Canada: Better Outcomes for Less Money

We’ve heard this many times. And not by accident. Growing up in Canada it was basically the Pledge of Allegiance.

So why does this happen? http://news.heartland.org/newspaper-article/top-canadian-politician-chooses-us-health-care

Consider what has to be true for the better outcome for less to be true:

Insurance companies in the US, like the Canadian government, decide what procedures they will cover based on a formula. Imagine that Canada has a formula that leaves their customers in better health while spending less money. One has to believe that American insurance companies choose to ignore this formula leaving them with less profit and their customers less healthy because, well, … this is never explained.

And they all do it. They collude to earn less and have less healthy customers.

The comparisons are not exact. Canadians sensibly mooch off of US research, have lower malpractice settlements and various laws constrain coverages. President Obama, in public speeches, explained these outcome differences were a result of the fact that everyone working in heathcare except for government bureaucrats has a greedy black heart. The money certainly isn’t going into insurance company profits.

The general message you are supposed to take away from outcome studies is that government is more efficient at managing health care.

Except for Medicare, Medicaid and the VA. These are not often cited as examples of legendary government efficiency.

It is easy to manipulate outcome studies (and outcomes). It isn’t even really manipulation. Payers have to decide how to allocate finite resources. Since the vast majority of money is spent at the end of life care and in hard to treat diseases, the easiest way to have treatments available for larger numbers of people – with better “outcomes” (for those people) – is to limit treatment of the expensive cases. Which is exactly what is done. There’s a good argument at least in the abstract that this is a rational and compassionate choice. To make this appear better in studies, simply choose outcome goals outside of the areas where funding is cut. As a concrete example, taking premature infants off of life support and not counting them against infant mortality gives better outcome for less.

America spends more for better outcomes. The current spending level is unsustainable, and more rationing is in your future. Perhaps the government will be better at rationing.

What won’t be true is that you get American outcomes for Canadian prices.

Mike.

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