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Public Health Care Provision in the CanadianProvinces and AmericanStates
Gerard W. Boychuk
Department of Political Science
University of Waterloo
Paper prepared for submission to Canadian Public Administration, July 2001.
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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 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:
…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-of-pocket 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 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 AMERICANSTATES AND CANADIANPROVINCES
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 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.)