Slow Growth?


When Canada adopted its national health-care system in 1967, the United States and Canada each spent about 6 percent of their GNP on health care. Twenty years later, the United States spent about 11 percent of its GNP on health care, but Canada spent only 9 percent.

So we can save money by emulating the Canadians? Not so quick, say John C. Goodman and Gerald L. Musgrave, authors of the National Center for Policy Analysis report, "Twenty Myths About National Health Insurance."

The problem with the comparison is that it is expressed in fractions. It doesn't show whether the difference is due to different changes in the numerators (health-care spending) or in the denominators (GNPs). In fact, almost all of the difference is accounted for by changes in the denominators. From 1967 to 1987, Canada's real GNP grew 74 percent, but U.S. GNP grew by only 38 percent. The real increase in per-capita health-care spending in both countries has been about the same—4.38 percent a year in the United States vs. 4.58 percent a year in Canada.

In recent years, Canada has been less successful in controlling costs than the United States. In the 1982 to 1987 period, the per-capita increase in Canada was 4.45 percent annually; in the United States it was 4.15 percent annually.

In this light, the alleged strength of Canada's health-care system—its ability to keep costs down—doesn't look so great.