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


The characteristics described in this backgrounder are not accidental by-products of global budgets and price controls. They are the natural and inevitable consequences of government's responding to increases in the demand for health care by restricting the supply.51

In Canada, hospitals and doctors are given fixed budgets and are forced to ration health care, with few questions asked. Politicians create as much distance as possible between themselves and the decisions that affect the lives of patients. As a practical matter, no administration can make it a national policy that people will be denied care because the government is unwilling to allow the purchase of additional technology. Nor can any administration announce that some people must wait for surgery so that the elderly can use hospitals as nursing homes or that elderly patients must be moved so that surgery can proceed.

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.

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

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.

Coproduced by the National Center for Policy Analysis and the Pacific Research Institute.

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.

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