Evidence-Based Legislation? Lessons From Abroad

President Obama appears to be refreshingly pro-science in his outlook, publicly lauding objectivity and careful analysis. He has even been credited with saying that “we need evidence-based legislation” in regards to public policy. The New York Times reports:

Agencies will be expected to pick science advisers based on expertise, not political ideology, the memorandum said, and will offer whistle-blower protections to employees who expose the misuse or suppression of scientific information.

The idea, the president said in remarks before an audience of lawmakers, scientists, patients advocates and patients in the East Room, is to ensure that “we make scientific decisions based on facts, not ideology”: a line that drew more applause than any other.

But when it comes to healthcare reform, many policy decisions put us in uncharted territory, with intelligent arguments on both sides of many legislative options and no American historical frame of reference to help us determine the best course of action. In times like these, perhaps the best we can do (to promote “evidence-based legislation”) is to study similar policy decisions made by our Canadian and European counterparts.

In a quest to inform myself about healthcare reform and its consequences in other countries, I attended a conference entitled, “Lessons From Abroad for Health Reform in the U.S.” at the Kaiser Family Foundation on March 9th in Washington DC. The event was sponsored by the Galen Institute and the International Policy Network, both of whom are politically rightward-leaning non-profit organizations. So I listened with interest, understanding that there may be other perspectives not fully represented.

I wasn’t sure what to expect from the conference, and assumed that speakers would offer a blend of pluses and minuses culled from Canadian and European healthcare reform experiences. I have to say that the pluses were hard to come by – and that the minuses were so provocative that I have decided to repeat some here for you, and let you make what you will of them.

Switzerland: Mandatory Health Insurance Creates Payer Cartels

Dr. Alphonse Crespo, an orthopedic surgeon who practices in Lausanne, Switzerland, described what sounded like the utter decimation of a perfectly good healthcare system. He said that in the 1960s Swiss healthcare was decentralized and quality-oriented. The government provided subsidies for health insurance for the poor, and subsidized public hospitals who took care of the poor and/or uninsured at a 50% rate. Overall, according to Dr. Crespo, Swiss healthcare was efficient, effective, and had high patient satisfaction ratings.

In 1994, socialism came into vogue and reformers called for a redistributive model of healthcare, with centralization of infrastructure and electronic medical records systems that would be compatible with those in use by other European countries. Mandatory insurance was introduced, which shifted disproportionate power to third party payors. The payors focused primarily on cost containment measures and profitability, rather than expanding access to quality care. Regional hospitals were forced to merge with larger ones or else shut down. Wait times increased, lengths of stay decreased, and there was an increase in “critical incidents” (i.e. medical errors) by 40%.

In 2002 the health insurers decided that “more doctors result in higher costs” and successfully lobbied for a cap on the total number of physician licenses, so that in order to practice medicine, a physician would need to take over the practice of a retiring physician or one who died.

In 2008, the third party payers attempted to legislate their ability to decide which physicians could practice within the healthcare system, and which would be excluded from coverage. This did not sit well with patients, and they voted for “freedom of choice” in a referendum on the issue. Fortunately, they blocked the insurer move to ban certain physicians from insurance coverage. Unfortunately, the insurers succeeded in forcing a reduction in reimbursement for basic laboratory testing by 20%, thus forcing physicians to close their labs and send samples to a centralized location.  Apparently physicians are planning to strike in Lausanne and Bern next week over this issue.

Dr. Crespo argued that the unforeseen consequence of the move to compulsory insurance was the emergence of a powerful cartel of health insurers without any apparent cost savings, and a measurable decrease in care quality. In fact, Switzerland’s healthcare system rapidly plummeted from 4th place in the Euro Health Consumer Index, to 8th place over the course of a few short years.

He concludes:

“Once cartels have entrenched themselves, there is no easy way to dislodge them. Americans should think twice before opting for compulsory insurance, unless they believe that cartelized and rationed healthcare is really in the best interest of patients.”

Canada: A Political Healthcare Monopoly

Dr. Brian Crowley is the Founder and President of the Atlantic Institute for Market Studies in Halifax, Nova Scotia. He describes the Canadian healthcare system this way:

Canadian Medicare operates in an unregulated, tax-financed, pay-as-you-go model. Our provincial governments are our monopoly provider. They not only pay for necessary care, but they also govern, administer, and evaluate the services that they themselves provide. They define what we call “medically necessary services” and pay for 99% of all physician services. They also forbid the use of private insurance for medically necessary services. They set the budgets for nominally private healthcare institutions. They appoint the majority of their board members and have explicit power to override management decisions.

Under these circumstances, no hospital or hospital administrator can be expected to take any responsibility or initiative because decisions will always be second-guessed by those in political power.

Before the advent of competition in our telephone industry, dissatisfied customers faced the massive indifference of a bureaucracy that took their business for granted, despite some theoretically powerful regulatory agencies. Administrators of the Canadian healthcare system likewise suffer no direct consequences for poor customer service. They aren’t even answerable to a regulatory agency. Accountability is a vague political concept which cannot be enforced in any meaningful way. Like all monopolists, Canada’s healthcare authorities abuse their positions of power.

Dr. Crowley argued that the provincial governments have no desire to measure how many people are waiting for health services, how long they’ve been waiting, or how many people leave Canada to get treatment south of the border. (He claims that the US is Canada’s secret safety valve.) Apparently the province of Ontario contracted with New York State for cancer care for their patients when wait times became politically untenable.

A couple of years ago, the Supreme Court of Canada ruled that the healthcare system violates Canada’s charter of rights because it collects taxes, promises healthcare in return, forbids competing suppliers and then often doesn’t deliver the care. The justices summarized the situation this way: “A place in a queue is not healthcare.”

Canada-wide average wait times for surgery is 17.8 weeks, though in Saskatchewan, wait times for hip replacements are as long as a year and a half. That’s after a physician has ordered the surgery. Getting to see a physician in the first place is very difficult. Statistics Canada reports that 1/5 of Canadians do not have a family doctor.

Dr. Crowley suggested that the Canadian healthcare system has become an unresponsive monopoly though it wasn’t supposed to be that way. It was designed to usher in a “grand era of choice.” It was supposed to be a healthcare system in which people would be able to get all the healthcare they needed without having to “worry about the cost.” Dr. Crowley concluded that “some of the ideas bandied about in Washington will lead to the worst features of the Canadian system without that having been anybody’s intention.”


There is no healthcare utopia. As demand for services climb (with older and sicker patient populations) and expensive new drugs and technologies are developed, all industrialized nations are experiencing cost containment challenges. The need to ration care encourages shifts in power that can result in unintended consequences – including payer cartels and indifferent bureaucracies. As the United States congress prepares to legislate major health reform this summer, they will do well to gather all the evidence they can from countries who’ve previously enacted similar legislation.

In the end, though, it is likely that limited resources, a weak economy, and an aging population will pretty much guarantee dissatisfaction with our healthcare system in the decades to come. Will “evidence-based legislation” help us to avoid others’ mistakes? I hope so, but I’m also not holding my breath.

Posted in: Politics and Regulation

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