Northern Neighbors

Question: Is there anything that Canadians can learn from Americans about health coverage – or vice versa?

Our neighbors to the north are skeptical, to put it mildly, but maybe we can share a few lessons about innovation and consumerism, as I tried to describe during a conference on Tuesday in Nova Scotia sponsored by the Atlantic Institute for Market Studies (AIMS), a market-oriented think tank in Halifax.

For starters, our challenges are similar:

  • While most people in both countries believe that everyone should have access to needed medical care, both of us struggle with achieving that goal – the U.S. with millions uninsured, and Canada, with long waiting lines for medical treatment.

  • Like every other nation, rising medical costs are a chronic concern.

  • And aging populations threaten the long-term solvency of public programs.

But the unrelenting criticism of the U.S. health care system makes it very hard for Canadians – or Europeans – to hear anything we might have to say. We are seen as barbarians who leave 46 million uninsured people bleeding in the streets. (Don’t they wonder why they don’t see these dramas on the evening news?)

But, in a luncheon speech there on Tuesday, I nonetheless offered some ideas about the advances emerging in the U.S. health care economy. Brian Lee Crowley, president of AIMS, is a refreshing voice who believes that keeping Canadians from having private options for health care retards innovation, choice, and the competition that leads to a better system.

Canada’s challenge, right now, is how to provide protection for catastrophic drug costs through Medicare – its universal health care program jointly financed by the federal and provincial governments. Like our own federally-financed Medicare program for seniors, drug coverage wasn’t part of their original program, and Canadian citizens have a patchwork of coverage, primarily through job-based supplementary insurance.

But about 2% of them fall through the cracks, and most live in the Atlantic provinces where as many as 28% have no coverage. AIMS explored options in its conference called “When tea and sympathy aren’t enough: The catastrophic gap in prescription drug coverage in Atlantic Canada.”

Just maybe there are some lessons in the tremendous innovations taking place in our own publicly-financed health sector, as we learned during our latest Medicaid Commission meetings this week in Dallas (and as Sen. Tom Coburn and Harvard’s Regina Herzlinger explain in an article about the momentum toward Medicaid reform in yesterday’s Wall Street Journal).

Some U.S. innovations I described:

  • Coordinated care: Instead of adding a limited, price-controlled drug formulary, Canada could bring drug coverage into a program that integrates medicines into an overall care management program.

    That’s an option for seniors in the U.S. now through the new Medicare Advantage program, and it’s been proven successful in hundreds of programs, from the Asheville Project, to the Florida: A Healthy State program. People get better care, and the programs save money. And we have demonstrated that private competition in administering the Part D drug benefit has expanded choice and brought prices down.

    And specialized treatment programs for people with chronic diseases, authorized in the new Medicare law, are showing that health care delivery can become faster, better, and cheaper.

  • Consumerism: Many health systems with global budgets and central payment systems see consumer demands for more choice and control as a growing threat. But, as the U.S. has shown through our Cash and Counseling programs in Medicaid, when people are given more control over decisions about their care, they can get better care, while costing no more and sometimes less than in traditional rule-driven benefit structures.

    And this is just the beginning: The loudest pleas we heard in testimony before our commission on Wednesday and Thursday were for more consumer direction and self-determination.

  • Dazzling new technologies: We saw a video in Dallas produced by the American Association of Homes and Services for the Aging that vividly showed how seniors can maintain their independence and quality of life through user-friendly, technology-driven home monitoring systems.

    Some of the technologies seem futuristic and not all are available here yet, but they are very much within reach and show a 21st century vision of care management that is better, in so many ways, than putting an aging parent in an over-worked, under-staffed, expensive nursing home.

We aren’t there yet, but the United States is innovating like crazy in both public and private programs, and, mark my words, our ideas and creativity will usher the rest of the world into 21st century health systems.


Health Policy Matters will take next week off while Grace-Marie and Douglas take a fifth-wedding-anniversary cruise to Bermuda.


Grace-Marie Turner


  • Death’s waiting list
  • Attention shoppers: Low prices on shots in the clinic off aisle 7
  • Why innovation in health care is so hard
  • Patients’ freedom of conscience: The case for values-driven health plans
  • A five-step health spending diet: More homeopathy than free-market
  • Here comes Catamount Health

Author: Sally Satel, M.D.
Source: The New York Times, 05/15/06

AEI’s Sally Satel, who recently received a kidney transplant, writes that “the federal government deserves much of the blame” for the lack of organs available for patients awaiting a transplant. “Someone on the organ list dies every 90 minutes,” she writes. Satel argues that current laws against selling or paying for organs hinder the system. “Paying for organs, from the living or deceased, may seem distasteful,” writes Satel. “But a system with safeguards, begun as a pilot to resolve ethical and practical aspects, is surely preferable to the status quo that allows thousands to die each year.”
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Virginia Postrel, Sally’s friend and kidney donor, documents the experience in an article for Texas Monthly.
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Author: Milt Freudenheim
Source: The New York Times, 05/14/06

The New York Times reports on the growing trend of walk-in health clinics opening in CVS, Wal-Mart and other retail stores. “For a $30 flu shot, a $45 treatment for an ear infection or other routine services from a posted price list, patients can visit nurse practitioners in independently operated clinics set up within the stores – whose own pharmacies can fill prescriptions,” reports the Times. According to the article, several new companies are opening clinics around the country. For example, Revolution Health Group has opened 11 RediClinics and has plans for 500 more within three years, and Take Care Health Systems has opened 16 stores and hopes in the next few years to expand to 1,400 locations.
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Author: Regina Herzlinger
Source: Harvard Business Review, 05/01/06

Harvard Professor and Manhattan Institute senior fellow Regina Herzlinger describes the different forces that can help or hinder health care innovation and provides a framework for ways to manage those forces. “Three kinds of innovation can make health care better and cheaper: One changes the way in which consumers buy and use health care, another taps into technology, and the third generates new business models,” writes Herzlinger. Obstacles which hinder innovation can be overcome “by managing the six forces that have an impact on health care innovation: players – the friends and foes who can bolster or destroy; funding – the revenue-generation and capital-acquisition processes, which differ from those in other industries; policy – the regulations that pervade the industry; technology – the foundation for innovations that can make health care delivery more efficient and convenient; customers – the empowered and engaged consumers of health care; and accountability – the demand from consumers, payers, and regulators that innovations be safe, effective, and cost effective.”
Article available to purchase at:

Authors: Robert E. Moffit, Ph.D, Jennifer A. Marshall, and Grace V. Smith
Source: The Heritage Foundation, 05/12/06

A primary goal of health care reform “should be to give individuals and families the freedom to choose health plans and physician networks that respect and support their ethical, moral, and religious values,” write Robert E. Moffit, Ph.D., Jennifer A. Marshall, and Grace V. Smith of The Heritage Foundation. Freedom of conscience in health care can be restored “by liberalizing the tax treatment of health insurance through individual health care tax credits; allowing families to choose health plans, including values-driven health plans, regardless of where they live; and allowing participants in public health programs to choose values-driven health plans, just as they could choose to spend their Medicare or Medicaid funds at religious hospitals, clinics, and nursing homes,” write the authors. “Americans must retain their individual right not only to dissent from existing public policies, but also to make personal health care decisions – including how money is spent for health benefits, medical treatments, and procedures – according to the dictates of their consciences.”
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Author: Tom Miller
Source: Health Affairs, May/June 2006

In the latest edition of Health Affairs, Tom Miller, senior health economist at the Joint Economic Committee, reviews John Cogan, Glenn Hubbard, and Daniel Kessler’s book, Healthy, Wealthy, and Wise: Five Steps to a Better Health Care System. Miller writes that “the authors do well when they highlight the key public policy causes behind the high cost and disappointing value of U.S. health care.” But ultimately, “Healthy, Wealthy, and Wise disappoints primarily because its authors have misread their political market and customer base for health policy reform,” concludes Miller. “The book is premised on an overly cautious incremental strategy that fails to excite free-market policy thinkers and holds the core constituency of HSA advocates at arm’s length.”
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Author: John McClaughry
Source: Ethan Allen Institute, 05/06

Catamount Health, a new mandated state health care program designed to cover Vermont’s uninsured, will quickly lead to a government-run health care system, writes John McClaughry of the Vermont-based Ethan Allen Institute. The private insurance plan, which allows enrollees to pay premiums based on their incomes, will become available in August, 2007, “because the state will force its two largest health insurers…to offer it.” To help finance the program, some small employers will “pay a new tax of $365 per year per uncovered employee, with four employees exempted.” McClaughry cautions that by 2009, “the private carriers will have found that they cannot possibly offer the costly state-mandated coverage for what the state is willing to pay. They will bow out, and the state will take over as the Catamount Health insurance company?it is certain to accomplish just what the single payer advocates have wanted all along: a rapid slide into a government-controlled, taxpayer financed health care takeover.”
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Is the Massachusetts Health Plan a Model for the Nation?
Cato Institute Briefing
Tuesday, May 23, 2006, 12:00 p.m.
For additional details and registration information, go to:

Another Step Forward for Free-Market Health Care Reform
The Heritage Foundation Event
Tuesday, May 23, 2006, 2:00 p.m.

For additional details and registration information, go to:

Health Care University: The Basic Economics of Health Care and Insurance Markets
Cato Institute Conference
Tuesday, May 30 – June 2, 2006, 12:00 p.m. daily

This is a series of four luncheon seminars on Capitol Hill. For additional details and registration information, go to:

Buy or Die: Market Mechanisms to Reduce the National Organ Shortage
American Enterprise Institute Event
Monday, June 12, 2006, 10:00 a.m. – 12:30 p.m.
Washington, D.C.

For additional details and registration information, go to:

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at

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