Obamacare could increase the cost of Canadian healthcare

Andy Radia

By and large, I think most Canadians feel that President Obama's healthcare reforms aka Obamacare are a positive step for the United States.

After all, it provides health care insurance to 44 million Americans who currently don't have it.

Unfortunately, according to a new report by the Fraser Institute, Obamacare might have negative consequences for our healthcare system in Canada.

The report included in a collection of essays titled 'The U.S. Election 2012: Implications for Canada' suggests that America's new healthcare plan could increase costs in Canada.

[ Related: New tax to fund Obamacare could leave expats in Canada owing Uncle Sam ]

Report author Steven Globerman who is also a professor at the Western Washington University suggests that Obamacare could lead to healthcare service scarcity because of greater demand and because lower payments to service providers could encourage consolidation in the sector. Globerman says longer wait times in the U.S. invariably mean longer wait times in Canada.

"The emergence of rationing and waiting times in the US might also increase the costs of Canadian health care by constraining provincial governments from using spare capacity in the US as a buffer against “excessive” waiting times in Canada. Rather than relying upon sending Canadian patients to the United States to deal with excessive wait times, provincial governments will presumably need to add domestic capacity or else increase waiting times for Canadians to receive medical treatment.

The demand for procedures such as CT scans that some Canadians acquire outside of provincial insurance plans could increase in Canada if those procedures become less readily available through US clinics. This development would intensify concerns about “two-tier” Canadian health care."

Globerman also argues that industry consolidation along with a new tax regime could reduce competition in United States and, consequently, reduce pressure on providers to innovate with regard to healthcare services and medical equipment.

[ Related: Quebec tops Fraser Institute’s healthcare rankings, while Newfoundland is last ]

That also impacts us here:

"These anticipated changes have implications for Canada. The United States is the leading source of new health care products and services, including medical equipment, pharmaceuticals, and surgical and clinical techniques. Other countries, including Canada, benefit by importing products developed in the United States, often at marginal cost.

Canadian health care providers also benefit by waiting until new procedures and techniques are proven effective in the United States before adopting them in Canada. The ability of the Canadian sector to acquire technology and knowledge from the United States reduces required Canadian investment in expensive research and development, clinical testing, and the like, thereby making state-of-the-art health care services less expensive for Canadians. If the ACA reduces innovation in the United States, other countries will presumably need to spend more on health care innovation."

The full report is available here.