The Fraser Institute is a Canadian public policy think tank and registered charity. It has been described as politically conservative and libertarian. The institute is headquartered in Vancouver, with offices also located in Calgary, Toronto, and Montreal, and ties to a global network of 80 think tanks through the Economic Freedom Network.
The Fraser Institute was founded in 1974 by Michael Walker, an economist from the University of Western Ontario, and businessman T. Patrick Boyle, then a vice-president of MacMillan Bloedel. It obtained charitable status in Canada on October 22, 1974, and in the United States in 1978.
Its stated mission is "to measure, study, and communicate the impact of
competitive markets and government intervention on the welfare of
individuals." The institute is named after the Fraser River.
Sir Antony Fisher, previously instrumental in setting up the UK's Institute of Economic Affairs, was appointed acting director in 1975, until Walker became executive director in 1977. In its first full year of operation, 1975, the institute reported revenues of $421,389. In 1988, revenues exceed $1 million, and in 2003, $6 million.
Political stance
The Fraser Institute describes itself as "an independent international research and educational organization",
and envisions "a free and prosperous world where individuals benefit
from greater choice, competitive markets, and personal responsibility".
As a registered charity with the Canada Revenue Agency, the institute files annual registered charity information returns. In 2010, the institute reported having $4.5 million CAD in assets and $10.8 million in annual revenue.
The institute depends on contributions from individuals,
corporations, and foundations. It does not accept government grants or
payments for research, however individual donors may claim tax credits
for donations and corporate donors may claim tax deductions.
The institute has received donations of hundreds of thousands of dollars from foundations controlled by Charles and David Koch, with total donations estimated to be approximately $765,000 from 2006 to 2016. It also received US$120,000 from ExxonMobil in the 2003 to 2004 fiscal period. In 2016, it received a $5 million donation from Peter Munk, a Canadian businessman.
In 2012, the Vancouver Observer reported that the Fraser
Institute had "received over $4.3 million in the last decade from eight
major American foundations including the most powerful players in oil
and pharmaceuticals". According to the article, "The Fraser Institute
received $1.7 million from 'sources outside Canada' in one year alone,
according to the group's 2010 Canada Revenue Agency (CRA) return. Fraser
Institute President Niels Veldhuis told The Vancouver Observer that the
Fraser Institute does accept foreign funding, but he declined to
comment on any specific donors or details about the donations."
Research and publications
The institute self-publishes a variety of reports:
Economic Freedom Index: The institute's annual Economic Freedom of the World index ranks the countries of the world according to their degrees of economic freedom.
The institute has also published regional and sub-national reports
ranking the economic freedom of North America, Latin America, the Arab
World, and the Francophonie. These reports are distributed worldwide through the Economic Freedom Network, a global network of 80 think-tanks.
Human Freedom Index: Along with the Cato Institute and the Liberales Institut at the Friedrich Naumann Foundation for Freedom, the Fraser Institute publishes annual Human Freedom Index,
which presents the state of human freedom in the world based on a broad
measure of 76 distinct indicators that encompasses personal, civil, and
economic freedom.
The index presents a broad measure of human freedom, understood as the
absence of coercive constraint. The index covers the following areas:
Rule of Law, Security and Safety, Movement, Religion, Association,
Assembly, and Civil Society, Expression, Relationships, Size of
Government, Legal System and Property Rights, Access to Sound Money,
Freedom to Trade Internationally, and Regulation of Credit, Labor, and
Business. The Human Freedom Index was created in 2015, covering 152 countries for years 2008, 2010, 2011 and 2012. In January 2016 data for 2013 was added, covering 157 countries.
Waiting Your Turn: Wait Times for Health Care in Canada
is the institute's annual report on hospital waiting times in Canada,
based on a nationwide survey of physicians and health care
practitioners. The twentieth annual survey, released December 2010,
found that the total waiting time between referral from a general
practitioner and delivery of elective treatment by a specialist,
averaged across 12 specialties and 10 provinces surveyed, had risen from
16.1 weeks in 2009 to 18.2 weeks in 2010.
Survey of Mining Companies: Published annually, the global Survey of Mining Companies
ranks the investment climates of mining jurisdictions around the
world, based on the opinions of mining industry executives and managers.
Global Petroleum Survey: An annual survey of petroleum executives regarding barriers to investment in oil- and gas-producing regions around the world.
Canadian Provincial Investment Climate: A series of reports
measuring the extent to which Canadian provinces embrace public policies
that contribute to, and sustain, positive investment climates.
Firearms reports. The Fraser Institute issued a number of articles and statements opposing Canadian gun control laws, including firearms registry.
School Report Cards: Every year, the institute publishes a series of School Report Cards ranking the academic performance of schools in British Columbia, Alberta, Ontario, Quebec, and Washington state based on the publicly available results of standardized testing mandated and administered by the provinces. The website www.compareschoolrankings.org allows anyone to compare up to five schools at once, based on a variety of performance indicators.
Tax Freedom Day: The institute's annual Tax Freedom Day
report calculates the day the average Canadian family has paid off the
total tax bill and royalties imposed on them and corporations by all
levels of government. In 2016, Tax Freedom Day was June 7 with $45,167 (42.9 per cent of income) having been collected per family. The institute also offers a personal Tax Freedom Day calculator.
The institute publishes three magazines: Fraser Forum, a bi-monthly review of public policy in Canada; Perspectives, a French-language review of public policy in Quebec and la Francophonie; and Canadian Student Review, a look at current affairs written for students, by students.
In March 2010, the institute released Did Government Stimulus Fuel Economic Growth in Canada? An Analysis of Statistics Canada Data,
a report critical of the Harper government's Economic Action Plan,
concluding that the stimulus package did not have a material impact on
Canada's economic turnaround in the latter half of 2009.
Education programs
The
institute periodically hosts free seminars across Canada for students,
teachers, and journalists, focusing on key economic concepts and timely
issues in public policy. In 2010, the institute hosted eight one-day student seminars, attracting more than 775 participants.
The Fraser Institute also offers an internship program, to which more than 431 individuals applied in 2010.
Other initiatives
Children First
Canada's first privately funded program of its kind, Children First: School Choice Trust,
offers tuition assistance grants to help parents in financial need send
their children to an independent school of their choice.
The program was discontinued in 2012.
Donner Awards
Canada's largest non-profit recognition program, the Donner Canadian Foundation Awards for Excellence in the Delivery of Social Services
recognize non-profit social service agencies that, despite budget
limitations, excel in terms of management and service delivery. Winners
are selected every year in a variety of categories, and share in $60,000
prize money.
School Chain Showcase
A global database of school chains, the multilingual website allows anyone to connect with school chain operators around the world.
Governance
In April 2012, economist Niels Veldhuis was appointed president.
The institute is governed by a board of trustees. Current members of
the board include Peter Brown (chairman), Mark Mitchell (vice-chairman),
and Edward Belzberg (vice-chairman).
Associated people
The institute has attracted some well-known individuals to its ranks, including politicians such as former Reform Party of Canada leader Preston Manning, former Progressive Conservative Ontario premier Mike Harris, former Progressive Conservative Alberta premier Ralph Klein, and former Liberal Newfoundland & Labrador premier Brian Tobin. From 1979 to 1991, the institute's senior economist was Walter Block. Former Alberta Wildrose Party leader, now talk show host Danielle Smith, was associated with the Fraser Institute.
Criticism
According to an article published in CBC News Online, some people allege that Michael Walker helped set up the institute after he received financial backing from forestry giant MacMillan Bloedel, largely to counter British Columbia's NDP government, then led by premier Dave Barrett.
In late 1997, the institute set up a research program emulating the UK's Social Affairs Unit, called the Social Affairs Centre. Its founding director was Patrick Basham. The program's funding came from Rothmans International and Philip Morris. When Rothmans was bought by British American Tobacco (BAT) in 1999, its funding ended,
and in 2000 the institute wrote to BAT asking for $50,000 per year, to
be split between the Social Affairs Centre and the Centre for Risk and
Regulation. The letter highlighted the institute's 1999 publication Passive Smoke: The EPA's Betrayal of Science and Policy,
"which highlighted the absence of any scientific evidence for linking
cancer with second-hand smoke [and] received widespread media coverage
both in Canada and the United States". At this time the CEO of BAT's Canadian subsidiary, Imasco, was also on the Fraser Institute's board of trustees. The Fraser Institute ceased disclosing its sources of corporate funding in the 1980s.
In 1999, the Fraser Institute was criticized by health professionals and scientists for sponsoring two conferences on the tobacco industry entitled Junk Science, Junk Policy? Managing Risk and Regulation and Should Government Butt Out? The Pros and Cons of Tobacco Regulation.
Critics charged the institute was associating itself with the tobacco
industry's many attempts to discredit authentic scientific work.
A comparison of the healthcare systems in Canada and the United States is often made by government, public health and public policy analysts. The two countries had similar healthcare systems
before Canada changed its system in the 1960s and 1970s. The United
States spends much more money on healthcare than Canada, on both a
per-capita basis and as a percentage of GDP.
In 2006, per-capita spending for health care in Canada was US$3,678; in
the U.S., US$6,714. The U.S. spent 15.3% of GDP on healthcare in that
year; Canada spent 10.0%.
In 2006, 70% of healthcare spending in Canada was financed by
government, versus 46% in the United States. Total government spending
per capita in the U.S. on healthcare was 23% higher than Canadian
government spending. And U.S. government expenditure on healthcare was
just under 83% of total Canadian spending (public and private).
Studies have come to different conclusions about the result of
this disparity in spending. A 2007 review of all studies comparing
health outcomes in Canada and the US in a Canadian peer-reviewed medical
journal found that "health outcomes may be superior in patients cared
for in Canada versus the United States, but differences are not
consistent."
Some of the noted differences were a higher life expectancy in Canada,
as well as a lower infant mortality rate than the United States.
One commonly cited comparison, the 2000 World Health
Organization's ratings of "overall health service performance", which
used a "composite measure of achievement in the level of health, the
distribution of health, the level of responsiveness and fairness of
financial contribution", ranked Canada 30th and the US 37th among 191
member nations. This study rated the US "responsiveness", or quality of
service for individuals receiving treatment, as 1st, compared with 7th
for Canada. However, the average life expectancy for Canadians was
80.34 years compared with 78.6 years for residents of the US.
The WHO's study methods were criticized by some analyses.
While life-expectancy and infant mortality are commonly used in
comparing nationwide health care, they are in fact affected by many
factors other than the quality of a nation's health care system,
including individual behavior and population makeup. A 2007 report by the Congressional Research Service carefully summarizes some recent data and noted the "difficult research issues" facing international comparisons.
Government involvement
In
2004, government funding of healthcare in Canada was equivalent to
$1,893 per person. In the US, government spending per person was
$2,728.
The Canadian healthcare system is composed of at least 10 mostly
autonomous provincial healthcare systems that report to their provincial
governments, and a federal system which covers the military and First Nations. This causes a significant degree of variation in funding and coverage within the country.
History
Canada and the US had similar healthcare systems in the early 1960s, but now have a different mix of funding mechanisms. Canada's universal single-payer healthcare system covers about 70% of expenditures, and the Canada Health Act
requires that all insured persons be fully insured, without co-payments
or user fees, for all medically necessary hospital and physician care. About 91% of hospital expenditures and 99% of total physician services are financed by the public sector.
In the United States, with its mixed public-private system, 16% or 45
million American residents are uninsured at any one time. The U.S. is one of two OECD
countries not to have some form of universal health coverage, the other
being Turkey. Mexico established a universal healthcare program by
November 2008.
Health insurance
The governments of both nations are closely involved in healthcare. The central structural difference between the two is in health insurance.
In Canada, the federal government is committed to providing funding
support to its provincial governments for healthcare expenditures as
long as the province in question abides by accessibility guarantees as
set out in the Canada Health Act, which explicitly prohibits billing end users for procedures that are covered by Medicare.
While some label Canada's system as "socialized medicine", health
economists do not use that term. Unlike systems with public delivery,
such as the UK, the Canadian system provides public coverage for a
combination of public and private delivery. Princeton University health
economist Uwe E. Reinhardt says that single-payer systems are not
"socialized medicine" but "social insurance" systems, since providers
(such as doctors) are largely in the private sector.
Similarly, Canadian hospitals are controlled by private boards or
regional health authorities, rather than being part of government.
In the US, direct government funding of health care is limited to Medicare, Medicaid, and the State Children's Health Insurance Program
(SCHIP), which cover eligible senior citizens, the very poor, disabled
persons, and children. The federal government also runs the Veterans Administration,
which provides care directly to retired or disabled veterans, their
families, and survivors through medical centers and clinics.
The U.S. government also runs the Military Health System.
In fiscal year 2007, the MHS had a total budget of $39.4 billion and
served approximately 9.1 million beneficiaries, including active-duty
personnel and their families, and retirees and their families. The MHS
includes 133,000 personnel, 86,000 military and 47,000 civilian, working
at more than 1,000 locations worldwide, including 70 inpatient
facilities and 1,085 medical, dental, and veterans' clinics.
One study estimates that about 25 percent of the uninsured in the
U.S. are eligible for these programs but remain unenrolled; however,
extending coverage to all who are eligible remains a fiscal and
political challenge.
For everyone else, health insurance must be paid for privately.
Some 59% of U.S. residents have access to health care insurance through
employers, although this figure is decreasing, and coverages as well as
workers' expected contributions vary widely.
Those whose employers do not offer health insurance, as well as those
who are self-employed or unemployed, must purchase it on their own.
Nearly 27 million of the 45 million uninsured U.S. residents worked at
least part-time in 2007, and more than a third were in households that
earned $50,000 or more per year.
Funding
Despite
the greater role of private business in the US, federal and state
agencies are increasingly involved, paying about 45% of the $2.2
trillion the nation spent on medical care in 2004. The U.S. government spends more on healthcare than on Social Security and national defense combined, according to the Brookings Institution.
Beyond its direct spending, the US government is also highly
involved in healthcare through regulation and legislation. For example,
the Health Maintenance Organization Act of 1973 provided grants and loans to subsidize Health Maintenance Organizations
and contained provisions to stimulate their popularity. HMOs had been
declining before the law; by 2002 there were 500 such plans enrolling 76
million people.
The Canadian system has been 69–75% publicly funded,
though most services are delivered by private providers, including
physicians (although they may derive their revenue primarily from
government billings). Although some doctors work on a purely
fee-for-service basis (usually family physicians), some family
physicians and most specialists are paid through a combination of
fee-for-service and fixed contracts with hospitals or health service
management organizations.
Canada's universal health plans do not cover certain services. Non-cosmetic dental care
is covered for children up to age 14 in some provinces. Outpatient
prescription drugs are not required to be covered, but some provinces
have drug cost programs that cover most drug costs for certain
populations. In every province, seniors receiving the Guaranteed Income Supplement have significant additional coverage; some provinces expand forms of drug coverage to all seniors, low-income families, those on social assistance, or those with certain medical conditions. Some provinces cover all drug prescriptions over a certain portion of a family's income. Drug prices are also regulated, so brand-name prescription drugs are often significantly cheaper than in the U.S. Optometry is covered in some provinces and is sometimes covered only for children under a certain age.
Visits to non-physician specialists may require an additional fee.
Also, some procedures are only covered under certain circumstances. For
example, circumcision is not covered, and a fee is usually charged when a parent requests the procedure; however, if an infection or medical necessity arises, the procedure would be covered.
According to Dr. Albert Schumacher, former president of the
Canadian Medical Association, an estimated 75 percent of Canadian
healthcare services are delivered privately, but funded publicly.
Frontline practitioners whether they're GPs or
specialists by and large are not salaried. They're small hardware
stores. Same thing with labs and radiology clinics ... The situation we
are seeing now are more services around not being funded publicly but
people having to pay for them, or their insurance companies. We have
sort of a passive privatization.
Coverage and access
There
is a significant difference in coverage for medical care in Canada and
the United States. In Canada, all citizens and permanent residents are
covered by the health care system, while in the United States, studies
suggest that 7% of U.S. citizens do not have adequate health insurance,
if any at all.
In both Canada and the United States, access can be a problem. In
Canada, 5% of Canadian residents have not been able to find a regular
doctor, with a further 9% having never looked for one. In such cases,
however, they continue to have coverage for options such as walk-in
clinics or emergency rooms. The U.S. data is evidenced in a 2007
Consumer Reports study on the U.S. health care system which showed that
the underinsured account for 4% of the U.S. population and live with
skeletal health insurance that barely covers their medical needs and
leaves them unprepared to pay for major medical expenses. The Canadian
data comes from the 2003 Canadian Community Health Survey,
In the U.S., the federal government does not guarantee universal healthcare to all its citizens, but publicly funded healthcare programs help to provide for the elderly, disabled, the poor, and children. The Emergency Medical Treatment and Active Labor Act or EMTALA also ensures public access to emergency services.
The EMTALA law forces emergency healthcare providers to stabilize an
emergency health crisis and cannot withhold treatment for lack of
evidence of insurance coverage or other evidence of the ability to pay.
EMTALA does not absolve the person receiving emergency care of the
obligation to meet the cost of emergency healthcare not paid for at the
time and it is still within the right of the hospital to pursue any
debtor for the cost of emergency care provided. In Canada, emergency
room treatment for legal Canadian residents is not charged to the
patient at time of service but is met by the government.
According to the United States Census Bureau, 59.3% of U.S. citizens have health insurance
related to employment, 27.8% have government-provided health-insurance;
nearly 9% purchase health insurance directly (there is some overlap in
these figures), and 15.3% (45.7 million) were uninsured in 2007. An estimated 25 percent of the uninsured are eligible for government programs but unenrolled. About a third of the uninsured are in households earning more than $50,000 annually.
A 2003 report by the Congressional Budget Office found that many
people lack health insurance only temporarily, such as after leaving one
employer and before a new job. The number of chronically uninsured
(uninsured all year) was estimated at between 21 and 31 million in 1998.
Another study, by the Kaiser Commission on Medicaid and the Uninsured,
estimated that 59 percent of uninsured adults have been uninsured for at
least two years. One indicator of the consequences of Americans' inconsistent health care coverage is a study in Health Affairs that concluded that half of personal bankruptcies involved medical bills. Although other sources dispute this, it is possible that medical debt is the principal cause of bankruptcy in the United States.
A number of clinics
provide free or low-cost non-emergency care to poor, uninsured
patients. The National Association of Free Clinics claims that its
member clinics provide $3 billion in services to some 3.5 million
patients annually.
A peer-reviewed comparison study of healthcare access in the two
countries published in 2006 concluded that U.S. residents are one third
less likely to have a regular medical doctor (80% vs 85%), one fourth
more likely to have unmet healthcare needs (13% vs 11%), and are more
than twice as likely to forgo needed medicines (1.7% vs 2.6%).
The study noted that access problems "were particularly dire for the US
uninsured." Those who lack insurance in the U.S. were much less
satisfied, less likely to have seen a doctor, and more likely to have
been unable to receive desired care than both Canadians and insured
Americans.
Another cross-country study compared access to care based on immigrant status in Canada and the U.S.
Findings showed that in both countries, immigrants had worse access to
care than non-immigrants. Specifically, immigrants living in Canada were
less likely to have timely Pap tests compared with native-born
Canadians; in addition, immigrants in the U.S. were less likely to have a
regular medical doctor and an annual consultation with a health care
provider compared with native-born Americans. In general, immigrants in
Canada had better access to care than those in the U.S., but most of the
differences were explained by differences in socioeconomic status
(income, education) and insurance coverage across the two countries.
However, immigrants in the U.S. were more likely to have timely Pap
tests than immigrants in Canada.
Cato Institute
has expressed concerns that the U.S. government has restricted the
freedom of Medicare patients to spend their own money on healthcare, and
has contrasted these developments with the situation in Canada, where
in 2005 the Supreme Court of Canada ruled that the province of Quebec
could not prohibit its citizens from purchasing covered services through
private health insurance. The institute has urged the Congress to
restore the right of American seniors to spend their own money on
medical care.
Coverage for mental health
The Canada Health Act covers the services of psychiatrists, who are medical doctors with additional training in psychiatry but does not cover treatment by a psychologist or psychotherapist unless the practitioner is also a medical doctor. Goods and Services Tax or Harmonized Sales Tax (depending on the province) applies to the services of psychotherapists.
Some provincial or territorial programs and some private insurance
plans may cover the services of psychologists and psychotherapists, but
there is no federal mandate for such services in Canada. In the U.S.,
the Affordable Care Act
includes prevention, early intervention, and treatment of mental and/or
substance use disorders as an "essential health benefit" (EHB) that
must be covered by health plans that are offered through the Health Insurance Marketplace.
Under the Affordable Care Act, most health plans must also cover
certain preventive services without a copayment, co-insurance, or
deductible.
In addition, the U.S. Mental Health Parity and Addiction Equity Act
(MHPAEA) of 2008 mandates "parity" between mental health and/or
substance use disorder (MH/SUD) benefits and medical/surgical benefits
covered by a health plan. Under that law, if a health care plan offers
mental health and/or substance use disorder benefits, it must offer the
benefits on par with the other medical/surgical benefits it covers.
Wait times
One
complaint about both the U.S. and Canadian systems is waiting times,
whether for a specialist, major elective surgery, such as hip replacement, or specialized treatments, such as radiation for breast cancer;
wait times in each country are affected by various factors. In the
United States, access is primarily determined by whether a person has
access to funding to pay for treatment and by the availability of
services in the area and by the willingness of the provider to deliver
service at the price set by the insurer. In Canada, the wait time is set
according to the availability of services in the area and by the
relative need of the person needing treatment.
As reported by the Health Council of Canada,
a 2010 Commonwealth survey found that 39% of Canadians waited 2 hours
or more in the emergency room, versus 31% in the U.S.; 43% waited 4
weeks or more to see a specialist, versus 10% in the U.S. The same
survey states that 37% of Canadians say it is difficult to access care
after hours (evenings, weekends or holidays) without going to the
emergency department compared to over 34% of Americans. Furthermore,
47% of Canadians and 50% of Americans who visited emergency departments
over the past two years feel that they could have been treated at their
normal place of care if they were able to get an appointment.
A 2018 survey conducted by the Fraser Institute,
a conservative public policy think tank, found that wait times in
Canada for a variety of medical procedures reached "an all-time high". Appointment duration (meeting with physicians) averaged under two minutes.
These very fast appointments are a result of physicians attempting to
accommodate for the number of patients using the medical system. In
these appointments, however, diagnoses or prescriptions were rarely
given, where the patients instead were almost always referred to
specialists to receive treatment for their medical issues. Patients in
Canada waited an average of 19.8 weeks to receive treatment, regardless
of whether they were able to see a specialist or not.
In the U.S. the average wait time for a first-time appointment is 24
days (≈3 times faster than in Canada); wait times for Emergency Room
(ER) services averaged 24 minutes (more than 4x faster than in Canada);
wait times for specialists averaged between 3–6.4 weeks (over 6x faster
than in Canada).
It must be noted that the PNHP identified statistical issues with the
Fraser Institute's reporting. Namely, the report relies on a survey of
Canadian physicians with a response rate of 15.8%. Distributing these
responses amongst the 12 specialties and ten provinces results in
single-digit tallies for 63 per cent of the categories, and often only
one physician falling into a given category. The much more credible
study from the Canadian Institute for Health Information confirms that
Canada is doing quite well in delivering care within medically
recommended wait times.
In the U.S., patients on Medicaid,
the low-income government programs, can wait up to a maximum of 12
weeks to see specialists (12 weeks less than the average wait time in
Canada). Because Medicaid payments are low, some have claimed that some
doctors do not want to see Medicaid patients in Canada. For example, in Benton Harbor, Michigan,
specialists agreed to spend one afternoon every week or two at a
Medicaid clinic, which meant that Medicaid patients had to make
appointments not at the doctor's office, but at the clinic, where
appointments had to be booked months in advance. A 2009 study found that on average the wait in the United States to see a medical specialist is 20.5 days.
In a 2009 survey of physician appointment wait times in the
United States, the average wait time for an appointment with an
orthopedic surgeon in the country as a whole was 17 days. In Dallas,
Texas the wait was 45 days (the longest wait being 365 days).
Nationwide across the U.S. the average wait time to see a family doctor
was 20 days. The average wait time to see a family practitioner in Los
Angeles, California was 59 days and in Boston, Massachusetts it was 63
days.
Studies by the Commonwealth Fund
found that 42% of Canadians waited 2 hours or more in the emergency
room, vs. 29% in the U.S.; 57% waited 4 weeks or more to see a
specialist, vs. 23% in the U.S., but Canadians had more chances of
getting medical attention at nights, or on weekends and holidays than
their American neighbors without the need to visit an ER (54% compared
to 61%).
Statistics from the Fraser Institute in 2008 indicate that the average
wait time between the time when a general practitioner refers a patient
for care and the receipt of treatment was almost four and a half months
in 2008, roughly double what it had been 15 years before.
A 2003 survey of hospital administrators conducted in Canada, the
U.S., and three other countries found dissatisfaction with both the
U.S. and Canadian systems. For example, 21% of Canadian hospital
administrators, but less than 1% of American administrators, said that
it would take over three weeks to do a biopsy for possible breast cancer
on a 50-year-old woman; 50% of Canadian administrators versus none of
their American counterparts said that it would take over six months for a
65-year-old to undergo a routine hip replacement surgery. However, U.S.
administrators were the most negative about their country's system.
Hospital executives in all five countries expressed concerns about
staffing shortages and emergency department waiting times and quality.
In a letter to The Wall Street Journal, Robert Bell, the President and CEO of University Health Network, Toronto, said that Michael Moore's film Sicko
"exaggerated the performance of the Canadian health system — there is
no doubt that too many patients still stay in our emergency departments
waiting for admission to scarce hospital beds." However, "Canadians
spend about 55% of what Americans spend on health care and have longer
life expectancy and lower infant mortality rates. Many Americans have
access to quality healthcare. All Canadians have access to similar care
at a considerably lower cost." There is "no question" that the lower
cost has come at the cost of "restriction of supply with sub-optimal
access to services," said Bell. A new approach is targeting waiting
times, which are reported on public websites.
In 2007 Shona Holmes, a Waterdown, Ontario woman who had a Rathke's cleft cyst removed at the Mayo Clinic in Arizona, sued the Ontario government for failing to reimburse her $95,000 in medical expenses.
Holmes had characterized her condition as an emergency, said she was
losing her sight and portrayed her condition as a life-threatening brain
cancer.
In July 2009 Holmes agreed to appear in television ads broadcast in the
United States warning Americans of the dangers of adopting a
Canadian-style health care system. The ads she appeared in triggered
debates on both sides of the border. After her ad appeared critics
pointed out discrepancies in her story, including that Rathke's cleft cyst, the condition she was treated for, was not a form of cancer, and was not life-threatening.
Price of health care and administration overheads
Healthcare
is one of the most expensive items of both nations' budgets. In the
United States, the various levels of government spend more per capita
than levels of government do in Canada. In 2004, Canada
government-spending was $2,120 (in US dollars) per person, while the
United States government-spending was $2,724.
Administrative costs are also higher in the United States than in Canada.
A 1999 report found that after exclusions, administration accounted for
31.0% of healthcare expenditures in the United States, as compared with
16.7% in Canada. In looking at the insurance element, in Canada, the
provincial single-payer insurance system operated with overheads of
1.3%, comparing favourably with private insurance overheads (13.2%),
U.S. private insurance overheads (11.7%) and U.S. Medicare and Medicaid
program overheads (3.6% and 6.8% respectively). The report concluded by
observing that gap between U.S. and Canadian spending on administration
had grown to $752 per capita and that a large sum might be saved in the
United States if the U.S. implemented a Canadian-style system.
However, U.S. government spending covers less than half of all
healthcare costs. Private spending is also far greater in the U.S. than
in Canada. In Canada, an average of $917 was spent annually by
individuals or private insurance companies for health care, including
dental, eye care, and drugs. In the U.S., this sum is $3,372. In 2006, healthcare consumed 15.3% of U.S. annual GDP. In Canada, 10% of GDP was spent on healthcare.
This difference is a relatively recent development. In 1971 the nations
were much closer, with Canada spending 7.1% of GDP while the U.S. spent
7.6%.
Some who advocate against greater government involvement in
healthcare have asserted that the difference in costs between the two
nations is partially explained by the differences in their demographics. Illegal immigrants, more prevalent in the U.S. than in Canada,
also add a burden to the system, as many of them do not carry health
insurance and rely on emergency rooms — which are legally required to
treat them under EMTALA — as a principal source of care. In Colorado, for example, an estimated 80% of undocumented immigrants do not have health insurance.
The mixed system in the United States has become more similar to the Canadian system. In recent decades, managed care
has become prevalent in the United States, with some 90% of privately
insured Americans belonging to plans with some form of managed care. In managed care,
insurance companies control patients' health care to reduce costs, for
instance by demanding a second opinion prior to some expensive
treatments or by denying coverage for treatments not considered worth
their cost.
Through all entities in its public–private system, the US spends more per capita than any other nation in the world, but is the only wealthy industrialized country in the world that lacks some form of universal healthcare.
In March 2010, the US Congress passed regulatory reform of the American
'health insurance system. However, since this legislation is not
fundamental healthcare reform, it is unclear what its effect will be and
as the new legislation is implemented in stages, with the last
provision in effect in 2018, it will be some years before any empirical
evaluation of the full effects on the comparison could be determined.
Healthcare costs in both countries are rising faster than inflation. As both countries consider changes to their systems, there is debate
over whether resources should be added to the public or private sector.
Although Canadians and Americans have each looked to the other for ways
to improve their respective health care systems, there exists a substantial amount of conflicting information regarding the relative merits of the two systems. In the U.S., Canada's mostly monopsonistic health system is seen by different sides of the ideological spectrum as either a model to be followed or avoided.
Medical professionals
Some of the extra money spent in the United States goes to physicians, nurses, and other medical professionals. According to health data collected by the OECD, average income for physicians in the United States in 1996 was nearly twice that for physicians in Canada. In 2012, the gross average salary for doctors in Canada was CDN$328,000. Out of the gross amount, doctors pay for taxes, rent, staff salaries and equipment. In Canada, less than half of doctors are specialists whereas more than 70% of doctors are specialists in the U.S.
Canada has fewer doctors per capita than the United States. In
the U.S, there were 2.4 doctors per 1,000 people in 2005; in Canada,
there were 2.2.
Some doctors leave Canada to pursue career goals or higher pay in the
U.S., though significant numbers of physicians from countries such as
China, India, Pakistan and South Africa immigrate to practice in Canada.
Many Canadian physicians and new medical graduates also go to the U.S.
for post-graduate training in medical residencies. As it is a much
larger market, new and cutting-edge sub-specialties are more widely
available in the U.S. as opposed to Canada. However, statistics
published in 2005 by the Canadian Institute for Health Information
(CIHI), show that, for the first time since 1969 (the period for which
data are available), more physicians returned to Canada than moved
abroad.
Drugs
Both Canada
and the United States have limited programs to provide prescription
drugs to the needy. In the U.S., the introduction of Medicare Part D
has extended partial coverage for pharmaceuticals to Medicare
beneficiaries. In Canada all drugs given in hospitals fall under
Medicare, but other prescriptions do not. The provinces all have some
programs to help the poor and seniors have access to drugs, but while
there have been calls to create one, no national program exists. About two thirds of Canadians have private prescription drug coverage, mostly through their employers.
In both countries, there is a significant population not fully covered
by these programs. A 2005 study found that 20% of Canada's and 40% of
America's sicker adults did not fill a prescription because of cost.
Furthermore, the 2010 Commonwealth Fund International Health
Policy Survey indicates that 4% of Canadians indicated that they did not
visit a doctor because of cost compared with 22% of Americans.
Additionally, 21% of Americans have said that they did not fill a
prescription for medicine or have skipped doses due to cost. That is
compared with 10% of Canadians.
One of the most important differences between the two countries
is the much higher cost of drugs in the United States. In the U.S., $728
per capita is spent each year on drugs, while in Canada it is $509.
At the same time, consumption is higher in Canada, with about 12
prescriptions being filled per person each year in Canada and 10.6 in
the United States.
The main difference is that patented drug prices in Canada average
between 35% and 45% lower than in the United States, though generic
prices are higher.
The price differential for brand-name drugs between the two countries
has led Americans to purchase upward of $1 billion US in drugs per year
from Canadian pharmacies.
There are several reasons for the disparity. The Canadian system
takes advantage of centralized buying by the provincial governments that
have more market heft and buy in bulk, lowering prices. By contrast,
the U.S. has explicit laws that prohibit Medicare or Medicaid
from negotiating drug prices. In addition, price negotiations by
Canadian health insurers are based on evaluations of the clinical
effectiveness of prescription drugs,
allowing the relative prices of therapeutically similar drugs to be
considered in context. The Canadian Patented Medicine Prices Review
Board also has the authority to set a fair and reasonable price on
patented products, either comparing it to similar drugs already on the
market, or by taking the average price in seven developed nations.
Prices are also lowered through more limited patent protection in
Canada. In the U.S., a drug patent may be extended five years to make up
for time lost in development. Some generic drugs are thus available on Canadian shelves sooner.
The pharmaceutical industry is important in both countries,
though both are net importers of drugs. Both countries spend about the
same amount of their GDP on pharmaceutical research, about 0.1% annually
Technology
The United States spends more on technology than Canada. In a 2004 study on medical imaging in Canada, it was found that Canada had 4.6 MRI scanners per million population while the U.S. had 19.5 per million. Canada's 10.3 CT scanners per million also ranked behind the U.S., which had 29.5 per million.
The study did not attempt to assess whether the difference in the
number of MRI and CT scanners had any effect on the medical outcomes or
were a result of overcapacity but did observe that MRI scanners are used
more intensively in Canada than either the U.S. or Great Britain.
This disparity in the availability of technology, some believe, results
in longer wait times. In 1984 wait times of up to 22 months for an MRI were alleged in Saskatchewan.
However, according to more recent official statistics (2007), all
emergency patients receive MRIs within 24 hours, those classified as
urgent receive them in under 3 weeks and the maximum elective wait time
is 19 weeks in Regina and 26 weeks in Saskatoon, the province's two
largest metropolitan areas.
According to the Health Council of Canada's 2010 report
"Decisions, Decisions: Family doctors as gatekeepers to prescription
drugs and diagnostic imaging in Canada", the Canadian federal government
invested $3 billion over 5 years (2000–2005) in relation to diagnostic
imaging and agreed to invest a further $2 billion to reduce wait times.
These investments led to an increase in the number of scanners across
Canada as well as the number of exams being performed. The number of CT
scanners increased from 198 to 465 and MRI scanners increased from 19
to 266 (more than tenfold) between 1990 and 2009. Similarly, the number
of CT exams increased by 58% and MRI exams increased by 100% between
2003 and 2009. In comparison to other OECD countries, including the US,
Canada's rates of MRI and CT exams falls somewhere in the middle.
Nevertheless, the Canadian Association of Radiologists claims that as
many as 30% of diagnostic imaging scans are inappropriate and contribute
no useful information.
Malpractice litigation
The extra cost of malpractice lawsuits is a proportion of health spending in both the U.S. (1.7% in 2002)
and Canada (0.27% in 2001 or $237 million). In Canada the total cost of
settlements, legal fees, and insurance comes to $4 per person each
year,
but in the United States it is over $16. Average payouts to American
plaintiffs were $265,103, while payouts to Canadian plaintiffs were
somewhat higher, averaging $309,417. However, malpractice suits are far more common in the U.S., with 350% more suits filed each year per person.
While malpractice costs are significantly higher in the U.S., they
constitute a small proportion of total medical spending. The total cost
of defending and settling malpractice lawsuits in the U.S. in 2004 was
over $28 billion. Critics say that defensive medicine consumes up to 9% of American healthcare expenses, but CBO studies suggest that it is much smaller.
Ancillary expenses
There
are a number of ancillary costs that are higher in the U.S.
Administrative costs are significantly higher in the U.S.; government
mandates on record keeping and the diversity of insurers, plans and
administrative layers involved in every transaction result in greater
administrative effort. One recent study comparing administrative costs
in the two countries found that these costs in the U.S. are roughly
double what they are in Canada.
Another ancillary cost is marketing, both by insurance companies and
health care providers. These costs are higher in the U.S., contributing
to higher overall costs in that nation.
Healthcare outcomes
In the World Health Organization's rankings of healthcare system performance
among 191 member nations published in 2000, Canada ranked 30th and the
U.S. 37th, while the overall health of Canadians was ranked 35th and
Americans 72nd.
However, the WHO's methodologies, which attempted to measure how
efficiently health systems translate expenditure into health, generated
broad debate and criticism.
Researchers caution against inferring healthcare quality from
some health statistics. June O'Neill and Dave O'Neill point out that
"...life expectancy and infant mortality
are both poor measures of the efficacy of a health care system because
they are influenced by many factors that are unrelated to the quality
and accessibility of medical care".
In 2007, Gordon H. Guyatt et al. conducted a meta-analysis, or
systematic review, of all studies that compared health outcomes for
similar conditions in Canada and the U.S., in Open Medicine, an
open-access peer-reviewed Canadian medical journal. They concluded,
"Available studies suggest that health outcomes may be superior in
patients cared for in Canada versus the United States, but differences
are not consistent." Guyatt identified 38 studies addressing conditions
including cancer, coronary artery disease, chronic medical illnesses and
surgical procedures. Of 10 studies with the strongest statistical
validity, 5 favoured Canada, 2 favoured the United States, and 3 were
equivalent or mixed. Of 28 weaker studies, 9 favoured Canada, 3 favoured
the United States, and 16 were equivalent or mixed. Overall, results
for mortality favoured Canada with a 5% advantage, but the results were
weak and varied. The only consistent pattern was that Canadian patients
fared better in kidney failure.
In terms of population health, life expectancy
in 2006 was about two and a half years longer in Canada, with Canadians
living to an average of 79.9 years and Americans 77.5 years. Infant and child mortality rates are also higher in the U.S.
Some comparisons suggest that the American system underperforms
Canada's system as well as those of other industrialized nations with
universal coverage.
For example, a ranking by the World Health Organization of health care
system performance among 191 member nations, published in 2000, ranked
Canada 30th and the U.S. 37th, and the overall health of Canada 35th to
the American 72nd. The WHO did not merely consider health care outcomes, but also placed heavy emphasis on the health disparities
between rich and poor, funding for the health care needs of the poor,
and the extent to which a country was reaching the potential health care
outcomes they believed were possible for that nation. In an
international comparison of 21 more specific quality indicators
conducted by the Commonwealth Fund International Working Group on
Quality Indicators, the results were more divided. One of the indicators
was a tie, and in 3 others, data was unavailable from one country or
the other. Canada performed better on 11 indicators; such as survival
rates for colorectal cancer, childhood leukemia,
and kidney and liver transplants. The U.S. performed better on 6
indicators, including survival rates for breast and cervical cancer, and
avoidance of childhood diseases such as pertussis and measles. The 21
indicators were distilled from a starting list of 1000. The authors
state that, "It is an opportunistic list, rather than a comprehensive
list."
While a Canadian systematic review
stated that the differences in the systems of Canada and the United
States could not alone explain differences in healthcare outcomes,
the study didn't consider that over 44,000 Americans die every year due
to not having a single payer system for healthcare in the United States
and it didn't consider the millions more that live without proper
medical care due to a lack of insurance.
The United States and Canada have different racial makeups,
different obesity rates and different alcoholism rates, which would
likely cause the US to have a shorter average life expectancy and higher
infant mortality even with equal healthcare provided. The US population
is 12.2% African Americans and 16.3% Hispanic Americans (2010 Census),
whereas Canada has 2.5% African Canadians and 0.97% Hispanic Canadians
(2006 Census). African Americans have higher mortality rates than any
other racial or ethnic group for eight of the top ten causes of death. The cancer incidence rate among African Americans is 10% higher than among European Americans. U.S. Latinos have higher rates of death from diabetes, liver disease, and infectious diseases than do non-Latinos. Adult African Americans and Latinos have approximately twice the risk as European Americans of developing diabetes. The infant mortality rates for African Americans is twice that of whites.
Unfortunately, directly comparing infant mortality rates between
countries is difficult, as countries have different definitions of what
qualifies as an infant death.
Another issue with comparing the two systems is the baseline
health of the patients for which the systems must treat. Canada's
obesity rate of 14.3% is about half of that of the United States 30.6%. On average, obesity reduces life expectancy by 6–7 years.
A 2004 study found that Canada had a slightly higher mortality rate for acute myocardial infarction (heart attack) because of the more conservative Canadian approach to revascularizing (opening) coronary arteries.
Cancer
Numerous
studies have attempted to compare the rates of cancer incidence and
mortality in Canada and the U.S., with varying results. Doctors who
study cancer epidemiology warn that the diagnosis of cancer is
subjective, and the reported incidence of a cancer will rise if screening is more aggressive, even if the real
cancer incidence is the same. Statistics from different sources may
not be compatible if they were collected in different ways. The proper
interpretation of cancer statistics has been an important issue for many
years. Dr. Barry Kramer of the National Institutes of Health
points to the fact that cancer incidence rose sharply over the past few
decades as screening became more common. He attributes the rise to
increased detection of benign early stage cancers that pose little risk
of metastasizing.
Furthermore, though patients who were treated for these benign cancers
were at little risk, they often have trouble finding health insurance
after the fact.
Cancer survival time increases with later years of diagnosis,
because cancer treatment improves, so cancer survival statistics can
only be compared for cohorts in the same diagnosis year. For example, as
doctors in British Columbia adopted new treatments, survival time for
patients with metastatic breast cancer increased from 438 days for those
diagnosed in 1991–1992, to 667 days for those diagnosed in 1999–2001.
An assessment by Health Canada found that cancer mortality rates are almost identical in the two countries.
Another international comparison by the National Cancer Institute of
Canada indicated that incidence rates for most, but not all, cancers
were higher in the U.S. than in Canada during the period studied
(1993–1997). Incidence rates for certain types, such as colorectal and
stomach cancer, were actually higher in Canada than in the U.S.
In 2004, researchers published a study comparing health outcomes in the
Anglo countries. Their analysis indicates that Canada has greater
survival rates for both colorectal cancer and childhood leukemia, while
the United States has greater survival rates for Non-Hodgkin's lymphoma
as well as breast and cervical cancer.
A study based on data from 1978 through 1986 found very similar survival rates in both the United States and in Canada. However, a study based on data from 1993 through 1997 found lower cancer survival rates among Canadians than among Americans.
A few comparative studies have found that cancer survival rates
vary more widely among different populations in the U.S. than they do in
Canada. Mackillop and colleagues compared cancer survival rates in
Ontario and the U.S. They found that cancer survival was more strongly
correlated with socio-economic class in the U.S. than in Ontario.
Furthermore, they found that the American survival advantage in the four
highest quintiles was statistically significant. They strongly
suspected that the difference due to prostate cancer was a result of
greater detection of asymptomatic cases in the U.S. Their data
indicates that neglecting the prostate cancer data reduces the American
advantage in the four highest quintiles and gives Canada a statistically
significant advantage in the lowest quintile. Similarly, they believe
differences in screening mammography may explain part of the American
advantage in breast cancer. Exclusion of breast and prostate cancer
data results in very similar survival rates for both countries.
Hsing et al. found that prostate cancer mortality incidence rate
ratios were lower among U.S. whites than among any of the nationalities
included in their study, including Canadians. U.S. African Americans in
the study had lower rates than any group except for Canadians and U.S.
whites.
Echoing the concerns of Dr. Kramer and Professor Mackillop, Hsing later
wrote that reported prostate cancer incidence depends on screening.
Among whites in the U.S., the death rate for prostate cancer remained
constant, even though the incidence increased, so the additional
reported prostate cancers did not represent an increase in real prostate
cancers, said Hsing. Similarly, the death rates from prostate cancer in
the U.S. increased during the 1980s and peaked in early 1990. This is
at least partially due to "attribution bias" on death certificates,
where doctors are more likely to ascribe a death to prostate cancer than
to other diseases that affected the patient, because of greater
awareness of prostate cancer or other reasons.
Because health status is "considerably affected" by socioeconomic
and demographic characteristics, such as level of education and income,
"the value of comparisons in isolating the impact of the healthcare
system on outcomes is limited," according to health care analysts. Experts say that the incidence and mortality rates of cancer cannot be combined to calculate survival from cancer.
Nevertheless, researchers have used the ratio of mortality to
incidence rates as one measure of the effectiveness of healthcare. Data for both studies was collected from registries that are members of the North American Association of Central Cancer Registries, an organization dedicated to developing and promoting uniform data standards for cancer registration in North America.
Racial and ethnic differences
The
U.S. and Canada differ substantially in their demographics, and these
differences may contribute to differences in health outcomes between the
two nations. Although both countries have white majorities, Canada has a proportionately larger immigrant minority population. Furthermore, the relative size of different ethnic and racial groups vary widely in each country. Hispanics and peoples of African descent constitute a much larger proportion of the U.S. population. Non-Hispanic North American aboriginal peoples constitute a much larger proportion of the Canadian population. Canada also has a proportionally larger South Asian and East Asian population. Also, the proportion of each population that is immigrant is higher in Canada.
A study comparing aboriginal mortality rates in Canada, the U.S.
and New Zealand found that aboriginals in all three countries had
greater mortality rates and shorter life expectancies than the white
majorities.
That study also found that aboriginals in Canada had both shorter life
expectancies and greater infant mortality rates than aboriginals in the
United States and New Zealand. The health outcome differences between
aboriginals and whites in Canada was also larger than in the United
States.
Though few studies have been published concerning the health of Black Canadians, health disparities between whites and African Americans in the U.S. have received intense scrutiny.
African Americans in the U.S. have significantly greater rates of
cancer incidence and mortality. Drs. Singh and Yu found that neonatal
and postnatal mortality rates for American African Americans are more
than double the non-Hispanic white rate.
This difference persisted even after controlling for household income
and was greatest in the highest income quintile. A Canadian study also
found differences in neonatal mortality between different racial and
ethnic groups.
Although Canadians of African descent had a greater mortality rate
than whites in that study, the rate was somewhat less than double the
white rate.
The racially heterogeneous Hispanic population in the U.S. has
also been the subject of several studies. Although members of this
group are significantly more likely to live in poverty than are
non-Hispanic whites, they often have disease rates that are comparable
to or better than the non-Hispanic white majority. Hispanics have lower
cancer incidence and mortality, lower infant mortality, and lower rates
of neural tube defects.
Singh and Yu found that infant mortality among Hispanic sub-groups
varied with the racial composition of that group. The mostly white
Cuban population had a neonatal mortality rate (NMR) nearly identical
to that found in non-Hispanic whites and a postnatal mortality rate
(PMR) that was somewhat lower. The largely Mestizo, Mexican, Central, and South American Hispanic populations had somewhat lower NMR and PMR. The Puerto Ricans who have a mix of white and African ancestry had higher NMR and PMR rates.
Impact on economy
This graph depicts gross U.S. health care spending from 1960 to 2008.
In 2002, automotive companies claimed that the universal system in Canada saved labour costs. In 2004, healthcare cost General Motors $5.8 billion, and increased to $7 billion. The UAW also claimed that the resulting escalating healthcare premiums reduced workers' bargaining powers.
Flexibility
In Canada, increasing demands for healthcare, due to the aging population, must be met by either increasing taxes or reducing other government programs. In the United States, under the current system, more of the burden will be taken up by the private sector and individuals.
Since 1998, Canada's successive multibillion-dollar budget
surpluses have allowed a significant injection of new funding to the
healthcare system, with the stated goal of reducing waiting times for
treatment. However, this may be hampered by the return to deficit spending as of the 2009 Canadian federal budget.
One historical problem with the U.S. system was known as job lock,
in which people become tied to their jobs for fear of losing their
health insurance. This reduces the flexibility of the labor market. Federal legislation passed since the mid-1980s, particularly COBRA and HIPAA, has been aimed at reducing job lock. However, providers of group health insurance in many states are permitted to use experience rating
and it remains legal in the United States for prospective employers to
investigate a job candidate's health and past health claims as part of a
hiring decision. Someone who has recently been diagnosed with cancer, for example, may face job lock
not out of fear of losing their health insurance, but based on
prospective employers not wanting to add the cost of treating that
illness to their own health insurance pool, for fear of future insurance
rate increases. Thus, being diagnosed with an illness can cause someone
to be forced to stay in their current job.
Politics of health
Politics of each country
More imaginative solutions in both countries have come from the sub-national level.
Canada
In Canada, the right-wing and now defunct Reform Party and its successor, the Conservative Party of Canada
considered increasing the role of the private sector in the Canadian
system. Public backlash caused these plans to be abandoned, and the
Conservative government that followed re-affirmed its commitment to
universal public medicine.
In Canada, it was Alberta
under the Conservative government that had experimented most with
increasing the role of the private sector in healthcare. Measures
included the introduction of private clinics allowed to bill patients
for some of the cost of a procedure, as well as 'boutique' clinics
offering tailored personal care for a fixed preliminary annual fee.
In 2006, Massachusetts adopted a plan
that vastly reduced the number of uninsured making it the state with
the lowest percentage of non-insured residents in the union. It requires
everyone to buy insurance and subsidizes insurance costs for lower
income people on a sliding scale. Some have claimed that the state's program is unaffordable, which the state itself says is "a commonly repeated myth".
In 2009, in a minor amendment, the plan did eliminate dental, hospice
and skilled nursing care for certain categories of noncitizens covering
30,000 people (victims of human trafficking and domestic violence,
applicants for asylum and refugees) who do pay taxes.
In July 2009, Connecticut passed into law a plan called SustiNet, with the goal of achieving health care coverage of 98% of its residents by 2014.
The
Canada Health Act of 1984 "does not directly bar private delivery or
private insurance for publicly insured services," but provides financial
disincentives for doing so. "Although there are laws prohibiting or
curtailing private health care in some provinces, they can be changed,"
according to a report in the New England Journal of Medicine.
Governments attempt to control health care costs by being the sole
purchasers and thus they do not allow private patients to bid up prices.
Those with non-emergency illnesses such as cancer cannot pay out of
pocket for time-sensitive surgeries and must wait their turn on waiting
lists. According to the Canadian Supreme Court in its 2005 ruling in Chaoulli v. Quebec, waiting list delays "increase the patient's risk of mortality or the risk that his or her injuries will become irreparable."
The ruling found that a Quebec provincial ban on private health
insurance was unlawful, because it was contrary to Quebec's own
legislative act, the 1975 Charter of Human Rights and Freedoms.
Consumer-driven healthcare
In the United States, Congress has enacted laws to promote consumer-driven healthcare with health savings accounts (HSAs), which were created by the Medicare bill signed by PresidentGeorge W. Bush on December 8, 2003. HSAs are designed to provide tax incentives
for individuals to save for future qualified medical and retiree health
expenses. Money placed in such accounts is tax-free. To qualify for
HSAs, individuals must carry a high-deductible health plan (HDHP). The higher deductible
shifts some of the financial responsibility for health care from
insurance providers to the consumer. This shift towards a market-based
system with greater individual responsibility increased the differences
between the US and Canadian systems.
Some economists who have studied proposals for universal
healthcare worry that the consumer driven healthcare movement will
reduce the social redistributive effects of insurance that pools
high-risk and low-risk people together. This concern was one of the
driving factors behind a provision of the Patient Protection and Affordable Care Act, informally known as Obamacare,
which limited the types of purchases which could be made with HSA
funds. For example, as of January 1, 2011, these funds can no longer be
used to buy over-the-counter drugs without a medical prescription.
IRS location sign on Constitution Avenue, Washington, D.C.
The IRS originates from the Commissioner of Internal Revenue, a federal office created in 1862 to assess the nation's first income tax to fund the American Civil War.
The temporary measure provided over a fifth of the Union's war expenses
before being allowed to expire a decade later. In 1913, the Sixteenth Amendment to the U.S. Constitution was ratified authorizing Congress to impose a tax on income, and the Bureau of Internal Revenue
was established. In 1953, the agency was renamed the Internal Revenue
Service, and in subsequent decades underwent numerous reforms and
reorganizations, most significantly in the 1990s.
Since its establishment, the IRS has been responsible for
collecting most of the revenue needed to fund the federal government,
albeit while facing periodic controversy and opposition over its
methods, constitutionality, and the principle of taxation generally. In
recent years the agency has struggled with budget cuts and reduced
morale.
As of 2018, it saw a 15 percent reduction in its workforce, including a
decline of more than 25 percent of its enforcement staff. Nevertheless, during the 2017 fiscal year, the agency processed more than 245 million tax returns.
The Revenue Act of 1862 was passed as an emergency and temporary
war-time tax. It copied a relatively new British system of income
taxation, instead of trade and property taxation. The first income tax
was passed in 1862:
The initial rate was 3% on income over $800, which exempted most wage-earners.
In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
By the end of the war, 10% of Union households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.
Post Civil War, Reconstruction, and popular tax reform (1866–1913)
After the Civil War, Reconstruction,
railroads, and transforming the North and South war machines towards
peacetime required public funding. However, in 1872, seven years after
the war, lawmakers allowed the temporary Civil War income tax to expire.
The Congress shall have power to
lay and collect taxes on incomes, from whatever source derived, without
apportionment among the several States, and without regard to any census
or enumeration.
This granted Congress the specific power to impose an income tax
without regard to apportionment among the states by population. By
February 1913, 36 states had ratified the change to the Constitution. It
was further ratified by six more states by March. Of the 48 states at
the time, 42 ratified it. Connecticut, Rhode Island, and Utah rejected
the amendment; Pennsylvania, Virginia, and Florida did not take up the
issue.
Post 16th Amendment (1913–present)
Though the constitutional amendment to allow the Federal government to collect income taxes was proposed by President Taft in 1909, the 16th Amendment was not ratified until 1913, just before the start of the First World War.
In 1913 the first edition of the 1040 form was introduced. A copy of
the very first IRS 1040 form, can be found at the IRS website
showing that only those with annual incomes of at least $3,000
(equivalent to $78,600 in 2020) were instructed to file the income tax
return.
In the first year after ratification of the 16th Amendment, no
taxes were collected. Instead, taxpayers simply completed the form and
the IRS checked the form for accuracy. The IRS's workload jumped by
ten-fold, triggering a massive restructuring. Professional tax
collectors began to replace a system of "patronage" appointments. The
IRS doubled its staff, but was still processing 1917 returns in 1919.
Income tax raised much of the money required to finance the war
effort; in 1918 a new Revenue Act established a top tax rate of 77%.
People filing tax forms in 1920.
In 1919 the IRS was tasked with enforcement of laws relating to prohibition of alcohol sales and manufacture;
this was transferred to the jurisdiction of the Department of Justice
in 1930. After repeal in 1933, the IRS resumed collection of taxes on
beverage alcohol. The alcohol, tobacco and firearms activities of the bureau were segregated into the Bureau of Alcohol, Tobacco, Firearms and Explosives in 1972.
A new tax act was passed in 1942 as the United States entered the Second World War.
This act included a special wartime surcharge. The number of American
citizens who paid income tax increased from about four million in 1939
to more than forty-two million by 1945.
In 1952, after a series of politically damaging incidents of tax evasion and bribery among its own employees, the Bureau of Internal Revenue was reorganized under a plan put forward by President Truman,
with the approval of Congress. The reorganization decentralized many
functions to new district offices which replaced the collector's
offices. Civil service directors were appointed to replace the
politically appointed collectors of the Bureau of Internal Revenue. Not
long after, the Bureau was renamed the Internal Revenue Service.
In 1954 the filing deadline was moved from March 15 to April 15.
By 1986, limited electronic filing of tax returns was possible.
The Internal Revenue Service Restructuring and Reform Act of 1998 ("RRA 98") changed the organization from geographically oriented to an organization based on four operating divisions. It added "10 deadly sins" that require immediate termination of IRS employees found to have committed certain misconduct.
Enforcement activities declined. The IRS Oversight Board noted
that the decline in enforcement activities has "rais[ed] questions about
tax compliance and fairness to the vast majority of citizens who pay
all their taxes". In June 2012, the IRS Oversight Board recommended to Treasury a fiscal year 2014 budget of $13.074billion for the Internal Revenue Service.
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act of 2017. It was signed into law by President Trump on December 22, 2017.
In the 2017 fiscal year, the IRS had 76,832 employees conducting its work, a decrease of 14.9 percent from 2012.
Presidential tax returns (1973)
From
the 1950s through the 1970s, the IRS began using technology such as
microfilm to keep and organize records. Access to this information
proved controversial, when President Richard Nixon's
tax returns were leaked to the public. His tax advisor, Edward L.
Morgan, became the fourth law-enforcement official to be charged with a
crime during Watergate.
John Requard, Jr., accused of leaking the Nixon tax returns,
collected delinquent taxes in the slums of Washington. In his words: "We
went after people for nickels and dimes, many of them poor and in many
cases illiterate people who didn't know how to deal with a government
agency." Requard admitted that he saw the returns, but denied that he
leaked them.
Reporter Jack White of The Providence Journal won the Pulitzer Prize
for reporting about Nixon's tax returns. Nixon, with a salary of
$200,000, paid $792.81 in federal income tax in 1970 and $878.03 in
1971, with deductions of $571,000 for donating "vice-presidential
papers". This was one of the reasons for his famous statement: "Well, I'm not a crook. I've earned everything I've got."
So controversial was this leak, that most later US Presidents
released their tax returns (though sometimes only partially). These
returns can be found online at the Tax History Project.
Computerization (1959–present)
By
the end of the Second World War, the IRS was handling sixty million tax
returns each year, using a combination of mechanical desk calculators, accounting machines, and pencil and paper forms. In 1948 punch card equipment was used. The first trial of a computer system for income tax processing was in 1955, when an IBM 650 installed at Kansas City processed 1.1 million returns. The IRS was authorized to proceed with computerization in 1959, and purchased IBM 1401 and IBM 7070 systems for local and regional data processing centers. The Social Security number
was used for taxpayer identification starting in 1965. By 1967, all
returns were processed by computer and punched card data entry was
phased out.
Information processing in the IRS systems of the late 1960s was
in batch mode; microfilm records were updated weekly and distributed to
regional centers for handling tax inquiries. A project to implement an
interactive, realtime system, the "Tax Administration System", was
launched, that would provide thousands of local interactive terminals at
IRS offices. However, the General Accounting Office prepared a report critical of the lack of protection of privacy in TAS, and the project was abandoned in 1978.
In 1995, the IRS began to use the public Internet for electronic
filing. Since the introduction of e-filing, self-paced online tax
services have flourished, augmenting the work of tax accountants, who
were sometimes replaced.
In 2003, the IRS struck a deal with tax software vendors: The IRS
would not develop online filing software and, in return, software
vendors would provide free e-filing to most Americans. In 2009, 70% of filers qualified for free electronic filing of federal returns.
According to an inspector general's report, released in November 2013, identity theft in the United States is blamed for $4billion
worth of fraudulent 2012 tax refunds by the IRS. Fraudulent claims were
made with the use of stolen taxpayer identification and Social Security
numbers, with returns sent to addresses both in the US and
internationally. Following the release of the findings, the IRS stated
that it resolved most of the identity theft cases of 2013 within 120
days, while the average time to resolve cases from the 2011/2012 tax
period was 312 days.
In September 2014, IRS Commissioner John Koskinen expressed concern over the organization's ability to handle Obamacare and administer premium tax credits that help people pay for health plans from the health law's insurance exchanges. It will also enforce the law's individual mandate, which requires most Americans to hold health insurance. In January 2015, Fox News
obtained an email which predicted a messy tax season on several fronts.
The email was sent by IRS Commissioner Koskinen to workers. Koskinen
predicted the IRS would shut down operations for two days later this
year which would result in unpaid furloughs for employees and service cuts for taxpayers. Koskinen also said delays to IT investments of more than $200million may delay new taxpayer protections against identity theft. Also in January 2015, the editorial board of The New York Times
called the IRS budget cuts penny-wise-and-pound-foolish, where for
every dollar of cuts in the budget, six were lost in tax revenue.
History of the IRS name
IRS and Department of the Treasury seal on lectern
As early as the year 1918, the Bureau of Internal Revenue began using
the name "Internal Revenue Service" on at least one tax form. In 1953, the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.
Current organization
The
1980s saw a reorganization of the IRS. A bipartisan commission was
created with several mandates, among them to increase customer service
and improve collections. Congress later enacted the Internal Revenue Service Restructuring and Reform Act of 1998.
Because of that Act, the IRS now functions under four major
operating divisions: Large Business and International (LB&I), Small
Business/Self-Employed (SB/SE), Wage and Investment (W&I), and Tax
Exempt & Government Entities (TE/GE). Effective October 1, 2010, the
name of the Large and Mid-Size Business division was changed to the
Large Business & International (LB&I) division. While there is some evidence that customer service has improved, lost tax revenues in 2001 were over $323billion.
The IRS is headquartered in Washington, D.C., and does most of its computer programming in Maryland. It currently operates five submission processing centers which process returns sent by mail
and returns filed electronically via E-file. Different types of returns
are processed at the various centers with some centers processing
individual returns and others processing business returns.
Originally, there were ten submission processing centers across
the country. In the early 2000s, the IRS closed five centers: Andover,
MA; Holtsville, NY; Philadelphia, PA; Atlanta, GA; and Memphis, TN. This
currently leaves five centers processing returns: Austin, TX;
Covington, KY; Fresno, CA; Kansas City, MO; and Ogden, UT. In October
2016 the IRS announced that three more centers will close over a
six-year period: Covington, KY in 2019; Fresno, CA in 2021; and Austin,
TX in 2024. This will leave Kansas City, MO and Ogden, UT as the final
two submission processing centers after 2024.
The IRS also operates three computer centers around the country
(in Detroit, Michigan; Martinsburg, West Virginia; and Memphis,
Tennessee).
The current IRS commissioner is Charles P. Rettig
of California. There have been 48 previous commissioners of Internal
Revenue and 28 acting commissioners since the agency's creation in 1862.
From May 22, 2013 to December 23, 2013, senior official at the Office of Management and BudgetDaniel Werfel was acting Commissioner of Internal Revenue. Werfel, who attended law school at the University of North Carolina and attained a master's degree from Duke University, prepared the government for a potential shutdown in 2011 by determining which services that would remain in existence.
No IRS commissioner has served more than five years and one month since Guy Helvering, who served 10 years until 1943. The most recent commissioner to serve the longest term was Doug Shulman, who was appointed by President George W. Bush and served for five years.
Deputy Commissioners
The Commissioner of Internal Revenue is assisted by two deputy commissioners.
The Deputy Commissioner for Operations Support reports directly
to the Commissioner and oversees the IRS's integrated support functions,
facilitating economy of scale efficiencies and better business
practices. The Deputy Commissioner for Operations Support provides
executive leadership for customer service, processing, tax law
enforcement and financial management operations, and is responsible for
overseeing IRS operations and for providing executive leadership on
policies, programs and activities. The Deputy assists and acts on behalf
of the IRS Commissioner in directing, coordinating and controlling the
policies, programs and the activities of the IRS; in establishing tax
administration policy, and developing strategic issues and objectives
for IRS strategic management.
The Deputy Commissioner for Services and Enforcement reports
directly to the Commissioner and oversees the four primary operating
divisions responsible for the major customer segments and other
taxpayer-facing functions. The Deputy Commissioner for Services and
Enforcement serves as the IRS Commissioner's key assistant acting on
behalf of the commissioner in establishing and enforcing tax
administration policy and upholding IRS's mission to provide America's
taxpayers top quality service by helping them understand and meet their
tax responsibilities.
The Office of the Taxpayer Advocate,
also called the Taxpayer Advocate Service, is an independent office
within the IRS responsible for assisting taxpayers in resolving their
problems with the IRS and identifying systemic problems that exist
within the IRS. The current head of the organization, known as the United States Taxpayer Advocate, is Erin M. Collins.
The Independent Office of Appeals is an independent organization
within the IRS that helps taxpayers resolve their tax disputes through
an informal, administrative process. Its mission is to resolve tax
controversies fairly and impartially, without litigation. Resolution of a case in Appeals "could take anywhere from 90 days to a year". The current chief is Donna C. Hansberry.
OPR investigates suspected misconduct by attorneys, CPAs and enrolled
agents ("tax practitioners") involving practice before the IRS and has
the power to impose various penalties. OPR can also take action against
tax practitioners for conviction of a crime or failure to file their own
tax returns. According to former OPR director Karen Hawkins, "The focus
has been on roadkill – the easy cases of tax practitioners who are non-filers." The current acting director is Elizabeth Kastenberg.
Internal Revenue Service, Criminal Investigation (IRS-CI) is responsible for investigating potential criminal violations of the U.S. Internal Revenue Code
and related financial crimes, such as money laundering, currency
violations, tax-related identity theft fraud, and terrorist financing
that adversely affect tax administration. This division is headed by the
Chief, Criminal Investigation appointed by the IRS Commissioner.
Programs
Volunteer
Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE)
are volunteer programs that the IRS runs to train volunteers and provide
tax assistance and counseling to taxpayers.
Volunteers can study e-course material, take tests, and practice using
tax-preparation software. Link & Learn Taxes (searchable by keyword
on the IRS website), is the free e-learning portion of VITA/TCE program
for training volunteers.
Operations Support – internal management and support services
Tax Exempt and Government Entities Division – administers tax laws governing governmental and tax exempt entities
Government Entities/Shares Services – manages, directs, and
executes nationwide activities for government entities as well as
provides divisional operational support
Employee Plans – administers pension plan tax laws
Exempt Organizations – determining tax exempt status for
organizations and regulating the same through examination and compliance
checks
Criminal Investigation Division – investigates criminal violations of tax laws and other related financial crimes
International Operations – conducts international investigations
of financial crimes and provides special agent attaches in strategic
international locations
Operations, Policy, and Support – plans, develops, directs, and
implements criminal investigations through regional field offices
Refund and Cyber Crimes – identifying criminal tax schemes and conducting cybercrime investigations
Strategy – internal support services
Technology Operations and Investigative Services – management of information technology
Office of Online Services
Return Preparer Office
Office of Professional Responsibility
Whistleblower Office
Deputy Commissioner for Operations Support
Assistant Deputy Commissioner for Operations Support
Chief, Facilities Management and Security Services
Chief Information Officer
Chief Privacy Officer
Chief Procurement Officer
Chief Financial Officer
IRS Human Capital Officer
Chief Risk Officer
Chief Diversity Officer
Chief Research and Analytics Officer
Chief of Staff
Chief, Communications and Liaison
National Taxpayer Advocate
Chief Counsel
Chief, IRS Independent Office of Appeals
Tax collection statistics
Summary of collections before refunds by type of return, fiscal year 2010:
For fiscal year 2009, the U.S. Congress appropriated spending of approximately $12.624billion of "discretionary budget authority" to operate the Department of the Treasury, of which $11.522billion was allocated to the IRS. The projected estimate of the budget for the IRS for fiscal year 2011 was $12.633billion. By contrast, during Fiscal Year (FY) 2006, the IRS collected more than $2.2trillion
in tax (net of refunds), about 44 percent of which was attributable to
the individual income tax. This is partially due to the nature of the
individual income tax category, containing taxes collected from working
class, small business, self-employed, and capital gains. The top 5% of
income earners pay 38.284% of the federal tax collected.
As of 2007, the agency estimates that the United States Treasury is owed $354billion more than the amount the IRS collects. This is known as the tax gap.
The gross tax gap is the amount of true tax liability that is not
paid voluntarily and timely. For years 2008-2010, the estimated gross
tax gap was $458billion. The net tax gap is
the gross tax gap less tax that will be subsequently collected, either
paid voluntarily or as the result of IRS administrative and enforcement
activities; it is the portion of the gross tax gap that will not be
paid. It is estimated that $52billion of the gross tax gap was eventually collected resulting in a net tax gap of $406billion.
In 2011, 234 million tax returns were filed allowing the IRS to collect $2.4trillion out of which $384billion were attributed to mistake or fraud.
Outsourcing collection and tax-assistance
In
September 2006, the IRS started to outsource the collection of
taxpayers debts to private debt collection agencies. Opponents to this
change note that the IRS will be handing over personal information to
these debt collection agencies, who are being paid between 29% and 39%
of the amount collected. Opponents are also worried about the agencies'
being paid on percent collected, because it will encourage the
collectors to use pressure tactics to collect the maximum amount. IRS
spokesman Terry Lemons responds to these critics saying the new system
"is a sound, balanced program that respects taxpayers' rights and
taxpayer privacy". Other state and local agencies also use private
collection agencies.
In March 2009, the IRS announced that it would no longer
outsource the collection of taxpayers debts to private debt collection
agencies. The IRS decided not to renew contracts to private debt
collection agencies, and began a hiring program at its call sites and
processing centers across the country to bring on more personnel to
process collections internally from taxpayers. As of October 2009, the IRS has ceased using private debt collection agencies.
In September 2009, after undercover exposé videos
of questionable activities by staff of one of the IRS's volunteer
tax-assistance organizations were made public, the IRS removed ACORN from its volunteer tax-assistance program.
Administrative functions
IRS appropriations, 2000–2019
Nominal appropriations
Adjusted for inflation
The IRS publishes tax forms
which taxpayers are required to choose from and use for calculating and
reporting their federal tax obligations. The IRS also publishes a
number of forms for its own internal operations, such as Forms 3471 and
4228 (which are used during the initial processing of income tax
returns).
In addition to collection of revenue and pursuing tax cheaters, the IRS issues administrative rulings such as revenue rulings and private letter rulings. In addition, the Service publishes the Internal Revenue Bulletin containing the various IRS pronouncements.
The controlling authority of regulations and revenue rulings allows
taxpayers to rely on them. A letter ruling is good for the taxpayer to
whom it is issued, and gives some explanation of the Service's position
on a particular tax issue. Additionally, a letter ruling reasonably relied upon by a taxpayer allows for the waiver of penalties for underpayment of tax.
As is the case with all administrative pronouncements, taxpayers
sometimes litigate the validity of the pronouncements, and courts
sometimes determine a particular rule to be invalid where the agency has
exceeded its grant of authority. The IRS also issues formal
pronouncements called Revenue Procedures, that among other things tell
taxpayers how to correct prior tax errors. The IRS's own internal
operations manual is the Internal Revenue Manual,
which describes the clerical procedures for processing and auditing tax
returns in excruciating detail. For example, the Internal Revenue
Manual contains a special procedure for processing the tax returns of
the President and Vice President of the United States.
More formal rulemaking to give the Service's interpretation of a statute, or when the statute itself directs that the Secretary of the Treasury shall provide, IRS undergoes the formal regulation process with a Notice of proposed rulemaking (NPRM) published in the Federal Register
announcing the proposed regulation, the date of the in-person hearing,
and the process for interested parties to have their views heard either
in person at the hearing in Washington, D.C., or by mail. Following the
statutory period provided in the Administrative Procedure Act
the Service decides on the final regulations "as is", or as reflecting
changes, or sometimes withdraws the proposed regulations. Generally,
taxpayers may rely on proposed regulations until final regulations
become effective. For example, human resource professionals are relying
on the October 4, 2005 Proposed Regulations (citation 70 F.R. 57930-57984) for the Section 409A on deferred compensation (the so-called Enron rules on deferred compensation to add teeth to the old rules) because regulations have not been finalized.
The IRS oversaw the Homebuyer Credit and First Time Homebuyer
Credit programs instituted by the federal government from 2008-2010.
Those programs provided United States citizens with money toward the
purchase of homes, regardless of income tax filings.
Most non-supervisory employees at the IRS are represented by a labor union. The exclusive labor union at the IRS is the National Treasury Employees Union (NTEU). Employees aren't required to join the union or pay dues. The IRS and NTEU have a national collective bargaining agreement.
In pursuing administrative remedies against the IRS for certain
unfair or illegal personnel actions, under federal law an IRS employee
may choose only one of the three forums below:
Employees are also required to report certain misconduct to TIGTA. Federal law prohibits reprisal or retaliation against an employee who reports wrongdoing.
The IRS has been accused of abusive behavior on multiple occasions.
Testimony was given before a Senate subcommittee that focused on cases
of overly aggressive IRS collection tactics in considering a need for
legislation to give taxpayers greater protection in disputes with the
agency.
Congress passed the Taxpayer Bill of Rights III on July 22, 1998, which shifted the burden of proof
from the taxpayer to the IRS in certain limited situations. The IRS
retains the legal authority to enforce liens and seize assets without
obtaining judgment in court.
In 2002, the IRS accused James and Pamela Moran, as well as
several others, of conspiracy, filing false tax returns and mail fraud
as part of the Anderson Ark investment scheme. The Morans were
eventually acquitted, and their attorney stated that the government
should have realized that the couple was merely duped by those running
the scheme.
In 2004, the law licenses of two former IRS lawyers were
suspended after a federal court ruled that they defrauded the courts so
the IRS could win a sum in tax shelter cases.
In 2013, the Internal Revenue Service became embroiled in a political scandal in which it was discovered that the agency subjected conservative or conservative-sounding groups filing for tax-exempt status to extra scrutiny.
On September 5, 2014, 16 months after the scandal first erupted, a
Senate Subcommittee released a report that confirmed that Internal
Revenue Service used inappropriate criteria to target Tea Party groups,
but found no evidence of political bias.
The chairman of the Senate Permanent Subcommittee on Investigations
confirmed that while the actions were "inappropriate, intrusive, and
burdensome", the Democrats have often experienced similar treatment.
Republicans noted that 83% of the groups being held up by the IRS were
right-leaning; and the Subcommittee Minority staff, which did not join
the Majority staff report, filed a dissenting report entitled, "IRS
Targeting Tea Party Groups".
On May 25, 2015, the agency announced that over several months
criminals had accessed the private tax information of more than 100,000
taxpayers and stolen about $50million in fraudulent returns.
By providing Social Security numbers and other information obtained
from prior computer crimes, the criminals were able to use the IRS's
online "Get Transcript" function to have the IRS provide them with the
tax returns and other private information of American tax filers. On August 17, 2015, IRS disclosed that the breach had compromised an additional 220,000 taxpayer records.
On February 27, 2016, the IRS disclosed that more than 700,000 Social
Security numbers and other sensitive information had been stolen.
The Internal Revenue Service has been the subject of frequent
criticism by many elected officials and candidates for political office,
including some who have called to abolish the IRS. Among them were Ted Cruz, Rand Paul, Ben Carson, Mike Huckabee, and Richard Lugar. In 1998, a Republican congressman introduced a bill to repeal the Internal Revenue Code by 2002. In 2016, The Republican Study Committee,
which counts over two-thirds of House of Representatives Republicans as
its members, called for "the complete elimination of the IRS", and
Republican Representative Rob Woodall of Georgia has introduced a bill every year since he entered Congress in 2011 to eliminate income taxes and abolish the IRS.
The IRS has been criticized for its reliance on legacy software. Systems such as the Individual Master File are more than 50 years old and have been identified by the Government Accountability Office
as "facing significant risks due to their reliance on legacy
programming languages, outdated hardware, and a shortage of human
resources with critical skills".
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