
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, January 8, 1994                   TAG: 9401110253
SECTION: EDITORIAL                    PAGE: A7   EDITION: METRO 
SOURCE: JOHN A. MARTIN
DATELINE:                                 LENGTH: Medium

CANADA'S HEALTH SYSTEM DOES NOT HAVE COST ADVANTAGES

THE COST of health care in the United States, expressed as a percentage of the gross domestic product and compared to health-care costs in Canada, is 4 to 5 percentage points higher than in Canada. This is another way of saying that Canada provides its citizens with up-to-date care more efficiently than does the United States.

However, understanding how Canada allocates costs changes the picture considerably.

In the Canadian system, the cost of capital is invisible. In our system, the cost of working capital is an expense, which Canadians don't include in their calculations of health-care costs. Canada's capital costs are largely buried in the overall cost of the Canadian government.

In Roanoke, the Carilion Health System is the largest employer. Carilion's cost of employee health benefits is substantial, and is included in the overall cost of health care. Nationwide, this is a very large number, particularly since medical care is very labor-intensive - the same as it is in Canada.

Yet in Canada, the health-insurance costs are excluded from the percentage calculation of the gross domestic product. Canada's employee health benefits are paid by the federal government and are not allocated directly to health-care costs.

Our elderly population is 1.2 percent larger than Canada's. (Could we have more elderly because of better health care?) If Canada had to provide the same percentage of care for the elderly as does the United States, Canada's costs would increase by 5.3 percent.

Similarly, other demographic differences affect the comparison of costs.

Canada doesn't have the cost of care for Vietnam or Korean veterans. Inner-city violence, substance abuse, sexually transmitted disease and teen pregnancy have a much greater impact on health-care costs in the United States than in Canada.

There is less research and development in Canada. If Canada's research and development equalled ours, that country's cost would increase by 2.4 percent.

Liability insurance costs for hospitals, drug companies and professionals are very much higher in the United States, which are included in the health-care percentage of our gross domestic product.

Also in Canada, the administrative costs of collecting general taxes, health-care premiums and the payments to providers aren't allocated to health-care costs, but are absorbed as a general cost of overall government.

Every time a Canadian citizen crosses our border for medical care, it adds to our costs and subtracts from Canada's. At the border towns, cities and elsewhere, this is an everyday event.

These numbers came from a study by Jacques Krasny and Ian R. Ferrier, both Canadian citizens. Their conclusion, after all the arithmetic, is that the Canadian system has no cost advantage when compared to ours.

John A. Martin of Roanoke is a retired physician.

by CNB