In the United States, in the ordinary course of things, as the price of health care increases, so too do insurance premiums since, ultimately, all insurance payments come from the pool of premiums collected from the insured. Since people usually obtain this type of insurance through their places of employment, it is often thought that the rising cost of insurance constitutes an increased cost to employers. This view is especially widespread with regard to health insurance in the United States, where it is often said that health insurance premiums make up a larger part of the cost of building a car than steel does. Canadian politicians are prone to argue that since, under Medicare, Canadian companies do not have to bear this extra cost, they have a competitive advantage in world markets. As with so many statements concerning Medicare, this too is wrong.
Economic theory predicts, and empirical evidence confirms, that the full cost of the insurance premiums is passed back to workers in the form of lower take-home pay. Canadian workers pay the costs of Medicare through income taxes; U.S. workers pay the cost of their health coverage through the pass-back of premiums. Even the part nominally paid by the employer actually comes out of the pool of funds available for paying labor and therefore comes out of the workers’ pockets before it even reaches them.
So in conclusion, ladies and gentlemen, let me just summarize again the Top 10 Things Many People Believe About Canadian Health Care But Shouldn’t:
• Number One: Canada has the best health care system in the world.
• Number Two: The Canadian public loves Medicare
• Number Three: Canadian Medicare is sustainable
• Number Four: Single payer, Canadian-style, keeps costs under control
• Number Five: More cash is the solution to Medicare’s problems
• Number Six: Under Medicare, people get the health care services that they need
• Number Seven: "Free" health care empowers the poor
• Number Eight: Canadian Medicare is fairer because no one gets better care than anyone else
• Number Nine: Medicare-type spending is the best way to improve health
• Number Ten: Medicare is an economic competitive advantage for business
Now like most Canadians, I believe that our system is superior in many respects to the U.S. system, but it is a system that staggers under the burden of serious design flaws. Far from sharing Mr. Romanow’s complacency, I am deeply worried about the long-term sustainability of our health care system, and think that we have much to learn from countries that ranked much higher than either Canada or the U.S. in the WHO rankings. These countries demonstrate that many of the fears that Canadians have about significant reform of Medicare — For example, of introducing payments for health care, of allowing people to pay directly for health care outside the government monopoly, and even of breaking up the provision monopoly to allow competition and a greater role for the private sector — are unfounded. All reforms can be carried out within a public policy framework that continues to be pre-occupied by equity considerations, and that gives Canadians better value for the tens of billions of dollars they so patiently and lovingly devote to public health care spending in a repeated triumph of hope over experience.