In a recent online seminar hosted by the Institute for Liberal Studies in Ottawa, Canada, I explained why both countries operate government-run health systems—just organized differently.
I argued that both countries have socialized systems, though the US version is more of a patchwork of different socialized medicine models stitched together into a health care system version of Frankenstein’s monster.
Consider the following:
- In Canada’s system, called Medicare, the federal government provides block grants—fixed amounts of money—to each province, and the provinces add whatever additional funds their legislatures decide. This combined funding pays for health care services for all 40 million Canadians, except for outpatient prescription drugs. Canada does not impose a formal cap on federal Medicare funding. However, the fixed-growth formula for the Canada Health Transfer functions as a soft cap, limiting how much the federal contribution can increase over time and gradually shrinking its share if provincial costs grow faster.
- In the US, roughly 70 million people—generally up to about 138 percent of the federal poverty level (FPL) in expansion states—are covered by Medicaid, a program that functions as a single-payer system for this population. Unlike in Canada, Medicaid covers outpatient prescription medications. As in Canada, the federal and state governments share responsibility for financing health care services. However, instead of providing states with block grants, the federal government offers open-ended matching funds, covering roughly 65 to 75 percent of program costs.
- In the US, nearly everyone age 65 or older (roughly 70 million people) is enrolled in a Canadian-style, single-payer system called Medicare, which includes an optional prescription drug benefit. This system is funded entirely with federal dollars, and as with Medicaid, its financing is open-ended.
In summary, Canada gives provinces a fixed check and lets them live within it. US Medicaid matches state spending, so the more states spend, the more Washington pays. US Medicare goes further—it’s essentially open-ended, with the federal government automatically covering costs as they rise, even when private insurers administer parts of the program.
Canada budgets health care up front; the US pays for it after the fact—and then tries to control costs through regulation, payment rules, and utilization management.
In the US, Medicaid and Medicare together cover roughly 40 percent of the population. In addition, many veterans receive their care through the Veterans Health Administration (VHA). This program more closely resembles the British National Health Service: Facilities, physicians, nurses, and other health care personnel are all federal government employees, and patients pay little to no out-of-pocket costs depending on their level of military service—for example, whether they served in combat. Indigenous people can receive similar health care services through the Indian Health Service. The VHA and Indian Health Service account for just under 3 percent of the US population.
Of the remaining US population, roughly 160 million, or 54 percent, receive health insurance through their employer. Federal law mandates that large employers offer coverage that complies with federal and state requirements, effectively standardizing key elements of the insurance they provide. The tax code strongly encourages this arrangement by allowing employers to deduct the cost of coverage while excluding it from employees’ taxable income. Some large companies take advantage of the Employee Retirement Income Security Act, or ERISA, by self-insuring, which exempts them from many state insurance mandates. Employer-sponsored coverage is not portable. Coverage is tied to employment and can change or disappear when workers change jobs. Together, these policies steer a substantial portion of workers’ compensation into employer-controlled health benefits rather than wages.
That leaves roughly 10 percent of the US population without Medicaid, Medicare, VHA coverage, or employer-provided (government-designed) health insurance. Those individuals typically obtain coverage through government-run exchanges to select a government-designed health insurance plan, which includes several federally mandated “essential benefits” that all people—regardless of age or personal circumstances—must purchase. In addition, the government does not allow low-risk patients to pay lower premiums than higher-risk patients; all must pay the same “community-rated” premium. And the government provides taxpayer subsidies to help pay for these expensive, low-quality insurance plans for people earning up to 400 percent of the FPL. Thus, in 2025, a family of four earning $47,000 per year paid no premium—taxpayer subsidies went directly to the insurance company to cover the premium.
This leaves about 8 percent of Americans, roughly 25 million to 27 million people, uninsured. Most are uninsured not because coverage doesn’t exist but because of cost, eligibility gaps, immigration status, and frequent churn as people lose and regain coverage when their jobs or income change.
Both Canada and the US have government-run health systems—but the US version is more fragmented, relies on private intermediaries, and costs more because federal spending is open-ended rather than budgeted.
Both systems ration care but along different margins. Canada uses budgets to control spending, which shows up as longer wait times and limited capacity. The US relies on prices and insurance design—premiums, deductibles, networks, and utilization controls—which can restrict access financially even when services are available.
But the similarities don’t end there.
In both Canada and the US, federal regulators restrict adults’ right to self-medicate by deciding which drugs are available and whether a permission slip (prescription) from a licensed gatekeeper (clinician) is required.
In both Canada and the US, governments use licensing laws to control which clinicians patients may see, while established professions lobby to keep allied providers from practicing to the full extent of their training.
Many were surprised to learn how much the two systems have in common. They shouldn’t be. When governments control financing, regulation, and access, the result isn’t fundamentally different systems—it’s different versions of the same constraints on patients and clinicians.
You can view the full online presentation here.