Physician Patient

US Health Care: Medicare or Medicaid for All?

Europe’s Alternative to Medicare for All
Swiss and Dutch private insurance provide better coverage than Canada’s single-payer system.

By Regina E. Herzlinger and
Bacchus Barua
April 16, 2019 7:33 p.m. ET

Sen. Bernie Sanders described his Medicare for All legislation in a Fox News town hall the other night: “What we are talking about is simply a single-payer insurance program, which means that you will have a card which says Medicare on it, you go to any doctor that you want, you will go to any hospital that you want.” He added that “you’re not paying any more premiums, you’re not paying any more copayments, you’re not paying any more deductibles.” In another context, he said the plan “would allow all Americans, regardless of their income, to get the health care they need when they need it.”

Not so fast. The experience of Canada, which follows the Sanders model, shows that single payer is not the best way to achieve the goal of access to timely care. Its single-payer program is universal, funded by taxpayers without deductibles or copayments, and excludes premiums for most users. Objective measures of performance show it’s a comparatively expensive system whose results are mediocre—and sometimes very poor.

A Fraser Institute study published in November examined 28 universal health-care systems across 45 indicators of performance. After adjusting for differences in the proportion of seniors, Canada ranked among the top spenders—fourth-highest as a percentage of gross domestic product and 10th-highest per capita. Yet it had less medical resources available for patients and painfully long wait times for specialists. Canada ranked 26th out of 28 for number of physicians, 22nd out of 27 for MRI units, and 25th out of 26 for hospital beds.

In Commonwealth Fund data comparing 11 developed countries, Canada reported the most patients waiting more than four weeks for a specialist appointment (56%), vs. only 22% for Switzerland and 23% for the Netherlands, the top performers. The proportion of patients waiting more than four months for elective surgery was 18% for Canadians, 2% for the French and zero for Germans. Canada performed well on only five of the 12 indicators of clinical performance and quality included in the Fraser Institute’s study. Its performance on the other seven—including obstetric traumas and diabetes-related amputations—was poor or average.

Overall, Canada performs worse than other universal-coverage countries, particularly Switzerland, the Netherlands and Germany. Why? Unlike Canada’s single-payer system, the Swiss, Dutch and German systems rely on private insurers, whether nonprofit or for-profit. Government helps the needy make premium payments.

German enrollees can use a public system composed of 145 competing independent nonprofit “sickness funds” or buy insurance from 43 companies or nonprofits. In the Netherlands and Switzerland, residents must select a standard insurance package from private insurers, of which both countries have dozens.

Unlike the U.S., with Medicare and its massive trillion-dollar unfunded liabilities, these countries cannot pass un-reimbursed current expenses onto future generations. If the expenses of private insurers exceed their revenues, they face bankruptcy.

The relatively successful universal health-care systems also rely on private hospitals and physicians. As of 2012, 42% of German hospitals were for-profit, almost all of them open to patients with public insurance. These regulated for-profit vendors can readily access private capital to fund medical innovations—unlike government-run systems, which need bureaucratic approval to use tax revenue.

Consumers and the private sector drive the health-care systems in these countries, which accomplish exactly what Mr. Sanders and his supporters say they want—universal coverage, controlled costs, high quality and ready access. In contrast, Canada’s experience shows the dangers of the Medicare for All model.

Bernie Sanders’ new ‘Medicare For All’ plan is co-sponsored by Democratic presidential rivals Cory Booker, Kirsten Gillibrand, Kamala Harris and Elizabeth Warren.

Ms. Herzlinger is a professor at Harvard Business School. Mr. Barua is associate director of the Fraser Institute’s Centre for Health Policy Studies.

This article appeared in the April 17, 2019, Wall Street Journal print edition as ‘Europe’s Alternative To Medicare For All.

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