If We Want Real Reform, Canada Has an Example : Health: American problems require American solutions, but not to the point of reinventing the wheel. Our neighbor’s model is an attractive one.

There is a remarkable consensus that American medical care needs a major overhaul. But for a variety of ideological and political reasons, the most widely discussed reform proposals--so-called pay or play plans--are half-hearted measures that would not remedy most of the shortcomings of our current arrangements.

There are, however, effective reform proposals available. The most comprehensive are Canadian-style plans sponsored by Rep. Marty Russo (D-Ill.) and Sen. Bob Kerrey (D-Neb.). Many politicians view the plans as too ambitious, but polls suggest that they are too timid.

A 1990 survey of 10 industrial nations found Americans the least satisfied with their health-care system; only 10% thought it “works pretty well,” and 89% agreed it needs “fundamental changes” or “complete rebuilding.” The public, if not the special interests that have so distorted the debate, seems prepared to accept big changes.

Some Democratic candidates for President believe that there is a campaign issue here. Kerrey in particular plans to make national health insurance a central plank of his campaign. The race may therefore widen the debate over health-care reform beyond the bounds imposed on it by Washington horse-traders.

Every industrial nation in the world, except the United States, has adopted some form of national health insurance. All of these nations are happier with their health-care systems than we are. If we are going to follow their example, it makes sense to look for models in those countries most like our own. An American system would have to be unique in many respects, but it would be foolish not to learn what we can from our neighbors.

Canada’s national health insurance (which they call Medicare) is the system most cited by and most attractive to those politicians who are advocating more far-reaching reform.

Canada’s economy, values and political institutions are similar to our own. Like the United States, Canada is a large country with a highly urbanized and diversified market economy. Free enterprise and free spirits are valued. Canada has a federal system of government similar to ours, but with important powers (greater even than in the United States) reserved to the provinces.

Canadian Medicare is responsive to local preferences and preserves freedom of choice while guaranteeing that everyone has financial access to care without bureaucratic hassles. Canadian Medicare is substantially financed and wholly administered by the provincial governments. Provincial plans differ markedly, reflecting local preferences. In fact, no province is required to provide health insurance benefits. It is the availability of federal matching funds, which provide roughly 40% of provincial health-care budgets, that has led them to do so.

The government does not prescribe the details of provincial health-care plans. But it does require that they adhere to five principles to receive federal funding. They must be universal (covering all citizens), comprehensive (covering all necessary hospital and medical care), accessible to all (imposing no deductibles or co-payment obligations on individuals), portable (each province recognizing the others’ coverage) and publicly administered (under control of a public, nonprofit organization).

These principles are understood by all Canadians and enjoy broad support. Physicians work for themselves rather than the government, and patients can go to any doctor they choose, as often as they and their doctor feel it is necessary. They never have to complete an insurance form, and physicians and hospitals never have to hound their patients for payment. There are no insurance claims adjusters looking over the shoulders of patients, and no “managed care” officials questioning individual treatment decisions.

Costs are contained through the provinces’ control over aggregate budgets. If total billings by physicians exceed budgeted targets, physician fees are subsequently reduced. Hospitals (run by private not-for-profit organizations) operate on the basis of negotiated annual budgets rather than individual billings.

Budget negotiations between medical-care providers and provincial health-care administrators are noisy, contentious affairs--but unlike the negotiations of private insurance companies and providers of “managed care” in the United States, they are in public view and subject to public influence through the political process.

Hard decisions have to be made. (Do you fund more heart bypass operations or another well-baby clinic?) The provincial agencies do make mistakes, but they are highly visible entities, accountable to the public for their decisions.

Canadian Medicare has proved reasonably effective at controlling costs. Before the introduction of universal health insurance in 1971, Canada financed its medical care the same way we did, spending about the same percentage of its GNP on medical care as we did. Its costs were increasing at about the same rate as ours. Since then, Canada’s health-care expenditures have flattened out while ours have skyrocketed. Canada now spends 30% less of its GNP on medical care than we do, and the difference is growing.

Finally, Canadian Medicare has met the test of public approval. In the 10-nation survey mentioned earlier, Canadians were the happiest with their health care system--56% reported overall satisfaction compared to our 10%.

It would be foolish to ignore Canada’s example, just as it would be foolish to try to replicate it in detail. American problems require American solutions, but we don’t have to reinvent the wheel. Canadian Medicare offers an attractive, practical model for dealing with our medical-care woes, and many of our political leaders know it. To remedy our shortcomings we need more pressure from the public and less special-interest propaganda.