Economics

The health care system in Canada is one that leaves the policymakers that advocate for health care reforms with lots of fascination. There are analysts who have concluded that the health care cost is lower in Canada as compared to that of United States when the health care spending of the two countries was compared. These analysts then come up with a conclusion that a monopoly kind of insurer that would impose budget constraints on the providers will be more efficient when it comes to delivering the insured medical care as compared to the established competitive private insurance type of market (Bodenheimer and Grumbach, 2002). It is worth noting here that this kind of a conclusion assumes here that the measured cost does reflect the real cost of the social life and that the benefits obtained are also similar. A more critical and a deeper analysis of how public and private insurers operate end up discovering hidden costs in the monopoly public type of system and hidden benefits in the private insurance (Deber, 2003). The accurate comparison of the benefits and total costs of the public insurance and private systems results into some very important measurement and conceptual questions that are examined here in this paper by comparing the health care system in Canada to that in USA. Of main interest here will be the comparison of the overhead costs between the two systems and try to show that the existing comparison could be misleading (Reinhardt et al.,2004).


Health problem in Canada
    There is low resource allocation for acute health care in Canada as compared to the amount of resources allocated in United States. This problem is made worse when the government imposes a health insurance scheme on people and fails to recognize that some of these problems could be solved if there was freedom of insurance choice. The lost benefits end up being an added hidden cost on the health insurance kind of monopoly in Canada that sees its self not being in a position to offer the best possible health care to its citizens (Bodenheimer and Grumbach, 2002).

Health care cost in Canada
Some analyst have initially given the impression that the measured health care cost is lower in Canada as compared to that in USA after having compared the health care spending in the budget constrained Canadas system with the USA system (Deber, 2003). These analysts conclude that the monopoly type of public insurer that imposes on the providers budget constraints is more efficient as compared to the private insurance market in delivering insured medical care. The criticism of private insurance is mainly due to the alleged high overhead costs. In the USA, the overhead costs estimates of the private insurer range from 11.9 to 34.4 percent of payment benefits compared with only 1 for the public insurance system in Canada. The presence of several diverse plans is also to be one of the causes of wasteful expenses (Reinhardt et al., 2004.

Any insurer whether public or private is required by law to perform 3 basic functions. First is to collect the premiums, then monitor as well as pay for services and finally if required, take responsibility of any risk that has not been catered forth by law. In the private insurance market, cost of carrying out these kind of functions is presented as accounting overheads of the total premium collections, returns on capital or even as claims on administration (Bodenheimer and Grumbach, 2002). Similar methods that are employed by the public insurers to carry out the same calculations result to some observable accounting costs that have a much higher hidden costs. This could in part be taken as one of the ways through which governments all over the world uses tricks to force people to pay taxes, bear risks as well as accept restrictions and prices on services. On the other hand, the private sector has to induce voluntary consumer participation. The analysis presented here compares the hidden costs in the public health insurance as compared to the private insurance taking Canada and USA as the prime examples (Deber, 2003)

It has been reported by the U.S Government accounting Office that the 14 of the differential in per capita spending on health care between United States and Canada is the spending that takes place on other professional this including podiatrists, physiotherapist and psychologists. These kind of services most likely have other hidden benefits that have so far not been well captured in the standard mortality and morbidity statistics. Most countries such as United States have a high demand on goods and services that have the tendency of improving the quality of life.  If an American is visiting a physiotherapist and a Canadian is exercising at home, then health care spending would be said to be more in United States and much less in Canada. This omission of patient time costs does understate the potential benefits of United States high spending on health (Bodenheimer and Grumbach, 2002).