U.S. trending toward European and Asian-style health care—not Canadian-style

Steve Globerman’s recent study of health systems in Canada and nine European and Asian countries with “universal” health care demonstrates Canadian patients are unique in having government control spending from the first dollar—that is, Canadian patients pay nothing directly out-of-pocket for services defined as medically necessary by the government. Further, they are uniquely prevented from choosing their own private health insurance for those services, either as a substitute for the government plan or supplemental to it.

What these other countries share is a commitment to universal coverage. The United States is the only developed country today where a large proportion of people are categorized as “uninsured.” In 2015, about 18 million people lacked health insurance for at least one year.

However, the U.S. is quickly moving towards a European or Asian model of coverage, with an American twist. Elites in both political parties accept that everyone should have affordable coverage.

This is largely due to Obamacare, which enshrined the notion that everyone should have access to health insurance notwithstanding their health status. No matter how sick you are, you can buy individual health insurance during the three-month open season (November through January) at the same premium as healthy people. On the other hand, the law mandates (with some exemptions) U.S. residents have coverage through some means—private or public—or be penalized.

In their recent policy document, A Better Way, Republicans in the U.S. House of Representatives (where they hold the majority under Speaker Paul Ryan) have generally accepted this doctrine. They would also use tax credits to ensure people could afford insurance. However, they would allow people to use their tax credits to pay for out-of-pocket costs directly, which they cannot under Obamacare. (Even though Obamacare includes some cost-sharing subsidies, they are only for a small segment of low-income households and are channeled through health insurers.)

Hillary Clinton, the presumptive Democratic nominee for president, has also proposed tax credits of up to $5,000, or five per cent of household income, explicitly to fund patient out-of-pocket costs. There is room for agreement between the two sides, if they back off their partisan rhetoric.

Both the House Republicans and Mrs. Clinton would leave in place the confusing jumble of employer-based benefits, individual health insurance, Medicare for seniors (and the disabled), Medicaid (for the poor), the Veterans Health Administration (for veterans), and a few other bits and pieces. U.S. health care will likely evolve towards universal coverage by building on the mosaic of programs that have existed for decades, rather than having the government take over the entire system holus bolus.

In other words, it is likely the U.S. health system will continue to evolve towards a model that looks more like European or Asian universal coverage through a mix of private and public insurance, with patients bearing direct out-of-pocket costs for non-catastrophic spending. Canada will increasingly look like an outlier among developed countries, with its insistence on monopolistic government control over every dollar of medical necessary health spending.