"Both the Congressional Budget Office and the New York Times warned that Clinton’s plan may lower the quality of medical care."

And the Congressional Budget Office (CBO), which normally would be expected to support a Democratic president’s health care proposal, offered a similar analysis. The CBO, according to the New York Times, says federal limits on private health insurance premiums could harm consumers by forcing a reduction in valuable medical care and restricting access to new medical technology.4

"An estimated 1,379,000 Canadians are waiting for some kind of medical service."

To see how the Clinton plan might affect patients, the president might look at Canada. In general, Canadians have little trouble seeing a general practice or family practice physician. But specialist services and sophisticated equipment are increasingly rationed. Canada attempts to control health care spending by limiting expensive medical technology. Within hospitals, physicians work under severely limited budgets. The resulting system of health care rationing is inefficient and unfair. It also threatens the quality of care Canadians receive. In general:

• Canadians do not have full access to existing modern medical technology, and there is very little research or development of new technology.
• Some patients, including a friend of one of the coauthors of this backgrounder, die while waiting for diagnosis and treatment.
• An estimated 1,379,000 Canadians are waiting for some kind of medical service.
• There are 177,000 Canadians waiting for surgical procedures, and 45 percent of them say they are "in pain" while they wait.
• Access to health care is unequal, with some Canadians having a much better chance of seeing a doctor than others.
• Despite these developments, Canada’s per capita health care costs have been rising at roughly the same rate as those in the United States.

Lack of Access to Technology

• On a per capita basis, the United States has 10 times as many magnetic resonance imaging (MRI) units- which use magnetism instead of x-rays- as Canada.
• The United States has three times as many computerized axial tomography (CAT) scanners per person.
• The United States also has about three times as many lithotripsy units (to destroy kidney stones and gallstones with sound waves) per person.
• And, per capita, the United States has about three times as many open-heart surgery units and eleven times as many cardiac catheterization units (for the treatment of heart disease)

Rationing Scarce Technology.

Delaying New Technology.

• The rate of pacemaker implantation in the United States during the mid-1970s was almost 20 times that of Canada.
• CAT scanners were more than three times as available in the United States as in Canada.
• The treatment rate of kidney patients was more than 60 percent greater in the United States than in Canada.
• Canada develops almost no new medical technology and spends very little on research and development. By contrast, research and development spending in the United States result in innovations that benefit the U.S., Canada and the rest of the world.

Rationing by Waiting

The Length of Waiting.

• The average wait to see an eye specialist in Prince Edward Island is six months- and it takes another six months on the average to be treated.
• On the average, it takes almost seven weeks to see a gynecologist in New Brunswick and another six months to be treated.
• To see an ear, nose and throat specialist takes a little more than two weeks in Newfoundland- but it takes another six months to be treated.

• Patients in British Columbia wait up to a year for routine procedures such as cholecystectomies, prostatectomies, hip replacements and surgery for hemorrhoids and varicose veins.9
• In Ontario, patients wait up to six months for a CAT scan, up to a year for eye surgery and orthopedic surgery, up to a year and four months for an MRI scan and up to two years for lithotripsy treatment.10
• All over Canada, patients wait for coronary bypass surgery, while the Canadian press tells of heart patients dying on the waiting list.11

Inequalities in Waiting.

• After seeing a specialist, patients wait an additional 14.6 weeks for surgical procedures in Prince Edward Island but only 5.9 additional weeks in Ontario.
• Following a diagnosis, a high proportion of patients in the Maritime provinces wait more than six months for treatment, but 96 percent of the waits in Ontario are less than three months.

  "45 percent of those waiting for surgery say they are in pain and some are risking their lives."

Case Study: Cardiovascular Cases.

• After a report that Newfoundland’s waiting list was a year long, the hospital performing open heart surgery received a special temporary grant to deal with the waiting list.
• After a public outcry over the six-month waiting list, British Columbia contracted with Washington state hospitals to perform some 200 cardiac operations in 1989.

Effects on Patients’ Health.

• Whereas only 7 percent of the patients waiting in 1967 were classified as urgent, 24 percent were classified as urgent in 1988.
• Whereas 0.6 percent of the population was on the waiting list in 1967, 1.1 percent-almost double the fraction of the population-was on the waiting list in 1992.

How Global Budgets Cause Rationing.

• Provinces that spend $1,500 or more per capita on health care have shorter waiting times.
• Ontario, the province with the shortest waiting times of all, spent $313.70 per capita more on health care than any other province in 1991, the latest year for which data are available.

How Americans Jump the Queue.

How Pets Jump the Queue.

How U.S. Providers Profit from Canada’s Health Care Rationing.

• Because of the inadequate facilities in Canada, about half of the in vitro fertilization patients at the University of Washington Medical Center are Canadians, paying $5,000 out-of-pocket for each procedure.22
• Enough Canadians come to the United States for heart surgery that a California heart surgery center has advertised its services in a Vancouver newspaper.23
• In 1990, the Ontario Health Insurance Plan paid about $214 million to U.S. doctors and hospitals- up 45 percent over the previous year.
• Of that amount, 40 percent went to Florida, 9 percent to New York, 5 percent to Michigan and Minnesota and 4 percent to California.
• In 1993, the Canada-America Health Care Corporation, based in Winnipeg, began to offer Canadians an insurance policy providing for access to care in the United States if they had to wait 45 days or longer for care in Canada.24

"America serves as Canada’s safety valve - delivering care that Canadian patients cannot get at home."

Unequal Access to Health Care

"The highest income groups have a much lower probability of waiting."

Global Budgets Favor the Rich and Powerful.

"Critics charge that those who are rich, influential, or ‘connected’ often ‘jump the queue,’ which changes Canadian health care into a two-tier system- precisely what the government wanted to avoid."28

Because government officials have little interest in verifying these facts, few formal studies exist. However, the evidence that does exist supports the charge. A recent analysis of surgical waiting lists in British Columbia concluded that "nearly 80 percent of queue jumping is not on the basis of emergency but on the basis of physician/surgeon preferences, requests from senior Ministry of Health officials and sometimes from members of the legislature."29 Members of the federal Parliament and 4,364 high-ranking federal bureaucrats can avoid waiting lists because they have access to the National Defense Medical Center. In 1990, the Canadian Auditor General reported that 61 percent of the center’s in-patient days were for nonmilitary patients.30

"Politicians jump the queue by going to a military hospital."

Canadians who can afford to pay also have other options. Since Canada does not allow private health insurance, if Canadians go to the less than 1 percent of physicians who practice privately or less than 5 percent of private hospitals that are private, they must pay the full bill out-of-pocket.31 The only exception is a small number of outpatient surgery clinics operated byentrepreneurial physicians, to whom government will pay the surgeon’s fee but not other costs. Canadians who receive cataract surgery on an outpatient basis, for example, must pay from $900 to $1,200 out-of-pocket.32 As noted above, increasing numbers of Canadian citizens are coming to the United States for health care they cannot get at home. In some cases, the Canadian province pays the bill. In other cases, patients spend their own money or rely on the newly established private insurance plan for U.S. care.33 In either event, patients must bear the costs of travel. Clearly, this alternative favors those with money.

"Canada’s principal minority group - Indians- fares less well than American Indians."

Global Budgets Discriminate Against the Elderly.

• Per capita, the United States performs twice as many coronary artery bypass operations on elderly patients as Canada does.
• Among 75-year-olds, the difference between the two countries is four to one.

Global Budgets Discriminate Against Racial Minorities.

• The age-adjusted mortality rate for Inuits is almost twice the rate for Canadians as a whole.
• Infant mortality rates are three times greater among the Crees and four times greater among the Inuits than for the rest of Quebec.
• The nationwide infant mortality rate is twice as high for Indians as for non-Indians; by comparison, the Indian infant mortality rate in the United States is slightly lower than that for non-Indians.
• The life expectancy at birth for both male and female Indians is almost 10 years less than for non-Indians, compared to a difference of only about three years for both males and females in the United States.38

Global Budgets Discriminate Against Rural Patients.

• On the average, people living in British Columbia’s two largest cities (Vancouver and Victoria) receive about 27 percent more physician services per capita than those living in the 28 rural districts of the province.
• Urban residents receive 45 percent more services from specialists per capita than rural residents, and for specific specialties the discrepancies are even greater.
• On the average, urban residents are 5 times more likely to receive services from a thoracic surgeon, 3.2 times more likely to receive the services of a psychiatrist and about twice as likely to receive services from a dermatologist, anesthesiologist or plastic surgeon.

• A child is 22 times more likely to see a dermatologist if the child is living in Vancouver than in the East Kootenay district (pop. 50,660).
• A baby girl is 10 times more likely to see a pediatrician for any reason if she is living in Vancouver rather than in Peace River (pop. 51,252).
• A 40-year-old woman is almost nine times as likely to have reconstructive plastic surgery if she is living in Vancouver rather than in Bulkley-Nechako (pop. 36,952).
• A 40-year-old woman with a mental disorder is 12 times more likely to see a psychiatrist if she is living in Vancouver rather than in Fraser-Fort George (pop. 88,250).

Deteriorating Quality of Care

"There are increasing reports of patient deaths and near-deaths because of rationing."

Inefficiency.

How much does it cost a hospital to perform an appendectomy? Outside the United States, it is doubtful that any public hospital knows. Nor do government-run hospitals typically keep records that would allow anyone else to find out.42 In organizational skills and managerial efficiency, Canadianhospitals are far behind hospitals run by Hospital Corporation of America, Humana or American Medical International. In fact, Canadian hospitals in several provinces have called in management groups from the U.S. to either retrieve them from financial difficulty or to improve generally their financial performance. While 177,000 wait for surgery in Canada, at any point in time one in five hospital beds is empty.43 Moreover, about 25 percent of all acute-care beds are occupied by chronically ill patients who are using the hospitals as nursing homes" often at six times the cost of alternative facilities.44" One reason for these inefficiencies is that under global budgets hospital managers have perverse incentives. In Canada, hospitalized chronic patients are known as "bed blockers," and they are apparently blocking beds with the approval of hospital administrators. Because these patients use mostly the "hotel" services of the hospital, they are less draining to limited hospital budgets.45

One widely used measure of hospital efficiency is average length of stay. In general, the more efficient the hospital, the more quickly it will admit and discharge patients. By this measure, U.S. hospitals are far in front of their Canadian counterparts. The average hospital stay is 42 percent longer in Canada than in the United States.46

A frequent criticism of the U.S. health care system is that it is wasteful because many procedures are "unnecessary." One source of evidence for unnecessary medical care is a series of studies that show wide variations in the rate of treatment among different U.S. communities, with no apparent justification. One might suppose that in countries where health care is rationed and many medical needs are unmet, doctors would tend to provide only necessary care. That turns out not to be the case. As in the United States, treatment rates in Canada vary considerably. For example:47

• There is a four-to-one difference among Canadian counties in the rate of cesarean sections.
• There is a four-to-one difference in rates of tonsillectomy and hysterectomy and a two-to-one difference in the rates of mastectomy, prostatectomy and cholecystectomy.

Failure to Control Costs in Canada

• First, the Canadian number doesn’t include capital spending to the same extent as the U.S. number.
• Second, the U.S. number includes research and development costs. Canada engages in very little such spending, while U.S. spending on research and development results in technological innovations that benefit Canada as well as the rest of the world.

Victims of Global Budgets

• Malcolm Stevens of British Columbia died of a heart attack after two months on the waiting list. Ironically, that same day his doctor bumped another patient from the surgery schedule in order to make room for Stevens.
• Charles Coleman, a 64-year-old man, died shortly after a heart operation at Toronto’s St. Michael’s Hospital. Coleman’s operation had been postponed 11 times.
• Stella Lacroix’s death started as a suicide. Moments after she swallowed a quart of cleaning fluid she raced to the nearest emergency room. Because the hospital wasn’t equipped to perform the surgery she needed to stop the internal bleeding, the emergency room physician spent 3 1/2 hours contacting 14 hospitals in an effort to secure emergency surgery and an available intensive care bed. By the time she arrived at Ontario’s York County Hospital, it was too late. She died that night.
• In January 1990, two-year-old Joel Bondy needed urgent heart surgery that was repeatedly postponed. Alarmed at their son’s deteriorating condition, his parents contacted Heartbeat Windsor, an underground railroad for Canadian heart patients, to arrange for the surgery in Detroit. Embarrassed by media coverage of Joel’s situation, Canadian officials promised Joel would be moved to the top of the waiting list. After a four-hour ambulance ride to a hospital which lacked an available bed, the family had to spend the night in a hotel. The next day Joel Bondy died.

• According to one report, 24 people died in 1989 while waiting for heart surgery in British Columbia.
• At Winnipeg’s Health Science Center, Manitoba’s largest hospital, six heart patients died in 1988 before they reached the operating room.
• In January 1989, long waiting lists forced Toronto’s highly respected Hospital for Sick Children to send home 40 children who needed heart surgery.
• At Moncton Hospital in New Brunswick, some patients were kept in hallways and even in closets, while 2,300 people were on the waiting list for surgery.
• Because of a four-month wait for mammograms at St. Clare’s Hospital in Newfoundland in 1988, preventive screening became impossible and the hospital could handle only women who needed an immediate diagnosis.

• Third, in both countries the costs of administering government health care spending are largely hidden. But since Canada’s public sector is relatively larger than that of the United States, far more of Canada’s costs are buried in bureaucratic budgets.
• More Precise Comparisons. In order to avoid these problems, one study measured international health care spending excluding costs of administration, hospital construction and research and development.50
• Using this more precise measure, the study found that the United States spends more of its income on health care than Canada - but the difference is smaller (10.2 percent vs. 8.4 percent.)
• During the 1980s, the real growth rate for health care spending was 85 percent higher in Canada than in the U.S.
• In per capita terms, Canada had a real growth rate that was 163 percent of the U.S. rate.

Conclusion

These decisions are so emotionally loaded that no elected official can afford to claim responsibility for them. Important decisions on who will and will not receive care and on how that care will be delivered are left to the hospital bureaucracy because no other course is politically possible.

To the extent that global budgets and rationing of care"work" in Canada, they do so because the wealthy, powerful and sophisticated-those most skilled at articulating their complaints - find ways to maneuver to the front of the rationing queues or avoid them by going to the U.S. for care. Thus those who have the power to change the system bear few of its costs.52 The conclusion of this backgrounder is that while the Clinton proposal has ostensibly rejected a Canadian version of nationalized health care, it has adopted the key deficiency of the Canadian system. Capping the supply of care through budget and premium limitations, as in the Canadian system, will lead to lower costs only to the extent that they lead to shortages of technology, waiting for treatment and reduced response to the health care needs of Americans.

"Canadaian politicians create as much distance as possible between themselves and the rationing decisions that affect the lives of patients."