Ensuring public health care access and insurance coverage has been proven to be a challenge in many countries—one that continues to be a hot topic in economic, political, and even personal debates. In the United States and Canada, people often weigh the advantages and disadvantages of their respective health care systems through comparison with other economically developed countries—particularly each other.

Public opinion varies in both the US and Canada (and other comparable nations) regarding health care satisfaction. Central to this opinion is the cost of health care for individuals (either out-of-pocket or through taxation), individual access, and the quality of care available.

While there are several statistics we could point to that distinguish US and Canadian health care systems, what lies beneath them are key distinctions in how each is structured. Join us as we walk you through the fundamental differences in the health care systems of these two North American neighbors.

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4 Key differences between the US and Canadian health care systems

Which health care system is superior? It’s best to draw your own conclusions by understanding the nature of health care systems. To help, we have outlined some of the key differences that draw the line between health care in the United States and in Canada.

1. Health care insurance coverage and how it is funded

In both the US and Canada, health insurance is the primary way individuals pay for their health care. The main difference is in how that health insurance is funded.

The United States health care system:

The US requires individuals to fund their own health care insurance. The only exception is if they qualify for eligibility in one of the government-provided insurance programs offered to individuals in particular income, age, or disability brackets. This includes programs like Medicare, Medicaid, or the Veterans Health Administration.

Health insurance in the US is often, but not always, tied to employment, with employers providing insurance coverage in the package of benefits they offer their employees. The type of coverage offered will vary from employer to employer, and coverage is not guaranteed.

The Canadian health care system:

In Canada, on the other hand, the federal government provides funding support for health care insurance to provincial governments as long as the province follows regulations outlined in the Canada Health Act (CHA) of 1984. This funding is used to provide all Canadian citizens with health insurance through the national health care system.

2. The role of private industry and competition in health care

Private industry plays a role in both the US and Canadian health care systems, just in different ways.

The United States health care system:

Private enterprises are the primary providers of both health care insurance and health care services in the US. Insurers compete for customers, selling insurance policies to employers as benefits packages for employees or selling health care insurance policies directly to individual consumers. Health care providers compete for patients, often through areas of medical specialty, quality, or cost.

Individual consumers have influence in this market, but it can be limited. Their choices are often constrained by the types of services covered by insurance providers, the types of insurance benefits employers negotiate, or the doctors available within the insurance provider’s network of physicians.

The Canadian health care system:

Most health care services are provided by private providers, rather than federal or provincial providers. This means that doctors and physicians work independently in private practice, or are employed by private hospitals or private health service management organizations. Rather than being paid through claims made through private insurers, they derive much of their revenue by billing government health insurance.

3. Types of care covered by health insurance

Regardless of how health care insurance is funded, consumers in both the US and Canada have concerns about which health care services are covered under their respective health care systems. Because of differences in how the systems are funded, consumers in each country end up having different access to types of health care services.

The United States health care system:

In the US, health care coverage through private insurance varies depending upon the types of benefits packages negotiated by employers or the types of policies individual consumers choose or can afford.

However, with the introduction of the Patient Protection and Affordable Care Act (ACA) in 2010, individuals are required to secure a minimum essential coverage, either through an employer or through private insurance. It also mandates that insurers cover essential health benefits (EHBs). These have been defined to include emergency services, hospitalization, ambulatory patient services, maternity and newborn care, mental health and substance use services, prescription drugs, rehabilitative services, laboratory services, preventative care services, and pediatric services.

The Canadian health care system:

The universal health care system that provides coverage for all Canadian citizens limits that coverage to services provided by hospitals, medical practitioners, or surgical dental services provided in a hospital.

Beyond these required health care services, provinces are allowed to (but not required to) provide insurance for additional services, such as coverage for prescriptions, home care, long-term care, vision care, dental care, mental health care, etc. In practice, dentists typically work outside of hospitals, so dental care services usually end up financed through other means—either out-of-pocket or through private insurance.

4. Delivery of primary care

Primary care providers, or general practitioners (GPs), play a significant role in both countries. Interestingly, both the US and Canada are facing shortages of these vital medical providers. Of those who do go into primary care, many are either self-employed or employed in small private practices. But there are differences in how their care is delivered.

The United States health care system:

Primary care physicians account for approximately one-third of all US doctors. They do not have a formal gatekeeping function for providing referrals to specialists or other health care service providers.

Patients have free choice of doctor, but often choose based on whether that doctor falls “in-network” with their health insurance provider. Physicians are typically paid through negotiated fees with private insurers, capitation through private insurers, or set fees through public insurance (or some combination of these). Patients are usually responsible for some portion of physician payment, unless the patient is uninsured and qualifies for waived or reduced fees.

The Canadian health care system:

Approximately half of practicing physicians in Canada are GPs. They act largely as gatekeepers for health care services, referring patients to specialists as needed. In fact, specialists receive lower fees for non-referred consultations.

Generally, patients have free choice for their primary care doctor, with some requirements for patient registration, which varies by province or territory. Physician fees are paid based on fee schedules that are negotiated by provincial and territorial ministries of health, with financial incentives sometimes linked to performance depending upon the province. Patients are not directly responsible for physician payment as long as the health care services are covered by the universal health care plan.

Key similarities in the US and Canadian health care systems

While the structure of US and Canadian health care systems are different, they do share some similarities.

For example, consumer protection is a major factor in both US and Canadian health care. Each system also works to protect competition in the health care industry, recognizing that competition is a key component to driving innovation and ensuring quality care to the public. Both countries have federal agencies dedicated to balancing consumer protection and industry innovation through competition.

Keep a pulse on health care industry insights

As health care systems continue to be a topic of discussion, changes in policy will remain on the horizon. St. George’s University (SGU) is committed to informing the medical community and consumers of the nature of medical innovation and how it affects their lives.

Keep yourself informed about industry trends in health care by following our blog, The SGU Pulse.

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