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Comparing the U.S and Canadian Healthcare Systems

Jasmine Gutierrez Santillan

California State University, Channel Islands

HLTH101: Overview Health Care Industry Professor Blair Barker

May 6, 2022
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Comparing the U.S and Canadian Healthcare Systems

Healthcare is constantly changing as a result of policy changes, technological

advancements, the growing older population, and disease trends. Let us quickly take a look at

some of these changes. The Affordable Care Act in the United States was a notable reform as it

helped millions of Americans to become insured. As a result, this act helped to reduce many

health disparities among racial and ethnic groups. The healthcare systems have also undergone a

lot of technological advancements, from devices such as portable monitors to digital charting,

known as electronic health records, and even to receiving care through our electronic devices.

Illness, such as COVID-19, has dramatically impacted our healthcare in terms of spending and

how and where people receive care. All these changes have affected our healthcare system and

have shaped them into how they are now. Healthcare systems worldwide differ in terms of

policies, coverage, funding, costs, and providers. To better understand these differences, this

paper will highlight the United States and Canadian healthcare systems by addressing the

differences between the two in these areas: type of healthcare system, the funding and its

priorities, the cost and care delivered to patients, and the providers who are providing the care.

Many countries in the world follow these models of healthcare systems: national health

insurance (NHI), national health system (NHS), and socialized health insurance (SHI). Contrary

to the countries that have a single healthcare system in place, the United States does not.

Undoubtedly, the United States has one of the most complex healthcare systems in the world.

Our healthcare system continues to experience changes that make it difficult to understand. The

U.S. healthcare system is a mix of public and highly privatized healthcare systems (Shi & Singh,

2019). There are different methods of providing healthcare in the United States. Health

insurance, which protects individuals and their families from medical costs, is offered in the
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United States through private or public sectors. The coverage and costs of health insurance,

whether private or public, all differ. Approximately 66.5% of the U.S. population is covered

through private insurance (Keisler-Starkey & Bunch, 2021). Private health insurances include

group insurance, a self-insured plan, and individual purchases. Group insurance, which covers

the majority of individuals with private health insurance, is usually obtained through an

employer. The employer obtains insurance through a company, whereas the employer acts

independently in a self-insured plan (Shi & Singh, 2019). There is also nongroup private

insurance, where people individually pay out-of-pocket insurance. These are all forms through

which individuals receive private healthcare coverage.

In addition, those who receive coverage through private insurance are individuals who

receive coverage through public programs. These public programs include Medicare, Medicaid,

the Children’s Health Insurance Program (CHIP), and the Department of Veterans Affairs (VA).

34.8% of the U.S Population accounts for public health insurance (Keisler-Starkey & Bunch,

2021). In 1965, President Lydon B. Johnson signed the Social Security Amendments 1965,

commonly known as the Medicare and Medicaid Act (Berkowitz, 2008). Medicare is a public

health insurance program available to those 65 and older or for individuals who are disabled,

whereas Medicaid is for those with low income. Programs like Medicare and Medicaid help

provide Americans with quality and affordable healthcare, which many individuals desire.

Despite these coverages, 28 million Americans are still uninsured, leaving them to pay

out-of-pocket costs (Keisler-Starkey & Bunch, 2021). As a result, uninsured individuals are

negatively impacted as they might be less likely to receive care.

Canada’s healthcare system is based on national health insurance (NHI), unlike the

United States. According to Bodenheimer and Grumbach (2016), a national health insurance
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system is a system through which all citizens within a nation are guaranteed health insurance.

NHI is commonly called universal coverage, which many think of when discussing healthcare in

Canada. Canada’s healthcare system is known as Medicare. Before this system was established,

let's trace it back to the 1940s when it all began. Ridic et al. (2012) explain that following World

War II, several shortages in hospitals and care were seen among Canada's provinces, leading

them to enact some acts. In 1961, Canada’s 13 provinces and territories provided health

insurance plans through which the government covered half the costs. By 1971, Canada

ultimately established its NHI system, “providing coverage for both hospitalizations and

physician services” (Ridic et al., 2012). Years later, diagnostics would also be covered under the

system. Citizens of Canada receive care and are covered without having to pay.

In 2020, health spending in the United States increased by 9.7% and reached $4.1 trillion,

with a lot of federal expenditures occurring during the COVID-19 pandemic (Wilson, 2022).

With a high value, one can’t help wondering who finances the healthcare system. The truth is

that there are several ways through which healthcare systems are financed. The United States

healthcare system is a multi-payer system funded through the government, private health

insurance, and individuals who pay out of pocket. Federal taxes often fund federal programs like

Medicare, Medicaid, and SCHIP. For example, let’s take a look at Medicare. Medicare is

supported by two trust funds, the Hospital Insurance (HI) Trust Fund, and the Supplementary

Medical Insurance (SMI) Trust Fund. According to Foster and Clemens (2005), the Hospital

Insurance Trust Fund is primarily funded through payroll taxes, which are taxes paid by all

working individuals. In addition, the HI trust fund is also financed by income taxes from

individuals who pay for Social Security benefits. On the other hand, the SMI trust fund is paid by

general funds of the Treasury and by premiums paid by beneficiaries (Foster and Clemens,
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2005). Moving on from these, taxpayer-funded insurances are private-funded and are mainly

employment-based. In employer-based health insurance, employers provide their employees with

a healthcare plan by determining what it covers and sharing the cost of premiums (Shi & Singh,

2019). In addition to these costs, individuals must pay out-of-pocket for deductibles,

copayments, and coinsurance. These methods of funding are essential to the United States

healthcare system. Financing not only lets us know who has access to health care, but it also lets

us know the demand for services.

In 2021, Canada’s healthcare spending increased by 12.8%, reaching $308 billion (CIHI,

2021). Now you may ask yourself how they pay all this money while offering free healthcare.

Canada’s healthcare is a single-payer system that the government publicly finances. As

mentioned previously, Canada has ten provinces and three territories. Each province and territory

is responsible for managing and planning health services and financing. Approximately 70% of

health expenditures are covered by federal, provincial, and territorial taxes (Valle, 2016).

Individuals within each province are allowed hospitalization and physician services without any

costs by collecting payroll and sales taxes. In addition to this funding, under the Canada Health

Act, Canada’s government provides territories with financial support by giving them a fixed

amount (Shi & Singh, 2019). For provinces to carry out their duties and receive financial

assistance, they must abide by Canada’s five principles: public administration,

comprehensiveness, universality, portability, and accessibility (Valle, 2016). By meeting these

requisites, the federal government provides these provinces with assistance and does not create

any financial barriers. For this reason, provinces and territories must uphold these principles.

Now that we understand how healthcare systems are financed, let's look at each system's

services. Given the various ways individuals receive care in the United States, no specific plan
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states which benefits or services one is entitled to. Instead, the services covered for an individual

depend on their insurance type. Let’s take a look once again at the U.S Medicare program,

which can be broken down into Parts A, B, and D. According to Foster and Clemens (2020), Part

A provides coverage for “inpatient hospital services, skilled nursing facilities, hospice services,

and post-institutional home health care.” Part B covers services from healthcare providers,

outpatient care, medical equipment, and preventative services, whereas Part D covers the cost of

prescription drugs (Foster and Clemens, 2005). The other program, Medicaid, covers inpatient

and outpatient hospital services, labs, X-rays, nursing facility services, and preventative services

(Gurney et al., 1992). As for insurance, the services covered are based on your insurance plan.

Individuals need to understand their plans as sometimes certain services aren’t offered. Some of

the essential services that are provided by insurance are outpatient services, emergency services,

pregnancy care, rehabilitation services, labs, and pediatric services. Although these services are

offered, one should note that you may have to cover additional costs and that some services

aren’t covered. For example, one may need to buy another insurance plan to help cover dental

health, or some may just pay out of pocket. Overall, the services offered are limited to the

individual and their insurance plans.

In Canada, all citizens within each province and territory are entitled to medically

necessary care, such as hospitalization and doctor visits. The Canadian healthcare system's

services include but are not limited to diagnostic services, prescription drugs given during

inpatient care, and preventative services such as immunizations (Tikkanen et al., 2020). Like the

United States, there are restrictions on the type of services the Canadian government covers.

Some healthcare services not covered include dental and vision care, medical equipment, and

appliances such as wheelchairs and outpatient prescription drugs (Valle, 2016). Although these
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services don’t cover individuals, certain individuals, fortunately, do get assistance from the

provinces and territories. Older adults, children, and low-income individuals are assisted with

these extra services. Unfortunately, those who don’t qualify for the groups mentioned above must

pay for these services either out-of-pocket or through private health insurance plans to access

them (Valle, 2016). Even though Canadian Medicare provides free healthcare for its citizens,

there are still areas where individuals have to fill in the cost.

Through research, it was found that the U.S. and Canadian healthcare systems are both

financed through federal taxes. Having said that, let's take a look to see each healthcare funding

priority. In the United States, healthcare funding prioritizes federal governments, such as

Medicare. Medicare, the health care program that provides health care to millions of Americans,

2020 accounted for 20% of national health expenditure at roughly $829.5 billion (CMS, 2020).

This is a lot of money, and given the increasing trend in the aging population, we can expect this

number to continue to increase. On the other hand, in Canada, there are four priority areas that

the government has in mind: greater access to physicians, national standards for mental health,

home care and palliative care, and pharmacare (Hajdu, 2020). Mental health is vital to our

everyday lives as it affects our thoughts and feelings. As mentioned in the services offered,

mental health is not covered by health care in Canada. I mention mental health because, in 2018,

roughly 5.3 million Canadians reported needing help with their mental health with individuals

who had several attitudes about existing barriers (Moroz, 2020). Long wait times, lack of mental

health services, and shortages of mental health professionals all contributed to their feelings.

Knowing that Canada is working to prioritize mental health is great, especially after all the

changes brought about by the pandemic.

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In addition, the differences between the U.S. and Canadian healthcare systems are

outpatient and inpatient care costs. The United States spends more money on healthcare

compared to any other country. The average inpatient and outpatient care cost in the United

States was roughly $6,624 (Kurani and Cox, 2022). The services covered by these costs included

payments to the hospital, physician services for primary care, and other visit fees. According to

Kurani and Cox, individuals in the United States have shorter hospital stays. In Canada, the

range of inpatient care for consumers was between $4,900 to $10,100 (CIHI, 2019). Canada’s per

capita spending was around $1,785, with the government spending $1,615 and out-of-pocket

expenditure being $170 (CIHI, 2021). The difference between the costs is reasonable,

considering the different forms of healthcare coverage these healthcare systems provide.

After discussing the type of services each healthcare system offers and the benefits and

costs, it’s essential to know who delivers the care. A primary care provider is the first person

people may see and be later referred to other specialists. In 2010, the United States had roughly

2009 primary care providers, which were “physicians (family and general), general pediatricians,

and geriatricians” (AHRQ, n.d.). Family and general physicians do various tasks, from

prescribing medication, performing diagnostic tests, monitoring patients' conditions, collecting

medical information, explaining procedures, referring patients to specialists, etc. Geriatricians

specialize in the aging population and provide support and care to their patients. In Canada,

primary care providers are family physicians who account for 51% of the physician workforce

(Hutchison et al., 2011). As mentioned above, family physicians are the primary source of care

for individuals. Patients check in with their physicians, who assess them for any health problems,

and if a problem arises, they can provide their patients with access to specialists. Regarding the

ratio between providers and the population they serve, according to Hutchinson et al. (2011),
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Canada has a low physician-to-population ratio, but a high general practitioner-to-population

ratio. These ratios show providers' workload and establish whether more or fewer physicians are

needed. A sufficient number of primary care providers is required to help meet the community's

needs.

There is no doubt that each system has its strengths and weaknesses. One of the Canadian

system's biggest strengths is its universal healthcare system. By providing access to health care,

individuals are already improving their quality of life and taking preventative measures. A

weakness of the Canadian system is the wait times for non-emergency surgeries. First,

individuals have to get a referral from their primary care provider. After receiving the referral,

the time between the consultation and treatment takes about 10.5 weeks (Barua and Moir, 2020).

Although non-emergency procedures may not seem like a big thing, waiting for an extended

period can increase the pain and possibly put an individual at risk. Contrary to Canada, not

having universal health care for all in the United States is one of their weaknesses. Individuals

who do not have access to health care in the United States contribute to the growing health

disparities. Another weakness of the U.S. healthcare system that relates to this is the population

who is uninsured. 8.6% of the U.S. population is uninsured, which puts them at a higher risk of

poor health outcomes (Keisler-Starkey and Bunch). These consequences include inadequate

access to preventive services, higher mortality, and disability rates, and a higher risk of sickness

and disease (Riley, 2012). These consequences result from inadequate funds for healthcare

services, lack of access, socioeconomic background, and even our environment. Although the

U.S. has these weaknesses, it still has its strengths, like highly qualified medical providers and

increased popularity in the workforce.

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This paper highlighted differences between the U.S. and Canadian healthcare systems.

There are differences in funding, services provided, consumers' pay amounts, and the health care

providers. The weaknesses observed between both systems show that no healthcare system is

perfect. What one system lacks can be another system's greatest strength. We will continue to see

changes in healthcare systems; hopefully, it is for the better.

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