Because the government is the sole payer, it can exert tremendous bargaining influence on the prices of medical services and drugs. That's why Canada -- whose Medicare system is the most well-known version of NHI -- has cheap drug prices that lure Americans north of the border even though it is illegal to purchase prescription medication abroad. NHI countries generally control costs by limiting the services they will pay for and by limiting the availability of certain services, thus creating the lengthy waits for non-acute secondary care.
Therein lies the essential tradeoffs of the NHI model; to achieve universal coverage with cost controls, the government
- strongly influences prices and therefore provider compensation
- limits the services covered by the national insurance
- limits the volume of selected services and procedures