Controlling Health Expenditures — the Canadian Reality

Canada and the United States have conducted a large-scale social experiment on the effects of alternative ways of funding expenditures for health care. Two very similar societies, with (until recently) very similar systems of providing health care, have adopted radically different systems of reimbursement. The results of this experiment are of increasing interest to Americans, because the Canadian approach has avoided or solved several of the more intractable problems facing the United States. In particular, overall health expenditures have been constrained to a stable share of national income, and universality of coverage (without user charges) eliminates the problems of uncompensated care, individual burdens of catastrophic illness, and uninsured populations. The combination of cost control with universal, comprehensive coverage has surprised some American observers, who have questioned its reality, its sustainability, or both. We present a comparison of the Canadian and American data on expenditures, identifying the sectors in which the experience of the two nations diverges most, and describing the processes of control. In any system, cost control involves conflict between providers and payers. Political processes focus this conflict, whereas market processes diffuse it. But the stylized political combat in Canada may result in less intrusion on the professional autonomy of the individual physician than is occurring in the United States.