Where Should We Plant the Canadian Flag?

The Supreme Court just confirmed the constitutionality of the Patient Protection and Affordable Care Act’s (PPACA) individual mandate. This provision requires all uninsured Americans to enroll in health insurance or pay a tax penalty. For those who could not afford insurance, the Act was also to expand Medicaid. This second provision was adjusted but not struck down by the Court, because I haven’t thoroughly digested these details, I will leave this provision out of my analysis. As you probably recall, the Act’s history was a tortured one – it was meant to allow all Americans to obtain health insurance. However, the White House was forced to make compromises among both its moderates in Congress and with Senator Scott Brown, a Republican who unexpectedly won Ted Kennedy’s former seat and thus imploded the Democratic super-majority in the branch.

So we are well on our way to becoming another Canadian health care system, right?  First, lets define what is Canadian healthcare. The system is single: the government manages care. It acts as the insurer describing when and how Canadians can receive treatments. This can lead to far less paperwork, but sometimes specialists and elective surgeries require long waits. It also negotiates lower bulk rates for pharmaceutical products.

Where the is the most similarity between systems is in the emergency department. Since President Ronald Reagan signed the Federal Emergency Medical Treatment and Labor Act (EMTALA) in 1986, American hospital emergency rooms have been required to assess and treat emergencies regardless of insurance coverage or ability to pay. Nowhere in the initial nurse-proctored assessment does an American get asked non-health related questions. The initial assessment then determines the wait. Similarly in Canada, the more severe the patient’s ailments, the shorter the wait, and vice versa. However, the similarities end once patients have been stabilized. At this point, money becomes a factor in entirely different ways. In Canada, there is an incentive for doctors to solve the underlying conditions – as this will lead to lower recidivism. In America, the point is to remove those who don’t pay as quickly as possible – federal payments for uninsured patients tend to be much lower than actual costs.

Yes, PPACA clearly expands the role of the federal government in healthcare, but it’s no copy of the Canadian system. Private insurers are and will remain the central element of healthcare. If you have insurance, you will likely see little change. I myself benefited by being able to continue under my parents’ plan until I turned 26. Also, pre-existing conditions can no longer be used against you like a battering ram.

If you don’t have health insurance, do not expect any Canadian-style entitlement. No more will healthy people be allowed to save money by not buying healthcare – they will be paying a private insurer upfront or the federal government on their tax return. But many will probably choose the tax penalty. When I was between jobs and bought the most-inexpensive (and least useful for anything short of catastrophic calamities) insurance, it was still about $45 per month. For a young person switching between unpaid internships and job applications this is not insignificant. We are talking an opportunity cost of at least one hundred Chipotle burritos each year – or one hundred and fifty Portillos hot dogs (if you prefer).  Given tax season is long after the year is over, many young people will need quite a whopper of a penalty to consider switching their behaviors. In the longer term, its possible changing attitudes may reduce these tax payers.

Nevertheless, if these taxes are used wisely by the government to prevent diabetes, lower infant mortality, and improve early detection of Cancer and heart disease, there might be a positive externality that might reduce the reasons that many uninsured go to emergency rooms to begin with.

To recap: 

The US is not becoming an insurance company

Healthcare prices will continue to rise

Short of a huge tax penalty, a large number of healthy people will continue to remain uninsured

This compromise of idealism and pragmatism, rooted in the separation of powers, is very American

Canada, this is not.