Canada and the United States offer a tale of two health systems. On one side of the border, government-funded health care is growing wildly, fuelling massive budget deficits. On the other side, spending on private insurance and out-of-pocket health expenses is surging.
If you figured the first scenario describes Canada and the second the United States, you’d be wrong. While provincial governments are indeed struggling to rein in public health-care costs, they’re in better shape than the U.S. federal government, whose massive spending on Medicare, Medicaid and Obamacare has made it by far the country’s biggest health-care provider.
Indeed, U.S. public health-care spending as a percentage of gross domestic product will likely surpass Canada’s share in the coming years. Over all, the United States still spends vastly more on health care (16.6 per of GDP) than Canada (10.9 per cent). But while government’s share of the overall tab has remained fairly constant here, it is on a steep upward climb there.
In 2015, Canadian governments spent 7.6 per cent of GDP on health care, while private health expenditures amounted to 3.3 per cent of GDP. But Canadians are spending more and more out of pocket or on private insurance to pay for drugs and health services not covered by the public system, with private expenditures growing more rapidly than overall health spending.
Pressure is also building to allow Canadians to purchase private insurance for medically necessary services covered by the public system. Vancouver doctor Brian Day is among those challenging the current ban. The B.C. Supreme Court will begin hearing his case next week.
South of the border, federal spending on health care totalled 5.3 per cent of GDP in 2015, and is expected to rise to 5.5 per cent of GDP in 2016, according to the Congressional Budget Office (CBO). The main drivers of public health spending there are Medicare (federal health insurance for seniors), Medicaid (federal-state health insurance for the poor) and Obamacare (which subsidizes private health insurance for individuals without employer-provided plans but who earn too much to qualify for Medicaid).
When state spending on Medicaid is added in, overall U.S. public health spending now approaches 7 per cent of GDP, not far off the Canadian share and poised to surpass it.
This is at odds with Canadian perceptions of the U.S. health-care system as a Wild West of private insurance. But the CBO notes there are now almost as many Americans who get health insurance through the government (152 million) as those who have private insurance through employers (155 million). Given current trends, it won’t be long before the tables have turned entirely.
One big reason is Obamacare. President Barack Obama’s signature health-care legislation, which aimed to insure a majority of the nearly 50 million Americans without health insurance, was seen as a compromise between a single-payer public system (favoured by progressive Democrats) and a purely private system (favoured by Republicans and the insurance industry). No Republicans voted for the bill, but the industry was won over by the promise of millions of new customers forced to buy private insurance with federal subsidies.
It hasn’t worked out as planned. Because Mr. Obama’s Patient Protection and Affordable Care Act mostly prohibited insurance companies from charging risk-based premiums, they have been inundated with too many sick customers and not enough healthy ones to offset costs. Surging premiums have further led younger and healthier Americans to go without insurance and pay modest fines rather than forking out thousands a year for plans. About 12 million Americans are covered under Obamacare plans, about half the number originally expected to sign up.
There is no easy fix for this design flaw, leading several major private insurance companies (including UnitedHealth, Aetna and Humana) to recently pull out of Obamacare exchanges in all or most states. Those that continue to offer policies have not only raised premiums, but sharply increased deductibles and strictly curbed patient choice of doctors and hospitals.
Because the majority of individual purchasers under Obamacare qualify for subsidies, it’s the U.S. taxpayer who bears the burden of rising insurance premiums. In about one-third of U.S. counties, only a single insurer offers Obamacare health plans – so it faces no competition to hold down premiums, driving public subsidies skyward.
Almost everyone agrees that Obamacare in its current form is unsustainable. Republicans vow to repeal it, while many Democrats insist that the only solution is cutting out private insurers altogether and creating a single, government-run insurer for Americans ineligible for either Medicare or Medicaid. Democratic nominee Hillary Clinton promises to make this so-called “public option” possible and allow any American over 55 to get insurance through Medicare.
So Obamacare may soon morph into Clintoncare, with an even bigger government role.Report Typo/Error