What President Clinton Can Learn from Canada About Price Controls and Global Budgets

Policy Backgrounders | Health

No. 129
Tuesday, October 05, 1993
by Michael Walker & John C. Goodman


Unequal Access to Health Care

Figure IV - Probability of Waiting by Income Group

In Canada26 and other countries with national health insurance, there is no national waiting list to assure that the sickest people get care first. Even in the same hospital there are instances where elective patients get surgery while those in much greater need are forced to wait.27 Who gets care and who doesn't? There is some evidence that when health care is rationed, those pushed to the rear of the waiting lines tend to be the poor, racial minorities, the elderly and people who live in rural areas. Let's take a closer look.

Global Budgets Discriminate Against the Poor. In general, low-income people in almost every country see physicians less often, spend less time with them, enter the hospital less often and spend less time there - especially when the use of medical services is weighted by the incidence of illness.

The survey that estimated the number of people waiting for some kind of medical service also collected information on the people's incomes, making it possible to determine whether those with high incomes and low incomes have an equal probability of waiting for medical services. Figure IV shows that the two highest income groups have half the probability of waiting of lower income groups. Those with annual incomes of $60,000 to $79,000 have a 4.7 percent probability of waiting, and those with annual incomes over $80,000 have a 4 percent probability. By contrast, every other income group has a probability of 7 percent or more, and most exceed 8 percent.

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

Global Budgets Favor the Rich and Powerful. Most people in Canada and other countries that ration health care through global budgets believe that the wealthy, the powerful and the sophisticated move to the head of the rationing lines. As one study of the Canadian system noted:

"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.

Figure V - Inequalities in the Use of Physician Services Among Urban and Rural Patients in British Columbia

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

Global Budgets Discriminate Against the Elderly. Wherever there is nonprice rationing of medical care, two pertinent features have been observed.34 First, when resources are limited, middle-aged patients tend to get priority over older patients. Second, the more limited the resources, the worse the degree of discrimination based on age. These observations are consistent with recent evidence on access to heart surgery in Canada:35

  • 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. According to the results of several studies, racial minorities do not fare as well as majorities under global budgets.36 In a recent study of the Inuits and Crees of northern Quebec, both groups had much less access to health care than did Caucasians in southern Quebec and in other areas of Canada - despite their much greater health needs. For example:37

  • 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

"Per capita, urban residents receive 45 percent more services from specialist than rural residents in British Columbia."

Global Budgets Discriminate Against Rural Patients. As part of the system of enforcing global budgets, Canada's health care tends to be hospital-based, with modern technology restricted to teaching hospitals and outpatient surgery discouraged. Moreover, specialists and major hospitals tend to be in major cities. As a result, rural residents often travel to the larger cities for medical care. How often does that happen? A study produced at the University of British Columbia provides the answer.39 Figure V shows some of the inequalities. The study found:

  • 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.

These are the broad averages. The discrepancies are worse between urban areas and British Columbia's most underserved areas. Even if we ignore the smallest districts and focus only on districts with at least 35,000 people, spending varies by a factor of almost 3 to 1 for all specialist services, almost 4 to 1 for OB/GYN services, 8 to 1 for internists and 35 to 1 for psychiatrists. The discrepancies are greater still among people in specific age and sex classifications in the regions, again ignoring the areas with the smallest populations. Roughly speaking:40

  • 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).

Read Article as PDF