New book from Fraser Institute discusses the government-run health insurance in Canada

As Americans debate the merits of a “public option” for health insurance, a new book published by the Fraser Institute, one of Canada’s leading economic think tanks, documents the many significant problems with government-run health care in Canada, providing valuable comparative information for U.S. policy-makers at a crucial moment.

“The truth is that government-run health insurance in Canada fails patients, exploits medical providers, wastes taxpayers’ money, and is ultimately financially unsustainable,” said Dr. Brett Skinner, Fraser Institute director of bio-pharma and health policy and author of Canadian Health Policy Failures: What’s wrong? Who gets hurt? Why nothing changes.

“Health care choices are highly politicized in Canada because government controls health insurance. Governments make choices about access, costs, and coverage that are politically expedient, not economically rational. Americans can learn what to avoid by reading this book.”

The peer-reviewed book identifies six key areas where Canadian health policy is failing: unsustainable costs, shortages of health professionals, shortages of medical technology, long waits for treatment, inefficient drug spending, and a lack of access to new medicines.

In one chapter, Skinner provides a small sample of published media stories and reports illustrating the ways in which real people are often harmed by Canadian health policy.

“Lengthy wait times for medically necessary treatment have become a standard part of the Canadian health care system because governments ration care in an attempt to control costs. As a result, patients suffer,” Skinner said.

The book devotes two chapters to identifying and discussing the key health and prescription drug policies in Canada that are most problematic, as well as various alternative policies that could provide better outcomes.

Skinner then examines the key political factors that act as barriers to the adoption of more economically rational health care policies in Canada.

One of his key findings is that Canadian policy-makers are affected by an imbalance of information. Government-commissioned health policy reports have tended to be one-sided, including only those experts who advocate greater state intervention in health care.

“The dominant ideology among tax-funded researchers in Canada tends to favor government involvement, causing them to discount or ignore both the problems in our system and the solutions,” Skinner said.

“Ideology also explains why some experts tend to exaggerate the shortcomings of the U.S. health care system and ignore the fact that current government involvement in health care is a major reason for those failures.”

Skinner further argues that powerful special-interest groups, including business groups, often benefit economically from government involvement in health care and this creates strong incentives for them to favor interventionist public policies and oppose liberalization.

“Once the government controls health insurance, special interest groups will line up at the public trough. We have seen this in Canada, and it is very difficult to dislodge these groups once they are entrenched. Allowing further government involvement in health care could be a one-way street with no turning back,” he said.

Skinner demonstrates that in Canada the majority of the tax burden is paid for by a minority of the population. This means most people are disproportionately insulated from the price of public health insurance programs. Therefore, the majority of voters have significantly reduced financial incentives to make cost-benefit calculations about the performance of the health system.

“The system is fundamentally unjust. The public is largely unaware of the problems simply because most people don’t use the health care system very much,” Skinner said.

“People who are seriously ill—those most directly harmed by wait times and a lack of access to medical care—make up a small percentage of the population. Politically speaking, ill people don’t represent a lot of votes. How can they have a decisive influence on policy-makers about declining access and coverage under Medicare? Politicians can afford to ignore them.”

The book also points out that the Canadian health care system does not perform better than the United States when it comes to actually delivering effective access to “insured” medical care.

“Access to a wait list is not the same thing as access to health care. When Canadians can’t get access to health care because they can’t find a physician or wait so long that they are effectively uninsured, they are no better off than uninsured Americans,” Skinner said.

“The health reform debate is dominated by many myths about government involvement in health care markets and the comparative structure and performance of the U.S. and Canadian health care systems. This book directly challenges these myths and provides objective, evidence-based answers to some of the most important questions about health care policy,” Skinner said.