2006 John F. Roatch

GLOBAL
LECTURE
S E R I E S
on Social Policy and Practice

2006

Roatch Global Lecture Series on Social Policy and Practice

Health Care in Canada and the United States:
Consumer Good, Social Service
or Right of Citizenship?
Presented by
Gregory P. Marchildon, Ph.D.
March 3, 2006

With gratitude

The present
to Mary Roatch

The John and Mary Roatch Endowment was
created by gifts made to the university by John and
Mary Roatch. The endowment provides support
for the Global Lecture Series, which are organized
through the office of the John F. Roatch
Distinguished Professor at University College.
John Roatch was born in Ellsworth, Wisconsin, on
May 3, 1921 and died in Phoenix, Arizona, on July 2, 1997. Mary was born to
missionary parents in Darjeeling, India and resides in Phoenix. The Roatches have
four children, Virginia, Thomas, David, and Joseph.
Both Mary and John met and graduated from Hamline University in St. Paul,
Minnesota. John also received a master of social work from Washington
University in St. Louis, Missouri. He practiced social work and was director of the
social work department at the Clinical Center of the National Institute of
Health in Bethesda Maryland from 1965 to 1972. John came to Phoenix as
director of the social service department at the Indian Medical Center, where he
retired in 1979 with the rank of Captain in the United States Public Health
Service. John then became a part-time financial consultant and real estate investor.
Mary Roatch was a teacher, a cottage-parent, and a tutor, but her real love was
being a librarian and a consultant on libraries for persons with special needs. She
worked at the Phoenix Public Library where she organized the first Special
Needs Center in 1983. Mary is a very accomplished individual who has been an
active speaker on issues affecting special needs programs in libraries. She was
the recipient of the 1993 Francis Joseph Campbell Award from the American
Library Association.
We continue to be indebted to John and Mary for their vision and to all the family
for their continued support of the Lecture Series.
Emilia E. Martinez-Brawley
John F. Roatch Distinguished Professor
2006

Celebrating
John F. Roatch’s
Legacy

The memory

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5

“T

he perception of essential health care as an economic
commodity rather than a public good is a barrier to fundamental
change in health financing in the United States. Perhaps it goes too
much against the grain of American political culture, with its strong
sense of individualism and its inherent anti-statism, to expect that an
overwhelming majority of Americans will suddenly view health care
as a social service. But it is possible that this country could one day
leapfrog that step by concluding, through a court decision, that
certain essential health services are a right of citizenship and must be
provided to everyone on the same basis.”

Gregory P. Marchildon, Ph.D.
Canada Research Chair and Professor

GREGORY P. MARCHILDON holds a Canada Research Chair in
Public Policy and Economic History and is Professor of Public Policy
in the Graduate School of Public Policy at the University of Regina.
He is also a Fellow of the School of Policy Studies at Queen’s
University and a Trudeau Mentor with the Trudeau Foundation.
From 2001-2002, he was Executive Director of the Commission on the Future of Health Care
in Canada also known as the Romanow Commission. The Commission’s Report, Building on Values:
The Future of Health Care in Canada, was delivered to the Canadian Parliament in November, 2002.
From 1997 until 2000, Dr. Marchildon was Cabinet Secretary and Deputy Minister to the Premier
of Saskatchewan. From 1994 until 1996, he was the Deputy Minister of Intergovernmental Affairs in
the Saskatchewan government. From 1989 until 1994, he was a professor of Canadian studies
and economic history at Johns Hopkins University’s School of Advanced International Studies in
Washington, DC.
He has a doctorate in economic history from the London School of Economics as well as degrees
in history, economics and law. He has written extensively on subjects ranging from public policy,
including health policy, to public administration and economic history. His first book, Profits and
Politics, was published by the University of Toronto Press in 1996. He has just completed a profile
of Canada’s health system for the World Health Organization’s Regional Office for Europe and
the University of Toronto Press. He has also edited or co-edited a number of books, including: The
Heavy Hand of History (2005), The Fiscal Sustainability of Health Care in Canada (2004); Changing
Health Care in Canada (2004); The Governance of Health Care in Canada (2004); Canadian Agriculture
at the Border (2000); The NAFTA Puzzle (1994); Canadian Multinationals and International Finance
(1992); and Mergers and Acquisitions (1991).

Scenes from the Lecture

7

Health Care in
Canada and the
United States:
Consumer Good,

I want to explore the extent to which
health care is treated as a consumer good,
a public social benefit or service, or a
right of citizenship in both Canada and
the United States.

Social Service or
Right of Citizenship?
March 3, 2006

I

t is a great honor to give this year’s John Roatch lecture, named in memory
of a public servant who dedicated his life to improving the plight of the poor and
marginalized in this country. Born in 1921, Mr. Roatch came of age during
the Great Depression. He saw first hand the human devastation caused by the
collapse of commodity prices and the impact this had on the farm belt.
In much the same way that drought-stricken farm states suffered the most in
the United States, the province of Saskatchewan was at the epicenter of the
same calamity in Canada. It is no accident that the people and government
of that province were the first to introduce national health insurance in North
America and that the political leaders and public servants of that province played
such a critical role in building the postwar welfare state in Canada itself. Just as
John Roatch dedicated his life to improving the community, working through
government—the community writ large—so, too, did this generation of prairie
progressives dedicate their lives.
Their names are now legendary. They include Tommy Douglas, the Premier of
Saskatchewan during the 1940s and 1950s, a reformer whose stature has only
grown with time. In fact, last year, during a popular television poll designed
to pick the greatest Canadian of all time, Tommy Douglas was chosen instead of
more visibly prominent individuals, including our first prime minister, Sir John A.
Macdonald, and our famously charismatic prime minister, Pierre Elliott Trudeau.
Why? In large part, it was because Tommy Douglas is known throughout the
country as the father of Canadian-style Medicare. It was his small and rather
impoverished provincial government that implemented the first working system
of universal health care in North America.
As I interpret the recent spate of articles in your local paper, the Arizona
Republic, universal health care is a goal shared by many here as well. Indeed,
the newspaper’s own poll suggests that just over 80 percent of registered voters
in the state of Arizona say it is time that the state or the federal government
“step in and create a health care system that ensures everyone has access to the
medical care they need” (Crawford 2006). Great! The only problem is that
everyone also disagrees on how this should be accomplished.
Today, I want to explore the extent to which health care is treated as a
consumer good, a public social benefit or service, or a right of citizenship in both
Canada and the United States. I want to ask if these current conceptions of
health care are helping or impeding us in our collective efforts to improve our
respective health systems.

8

Whatever happens, we know one thing for sure.
Politicians, policy experts, professionals, and the public
in both countries will be pointing to the experience
of the other country to draw lessons, and no doubt some
will continue to demonize the system across the border
in an effort to buttress their respective cases. So, whether
we like it or not, the manner in which our respective
health systems are perceived or misconceived, purposely or
otherwise, by politicians, pressure groups, and opinion
leaders in both countries has major spill-over effects in our
respective domestic policy debates. While we often talk
about European and other countries in these debates, it is
always our closest neighbor that we tend to focus on.
THE CANADA-US DYNAMIC
Let me start with an anecdote. In the very early 1990s,
when I was teaching at Johns Hopkins University, I had
brought a guest from Canada to speak to my students
about social policy. After an erudite lecture and a pleasant
question-and-answer session, we retired to a local bar
for a few drinks. By the third boozy round, the
conversation turned to health care, with my American
students offering their views of public health care policy
in Canada. At first, my Canadian guest batted away at
some of the misconceptions by explaining how the
Canadian system actually worked. But then, when one
well-meaning but hapless student used the phrase
“health care industry,” he jumped on the remark, exclaiming:
“There, that is the real difference. You see health care
as an industry and we see it as a social service.” Of course,
he immediately looked my way to justify his use of the
royal “we.” I am embarrassed to say that I did nod my
head, oh so slightly, in support of my guest even though I
knew deep down that the statement obscured much
more than it revealed.
The complex truth of the matter is that Canadians only
view a part of their system as a social service. When it
comes to hospital care, physician care, and public health,
most Canadians see these so-called “essential health
services” as social services and have done so for decades.
I would argue that these services have come to be
regarded as a right of citizenship over time because they
are universal, although no court has yet confirmed this.
Yet, when it comes to other health goods and services,
this is patently not the case.
So, what health services are not considered “insured services”
under the Canada Health Act and, therefore, not subject
to that law’s five principles of public administration,
universality, accessibility, comprehensiveness and portability?
They include prescription drug care, dental care, home
care, nursing home care, some types of mental health care,
and most types of rehabilitative care. These mixed and
private services are often perceived by Canadians more as
goods and services for which they are privately responsible
through their job-based insurance plans and out-of-pocket
payments. Nevertheless, Canadians seem to appreciate
public subsidy programs that are aimed at the old and the
poor, particularly when it comes to prescription drugs and
nursing home care.

In other words, public attitudes towards health care in
Canada run along a spectrum from right of citizenship,
through social service or benefit, to consumer good
depending on the position the good or service occupies
on a public-private continuum of governance, funding,
administration, and delivery.
It is only at the public, universal end of this spectrum that
Canadian health care differs sharply from American health
care. Indeed, I am fascinated by the extent to which the
Canadian system of prescription drug care is a mini-version
of the American system of health care. Job-based coverage
for drugs is at the core of the system. In the 1970s and
early 1980s, provincial governments moved in to fill the
large cracks in this system by offering coverage to the poor
and the old and, in a couple of cases, to children. Like the
United States, this patchwork “system” has extremely poor
cost control, with private and public plans growing well
over 12 percent per year since 1997. The Quebec drug plan
alone has been growing at an annual clip of 20 percent
on average, a rate of growth that is clearly unsustainable
(Marchildon 2006).
And what do we get for these growing expenditures?
We get a prescription drug “system” that provides no
coverage for some Canadians, particularly the working
poor, and, given rising co-payments and deductibles,
inadequate coverage for many others. I think you are all
intimately familiar with this kind of problem.
I could go on, but the point I want to make is that,
contrary to the conventional American perspective, the
Canadian single-payer model of universal health care
actually covers slightly less than 50 percent of all health
services. It is a “narrow but deep” system; narrow relative
to many Western European health systems but deep in the
sense that Canadians are guaranteed universal access, with
no cost at the point of delivery, for medically necessary
hospital, diagnostic, or physician services that are defined
as “insured services” under the Canada Health Act.
To be honest, however, I have also found that my fellow
Canadians have numerous misperceptions of the
American system. First of all, there is not one system.
Public coverage and benefits vary considerably from person
to person depending on age and income, from state to
state given the quite different approaches to Medicaid,
and, in particular, from job to job given the edifice of
employment-based health insurance upon which Medicare
and Medicaid have been built.
Second, it is not an entirely market-based system. Over time,
there have been major public interventions to address the
substantial market failures of private health care. This is not
just Medicare and Medicaid but also the dense and expensive
network of tax expenditure subsidies that support the jobbased insurance system. Even without these tax expenditures
counted in, Americans spend more per capita on public
health care than Canadians. As wryly observed by Steffie
Woolhandler and David Himmelstein (2002) of Harvard
Medical School, Americans have been paying for “national
health insurance and not getting it” for a long time.

9

Finally, you do not need, as many Canadians believe, cash or a credit card in
order to get access to emergency care in the United States. There are legal and
other protections built into the system to ensure that emergency hospital
treatment is provided irrespective of ability to pay at the time, although payment
is generally sought afterwards. On this last point, let me digress with one
personal experience.

There is a reason for
avoiding the more
common misperceptions
we have of each other’s
systems. They do
matter in policy terms.
Geographically,
culturally, and
linguistically, we are the
closest of neighbors. We
visit each other on a
regular basis. It would
be hard to find two
national societies that
know—or at least think
they know—each other
as well as we do.

Fifteen years ago, while living in Washington, DC, we thought our young son
had ingested something poisonous. As young parents, we were easily panicked,
and we rushed him to Children’s Hospital. He was examined, his stomach
pumped, and nothing was found—to our great relief. We were covered by Blue
Cross-Blue Shield of Maryland through my university job. We paid Children’s
Hospital and then applied for reimbursement from our insurer. Having made the
mistake of paying the hospital directly, our insurer nonetheless insisted we would
have to recover from the hospital. We tried and tried but Children’s Hospital
refused to even concede that it had been double-paid. So I sued.
The amount was small but this, I convinced myself, was a matter of principle.
Eventually, I ended up in small claims court only to discover two lawyers seated
side-by-side representing various hospitals, using the small-claims process to
get judgements on literally hundreds of unpaid bills. I am sure I was the only
“customer” suing that day. When my case was finally called by the judge, the
lawyers turned around just to see what kind of freak would actually sue for such
a small amount. To my surprise, the judge demanded that my matter be put
aside and “mediated,” at which point one of the lawyers left his seat and waived
me to the side where he gave me a check for the full amount that was owed.
Angrily muttering that I wanted my day in court, I tried to reject the offer, but the
lawyer assured me that, while he felt my pain and frustration, the judge would
not be so patient with me if he realized that I had been offered the full amount of
my claim. So off stage I went, but I shall never forget that enormous pile of unpaid
bills awaiting judgment and execution. It is my mental image of the approximately
two million Americans that go through medical bankruptcy every year.
Digression aside, there is a reason for avoiding the more common misperceptions
we have of each other’s systems. They do matter in policy terms. Geographically,
culturally, and linguistically, we are the closest of neighbors. We visit each other
on a regular basis. It would be hard to find two national societies that know—or
at least think they know—each other as well as we do.
But when it comes to health care, because of our differing systems, we watch
each other suspiciously. Canadians and Americans are fearful of reforms that
originate from the other country. There are those who see the free market and,
by extension, the American system with its emphasis on the consumer-and
demand-side incentives and disincentives as the potential saviour of Canadian
health care. And, there are those who advocate in favour of national health
insurance universality and Canadian-style single payer administration as the
potential saviour of American health care.
LOOKING TO THE FUTURE IN CANADA
In Canada, we continue to have a hard-hitting debate about whether to push
our system further in the direction of more public funding and administration or,
alternatively, in the direction of more private funding and private administration
through the market. Our Supreme Court recently entered the fray on the private
side by suggesting that our waiting times in Quebec for elective surgery were
too long and ordered the provincial government to review its legal prohibition of
private health insurance for medically necessary health services. While many
analysts agree that the legal consequences of the Chaoulli v. Quebec (Attorney
General) decision may be minimal in the short run, it has re-energized a small but
powerful minority of Canadians in favor of a private, market-driven system.
While the clarion call for private, multi-payer insurance is based on efficiency and
choice, I would argue that the underlying and rarely voiced opposition to the

10

Canadian model is its highly re-distributional nature.
Without a doubt, for decades it has reallocated resources
from the wealthy and the healthy to the poor and
the sick. But if you think that health care is a consumer
good, then it only makes sense that health resources
should be allocated as an economic reward. You will be
offended by the fact that 50 percent of health services
are defined as public goods and allocated on the basis on
medical necessity rather than ability to pay. If you see
health care predominantly as a consumer good, then your
question becomes: How can we afford to provide
collectively what some people can’t afford, and don’t
deserve, on an individual basis?
Before the Chaoulli case, individuals who held this view
were careful not to pitch their arguments against the
single-payer aspect of the Canadian system and in favor
of multi-payer private insurance as in the United States.
Instead, they pointed to Europe and Asia to support what
they called “patient participation” through user fees,
co-payments, or medical savings accounts. They suggested
that more private delivery was required, conveniently
forgetting the fact that, unlike the National Health Service
in Britain, most delivery in Canada has been through
private not-for-profit hospitals and other non-governmental
organizations (Boychuk 1999).
Beginning in 2000, there were a number of commissions
and committees that considered these questions. At the
provincial level, there were three such reports and, at the
federal level, a Senate Committee as well as a Royal
Commission on the Future of Health Care in Canada
established by the Prime Minister. The governments that
sponsored these studies differed, and indeed the
various reports and their recommendations also differed,
sometimes slightly and sometimes much, on issues such
as private-for-profit delivery and user fees.
Despite these differences, all ostensibly supported
the principle of universality, and although the report from
Alberta pushed for more private finance in the system,
none recommended moving from a single-payer model of
public funding to a multi-payer model of private and
public insurers. Indeed, the two reports at the federal level
carefully reviewed the merits and demerits of single-payer
and multi-payer alternatives and came down firmly on
the side of single-payer, based largely upon its administrative
efficiencies. This consensus seemed to silence the small
minority of single-payer critics.
Now, I must come clean with you and declare my interest.
I was Executive Director of the Commission on the Future
of Health Care in Canada, commonly known as the
Romanow Commission, because Roy Romanow, the former
Premier of Saskatchewan, was the chair. This Royal
Commission reported to the Parliament of Canada toward
the end of November 2002. After 18 months of amassing
evidence and undertaking an ambitious and multi-faceted
set of consultations, including the first-ever national citizens’
dialogue, the Commission concluded that the universal,
single-payer model was one of the greatest strengths of the
public system, not one of its weaknesses (Canada 2002).

The real problems lay elsewhere. These problems included:
The lack of cost control on both public and private
health services outside the single-payer system, in
particular prescription drugs. In comparison, the
growth in costs for hospital and physician services
has been very restrained.
The deleterious impact of social program cost-cutting
during the early- to mid-1990s, a belated response to
debt accumulated by all governments in the country
during the 1970s and 1980s. For example, cuts to
provincial health spending forced greater rationing,
sometimes through prolonging wait times for
elective surgery.
The anemic implementation of primary care reforms
throughout the country, the continuing separation of
general practitioners from other professionals, and
a broad range of frontline illness, wellness, and
diagnostic health services essential to preventing or
mitigating downstream acute and institutional care.
Slow progress here reflects provincial government’s
historical compromises with, and dependence on,
the collegial institutions of the medical profession
(Tuohy 1999).
The under-investment in health infrastructure,
including advanced diagnostic services, information
systems, telemedicine in rural and remote areas, and
applied research aimed at health reform objectives.
Despite the recent Supreme Court of Canada decision in
Chaoulli case, deploying evidence and a chain of reasoning
that I, along with a platoon of other analysts, have argued
is highly dubious (Flood et al. 2005), I still think that the
single-payer model will survive this challenge in Canada.
First, the overwhelming majority of Canadians support
the universal, single-payer, approach to public health care.
Public opinion studies demonstrate a strong sense of
solidarity: The majority of the population still want
everyone to receive essential health services on the basis of
need. Few buy the argument that things will improve if we
move to a categorical, multi-payer system; deep down,
they know that choice in such a system would be based
on ability to pay. Moreover, the increased investment that
we have seen since the late 1990s is beginning to reap
dividends in that, contrary to some media reports, waiting
lists are getting shorter, MRIs are becoming more available,
and patient satisfaction is on the rise again.
Second, the argument concerning the administrative
efficiency of the single-payer system is hard to dispute
given the evidence. In a 2003 article in the New England
Journal of Medicine, it was estimated that total
administrative overhead costs in Canada were $307 per
capita in 1999. This compared to $1,059 per capita in the
United States, well over three times the difference
(Woolhandler et al. 2003). In the same issue of the New
England Journal of Medicine, Henry Aaron of the
Brookings Institution launched a frontal attack on the

11

estimates, claiming that the administrative cost differences were exaggerated.
But in producing his own, more conservative, estimates, Aaron still ended up
with almost three times the difference, admitting that he “would impose a very
heavy burden of proof on any claim that the U.S. health care system does not
spend more on administration than the Canadian system does, much of it to no
constructive purpose” (Aaron 2003, p. 801).
Finally, since the late 1950s and 1960s, private health insurance in Canada—most
of which is job-based—has supplemented public health insurance. The reverse
holds true in the United States where Medicare and Medicaid were constructed
on top of a foundation of job-based insurance. American policy scholar Jacob
Hacker (2002) uses a path dependency model to illustrate why it is so hard to
change once you have built the rest of your system around a core of either
job-based private insurance or, as is the case in Canada, around a core of public,
single-payer, hospital, and physician insurance.

The fact that, as I both
predict and hope, the
single-payer aspect of the
Canadian system will
endure should not be
interpreted as
complacency or blind
support for the status
quo. Au contraire, I am

The fact that, as I both predict and hope, the single-payer aspect of the Canadian
system will endure should not be interpreted as complacency or blind support
for the status quo. Au contraire, I am convinced that the public system is in need
of major administrative and managerial change that will transform the very
nature of health service delivery—a set of reforms that are much harder to
implement successfully than changes to payment systems.
Indeed, we are in the midst of some fairly revolutionary change right now.
Nine of ten provinces have recently regionalized their services through arm’slength public organizations known as regional health authorities. These RHAs
are integrating, consolidating, and coordinating a broad spectrum of health
services, from acute and institutional care to home care, primary care and
population health interventions. In other words, provinces are moving from acting
as passive public health insurance agencies to publicly managing the system.
They are doing this in an effort to reallocate funding based on population needs,
keep a lid on costs, and to improve quality, timeliness, and access.
Two decades after universal Medicare was implemented in Saskatchewan, Tommy
Douglas described the task in this way:

convinced that the public
system is in need of
major administrative
and managerial change
that will transform the
very nature of health
service delivery.

When we began to plan Medicare, we pointed out that it would be in two
phases. The first phase would be to remove the financial barrier between
those giving the service and those receiving it. The second phase would be
to reorganize and revamp the whole delivery system—and, of course, that’s
the big item. That’s the thing we haven’t done yet.
It is too early to assess results, but I think this quiet managerial revolution
holds more promise than any financing reform yet proposed, most of which are
really a retreat to the past. I would readily admit, however, that there are
other parts of the health care system we seem to be incapable of fixing in
Canada. Our mixed and fragmented system of financing and administering
prescription drugs is highly resistant to fundamental reform for many of the path
dependency reasons Hacker and others use to explain why major reform of
the job-based health benefit system in the United States is so difficult to achieve.
Similarly, we seem unable to address the fragmentation of health services for
Indians and Inuit, among the poorest and most marginalized Canadians.
This situation has helped produce health outcomes in parts of Canada that are
more Third World than First World.
LOOKING TO THE FUTURE IN THE UNITED STATES
This now brings me to the question of health care change in the United States.
I must say that I am more than a little intimated by the prospect of even daring
to suggest what change is needed here, but I shall give it a try. After all, you are
free to discount my arguments and evidence now that you know where I stand
in terms of health care change for my own country. Moreover, if you believe

12

that single-payer is too “radical” an approach to ever
be accepted into the mainstream political culture of this
country, or that any viable reform here has to build
upon the system of private, job-based, insurance, you can
dismiss the Canadian experience as irrelevant in any
event. Let me start with a negative proposition about what
is not needed—more money. No country in the world
spends more in per capita terms, publicly or privately, on
health care. No country devotes more resources to health
care as a share of Gross Domestic Product—about 16%
compared to 10% among the highest-spending
Organisation for Economic Co-operation and Development
(OECD) countries, including Canada.

global competitive advantage through higher cost
products and services. One thing seems abundantly clear:
The country as a whole is now losing.

Without a doubt, the money has bought some of the
best medical infrastructure, teaching and research in the
world, including the well-funded National Institutes of
Health, the highly-emulated Centers for Disease Control in
Atlanta, prestigious medical hospitals and clinics
including the Johns Hopkins University and Hospital and its
associated schools of medicine, nursing and public
health with which I am familiar, and the Mayo Clinic
system including its hospital here in Phoenix, among many
other examples.

I can see exactly the same problem in microcosm in
terms of prescription drug care in Canada. Canadians are
losing because of the fragmented nature of coverage
and the lack of adequate cost control. The sad fact is that,
as bad as it gets, and no matter how large the coalition
in favor of major change, fundamental reform remains
extremely difficult to achieve.

Most observers agree that the key challenge for American
health care policy continues to be one of financial access.
As described by Jacob Hacker (2002, p. 277), a job-based
system that determines coverage on the basis of the job
you hold cannot offer “broad protection across both
income groups and risk categories.” Although Medicaid
and Medicare address some of the cracks created by a
job-based system, they cannot fully offset the coverage
problems inherent in a job-based system. Therefore, as
long as reforms refuse to address the core of the system,
as difficult as that is, the coverage problem will continue
to fester.
Cost is a different kind of problem. The statistics tell you
this country is in a league of its own when it comes to
health care spending. This in itself need not be a problem.
The wealthiest society in the world can decide that it
wants the most expensive system in the world. As
Princeton University health economist Uwe Reinhardt puts
it, the real question is whether you are getting enough for
your money, individually and collectively. You may or may
not feel you are getting enough for the money you pay
individually, but based upon two trends, the growing gap
in coverage for medical care and deteriorating health
status performance relative to other OECD countries, I
would say that you are not getting value for public money.
If this is the inescapable consequence of building public
programming on an edifice of job-based insurance, then
the funding structure will have to be changed quite
fundamentally to reverse these trend lines.
I know that some, perhaps many, leaders in corporate
America are also unhappy with the situation. Although it is
hard to figure out exactly who pays the lion’s share of
employment-based insurance: workers, through foregone
salary and benefits, or employers, through the loss of

Certainly, business and labor both lose when American
auto plants are shut down because of health benefit costs.
During the Romanow Commission, I can remember the
Canadian subsidiaries of the Big Three automakers signing
joint letters with their largest union, the Canadian
Autoworkers, expressing support for Canadian-style
Medicare, stating that it provided them with an important
competitive advantage relative their operations south of
the border.

Does fundamental reform in the United States require a
single-payer approach? Perhaps not, although I do not
think it should be rejected out of hand. I was intrigued by
a proposal here in Arizona, originating from New Mexico.
The proposal was initiated by Rep. Phil Lopes, a former
health planner from Tucson. Instead of creating a new,
single-payer administrative structure, the Lopes plan would
pool existing health care funds from employers, Medicaid,
and Medicare. Out of this single fund, the state would
pay for universal coverage for at least catastrophic services
and perhaps a few other essential services.
Why are we seeing such an initiative in Arizona? The
reason is as obvious as it is difficult to contest. The trend
lines are all wrong. Every year, more and more residents
of Arizona are without adequate medical coverage. More
and more residents have to go through the anguish
of not knowing whether their loved ones will get the kind
of care they need when they need it and the pain of
personal bankruptcy to pay for services they cannot afford
individually when an unexpected health crisis crashes in.
Len Kirschner, the director of Medicaid in Arizona from
1987 to 1993, argues that the three legs of the U.S.
health care stool—job-based insurance, Medicare and
Medicaid—are already broken. Coverage is getting worse,
not better. Costs are climbing to the point that employers
and governments alike are being pushed into reducing
benefits for employees and coverage for the poor and the old.
Will a fiscal crisis be enough to force fundamental
reform? It does appear that a broad-based coalition
against the status quo is growing. If fundamental change
through the political process is too difficult at the
federal level, then perhaps some brave state—if not
Arizona then another ambitious state—could launch a
bold experiment that could be enough to break the
impasse and provide a demonstration project for the rest
of the country. Who knows?

13

enough to force

Still, it seems clear to me that the perception of essential health care as an
economic commodity rather than a public good is a barrier to fundamental
change in health financing in the United States. And perhaps it goes too
much against the grain of American political culture, with its strong sense of
individualism and its inherent anti-statism, to expect that an overwhelming
majority of Americans will suddenly view health care as a social service. But it is
possible that this country could one day leapfrog that step by concluding,
through a court decision, that certain essential health services are a right of
citizenship and must be provided to everyone on the same basis.

fundamental reform? …

CONCLUSION: ESSENTIAL HEALTH AS A RIGHT OF CITIZENSHIP

If fundamental change

Alexis de Tocqueville once observed: “There is hardly a political question in the
United States which does not sooner or later turn into a judicial one.” If this is
true, then perhaps one day a court will decide that the lack of access to essential
health services is, in effect, a deprivation of life, liberty, or property, in a creative
interpretation of the Fifth Amendment, or perhaps a new amendment will be
passed setting out the same. If this were to happen, then governments, federal
and state, would have to redesign their systems of financing and administration
to ensure basic access to all Americans as a right of citizenship. The means could
not be proscribed by the courts, but the end result would be regulated through
the judiciary rather than by governments.

Will a fiscal crisis be

through the political
process is too difficult at
the federal level, then
perhaps some brave
state—if not Arizona
then another ambitious
state—could launch a
bold experiment that
could be enough to
break the impasse and
provide a demonstration
project for the rest of
the country.

In Canada, I do expect that some day some court will decide that essential
health services are a right of citizenship, not simply a social service or benefit.
We shall see whether that day comes before, or after, a similar decision in
the United States.

14

SOURCES

&

Aaron H. 2003. The Costs of Health
Care Administration in the United
States and Canada: Questionable
Answers to Questionable Questions.
New England Journal of Medicine 349,
no. 8, pp. 801-803.
Boychuk T. 1999. The Making and
Meaning of Hospital Policy in the
United States and Canada. Ann Arbor:
University of Michigan Press.
Canada. 2002. Building on Values: The
Future of Health Care in Canada.
Saskatoon: Commission on the Future
of Health Care in Canada.
Crawford AJ. 2006. “Health Care’s
Foundation Crumbling.” The Arizona
Republic. Jan. 15, p. A6.
Flood CM, Sossin L, Roach K, eds.
2005. Access to Care: Access to
Justice: The Legal Debate over Private
Health Insurance in Canada. Toronto:
University of Toronto Press.
Hacker JS. 2002. The Divided Welfare
State: The Battle over Public and
Private Social Benefits in the United
States. Cambridge: Cambridge
University Press.

Maioni A. 1998. Parting at the
Crossroads: The Emergence of Health
Insurance in the United States and
Canada. Princeton, NJ: Princeton
University Press.
Marchildon GP. 2006. Federal
Pharmacare: Prescription for an Ailing
Federation? Inroads 18, no. 2,
pp. 94-108.
Reinhardt UE. 2003. “Churchill’s
Dictum and the Next New Thing in
American Health Care.” Business
Economics 38, July, pp. 38-51.
Tuohy CH. 1999. Accidental Logics:
The Dynamics of Change in the Health
Care Arena in the United States, Britain
and Canada. New York: Oxford
University Press.
Woolhandler S and Himmelstein D.
2002. “Paying for National Health
Insurance – And Not Getting It.”
Health Affairs 22, no. 1, pp. 88-98.
Woolhandler S, Campbell T,
Himmelstein D. 2003. Costs of Health
Care Administration in the United
States and Canada. New England
Journal of Medicine 349, no. 8,
pp. 768-775.

15

Respondent Susan Gerard
Susan Gerard
Director, Arizona Department of Health Services

Gregory Marchildon’s insightful address points to an interesting contrast
between Canada and the United States. While Canada debates adding private,
market-driven elements to its health care system, the United States argues
over shifting to publicly funded universal health care coverage. Both systems are
struggling with rising costs, quality, access issues, and an aging population.
The Canada vs. U.S. discussion is an interesting one, yet it’s time to move
forward and look at something we all can agree really works to reduce health
care costs and improve health: Promoting prevention, physical activity, and
healthy lifestyles are critical to solving our nation’s health care crisis.
Consider these staggering statistics:
Obesity cost the American economy $117 billion in the year 2000.
About 75 percent of our health care dollars are spent treating chronic
diseases such as heart disease, cancer, and diabetes. And $75 billion
of that treats obesity alone.
These chronic illnesses—many of which can be prevented by healthy lifestyles—
cause seven out of every 10 deaths. What’s even more alarming is that our
children are becoming increasingly heavy. Childhood obesity and diabetes rates
are skyrocketing. Yet we know that an increased focus on prevention and
disease management can make a real difference.
At the Arizona Department of Health Services, we are practicing what we
preach. We have made healthy living and disease prevention a high priority.
I instituted smoking cessation classes for employees, with free nicotine
replacement therapy, and our Wellness Council offers a wide variety of classes.
Twice a week, employees join me and other managers on a 15-minute
“Director’s Challenge” walk around the Capitol.
We’re combating childhood obesity through the Governor’s Call to Action;
Maintaining Healthy Weight in Children and Families program, which features
statewide nutrition and physical activity campaigns, focused on developing
new programs to get our residents to be more active and to eat better.
Arizona was only one of four states chosen to receive a federal Steps Across
America grant. We’re using this grant to develop our steps along the border
project to reduce the burden of diabetes, obesity and asthma by providing
community and school interventions in Santa Cruz, Cochise and Yuma counties.
The bottom line is that if we’re serious about reducing health care costs, we
all can agree that adopting the right lifestyle habits and making good choices are
the key. All of us have the responsibility to encourage healthy behavior in our
communities, and in our families.

16

Respondent Name
Leonard Kirschner
Former Director, Arizona Health Care Cost Containment System

Gregory Marchildon’s engaging and provocative discussion, “Health Care in
Canada and the United States,” reminds us of the key role played by political
leaders in developing systems of social services. Tommy Douglas, the premier
of Saskatchewan, in the period after World War II, played that role in the
development of the Canadian health care system. His counterparts in the United
States’ political leadership played equally important but far differing roles.
Gregory uses five terms to describe the Canadian model: “public administration,
universality, accessibility, comprehensiveness, and portability.” The five words I use
to describe the United States system, “chaotic, costly, inefficient, inequitable,
and superb,” reflect the different reality of our two countries and the paradox
that these differences illustrate.
In the first decades of the 20th century, the Canadian and United States systems
were quite similar, and it is only in the post-World War II period when they
diverged in basic ways. Political leaders in both countries have grappled with the
complex issue of health care for the past 100 years. Theodore Roosevelt, in
1912, running on the Bull Moose ticket, proposed a social system similar to the
German model. It would be his cousin, Franklin Delano Roosevelt, who would
return to this subject in the 1930s, but instead of a national health care system
we got wage price controls and the employer based system that has dominated
health care in this country for the past 60 years. Harry Truman fought valiantly
for a national system but lost to the cries of “socialized medicine” from the
American Medical Association. In 1964, Lyndon Johnson crushed Barry Goldwater
in the presidential election and moved on to sign the Social Security amendments
of 1965, giving the United States both Medicare and Medicaid. That signing
ceremony took place at the Truman Library in Independence, Missouri, and Harry
Truman became the first Medicare beneficiary. What wonderful symbolism!
Every President since Lyndon Johnson has dealt with our system of care in one
fashion or another. Richard Nixon became “the father of managed care” after
signing the Health Maintenance Organizations (HMO) Act and Ronald Reagan
proposed massive changes to Medicare in the ill-fated Medicare Catastrophic Act
of 1988. It was, of course, Bill and Hillary Clinton who raised the issue of reform
to a new level with their Health Security Act. President George W. Bush signed
the Medicare Prescription Drug Improvement and Modernization Act in December
2003, and the provisions of that law are playing out today.
Gregory asked the provocative question; “Is health care a consumer good, a
social service, or a right of citizenship?” Both of our countries continue to
struggle to find the right answer and the right balance. Is health care a right?
Is health care a privilege? The United States system is supported by three
financial legs: employer based coverage, Medicare, and Medicaid. All three legs
are crumbling, and our political leadership will be forced to return to the
subject of our health care system in the months and years to come. As Winston
Churchill once said, “You can always count on Americans to do the right
thing–after having first exhausted all other alternatives.” We still have many
alternatives to consider and, as our speaker noted, our close neighbor to the
north may have alternatives we will want and need to consider.

© 2006 Arizona Board of Regents, 06.199
Editor Emilia Martinez-Brawley, Technical Editor Julie Riddle
Graphic Design Chrys Gakopoulos, Deanna Johnson, Brittany Fullmer
Photography Chrys Gakopoulos, Jim Patzer