Question

how best to fund and ensure healthcare services in the U.S. Based on your reading, research, and experience, which path of these our country should follow.

A single-payer (Canadian) system

2. Employer-mandated health insurance with an individual mandate

3. Income-related tax credits

Answer 1

Americans can learn from Canadians Wharton professor of health care management. “The design of a country’s health care system and the performance it is very dependent on a specific country’s culture, ethnicity and a whole lot of factors that have nothing to do directly with health care but have everything to do with health outcomes. It’s the old apples and oranges problem. Canada is most similar to us of any other country, so in that sense, we have more of a chance of learning some things. But the literal answer to the question, ‘Why don’t we just copy the Canadians?’ is because we can’t. We’re not Canadian and we don’t share the same history or the same social ethos.’”

Polsky agrees that differing social values are the core issue. “At the end of the day, the debate is about what are our values. What is the best way we should structure a system of insuring our public? When you talk with the Canadians, there are a number of problems with their health care system that, for a lot of people in Canada, reflect their values about being in a country that has a system that provides … for all of its citizens. For the most part, they are very much in favor of their health care system. In our country, we have a mix of public and private insurance. Half of our health care is paid through Medicare and Medicaid, which are publicly sponsored health care programs, and the other half is paid through private insurance. What you end up with here is a very mixed view of the values.”

Universal health care in the U.S. don’t always understand the difference between a ‘single-payer’ and universal health coverage. Explains Polsky: “Universal coverage is [when] everyone has some health insurance. That would be my value; everyone is insured in some way. We could achieve that in this country just by filling in the holes, with a little bit of Medicare, a little bit of Medicaid, a little of employer coverage, and the individual market. [It would be] a crazy, mixed-up system, and at least we’d have everybody covered. A single-payer system is what they have in Canada, which is that in each of the provinces, all health care for hospitals and mostly for doctors is paid for through the public insurance system. This is one system that pays each doctor in each hospital.”

Some things we can learn by studying the Canadian system, Pauly argues. “Number one, although in many ways the system looks like ours, the system has a much greater emphasis on primary care and less emphasis on specialist care and hospitalization, and on complex and costly procedures. And that probably contributes a lot to the lower spending [in Canada], because while primary care can be good for you, expensive procedures such as for cancer may add only a few months of life but cost hundreds of thousands of dollars.”

Pauly adds, “Ordinary people in Canada are healthier than in the U.S., but outcomes for cancer and very serious illnesses are less good there. It’s a great place to live as long as you don’t get too sick, as one critic put it.”

Another fact that might dissuade Americans from duplicating the Canadian model, Pauly adds, is that “Canadians have a longer waiting list for things like joint replacement, so if your hips are killing you in Canada, you may wait months for that [surgery] to happen. In the U.S., the orthopedic surgeons are calling you every day, wondering when you are going to come in for your joint replacement procedure. We probably do too many; they probably do too few. But the safety valve for Canada is that they can always come across the border, and have a procedure done here.”’

Why Canada’s System Developed Differently

Given cultural similarities between U.S. and Canadian societies, why did health care in Canada emerge so differently? “It may have something to do with the respective ages of the countries, time of settlement and who settled there,” asserts Michael Decter, a former deputy minister of health for Ontario who was responsible for managing that province’s $18 billion health system, serving its 11 million residents. “When Saskatchewan — one poor province — started the ball rolling in the 1950s by providing its people with hospital insurance, its government said they were going to pay the hospital bills for all of their citizens. And then a decade later, they said they’d pay the physician bills, which was much more contentious. A lot of your northern [U.S.] states were not far off that. Wisconsin, Minnesota were heading that way.”

Single-payer System
Despite of such imperfections, there is growing support in the U.S. for instituting a single-payer health care system based on the Canadian model. But it is far from certain that there is enough of a social and political consensus to bring it about. Notes Pauly, “There has been more of a consciousness [lately], and probably consensus on what ought to be some social objectives here [in the U.S.] What I don’t see, though, is a consensus on how to achieve them. [U.S. Senator] Bernie Sanders believes, I guess, that you should have a right to as much health care as you and your doctor agree on, and it should be paid for by millionaires and billionaires. But I don’t think we really have a national consensus on that… The real question is ‘How much health care does an individual person have a right to; and who has the obligation to pay for it? And who should pay for that?’ Those questions are not addressed by Sanders in a way that there would be a consensus on.”

What is the most practical way of bringing to life Sanders’ dream of a single-payer, national health care system in the U.S.? Perhaps, argues Pauly, by “letting it happen piecemeal, state by state, just as it happened piecemeal, province by province in Canada. Although there was an overarching federal plan there to get the individual provinces to coordinate and subsidize them, originally it was a provincial initiative. Maybe that’s the way that Senator Sanders ought to go. First, start back home — and see if he can get Vermont to do what he advocates for the rest of the country. And then New Hampshire should be easy and then work across the northern tier. Washington [State] should be a snap, rather than try to persuade the heart of Republican power in the South to go along with this; that’s never going to happen.”

For his part, Polsky argues, “It’s one thing to talk about the values that are consistent with the health system you want; it’s another thing to get there.” Sanders’ plan has resonated with many in terms of the values it embodies, he notes, “but the details of that plan have never been worked out…. And a lot of the challenges are in the details.”

The rationale behind the mandate
Health insurance works by creating "risk pools," which are groups of policyholders. In a typical risk pool, everyone pays insurance premiums, but only some will file claims. If a health insurance risk pool is large enough and has enough healthy people paying premiums, then there will be enough money available to cover the costs of those who get sick.

The rationale behind the individual mandate is that if everyone is required to have insurance—especially healthy people—the risk pools will be broad enough to lower premiums for everyone, even those with expensive medical conditions.

Who must have coverage

Unless they're in a category of people exempt from the individual mandate, all U.S. citizens and permanent residents must have health insurance. Exempt groups include:

People whose religion forbids them from having any health insurance
People who are incarcerated
Members of Native American tribes; undocumented immigrants
Families whose income is so low that they are not required to file a tax return
Individuals who would have to pay more than 8 percent of their income for insurance, after taking into account employer contributions or other subsidies
Which coverage counts
If you're required to have coverage, the next consideration is what kind of coverage you have. It has to meet the federal definition of "essential care." In general, health insurance obtained through an employer's plan qualifies as essential care. So do Medicare, Medicaid and the Children's Health Insurance Program. Also qualifying: Tricare insurance for military service members, retirees and their families; veterans' medical benefits; individual health care policies that provide a certain minimum level of benefits; and any plan that existed before the law was enacted and has been "grandfathered in" by the federal government.

Tax penalties
Legislation passed in late 2017 ended the penalties beginning with the 2019 tax year.

Tax penalties for lack of coverage began accruing in 2014, and they were to phase in over a three-year period. Taxpayers are penalized for lacking coverage for themselves and for their dependents. Beginning in 2019 the penalties will no longer be assessed.

Law sets an annual penalty amount and then pro-rates that amount based on the number of months you were without coverage. For example, if your penalty amount was $300, and you were without coverage for eight months (two-thirds of the year), then your actual penalty would be $200. No penalty will be assessed for gaps in coverage lasting less than three months. Penalties for a year will be assessed and need to be paid with that year's income tax return.

Penalty amounts specified
The penalty you pay for not having health coverage is either a dollar amount or a percentage of family income, whichever is greater. For the law's first year, 2014, the law set the annual penalty at $95 per adult and $47.50 per child, up to a maximum of $285 per family—or 1 percent of family income, whichever is greater. For 2015, the penalty was set at $325 per adult and $162.50 per child, up to a maximum of $975 per family—or 2 percent of family income, whichever is greater. For 2016 and beyond, the law set the penalty at $695 per adult and $347.50 per child, up to a maximum of $2,085 for a family—or 2.5 percent of income, whichever is greater. Penalties are to rise with inflation.