Proposed Single-Payer Plan Sends California Down Canadian Trail

Published September 1, 2005

California State Sen. Sheila Kuehl’s (D-Santa Monica) health care bill (SB 840), which aims to have state government employees run California’s entire health care system, passed the State Senate in May and is expected to pass the Assembly later this year. The law would make it illegal to offer or purchase private insurance for services covered by the state.

Kuehl’s California Health Insurance Reliability Act (CHIRA) was introduced in February. If it becomes law, the Canadian health care system provides a preview of what might unfold.

“Everybody knows that health care costs are out of control. The system is broken and tinkering won’t fix it,” said Kuehl when introducing the bill in February. “We’re beyond the point of cosmetic surgery. What we need is a cure.”

Canadian Warning

But health care experts familiar with Canada’s approach advise caution.

“Advocates of a single-payer health care system suggest that Americans could enjoy universal coverage and modern health care,” notes David Gratzer, a Toronto-based physician and senior fellow at the Manhattan Institute’s Center for Medical Progress.

“But, looking at Canada, we see the reality: Patients wait for practically any diagnostic test or surgical procedure,” Gratzer said. “Indeed, as part of government rationing of health care, there is now a widespread shortage of physicians. In Norwood, Ontario, for example, one family doctor serves the entire town, and he can take only 50 new patients a year. The town holds an annual lottery to choose the lucky 50. According to Statistics Canada, approximately 1.2 million Canadians lack a family doctor and are looking for one.”

Tradeoffs Still Necessary

CHIRA is based on a model put forward in a study released this January by the Lewin Group, a health care cost analysis firm.

According to the Lewin model, it is possible to insure all state residents with full coverage that includes medical, dental, vision, hospitalization, and prescription drug benefits, and still have a high standard for quality, by streamlining the process of reimbursement. Means-based premiums–assessed according to income and, for those who receive coverage through their employer, a firm’s payroll (the aggregate wages a firm pays)–would replace all premiums, deductibles, co-pays, and out-of-pocket expenses.

The vast majority of individuals, families, and businesses that pay for insurance would save money while receiving better coverage, supporters argue. But health policy experts disagree.

“This model overestimates government efficiency and relies on price and wage controls, which would distort the system,” says John Graham, director of health care studies for the Pacific Research Institute. “The government cannot provide all those services because people, thinking they are free, will demand a lot more than government can afford to supply, hence wait lists. That is why waiting lists develop.”

“Half of the personal bankruptcies in this country are related to medical expenses,” Kuehl said in a public statement on the day she introduced the bill, “and most of the people bankrupted have insurance when they get sick. Californians just can’t rely on their insurance when they get sick or injured. There are too many holes and deductibles in the plans they buy, and if they lose their job, they lose their benefits.”

“Single-payer advocates always argue that government-run health care will be a bargain,” responds Gratzer. “But sometimes a bargain isn’t such a good deal. For the woman waiting for chemotherapy or the gentleman waiting to see a psychiatrist, it doesn’t seem like such a good deal. Government systems don’t contain costs, they shift them from the government ledger to the non-monetary costs borne by patients.”

Canadian System Challenged

Canada, Cuba, and North Korea are the only countries in the world where it is illegal to purchase private insurance to cover services ostensibly provided by the government. And on June 9 , the Supreme Court in Canada struck down that country’s ban on private health insurance for services covered by Medicare.

A doctor and his patient sued, charging Quebec’s prohibition on private insurance violated the rights protected by Quebec’s Charter of Human Rights and Freedom to “life and personal inviolability.” The patient was forced to wait in agony for more than a year for a hip replacement, a period during which he became addicted to painkillers and thought he might die. The doctor was repeatedly denied the right to operate a home-based medical practice and establish a private clinic.

Waiting Lists Inevitable

The court noted waiting lists are not just an unlucky glitch in Quebec’s health care system, but are instead a fundamental, “real and intentional” rationing mechanism found in any system where there are no incentives not to consume an “unlimited” amount of health care.

The court then detailed the real-world consequences, noting “the delays are widespread and that in some serious cases patients die as a result of waiting lists for public health care.” The court added, “Many patients on non-urgent waiting lists are in pain and cannot fully enjoy a real quality of life.”

The ruling is causing an uproar in Canada, where national identity is strongly tied to contrasting its “humane” health care system to that of the United States.

Sally C. Pipes ([email protected]) is president and CEO of the Pacific Research Institute. A Canadian living in the United States, she is the author of Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer.

For more information …

The 122-page decision of the Supreme Court of Canada in Chaoulli v. Quebec (Attorney General), rendered June 9, 2005, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to, click on the PolicyBot™ button, and search for document #17625.