Parting at the Crossroads: The Development of Health Insurance in Canada and the United States, 1940-1965

Abstract

Frequently raised in recent discussions about health care reform in the United States has been the model of the Canadian health insurance system.' While debates about health insurance often turn into polemical battles over which country offers the best health care for its citizens, the issues at stake raise a fundamental question. Why did these two neighbors develop different forms of health insurance, a universal system of government-financed health care in Canada and a dual-tiered system of Medicare and Medicaid targeted at the elderly and poor in the United States? The contrast is even more significant when we consider that these two countries, generally classified as liberal welfare states,2 share many common economic, political, and social attributes and resemble one another in many of the features that influence welfare state expansion.3 Why, then, did Canada and the United States embark upon two very different paths to health reform, one of the most important pillars of the welfare state? The extensive literature on the development of the welfare state provides us with at least three clues as to the types of factors that can explain divergent paths to health reform in Canada and the United States: the influence of social forces, the role of state actors, and the impact of state structures and political institutions. Social explanations concentrate on the role and influence of organized groups by examining the power of professional groups and business interests in shaping social reform.4 Neo-Marxist explanations focus on how social policy reflects the class struggle and demonstrate the correlation between higher social expenditures and the political strength of the working class mobilized into a social democratic party.' The state-centered approach emphasizes the role of individual state actors, influential bureaucrats, and political leaders in setting the policy agenda and shaping legislation and the state's administrative capacity to implement social reform.6 The recent application of neoinstitutionalism to the study of the welfare state has further enhanced our understanding of the interaction between social forces and the state in the development of social policy. This approach builds on the idea that the of the game of a political system impose certain constraints and opportunities conditioning legislative outcomes. These rules are derived from the constitutional settings that shape political institutions.7