What the US — And Bernie Sanders — Can Learn From Canada's Single-Payer Health Care System

What the US — And Bernie Sanders — Can Learn From Canada's Single-Payer Health Care System

Six years after President Barack Obama signed the Affordable Care Act, political debate in the United States is once again focused on changing the nation's health care system. This time, the conversation is centered around a proposal that's much more ambitious than any health reform idea to hit the mainstream in decades: single-payer health care.

Single-payer health care, a system in which the government pays health care expenses, is generating a great deal of buzz thanks to one person: Bernie Sanders. Earlier in January, the firebrand Vermont senator released his long-awaited health care plan, calling for a "Medicare for All" system in which the government replaces the private health insurance industry as the chief provider of health coverage. Sanders has proposed similar policies for years with no results, but his unexpected emergence as a serious contender for the Democratic presidential nomination has finally forced opponents to take his ambitions seriously.

Under Sanders' plan, a federally administered, single-payer health care program would provide universal coverage for the "entire continuum of health care," as his proposal states. The plan, which would be financed by new taxes on both working Americans and the very wealthy, would save the United States $6 trillion in health care spending within 10 years, according to the campaign's estimates.

Hillary Clinton argues that pushing for single-payer is a reckless gamble, and has instead proposed improving upon Obama's landmark health reform law, the first successful major expansion of health care since President Lyndon Johnson signed Medicare into law in 1965. A number of liberal commentators have described Sanders' plan as unrealistic in its promises to control costs.

But the debate over Sanders' sweeping proposal can make it easy to forget that single-payer is a proven model for delivering universal coverage. Canada has had a single-payer system since the 1960s, and it has proven to be an effective way to provide universal, high-quality health care for the population at nearly half the cost per person of the same care in the United States.

For fans of moving beyond Obamacare's reliance on corporate insurance, Canada's success with single-payer is a north star, a guiding light that shows how much more efficiently and humanely health insurance could run in the U.S. But a closer look at how the system works should also worry Sanders' supporters, given that adopting a similar model would entail a much more dramatic shift of resources and bitter fighting with vested interests than the senator has let on.

How does it work? When you visit a doctor in the U.S., you are responsible for the medical bill. If you have health insurance, the bill is submitted to your insurance provider. Assuming you're not poor enough to qualify for Medicaid or old enough to qualify for Medicare, that's typically a health care plan provided by your employer or purchased through an exchange. Your insurance company decides how much of the services you used it will cover, and then you pay the rest.

In the Canadian system, medical bills from physician and hospital services are covered entirely by the government. Hospitals are publicly funded, but doctors generally remain in the private sector — they're technically private independent contractors. Not all health-related expenses are covered by the government's coverage plan: Prescription drugs, dentistry and optometry are uninsured. Most Canadians take out private supplemental insurance to cover those expenses. Private insurance for services covered by the government plan is not allowed.

Canada's decision to have one single entity — the government — foot insurance bills is one way in which it cuts down on costs compared to the United States' private insurance system. Streamlining the system to one nonprofit payer cuts down on administrative costs associated with the messy complex of profit-oriented insurance companies.

"Just switching to single-payer probably saves you at least 10% in terms of the total amount you spend on health care, because of administrative costs," Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology and a key architect of Obamacare, estimated in an interview with Mic.

Another major feature of how the Canadian system works — one that's key to how inexpensive it is — is fixed prices for services. The cost of medical care is entirely standardized: The amount doctors are paid, hospital stays, expensive diagnostic tests like MRIs and the cost of drugs are all on a regulated price schedule set by the government. Not only are those prices fixed, they're also set low; health providers are paid a lot less than they are in the United States.

The final standout feature of single-payer in Canada is how supply of care is deliberately limited. Health regions and hospitals have fixed annual budgets. There's a frugal distribution of expensive diagnostic tools. That's a product of the fundamental fiscal conservatism of the single-payer system — when hospitals are given a budget to work with and expensive tools are fewer in number, it saves money.

It also increases wait times for care. The time it takes to get a bed at an emergency room or see a specialist in Canada is longer than in the U.S. The wait times for MRIs there are notoriously bad. While stories of these delays often conjure up a specter of Soviet-style rationing for more conservative Americans, the reality is that high cost of care ends up producing a similar result in the U.S. In fact, lack of insurance and high costs cause Americans to delay or forgo services so much that their preventable death rate and unattended health problem rate is much higher than Canada's.

Can it be done in the U.S.?  Is it possible, as Sanders suggests, that the federal government could replace the private health insurance industry and finally make health coverage in the U.S. completely universal, as Canada has done?

On level of policy, it's entirely possible. The single-payer model works with large populations and can be replicated.

But its political plausibility in today's climate is another question entirely, and Sanders' specific pitch for setting up single-payer sidesteps some of the thorniest political issues standing in the way of it actually becoming a reality. Sanders has been very good at selling the exciting parts of single-payer health care like savings and expanded coverage, but he's been strikingly vague on the details of execution and has omitted several crucial elements of the way single-payer works in countries like Canada, things that might make the policy sound a lot less appealing than it sounds in his stump speeches.

What are those omissions? One is the absence of a serious reckoning in his policy proposal with the fact that health providers like doctors and hospitals must be paid much less in order to actually achieve his predicted trillions in health savings — and what that reality will mean for the fight to implement his plan. Another thing missing is any substantial discussion about how controlling supply is crucial to saving money with single-payer, something that will inevitably induce discomfort in a society that may suffer from overly expensive care but rarely wants for physical access to services.

On a much bigger picture level, there's also just not momentum for sweeping health reform the way there was in in the run up to the 2008 elections, which, despite the mandate it created, still resulted in a harrowing legislative battle. And that was over a far less ambitious health care plan; the Affordable Care Act did not involve disrupting the entire health care system as it exists and required allying with the powerful private insurance industry, not declaring war on it.  

"You need a massive shift in the political environment, and I think now is a uniquely bad time, because we just made the greatest stride we made in our history in terms of improving health care for American citizens," Gruber said. "It's like saying 'Wow, I've been starving in the desert, here's a piece of cake — but I'm going to throw this piece of cake away on a 0.01% chance of a whole cake.' Why would you do that?"

Could the United States one day upgrade to the Canadian system? Certainly. But at the moment the prospects for the system reset it would entail are bleak — even Sanders' home state of Vermont, a bastion of offbeat liberalism, couldn't make the switch in 2014. It doesn't seem to be an idea whose time has yet arrived. Then again, Sanders has defied expectations again and again — perhaps the idea of single-payer could too.