Canadian healthcare analyzed by Robert Gordon…

Robert Gordon • Alan P obliges me to comment on drug availability in Canada and on recourse to the US private sector for healthcare services. I comment first on DRUGS.

In Canada, healthcare (“The Establishment, Maintenance, and Management of Hospitals, Asylums, Charities”) is explicitly made a provincial responsibility by Section 92.7 of the BNAct 1867, Canada’s founding written Constitution. In subsequent supreme court (Privy Council) decisions, a decentralized (“States’ Rights”) interpretation was entrenched. In 1968 and 1984, the federal government got laws to put funding pressure on Provincial laws in healthcare, thus resulting in a great deal of uniformity (portability). Hence, each Province has its own legal structure for these matters, but there is a general similarity too. So it makes sense to speak of Canada’s system, noting Provincial differences by exception.

DRUGS. Access to drugs is not included in Canada’s healthcare system (except implicitly during hospitalization – about 10% of total drug costs partly due to manufacturers’ willingness to “negotiate” very low prices for hospitals). There is a federal FDA-like organization that approves the sale of drugs in Canada based on safety and efficacy. Another national agency, PMPRB, tracks global pricing and caps Canadian patented drugs at a 12-country (incl the USA, whose relatively very high prices fund most of the discovery research in the world) average. There is another national organization that does cost-benefit analysis of new drugs or new indications and recommends (which can seem to be ignored by provinces) use, non-use, prices (on scales). Each province also maintains a provincial formulary, mainly to control Provincial spending (so some new drugs may not be available). Each province has some sort of drug plan for seniors and the poorest; and this coverage has been expanding as all tax-paid entitlements do. The increasing total cost of drugs as a portion of healthcare expenditure has led to quite noticeable differences among provinces as to what will be covered under provincial plans; lags on coverage can take several years. Prices on generic drugs have for the past few decades been much lower in the free-market US than in regulated Canada (and some seniors found it cheaper to drive across the border to get drugs at Walgrens rather than pay the Provincial Plan deductibles etc.). But that discrepancy is being addressed by selective use of market mechanisms such as sole-supply auctions, legislative capping relative to patent price etc.

Next on Services.

5 minutes ago• Like

Robert Gordon • Now on Services.

[Constitutionality note repeated] In Canada, healthcare (“The Establishment, Maintenance, and Management of Hospitals, Asylums, Charities”) is explicitly made a provincial responsibility by Section 92.7 of the BNAct 1867, Canada’s founding written Constitution. In subsequent supreme court (Privy Council) decisions, a decentralized (“States’ Rights”) interpretation was entrenched. In 1968 and 1984, the federal government got laws to put funding pressure on Provincial laws in healthcare, thus resulting in a great deal of uniformity (portability). Hence, each Province has its own legal structure for these matters, but there is a general similarity too. So it makes sense to speak of Canada’s system, noting Provincial differences by exception.

MEDICAL SERVICES. Alan P gives an accurate general sense of the extent of medical tourism from Canada to the US as a volume of trade. Some patients are actually sent by their Provincial system to US providers. Other patients (whether rationally or not) are too frightened to wait (e.g. several weeks for an MRI) on a Canadian waiting list (waiting is our rationing mechanism instead of ability-to-pay), take themselves to the US and sometimes are able to win lawsuits for reimbursement when (or some years after) they get back. And some people (not actually “patients”) travel to the US for “unnecessary” care, curiosity-driven diagnostic screening, etc. There is very little travel to Canada from the US for treatments.

Here’s a little point that I should make clear:
IT IS ILLEGAL TO SELL OR BUY NECESSARY MEDICAL SERVICES IN CANADA.
Either the system provides necessary services or not, but that’s what there is. Period. In this regard, we are the harshest socialist system in the OECD (I have heard that only North Korea is harsher).

But the value to Canadians of having the US free-market in medical supplies and service next door (80% of Canadians live within about 150 miles of the border) is not that they actually do go across, but the fact that they can go across and would do so if the Canadian system were not providing the necessaries. This potential movement, proven by the trickle of actual cross-border travel, keeps our government system honest. Forces them to include in coverage what is standard practice in the US. Forces them to make sure proven treatments are available. And they need this discipline. Otherwise they will satisfy themselves with the healthy majority of voters by claiming to have a universal access system, scorning the tiny minority of voters who are sick and untreated, while spending money on their preferred political projects. The extent to which governments are willing to go was clearly shown in a Canadian Supreme Court case (Chaoulli v. Quebec Attorney General [2005]), finding that if the government system was not actually providing healthcare services (which it was not in this case) then laws forbidding the sale of such services would be void. Chaoulli has created a new less-totalitarian tone in discussions of whether we ought to allow some free-market back into our system.

done

About Brian D Gregory MD, MBA

Board Certified Anesthesiologist for 30 years. TOC design and implement for 30 years. MBA from U of Georgia '90: Finance, Data Management, Risk Management. Practiced in multiple US states and Saudi Arabia at KFSH&RC and KFMC Taught residents in two locations. Worked with CRNAs for 20 years.
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1 Response to Canadian healthcare analyzed by Robert Gordon…

  1. Colin Lay says:

    The Chaoulli victory was very hollow. The plaintiff wanted to be able to buy insurance to cover a problem for which he already had the diagnosis. Insurance companies are not that stupid. Seven years later no company has stepped forward to offer such coverage. It would have been as cheap for the plaintiff to drive to Boston to purchase the treatment he desired. Look at the insurance market in the USA prior to PPACA. Lots of people could not get insurance coverage because they were not part of a large enough group. Even with coverage, a major problem can bankrupt a family. Can? Does.

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