shortcoming of such studies is a predominant
focus on national averages which “ignore[s] the substantial variation that exists among
American states and Canadian provinces.”39 Several American states (New York, Maryland,
New Jersey, Massachusetts and California) had, by the early 1990s, implemented all-payer
hospital rate setting which achieved better cost containment performance between 1978 and
1987 than various Canadian provinces. According to Thorpe, it was the predominant focus
on national-level characteristics and national averages which led to the erroneous conclusion
that better cost performance in Canada was a result of universal coverage and the singlepayer system. Again, the suggestion is that political commitment to cost containment is more
important than the structure of the health care system. However, numerous Canadian studies
continue to argue that the key difference in explaining cost performance in Canada is the
single-payer system and universal coverage.40
None of this is to argue for or against different models of health care provision.
However, comparative analyses aspiring to rise above using the American example merely as
a polemical device will need to engage in the hard work of carefully documenting and
integrating analysis of differences in public health care provision among both American
states and Canadian provinces into broader comparisons of the two systems.
9
Morris L. Barer and Robert G. Evans. (1992) “Interpreting Canada: Models, Mind-Sets, and
Myths” Health Affairs (Spring 1992): 44.
2
Joan Price Boase, “Health Reform or Health Care Rationing? A Comparative Study,”
Canadian-American Public Policy 26 (May 1996): 24.
3
Michael S. Sparer, “The Unknown States,” 430-9 in James A. Morone and Gary S. Belkin,
ed., The Politics of Health Care Reform: Lessons from the Past, Prospects for the Future
(Durham and London: Duke University Press, 1994), 430.
4
Daniel M. Fox and John K. Inglehart, ed., Five States That Could Not Wait: Lessons for
Health Reform from Florida, Hawaii, Minnesota, Oregon and Vermont. 1995), 1 and
Mark C. Rom, “Transforming State Health and Welfare Programs,” 349-92 in Virginia Gray
et al., eds., Politics in the American States: A Comparative Analysis, 7th ed. (Washington:
Congressional Quarterly, 1999), 349.
5
See, for example, Robert Chernomas and Ardeshir Sepheri, eds., How to Choose? A
Comparison of the US and Canadian Health Care Systems (Amityville: Baywood, 1998);
Carolyn Bennett, Kill or Cure: How Canadians Can Remake Their Health Care System
(Toronto: Harper Collins, 2000); Pat and Hugh Armstrong with Claudia Fegan, Universal
Health Care: What the United States Can Learn from the Canadian Experience (New York:
New York Press, 1998); Colleen Fuller, Caring for Profit: How Corporations are Taking
Over Canada’s Health Care System (Vancouver: New Star Books, 1998); Michael Rachlis et
al., Revitalizing Medicare: Shared Problems, Public Solutions (Vancouver: Tommy Douglas
Research Institute, 2001).
6
Drawn from Chernomas and Sepehri.
7
Robert Evans, “Two Systems in Restraint: Contrasting Experiences with Cost Control in the
1900s,” 21-51 in David M. Thomas, ed., Canada and the United States: Differences that
Count, 2nd ed. (Peterborough: Broadview, 2000), 24.
8
Evans, 25-6.
9
Steven G. Morgan, “Issues for Canadian Pharmaceutical Policy,” 677-735 in National
Forum on Health, Canada Health Action: Building on the Legacy, Vol.4: Health Care
Systems in Canada and Elsewhere (Sainte Foy, PQ: Éditions MultiMondes, 1998), 683..
10
Lawrence O. Gostin, “Public Health Law in a New Century, Part II: Public Health Powers
and Limits” JAMA, Journal of the American Medical Association 283, 22 (June 14, 2000):
2979.
11
Medicare has two components – Part A and Part B. The former provides hospital
insurance and is predicated upon social insurance principles: “…workers make mandatory
contributions to a dedicated trust fund during their working years, with the promise of
receiving benefits after they retire. By law, the nation’s employers…and employees are
required to pay equal amounts of a payroll tax that totals 2.9 percent of earned income. Selfemployed workers pay the entire 2.9 percent of their net income into the trust fund.” Part B,
the Supplementary Medical Insurance Program, finances physician care, outpatient, home
health and other services. This element of Medicare is voluntary and enrollees are required to
pay flat-rate monthly premiums. However, premiums comprise only 24% of total
expenditures under Part B and virtually everyone eligible enrolls. John K. Inglehart, “The
American Health Care System: Expenditures” New England Journal of Medicine 340, 1
(Jan.7, 1999): 72.
12
“The federal Medicare program…requires patients to pay “deductibles” in each of its two
components (Part A for hospitals and Part B for physician’s services). Only those costs that
exceed a certain amount in each year are reimbursable. Patients must also pay a “coinsurance” of 20% of all subsequent reimbursable expenses for physicians’ services, plus any
1
10
amount which a provider may choose to extra-bill above rates allowed by Medicare. […]
Since these out-of-pocket expenses can be substantial, there is a large market in “Medigap”
insurance, privately sold to cover them.” Evans, 27 However, despite premiums and other
out-of-pocket payments, “…most beneficiaries who require medical care receive far more
from the program than they contributed in payroll taxes…” For example, future benefits
have an estimated value of up to six times the lifetime contributions for a retiring couple with
one earner. John K. Inglehart, “The American Health Care System: Medicare” New England
Journal of Medicine 340, 4 (Jan.28 , 1999): 328.
13
State expenditures in 1994 constituted approximately 43% of program expenditures. Rom,
351.
14
John K. Inglehart, “The American Health Care System: Medicaid” New England Journal
of Medicine 340, 5 (Feb.4 , 1999): 403, 407, 403.
15
“…states are now required to set reimbursement rates high enough so that Medicaid
services will actually be available to recipients, at least to the extent that they are available to
other residents in the state. Health care providers cannot charge Medicaid patients additional
fees above these amounts.” Rom, 353.
16
Inglehart, “The American Health Care System: Medicaid,” 404.
17
In 1997, the federal government devoted new funds for cost-sharing state expansions in
health insurance coverage for children under the SCHIP (State Children Health Insurance
Plan) program; however, total expenditures under this program are not very significant in
comparison to total spending under Medicaid.
18
Under the Employee Retirement Income Security Act, 1974, states are prohibited from
regulating private employer-provided insurance by firms that self-insure. This has exempted
one-third to one-half of all private insurance on a national basis from state regulation.
However, by virtue of their power to regulate health maintenance organizations (HMOs) and
insurance providers, states retain the power to regulate the remainder of the private insurance
market. National Governors’ Association, Health Policy Studies Division, ERISA Case Law
Update, May 2000. [http://www.nga.org/pubs/issueBriefs/2000/000501ERISA.pdf ]
19
Fox and Inglehart, 11.
20
As employer-provided health insurance benefits are not counted as taxable income, private
health insurance is publicly subsidized. This tax expenditure was $111 billion in 1998.
These expenditures are roughly 1/5th the magnitude of total public health expenditures and, as
Inglehart notes, “If this were a federal health program, it would be the third most expensive
one after Medicare and Medicaid.” Inglehart, “The American Health Care System:
Expenditures,” 71. Despite their significance, these expenditures are not generally included
in calculations of public health expenditures and are not included in the comparisons of
public health expenditures presented in this paper except where specified.
21
Driver, 1998: 45.
22
Canadian Institute for Health Information, webpage.
23
Regarding differences in complementary and alternative care, see Rona Achilles et al.
(1999) “Complementary Alternative Health Practices and Therapies: A Canadian Overview.
Toronto: York University Centre for Health Studies, 1999. [Report available in MS-Word
format at http://www.yorku.ca/research/ychs/html/publications.html]
24
Canadian Institute for Health Information, webpage.
25
For example, see Fuller, 83.
26
On a nation-wide basis, the public portion of total expenditures for hospitals is the same in
1999 (91.9%) as it was in 1980 and this proportion actually increased slightly over the 1990s.
The public proportion of total expenditures for physician care is slightly higher than it was in
1980 and has remained virtually unchanged over the course of the 1990s. Controlling for
11
inflation, public expenditures per capita on hospitals and physicians is the same in 1999 as it
was in 1985 while public expenditures for all other categories combined has increased
steadily so that by 1999 public expenditures for these other categories were 70% higher than
in 1985. Although they have decreased slightly over the 1990s, total public health
expenditures were 10% higher in 1999 than in 1985.
27
Armstrong and Armstrong, 75.
28
Unfortunately, public expenditures as a percent of total health expenditures (as reported on
a national basis by the Health Care Financing Administration) are not currently available on a
state-by-state basis.
29
The following is drawn from Robert J. Mills, Current Population Reports: Health
Insurance Coverage, 1999 (Washington: US Census Bureau, 2000), 9-11 and United States
Census Bureau, Health Insurance Historical Tables, Table 5.
[http://www.census.gov/hhes/hlthins/historic/hihistt5.html]
30
The federal Health Insurance Portability and Accountability Act, 1996 (HIPAA) set
standards for the segment of the private health insurance market previously protected from
state standards under ERISA and implemented basic federal standards for insurance under
state regulation. In doing so, this legislation lessened state differences in insurance regulation
as well as increased overall government intervention into private insurance markets including
the one-third to one-half of the private insurance market previously unregulated. See Len M.
Nichols and Linda J. Blumberg, “A Different Kind of ‘New Federalism’? The Health
Insurance Portability and Accountability Act of 1996” Health Affairs 17, 3 (May/June 1998):
25-42.
31
Marshall W. Raffel and Norma K. Raffel, “The Health System of the United States,” 26389, in Marshall W. Raffe., ed., Health Care and Reform in Industrialized Countries
(University Park, PA: Pennsylvania University Press, 1997), 278. In the case of not-forprofit hospitals, it is uncompensated care which justifies their tax-exempt status. As no such
legal obligation as described above or tax-exempt status applies to private physicians,
physician services are more difficult to secure for the uninsured.
32
Graham Atkinson, W. David Helms and Jack Needleman, “State Trends in Hospital
Uncompensated Care” Health Affairs (July/August 1997): 233..
33
To determine the amount of health care services which could be purchased, expenditure
figures must be adjusted using a purchasing power parity for health service which “indicates
the rate at which one currency should be converted to another to be able to purchase an
equivalent basket of health goods and services in the two countries.” Delphine Arweiler,
“International Comparisons of Health Expenditures,” 211-251 in Vol.4 National Health Care
Forum, 218.
34
I expect that public drug expenditures for the non-elderly are higher on a per capita basis in
some American states than in certain Canadian provinces. My initial data comparisons in this
area are extremely sketchy and I am awaiting updated figures from the Health Care Financing
Administration which may help in exploring these issues.
35
See, for example, Chernomas and Sepheri, How to Choose?, 4; Fuller, Caring for Profit,
119.
36
Fuller, Caring for Profit, 279.
37
Bob Rae, “Health Policy in the Consumer Era,” 89-94 in Margaret A. Sommerville, ed., Do
We Care? Renewing Canada’s Commitment to Health (Montreal and Kingston: McGillQueen’s University Press, 1999), 94. However, “…US governments spend almost exactly
the same amount – a little less than seven percent of GDP – on health care as do Canadian
governments.” Robert D. Brown, "The Impact of the US on Canada's Tax Strategy," ISUMA
1, 1 (Spring 2000): 73.
12
Kenneth E. Thorpe, “American States and Canadian Provinces: A Comparative Analysis of
Health Care Spending,” 405-17 in James A. Morone and Gary S. Belkin, ed., The Politics of
Health Care Reform: Lessons from the Past, Prospects for the Future (Durham: Duke
University Press, 1994), 406.
39
Thorpe, 406.
40
For a recent example of this argument, see Armstrong and Armstrong, Universal Health
Care, 2-3.
38
13
Figure 1: Health Care Expenditures, by use of funds, Canada, 1999
HEALTH EXPENDITURES, BY USE OF FUNDS, CANADA, 1999
Other
26%
Other
Professionals
13%
Hospitals
32%
Drugs
15%
Physicians
14%
Source: Adapted from Canada Institute of Health Care Information, Health Care in
Canada 2000: A First Annual Report, 16.
14
Figure 2: Public Drug Expenditures as a Percent of Total Drug Expenditures,
1999
PUBLIC DRUG EXPENDITURES, 1999
45
40
35
% of Total
30
25
20
15
10
5
0
NF
PEI
NS
NB
QB
ON
MB
SK
AB
BC
Source: Canada Institute for Health Information. National Health Expenditure Trends,
1975-1999. Ottawa: CIHI, 2000.
15
Figure 3: Medicare and Medicaid, % of Total Personal Health Expenditures, by
state, 1993
MEDICARE AND MEDICAID, % OF TOTAL PERSONAL HEALTH EXPENDITURES, 1993
45
40
35
30
25
20
15
10
5
O
H
AKI
C
M
I
M
T
C
T
N
J
N
C
AZ
O
K
IO
O
H
AL
SD
M
O
N
D
SC
IL
VT
G
A
W
I
O
R
M
N
M
D
C
A
KA
D
C
W
A
N
E
ID
TX
N
M
W
Y
N
V
D
E
U
T
N
H
VA
N
Y
R
WI
V
LA
AR
M
S
M
E
FL
KY
PA
ID
M
A
TN
0
Source: Data provided on request by Health Care Financing Administration, National
Health Statistics Group. Data available upon request from author.
Notes: Personal health care expenditures do not include expenditures on public health
which are not available on a state by state basis.
16
Figure 4: Uninsured Children, % of Total Children, 1999
UNINSURED CHILDREN, 1999
30
% of Total Population <18
25
20
15
10
0
NM
LA
TX
NV
ID
SC
MT
CA
DC
OK
FL
AZ
CO
MS
WY
VA
AL
W
KY
W
OR
GA
KA
NC
IL
AR
NY
UT
WI
AK
HI
ND
NJ
MI
MD
TN
CT
MA
SD
IN
NE
OH
VT
PA
MN
RI
DE
ME
IO
NH
MO
5
Source: United States Census Bureau. Health Insurance Historical Tables, Table 5.
http://www.census.gov/hhes/hlthins/historic/hihistt5.html
17
Figure 5: HOSPITALS, Type of Control, by State, 1997
HOSPITAL, BY TYPE OF CONTROL, 1997
100%
% of All Hospitals
80%
Profit
NFP
State and Local
60%
40%
0%
FL
TN
TX
LA
SC
AL
UT
AZ
CA
WV
WV
GA
AR
KY
MS
VA
OK
NH
NM
CO
MO
NC
IN
DC
WY
ID
MA
KA
OR
IL
AK
OH
HI
NY
WA
MD
PA
CT
ME
ND
NE
MI
MT
IO
NJ
WI
MN
SD
DE
RI
VT
20%
Source: American Hospital Association, 2000.
Notes: As data on hospital control by number of beds is not available on a state-bystate basis, this comparison is based on number of hospitals in each category in each
state.
18
Figure 6: Total Public Health Expenditures (per capita), by state and province,
1996
HEALTH EXPENDITURES, TOTAL PUBLIC, 1996
$US per capita
2500
2000
1500
1000
CDA
US
500
0
Sources:
Canada Institute for Health Information. National Health Expenditure Trends, 19751999. Ottawa: CIHI, 2000 for total public health care spending by province.
United States, Department of Commerce, Bureau of the Census, Federal Expenditures
by State for Fiscal Year 1997 for federal expenditures including Medicaid, public
health services, Medicare [hospital insurance payments, supplementary medical
insurance payments] and Department of Health and Human Services research
programs.
United States. Department of Commerce, Bureau of the Census, Statistical Abstract
of the United States, 1999 for state and local government expenditure on “Health and
Hospitals,” Table No.514.
OECD website for purchasing power parities. [http://www.oecd.org/]
Notes: Total US public expenditures on health care reported above do not include
health care expenditures under Veterans Affairs programs or health care programs
provided under state general assistance programs. Thus, total public expenditures
reported in these comparisons ($409.4 billion) are 11.3% less than the national total
public health expenditures of $481.4 billion reported in US Health Care Financing
Administration, Health Care Financing Review 1998. Secondly, the American
figures used in these comparisons do not include tax subsidies for private, employerprovided health insurance benefits.
19
Total public health expenditures in 1997 in the US were US$1876 per capita while the
comparable figure in Canada was US$1515. Including estimated tax expenditures for
employer-provided health insurance in the US (US$412 per capita in 1997), US
public health expenditures are US$2288.
20
Figure 7: Total Public Health Care Consumption/Supply (per capita), by state
and province, 1996
HEALTH CARE SUPPLY/CONSUMPTION, TOTAL PUBLIC, 1996
$US [ppp(health)=0.76]
3000
2500
2000
1500
US
CDA
1000
500
0
Sources: See Figure 4.
PPP(health) for 1996 are estimated by the author using PPP(health) for 1993 as
reported by the OECD deflating American expenditures using US Census Bureau,
Statistical Abstract of the United States 1998 price index for medical care.
Notes:
Estimating the supply or consumption of publicly provided health services (using an
estimated purchasing power parity[medical services]=0.72), national per capita
consumption of public health services in Canada was US$2503 compared to the US
figure of US$1876 (or US$2288 including estimated tax expenditures for employerprovided health insurance.)
21
Table 1: Regulation of Individual and Small-Group Insurance, American States,
as of June 1996
No Regulation
Limited
Moderate
Strong Regulation
(0)
Regulation (1-3)
Regulation (4-5)
(6-8)
AL, AR, MI, PA
AK, AZ, CO, DE,
FL, GA, KA, IL,
IN, MA, MD, MO,
MT, NC, NE, NM,
NV, OK, RI,
SD,TN, TX, VA,
WI, WV
CA, CT, ID, IO,
LA, MN, OH, OR,
SC, UT, WY
KY, ME, ND, NJ,
NH, NY, VT, WA
Italics indicate border states.
Source: Urban Institute, Assessing the New Federalism State Database.
[http://newfederalism.urban.org/nfdb/index.htm]
Table 1 categorizes states according to the number of individual and small group
insurance regulations recorded for each state in the Urban Institute’s State Database.
Categories of regulations include “guarantee issue” for individual insurance, “preexisting condition” legislation for individual insurance, “guaranteed renewal”
legislation for individual insurance; “community rating” legislation for individual
insurance; “mandatory loss ratio” legislation for individual insurance; “guaranteed
issue of products” legislation; “community rating” legislation for small-group
insurance; and “pre-existing condition” legislation for group insurance.
22
Table 2: Uncompensated Care, % of Total Hospital Charges, by State, 1994
UNCOMPENSATED CARE (% of
STATE
Total Hospital Charges)
California
3.17%
Florida
7.35%
Washington
3.47%
Connecticut
3.45%
New Jersey
8.47%
New York
5.24%
Maryland
8.22%
Source:
Graham Atkinson, Graham, W. David Helms and Jack Needleman. “State Trends in
Hospital Uncompensated Care” Health Affairs (July/August 1997): 236.