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June 30, 2005

Bush & Congress agree on reform - "Patient Navigator"

Bush Signs ‘Patient Navigator’ Bill To Help People Make Medical Decisions
Kaiser Daily Health Policy Report
June 30, 2005

President Bush on Wednesday signed into law a bill that will establish a “patient navigator” system to help patients with chronic illnesses make medical decisions, CongressDaily reports (Rovner, CongressDaily, 6/30).

The law authorizes $25 million in grants over five years to establish patient navigator programs to aid uninsured patients in low-income and rural communities nationwide. Under the system, counselors will help patients evaluate their treatment options, enroll in clinical trials, obtain referrals and apply for financial assistance (Kaiser Daily Health Policy Report, 6/24). Rep. Robert Menendez (D-N.J.), who co-sponsored the legislation with Rep. Deborah Pryce (R-Ohio), said, “This is a textbook example of how the legislative process should work” (CongressDaily, 6/30).

http://www.kaisernetwork.org/daily_reports/rep_hpolicy.cfm

Comment: Is this a textbook example of the way the legislative process should work?

Helping low-income, uninsured individuals find free programs or locations for financial assistance is certainly not bad policy. But at an average of $100,000 per state per year, there are not enough funds to pay for one individual per state, plus the overhead required for that individual to function.

Unfortunately, this is a textbook example of how our “bipartisan” legislative process is failing us miserably. Political solutions exist which would provide affordable access to comprehensive health care for everyone, without spending more than we do already. Yet the politicians continue to turn their backs, pretending that they didn’t hear us.

We don’t need money from Congress; we need authorization for structural reform of health care financing. Now that we’re ready to build a splendiferous new financing structure for health care, our Congress can’t seem to come up with much more than the equivalent of a construction-project outhouse on an empty lot. Surely the legislative process can work better than that.

June 29, 2005

"Medicare Health Accounts"

Medicare Health Accounts: A New Policy Option to Help Adults Save for Health Care Expenses Not Covered by Medicare Findings from the Commonwealth Fund Survey of Older Adults
By Sara R. Collins, Karen Davis, Sabrina K. H. How, and Alyssa L. Holmgren
The Commonwealth Fund
June 30, 2005

While Medicare was designed to protect people over age 65 from health costs and facilitate access to needed services, the program has substantial cost-sharing requirements and does not cover such high-cost services as long-term care. Medicare beneficiaries spend 22 percent of their incomes on premiums and out-of-pocket medical expenses—a figure that is projected to increase to 30 percent by 2025.

New strategies are needed to encourage people to save more for their retirement. The Commonwealth Fund Survey of Older Adults, a nationally representative sample of 2,007 adults ages 50 to 70 conducted in late 2004, asked respondents about their interest in new savings accounts that could be created within the Medicare program. Such accounts would allow people to automatically save for health costs that are not currently covered by Medicare. With Medicare Health Accounts, up to 1 percent of earnings could be deducted automatically from people’s paychecks and placed in an account in the Medicare program. The savings could then be used by people in their retirement to cover costs of long-term care, home health, and other costs not covered by Medicare.

Among older adults in households in which at least one member was working, nearly seven of 10 (69%) said they would be interested in having a Medicare Health Account.

http://www.cmwf.org/usr_doc/842_collins_olderadults_fs_06-30-2005.pdf

Comment: Medicare covers less than 50% of health care costs of Medicare beneficiaries. As costs increase both health security and financial security are declining for seniors, and everyone else.

In this survey of seniors on the declining affordability of health care, Medicare beneficiaries were asked if they supported the option of reducing the financial risk of health care: placing 1% of their paychecks in a segregated Medicare Health Account to be used when the need arises.
Without a discussion of the implications of segregated accounts nor a discussion of other options, Medicare Health Accounts, at first blush, would seem like a good idea. The strong positive response is really not surprising.

But there is a great variability in health care needs amongst Medicare beneficiaries. Some remain healthy and drop dead suddenly of a cardiac arrest. The financial burden is negligible for them. Others have very protracted and expensive end-of-life disorders and yet others have high-cost long-term care needs.

The Medicare Health Accounts would be superfluous for those with few needs, but, as described, they would likely be inadequate to provide financial security for those with greater needs.

The lesson is obvious. For insurance to work, risk must be pooled. Medicare Health Accounts segregate risk, defeating the very purpose of insurance.

Although it is suspected that these accounts have been proposed as a solution that might appease conservatives, this is very unlikely. First, conservatives want to reduce public funding of Medicare. These accounts are add-ons and do nothing to reduce the Medicare tax burden. Second, conservatives want to reduce health care spending by requiring individuals to be sensitive to more of the costs. An account dedicated exclusively to out-of-pocket expenses under Medicare largely insulates patients from the costs and defeats the strategy of the conservatives.

Once again, we come to the bottom line. Insurance should be funded by modest contributions from everyone to ensure that health care is affordable and accessible by all. Medicare segregates a high-cost sector into a separate risk pool. Employer-sponsored plans segregate a low-cost sector into a separate quasi-pool, but one that is rife with inefficiencies, inequities, and egregious waste.

Medicare beneficiaries would benefit by being placed in a low-cost pool that covers everyone. Healthy, employed individuals are already funding Medicare anyway, so they wouldn’t suffer by being included in the Medicare pool, and they would also benefit by being included in a program that reduces administrative waste and inefficiencies, and would ensure equitable access in time of need.

Incremental measures result from an effort to appease all parties, but they end up increasing costs without net improvements in coverage and affordability. All parameters are getting worse, not better. We know how to fix the system. We just need to finally decide that it’s time to do it.

June 28, 2005

Dissenting opinion, Canadian Supreme Court decision

From Chaoulli v. Quebec

Binnie and LeBel JJ. (Dissenting) -

I. Introduction

161 The question in this appeal is whether the province of Quebec not only has the constitutional authority to establish a comprehensive single-tier health plan, but to discourage a second (private) tier health sector by prohibiting the purchase and sale of private health insurance. The appellants argue that timely access to needed medical service is not being provided in the publicly funded system and that the province cannot therefore deny to those Quebeckers (who can qualify) the right to purchase private insurance to pay for medical services whenever and wherever such services can be obtained for a fee, i.e. in the private sector. This issue has been the subject of protracted debate across Canada through several provincial and federal elections. We are unable to agree with our four colleagues who would allow the appeal that such a debate can or should be resolved as a matter of law by judges. We find that, on the legal issues raised, the appeal should be dismissed.

162 Our colleagues the Chief Justice and Major J. state at para. 105:

By imposing exclusivity and then failing to provide public health care of a reasonable standard within a reasonable time, the government creates circumstances that trigger the application of s. 7 of the Charter. [Emphasis added.]

163 The Court recently held in Auton (Guardian ad litem of) v. British Columbia (Attorney General), [2004] 3 S.C.R. 657, 2004 SCC 78, that the government was not required to fund the treatment of autistic children. It did not on that occasion address in constitutional terms the scope and nature of “reasonable” health services. Courts will now have to make that determination. What, then, are constitutionally required “reasonable health services”? What is treatment “within a reasonable time”? What are the benchmarks? How short a waiting list is short enough? How many MRIs does the Constitution require? The majority does not tell us. The majority lays down no manageable constitutional standard. The public cannot know, nor can judges or governments know, how much health care is “reasonable” enough to satisfy s. 7 of the Canadian Charter of Rights and Freedoms (“Canadian Charter”) and s. 1 of the Charter of Human Rights and Freedoms, R.S.Q. c. C-12 (“Quebec Charter”). It is to be hoped that we will know it when we see it.

164 The policy of the Canada Health Act, R.S.C. 1985, c. C-6, and its provincial counterparts is to provide health care based on need rather than on wealth or status. The evidence certainly established that the public health care system put in place to implement this policy has serious and persistent problems. This does not mean that the courts are well placed to perform the required surgery. The resolution of such a complex fact-laden policy debate does not fit easily within the institutional competence or procedures of courts of law. The courts can use s. 7 of the Canadian Charter to pre-empt the ongoing public debate only if the current health plan violates an established “principle of fundamental justice”. Our colleagues McLachlin C.J. and Major J. argue that Quebec’s enforcement of a single-tier health plan meets this legal test because it is “arbitrary”. In our view, with respect, the prohibition against private health insurance is a rational consequence of Quebec’s commitment to the goals and objectives of the Canada Health Act.

165 Our colleague Deschamps J. states at para. 4:

In essence, the question is whether Quebeckers who are prepared to spend money to get access to health care that is, in practice, not accessible in the public sector because of waiting lists may be validly prevented from doing so by the state. [Emphasis added.]

This is so, but of course it must be recognized that the liberty and security of Quebeckers who do not have the money to afford private health insurance, or who cannot qualify for it, or who are not employed by establishments that provide it, are not put at risk by the absence of “upper tier” health care. It is Quebeckers who have the money to afford private medical insurance and can qualify for it who will be the beneficiaries of the appellants’ constitutional challenge.

166 The Quebec government views the prohibition against private insurance as essential to preventing the current single-tier health system from disintegrating into a de facto two-tier system. The trial judge found, and the evidence demonstrated, that there is good reason for this fear. The trial judge concluded that a private health sector fuelled by private insurance would frustrate achievement of the objectives of the Canada Health Act. She thus found no legal basis to intervene, and declined to do so. This raises the issue of who it is that should resolve these important and contentious issues. Commissioner Roy Romanow makes the following observation in his Report:

Some have described it as a perversion of Canadian values that they cannot use their money to purchase faster treatment from a private provider for their loved ones. I believe it is a far greater perversion of Canadian values to accept a system where money, rather than need, determines who gets access to care.

(Building on Values: The Future of Health Care in Canada: Final Report (2002), at p. xx (“Romanow Report”))

Whether or not one endorses this assessment, his premise is that the debate is about social values. It is not about constitutional law. We agree.

167 We believe our colleagues the Chief Justice and Major J. have extended too far the strands of interpretation under the Canadian Charter laid down in some of the earlier cases, in particular the ruling on abortion in R. v. Morgentaler, [1988] 1 S.C.R. 30 (which involved criminal liability, not public health policy). We cannot find in the constitutional law of Canada a “principle of fundamental justice” dispositive of the problems of waiting lists in the Quebec health system. In our view, the appellants’ case does not rest on constitutional law but on their disagreement with the Quebec government on aspects of its social policy. The proper forum to determine the social policy of Quebec in this matter is the National Assembly.

168 Our colleagues the Chief Justice and Major J. write:

The task of the courts, on s. 7 issues as on others, is to evaluate the issue in the light, not just of common sense or theory, but of the evidence. [para. 150]

This, of course, is precisely what the learned trial judge did after weeks of listening to expert testimony and argument. In general, we agree with her conclusions. There is nothing in the evidence to justify our colleagues’ disagreement with her conclusion that the general availability of health insurance will lead to a significant expansion of the private health sector to the detriment of the public health sector. While no one doubts that the Quebec health plan is under sustained and heavy criticism, and that at least some of the criticisms were supported by the trial judge on the basis of the evidence, the trial judge rejected the appellants’ contention (now accepted by our colleagues the Chief Justice and Major J.) that the prohibition on private insurance is contrary to the principles of fundamental justice. The trial judge’s conclusion was endorsed by Justice Forget of the Quebec Court of Appeal. As a matter of law, we see no reason to interfere with their collective and unanimous judgment on this point. Whatever else it might be, the prohibition is not arbitrary.

169 We can all support the vague objective of “public health care of a reasonable standard within a reasonable time”. Most people have opinions, many of them conflicting, about how to achieve it. A legislative policy is not “arbitrary” just because we may disagree with it. As our colleagues the Chief Justice and Major J. fully recognize, the legal test of “arbitrariness” is quite well established in the earlier case law. In our view that test is not met in this case, for reasons we will develop in some detail. Suffice it to say at this point that in our view, the appellants’ argument about “arbitrariness” is based largely on generalizations about the public system drawn from fragmentary experience, an overly optimistic view of the benefits offered by private health insurance, an oversimplified view of the adverse effects on the public health system of permitting private sector health services to flourish and an overly interventionist view of the role the courts should play in trying to supply a “fix” to the failings, real or perceived, of major social programs.

A. The Argument About Adding an “Upper Tier” to the Quebec Health Plan


170 The nature of a two-tier system is explained as follows:

In the broad sense, a two-tier system refers to two co-existing health care systems: a publicly funded system and a privately funded system. This definition implies that there is a differential access to health services based on one’s ability to pay, rather than according to need. In other words, those who can afford it may either obtain access to better quality care or to quicker care in the privately funded system, while the rest of the population continues to access health care only through the publicly funded system. [Emphasis added.]

(The Health of Canadians - The Federal Role, vol. 4, Issues and Options, Interim report (2001), p. 67 (“Kirby Report”))

It is evident, of course, that neither Quebec nor any of the other provinces has a “pure” single-tier system. In the area of uninsured medical services, for example, the private sector is the dominant supplier. In other cases, the private sector may perform the service but is paid by the state. The issue here, as it is so often in social policy debates, is where to draw the line. One can rarely say in such matters that one side of a line is “right” and the other side of a line is “wrong”. Still less can we say that the boundaries of the Quebec health plan are dictated by the Constitution. Drawing the line around social programs properly falls within the legitimate exercise of the democratic mandates of people elected for such purposes, preferably after a public debate.

B. Background to the Health Policy Debate

171 Prior to 1961, only 53 per cent of Canadians were covered by some form of health insurance, leaving approximately 8 million Canadians without insurance coverage (Voluntary Medical Insurance and Prepayment (1964) (“Berry Commission”)). At that time, health care costs were the number one cause of personal bankruptcy in Canada.

172 In these circumstances, the people of Quebec, through their elected representatives, opted for a need-based, rather than a wealth-based, health care system. In the Castonguay-Nepveu Report, said to be the foundation of the public health care system in Quebec, it was stated:

The maintenance of the people’s health more and more is accepted as a collective responsibility. This is not surprising since it must be admitted that without vigorous State action, the right to health would remain a purely theoretical notion, without any real content. [Emphasis added.]

(Rapport de la Commission d’enquête sur la santé et le bien-être social: La santé, Tome 1, La situation actuelle (1970), at p. 34 (“Castonguay-Nepveu Report”))

173 The Kirby Report noted in 2001 that “Canadians’ attachment to a sense of collective responsibility for the provision of health care has remained largely intact despite a shift towards more individualistic values” (vol. 4, p. 137; see also Emerging Solutions: Report and Recommendations (2000), p. 243 (“Clair Report”); La complémentarité du secteur privé dans la poursuite des objectifs fondamentaux du système public de santé au Québec: Rapport du groupe de travail (1999), p. 34 (“Arpin Report”)). Both the Kirby Report and the Romanow Report contained extensive investigations into the operations and problems of the current public health systems across Canada. They acknowledged that the financing of health care is putting a growing stress on public finances and national resources. For fiscal year 2004-2005, federal/provincial/territorial spending on health care is estimated to be about $88 billion (Federal Support for Health Care: The Facts, Finance Canada (September 2004)). Whether this growing level of expenditure is sustainable, justified or wise is a matter on which we all have opinions. In the absence of a violation of a recognized “principle of fundamental justice”, the opinions that prevail should be those of the legislatures.

174 Not all Canadian provinces prohibit private health insurance, but all of them (with the arguable exception of Newfoundland) take steps to protect the public health system by discouraging the private sector, whether by prohibiting private insurance (Quebec, Ontario, Manitoba, British Columbia, Alberta and Prince Edward Island) or by prohibiting doctors who opt out of the public sector, from billing their private patients more than the public sector tariff, thereby dulling the incentive to opt out (Ontario, Manitoba and Nova Scotia), or eliminating any form of cross-subsidy from the public to the private sector (Quebec, British Columbia, Alberta, Prince Edward Island, Saskatchewan and New Brunswick). The mixture of deterrents differs from province to province, but the underlying policies flow from the Canada Health Act and are the same: i.e. as a matter of principle, health care should be based on need, not wealth, and as a matter of practicality the provinces judge that growth of the private sector will undermine the strength of the public sector and its ability to achieve the objectives of the Canada Health Act.

175 The argument for a “two-tier system” is that it will enable “ordinary” Canadians to access private health care. Indeed, this is the view taken by our colleagues the Chief Justice and Major J. who quote the appellants’ argument that “disallowing private insurance precludes the vast majority of Canadians (middle-income and low-income earners) from accessing” private health care (para. 137). This way of putting the argument suggests that the Court has a mandate to save middle-income and low-income Quebeckers from themselves, because both the Romanow Report and the Kirby Report found that the vast majority of “ordinary” Canadians want a publicly financed single-tier (more or less) health plan to which access is governed by need rather than wealth and where the availability of coverage is not contingent on personal insurability. Our colleagues rely in part on the experience in the United States (para. 148) and the fact that public funding in that country accounts for only 45 per cent of total health care spending. But if we look at the practical reality of the U.S. system, the fact is that 15.6 per cent of the American population (i.e. about 45 million people) had no health insurance coverage at all in 2003, including about 8.4 million children. As to making health care available to medium and low-income families, the effect of “two-tier” health coverage in the U.S. is much worse for minority groups than for the majority. Hispanics had an uninsured rate of 32.7 per cent, and African Americans had an uninsured rate of 19.4 per cent. For 45 million Americans, as for those “ordinary” Quebeckers who cannot afford private medical insurance or cannot obtain it because they are deemed to be “bad risks”, it is a matter of public health care or no care at all. (C. DeNavas-Walt, B. D. Proctor and R. J. Mills, Income, Poverty, and Health Insurance Coverage in the United States: 2003: Current Population Reports: Consumer Income (2004), pp. 56-59).

176 It would be open to Quebec to adopt a U.S.-style health care system. No one suggests that there is anything in our Constitution to prevent it. But to do so would be contrary to the policy of the Quebec National Assembly, and its policy in that respect is shared by the other provinces and the federal Parliament. As stated, Quebec further takes the view that significant growth in the private health care system (which the appellants advocate) would inevitably damage the public system. Our colleagues the Chief Justice and Major J. disagree with this assessment, but governments are entitled to act on a reasonable apprehension of risk of such damage. As noted by the majority in R. v. Malmo-Levine, [2003] 3 S.C.R. 571, 2003 SCC 74, at para. 133:

Members of Parliament are elected to make these sorts of decisions, and have access to a broader range of information, more points of view, and a more flexible investigative process than courts do.


While the existence of waiting times is undoubted, and their management a matter of serious public concern, the proposed constitutional right to a two-tier health system for those who can afford private medical insurance would precipitate a seismic shift in health policy for Quebec. We do not believe that such a seismic shift is compelled by either the Quebec Charter or the Canadian Charter.

II. Analysis

177 The appellants’ principal argument is that the existence of waiting lists in Quebec and the concurrent prohibition on private health insurance violate s. 7 of the Canadian Charter, which guarantees everyone the right to life, liberty and security of the person, and the right not to be deprived thereof except in accordance with the principles of fundamental justice.

178 The legal question raised by our colleagues the Chief Justice and Major J. under the Canadian Charter is whether or not the Quebec health plan violates a principle of fundamental justice and, if so, whether the plan can nevertheless be saved under s. 1.

179 The reasons of our colleague Deschamps J., on the other hand, are limited to s. 1 of the Quebec Charter which protects the right of every human being to life and to personal security, inviolability and freedom. The Quebec Charter does not talk explicitly about “principles of fundamental justice”. Nevertheless, in our view, the legislative limits fixed by the Quebec Charter are no more favourable to the appellants’ case than are those fixed by the Canadian Charter. Rights under the Quebec Charter are to be exercised with “proper” regard to “democratic” values (including those of the electorate) “public order and the general well-being of the citizens of Quebec” (including those who cannot afford, or may not qualify for, private health insurance coverage). We address this issue below starting at para. 266.

180 Our colleagues the Chief Justice and Major J. agree with the appellants that there is a violation of s. 7 of the Canadian Charter. As mentioned earlier, their opinion rests in substantial part on observations made by various members of this Court in Morgentaler. At issue in that case was the criminal liability of doctors and their patients under s. 251 of the Criminal Code, R.S.C. 1970, c. C-34, for performing abortions. The nub of the legal challenge was that in creating the abortion offence Parliament had qualified the charge with a “therapeutic abortion” defence, but the defence was not working. The factual and legal issues raised in that criminal law problem are, we think, far removed from the debate over a two-tiered health system. Morgentaler applied a “manifest unfairness” test which has never been adopted by the Court outside the criminal law, and certainly not in the context of the design of social programs. The Morgentaler judgment fastened on internal inconsistencies in s. 251 of the Criminal Code, which find no counterpart here. In our view, with respect, Morgentaler provides no support for the appellants in this case, as we discuss commencing at para. 259.

181 As stated, we accept the finding of the courts below that a two-tier health care system would likely have a negative impact on the integrity, functioning and viability of the public system, [2000] R.J.Q. 786, p. 827; reasons of Forget J.A., [2002] R.J.Q. 1205, p. 1215. Although this finding is disputed by our colleagues the Chief Justice and Major J. (a point to which we will return), it cannot be contested that as a matter of principle, access to private health care based on wealth rather than need contradicts one of the key social policy objectives expressed in the Canada Health Act. The state has established its interest in promoting the equal treatment of its citizens in terms of health care. The issue of arbitrariness relates only to the validity of the means adopted to achieve that policy objective. Counsel for the appellant Zeliotis was not oblivious to the potential danger posed by the re-allocation of health resources to the private sector. In opening his oral submissions to the Court, he acknowledged the need as a matter of social policy to protect the public health system:

[translation] May a person use his or her own resources to obtain medical care outside the public system if the public system is unable to provide medical care within an acceptable time and if doing so would not deprive the public system of the resources it needs? . . .

We recognize that it is perfectly legitimate for the state to make sure that the public system has on a priority basis all the resources it needs to function. We concede that, if this were in fact impossible, our appeal should fail. [Emphasis added.]

(Oral Transcript, M^e Trudel, p. 24)

While Quebec does not outlaw private health care, which is therefore accessible to those with cash on hand, it wishes to discourage its growth. Failure to stop the few people with ready cash does not pose a structural threat to the Quebec health plan. Failure to stop private health insurance will, as the trial judge found, do so. Private insurance is a condition precedent to, and aims at promoting, a flourishing parallel private health care sector. For Dr. Chaoulli in particular, that is the whole point of this proceeding.

A. Preliminary Objections

182 The Attorneys General made two preliminary objections: first, that the claims raised on this appeal are not properly justiciable; and second, that neither Dr. Chaoulli nor Mr. Zeliotis has standing to bring their claim. These objections should be rejected.

(1) Justiciability

183 The Attorneys general of Canada and Quebec argue that the claims advanced by the appellants are inherently political and, therefore, not properly justiciable by the courts. We do not agree. Section 52 of the Constitution Act, 1982 affirms the constitutional power and obligation of courts to declare laws of no force or effect to the extent of their inconsistency with the Constitution. Where a violation stems from a Charter breach, the court may also order whatever remedy is “appropriate and just” in the circumstances under s. 24. There is nothing in our constitutional arrangement to exclude “political questions” from judicial review where the Constitution itself is alleged to be violated.

184 Nevertheless, a correct balance must be struck between the judiciary and the other branches of government. Each branch must respect the limits of its institutional role. As stated in Vriend v. Alberta, [1998] 1 S.C.R. 493, “the courts are to uphold the Constitution and have been expressly invited to perform that role by the Constitution itself. But respect by the courts for the legislature and executive role is as important as ensuring that the other branches respect each others’ role and the role of the courts” (para. 136).

185 In the present case, the appellants are challenging the legality of Quebec’s prohibition against private health insurance. While the issue raises “political questions” of a high order, the alleged Charter violation framed by the appellants is in its nature justiciable, and the Court should deal with it.

(2) Standing of Dr. Chaoulli and Mr. Zeliotis

186 Article 55 of the Code of Civil Procedure, R.S.Q., c. C-25, requires that the party bringing an action have a “sufficient interest” in the litigation. In our view, for the reasons given by the trial judge, as previously mentioned, Mr. Zeliotis has not demonstrated that systemic waiting lists were the cause of his delayed treatment.

187 Dr. Chaoulli’s situation is different. He offers himself as an advocate for private health insurance. He is a medically trained individual who has a history of conflict with the Quebec health authorities and of disobedience to their rules governing medical practice. The trial judge found Dr. Chaoulli’s motives to be questionable:

[translation] At first, Dr. Chaoulli was supposed to complete his initial contract in a remote region. He did not do so but returned to Montréal and, contrary to what he was entitled to do, began practising on the South Shore. He then obstinately insisted on practising medicine as he pleased, disregarding the regional board’s decisions. Dr. Chaoulli never testified that he had received inadequate care or that the system had not responded to his personal health needs. He still faces substantial penalties at the Régie de l’assurance-maladie du Québec. He was released from his obligations, returned to the public system, and is still not satisfied. All this leads the Court to question Dr. Chaoulli’s real motives in this dispute. It is impossible not to be struck by the contradictions in his testimony and by the impression that Dr. Chaoulli has embarked on a crusade that now raises questions transcending his own personal case. [p. 795]

188 Nevertheless, we accept that the appellants have a sufficient interest in the constitutional questions to be given public interest standing. In Minister of Justice of Canada v. Borowski, [1981] 2 S.C.R. 575, at p. 598, Martland J. wrote that to qualify in that regard, a person must satisfy three requirements:

[T]o establish status as a plaintiff in a suit seeking a declaration that legislation is invalid, if there is a serious issue as to its invalidity, a person need only to show that he is affected by it directly or that he has a genuine interest as a citizen in the validity of the legislation and that there is no other reasonable and effective manner in which the issue may be brought before the Court.

See also Canadian Council of Churches v. Canada (Minister of Employment and Immigration), [1992] 1 S.C.R. 236.

189 All three of these conditions are met in the present case. First, there is a serious challenge to the invalidity of the impugned provisions. Access to medical care is a concern of all Quebec residents. Second, Dr. Chaoulli and Mr. Zeliotis are both Quebec residents and are therefore directly affected by the provisions barring access to private health insurance. Third, the appellants advance the broad claim that the Quebec health plan is unconstitutional for systemic reasons. They do not limit themselves to the circumstances of any particular patient. Their argument is not limited to a case-by-case consideration. They make the generic argument that Quebec’s chronic waiting lists destroy Quebec’s legislative authority to draw the line against private health insurance. From a practical point of view, while individual patients could be expected to bring their own cases to court if they wished to do so, it would be unreasonable to expect a seriously ailing person to bring a systemic challenge to the whole health plan, as was done here. The material, physical and emotional resources of individuals who are ill, and quite possibly dying, are likely to be focussed on their own circumstances. In this sense, there is no other class of persons that is more directly affected and that could be expected to undertake the lengthy and no doubt costly systemic challenge to single-tier medicine. Consequently, we agree that the appellants in this case were rightly granted public interest standing. However, the corollary to this ruling is that failure by the appellants in their systemic challenge would not foreclose constitutional relief to an individual based on, and limited to, his or her particular circumstances.

B. The Canadian Charter of Rights and Freedoms

190 The Chief Justice and Major J. would strike down the Quebec legislation on the basis of s. 7 of the Canadian Charter, which provides:

Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.


191 Like our colleagues McLachlin C.J. and Major J., we accept the trial judge’s conclusion that in some circumstances some Quebeckers may have their life or “security of the person” put at risk by the prohibition against private health insurance. However, unlike our colleagues, we agree with the trial judge and the Quebec Court of Appeal that this situation, however deplorable, is not capable of resolution as a matter of constitutional law. At the same time, we reject some of the constraints that the Attorney General of Quebec would place on the Court’s analysis.

(1) The Application of Section 7 to Matters Not Falling Within the Administration of Justice

192 The Attorney General of Quebec argues that s. 7 does not protect economic rights. This is true, but is somewhat beside the point. The appellants seek access to a two-tier health system. The fact it will cost money to the people in the “upper tier” is an incidental (although important) aspect of their challenge, which is principled in nature.

193 Section 7 gives rise to some of the most difficult issues in Canadian Charter litigation. Because s. 7 protects the most basic interests of human beings - life, liberty and security - claimants call on the courts to adjudicate many difficult moral and ethical issues. It is therefore prudent, in our view, to proceed cautiously and incrementally in applying s. 7, particularly in distilling those principles that are so vital to our society’s conception of “principles of fundamental justice” as to be constitutionally entrenched.

194 At first blush, s. 15 of the Health Insurance Act, R.S.Q., c. A-29, and s. 11 of the Hospital Insurance Act, R.S.Q., c. A-28, seem far removed from the usual concerns of s. 7 of the Canadian Charter. The provisions sought to be invalidated provide:

15. No person shall make or renew a contract of insurance or make a payment under a contract of insurance under which an insured service is furnished or under which all or part of the cost of such a service is paid to a resident or a deemed resident of Québec or to another person on his behalf. …

11. (1) No one shall make or renew, or make a payment under a contract under which

(a) a resident is to be provided with or to be reimbursed for the cost of any hospital service that is one of the insured services;

(b) payment is conditional upon the hospitalization of a resident; or

(c) payment is dependent upon the length of time the resident is a patient in a facility maintained by an institution contemplated in section 2.

195 The present challenge does not arise out of an adjudicative context or one involving the administration of justice. Sections 11 and 15 are plainly not adjudicative provisions. Nor are they administrative provisions in the sense of being part of the administrative scheme for the provision of health services, though they do form part of the regulatory health regime. Section 11 is a civil prohibition against the making or renewing of a contract for insurance for “insured services” and against the payment under such a contract for “insured services”. Any contract entered into in contravention of s. 11 and s. 15 would be absolutely null and unenforceable because it is contrary to the general interest: art. 1417 of the Civil Code of Québec, S.Q. 1991, c. 64. Although small fines may be imposed for the breach of these provisions, we think that regulations providing for such fines, which are wholly incidental to the regulatory purpose, would not create a sufficient nexus with the adjudicative context to ground the application of s. 7 on that basis.

196 It will likely be a rare case where s. 7 will apply in circumstances entirely unrelated to adjudicative or administrative proceedings. That said, the Court has consistently left open the possibility that s. 7 may apply outside the context of the administration of justice: Gosselin v. Quebec (Attorney General), [2002] 4 S.C.R. 429, 2002 SCC 84, at paras. 78-80 and 414.

197 The Court has been moving away from a narrow approach to s. 7, which restricted the scope of the section to legal rights to be interpreted in light of the rights enumerated in ss. 8-14: see, e.g., Reference re ss. 193 and 195.1(1)© of the Criminal Code (Man.), [1990] 1 S.C.R. 1123 (“Prostitution Reference”), at pp. 1171-74. In Blencoe v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307, 2000 SCC 44, the majority held that s. 7 can apply outside of the criminal context. Further, in Winnipeg Child and Family Services v. K.L.W., [2000] 2 S.C.R. 519, 2000 SCC 48, the Court held that the wardship provisions of the Child Welfare Act, S.A. 1984, c. C-8.1, denying parents the ability to choose medical treatment for their infants, implicated the s. 7 liberty interests of parents.

198 Placing s. 7 under the heading “Legal Rights” in the Canadian Charter does not narrow or control its scope. Such a result would be unduly formalistic and inconsistent with the large, liberal and purposive interpretation of s. 7 that has been the hallmark of this Court’s approach since Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486. This is evidenced by the refusal of the majority in that case to restrict “principles of fundamental justice” solely to procedural guarantees. Lamer J. observed that “the principles of fundamental justice are to be found in the basic tenets and principles, not only of our judicial process, but also of the other components of our legal system” (p. 512 (emphasis added)).

199 Claimants whose life, liberty or security of the person is put at risk are entitled to relief only to the extent that their complaint arises from a breach of an identifiable principle of fundamental justice. The real control over the scope and operation of s. 7 is to be found in the requirement that the applicant identify a violation of a principle of fundamental justice. The further a challenged state action lies from the traditional adjudicative context, the more difficult it will be for a claimant to make that essential link. As will become clear, that is precisely the difficulty encountered by the claimants here: they are unable to demonstrate that any principle of fundamental justice has been contravened.

(2) Which Section 7 Interests Are Engaged?

200 Section 7 interests are enumerated as life, liberty and security of the person. As stated, we accept the trial judge’s finding that the current state of the Quebec health system, linked to the prohibition against health insurance for insured services, is capable, at least in the cases of some individuals on some occasions, of putting at risk their life or security of the person.

201 We do not agree with the appellants, however, that the Quebec Health Plan puts the “liberty” of Quebeckers at risk. The argument that “liberty” includes freedom of contract (in this case to contract for private medical insurance) is novel in Canada, where economic rights are not included in the Charter and discredited in the United States. In that country, the liberty of individuals (mainly employers) to contract out of social and economic programs was endorsed by the Supreme Court in the early decades of the 20th century on the theory that laws that prohibited employers from entering into oppressive contracts with employees violated their “liberty” of contract; see, e.g., Lochner v. New York, 198 U.S. 45 (1905), at p. 62:

… a prohibition to enter into any contract of labor in a bakery for more than a certain number of hours a week, is, in our judgment, so wholly beside the matter of a proper, reasonable and fair provision, as to run counter to that liberty of person and of free contract provided for in the Federal Constitution.

Of this line of cases, which was not brought to an end until West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937), Professor L. H. Tribe has written that the Supreme Court of the United States:

… relied on the Fourteenth Amendment’s Due Process Clause to strike down economic legislation that the Court saw as improperly infringing on contractual liberty, but in which the Court was widely (even if not always correctly) perceived to be substituting its own judgment, in the absence of any actual constitutional mandate, for that of the legislature. [Emphasis added.]

(American Constitutional Law (3rd ed. 2000), vol. 1, at p. 1318)

202 Nor do we accept that s. 7 of the Canadian Charter guarantees Dr. Chaoulli the “liberty” to deliver health care in a private context. The trial judge correctly concluded that [translation] “s. 7 of the Canadian Charter does not protect a physician’s right to practise his or her profession without restrictions in the private sector. That is a purely economic right” (p. 823). The fact that state action constrains an individual’s freedom by eliminating career choices that would otherwise be available does not in itself attract the protection of the liberty interest under s. 7. The liberty interest does not, for example, include the right to transact business whenever one wishes: R. v. Edwards Books and Art Ltd., [1986] 2 S.C.R. 713, at p. 786. Nor does it protect the right to exercise one’s chosen profession: Prostitution Reference, at p. 1179, per Lamer J. We would therefore reject Dr. Chaoulli’s claim on behalf of care providers that their liberty interest under either the Canadian Charter or the Quebec Charter has been infringed by Quebec’s single-tier public health system.

(3) Is There a Constitutional Right to Spend Money?

203 Reference has already been made to the question raised by our colleague Deschamps J. at para. 4 of her reasons:

In essence, the question is whether Quebeckers who are prepared to spend money to get access to health care that is, in practice, not accessible in the public sector because of waiting lists may be validly prevented from doing so by the state.

While we do not accept that there is a constitutional right “to spend money”, which would be a property right, we agree that if the public system fails to deliver life-saving care and an individual is simultaneously prevented from seeking insurance to cover the cost of that care in a private facility, then the individual is potentially caught in a situation that may signal a deprivation of his or her security of the person.

204 This is not to say that every encounter with a waiting list will trigger the application of s. 7. The interference with one’s mental well-being must not be trivial. It must rise above the ordinary anxiety caused by the vicissitudes of life, but it need not be so grave as to lead to serious mental anguish or nervous breakdown. Some individuals that meet this test are to be found entangled in the Quebec health system. The fact such individuals do not include the appellants personally is not fatal to their challenge because they come here as plaintiffs purporting to represent the public interest.

205 The Court has found a deprivation of one’s psychological integrity sufficient to ground a s. 7 claim in a range of cases. In Morgentaler, the majority held that the impugned abortion provisions seriously compromised a woman’s physical and psychological integrity in a manner that constituted an infringement of her security of the person: at pp. 56-57, per Dickson C.J. (Lamer J. concurring), at pp.104-105, per Beetz J. (Estey J. concurring); at pp. 173-74, per Wilson J. The Court subsequently held that the criminal prohibition against assisting someone to commit suicide constituted an impingement of the claimant’s physical and psychological integrity that amounted to a deprivation of the right to security of the person under s. 7; the claimant in that case was suffering from Lou Gehrig’s disease, a rapidly deteriorating condition, which results in paralysis and eventually requires invasive life-prolonging measures to be taken: Rodriguez v. British Columbia (Attorney General), [1993] 3 S.C.R. 519. More recently, in New Brunswick (Minister of Health and Community Services) v. G. (J.), [1999] 3 S.C.R. 46, the Court was unanimous in saying that removal of a child from parental custody by the state pursuant to its wardship jurisdiction constituted a serious interference with the psychological integrity of the parent that deprived the parent of the security of the person.

206 It may also be that a lack of timely medical intervention will put the physical security of the patient at risk. The condition of a cardiac or cancer patient, for example, may seriously deteriorate if treatment is not available quickly.

207 As stated, the principal legal hurdle to the appellants’ Charter challenge is not the preliminary step of identifying a s. 7 interest potentially affected in the case of some Quebeckers in some circumstances. The hurdle lies in their failure to find a fundamental principle of justice that is violated by the Quebec health plan so as to justify the Court in striking down the prohibition against private insurance for what the government has identified as “insured services”.

C. Principles of Fundamental Justice

208 For a principle to be one of fundamental justice, it must count among the basic tenets of our legal system: Re B.C. Motor Vehicle, at p. 503. It must generally be accepted as such among reasonable people. As explained by the majority in Malmo-Levine, at para. 113:

The requirement of “general acceptance among reasonable people” enhances the legitimacy of judicial review of state action, and ensures that the values against which state action is measured are not just fundamental “in the eye of the beholder only”: Rodriguez, at pp. 607 and 590 (emphasis in original). In short, for a rule or principle to constitute a principle of fundamental justice for the purposes of s. 7, it must be a legal principle about which there is significant societal consensus that it is fundamental to the way in which the legal system ought fairly to operate, and it must be identified with sufficient precision to yield a manageable standard against which to measure deprivations of life, liberty or security of the person. [First emphasis in original; subsequent emphasis added.]

See also Canadian Foundation for Children, Youth and the Law v. Canada (Attorney General), [2004] 1 S.C.R. 76, 2004 SCC 4, at para. 8.

209 Thus, the formal requirements for a principle of fundamental justice are threefold. First, it must be a legal principle. Second, the reasonable person must regard it as vital to our societal notion of justice, which implies a significant societal consensus. Third, it must be capable of being identified with precision and applied in a manner that yields predictable results. These requirements present insurmountable hurdles to the appellants. The aim of “health care to a reasonable standard within reasonable time” is not a legal principle. There is no “societal consensus” about what it means or how to achieve it. It cannot be “identified with precision”. As the testimony in this case showed, a level of care that is considered perfectly reasonable by some doctors is denounced by others. Finally, we think it will be very difficult for those designing and implementing a health plan to predict when its provisions cross the line from what is “reasonable” into the forbidden territory of what is “unreasonable”, and how the one is to be distinguished from the other.

(1) The Experts Recognized that the Potential Market for Health Services Is Almost Limitless, and the Supply Must Therefore Be Rationed Whether by Governments in the Public Sector or Insurers or Other Health Care Providers in the Private Sector

210 Much of the argument pursued by the Chief Justice and Major J., as well as by Deschamps J. in her reasons relating to the Quebec Charter, revolves around the vexing issue of waiting lists, which have notoriously fuelled major public debates and controversies.

211 The case history of the appellant Zeliotis illustrates why rationing of health services is necessary and how it works. The trial judge, having heard all the evidence, concluded that the delays Mr. Zeliotis experienced in obtaining hip surgery were caused not by excessive waiting lists but by a number of other factors, including his pre-existing depression and his indecision and unfounded medical complaints (p. 793):

[translation] The truth is that, in light of his personal medical impediments, the fact that he was already suffering from depression, his indecision and his complaints, which in many respects were unwarranted, it is hard to conclude that the delays that occurred resulted from lack of access to public health services, and in fact even Mr. Zeliotis’s complaints about delays are questionable. It was he who initially wanted a second opinion, it was his surgeon who hesitated because of his problems, and so on. Thus, his complaint to the director of professional services at the Royal Victoria Hospital . . . was not corroborated. An out-of-court examination in connection with another case is puzzling, as Mr. Zeliotis said he was in very good health . . .

Mr. Zeliotis sought a second opinion, which he was entitled to do, and this further delayed his surgery. More importantly, his physician believed that Mr. Zeliotis was not an “ideal candidate” for the surgery because he had suffered a heart attack and undergone bypass surgery earlier that year. Accordingly, neither the mere existence of waiting lists, nor the fact that certain individuals like Mr. Zeliotis feel unfairly dealt with, necessarily points to a constitutional problem with the public health system as a whole.

(a) There Is No Consensus About What Constitutes “Reasonable” Waiting Times

212 A review of the expert evidence and the medical literature suggests that there is no consensus regarding guidelines for timely medical treatment. Dr. Wright remarked:

So the issue of defining what is a reasonable waiting list is a very difficult one because if you have a hundred (100) surgeons, you have a hundred (100) opinions, it’s very difficult to come to a consensus on these questions. [A.R. p. 1186]

There are currently no national standards for timely treatment: see C. Sanmartin, et al., “Waiting for medical services in Canada: lots of heat, but little light” (2000), 162 C.M.A.J. 1305; S. Lewis, et al., “Ending waiting-list mismanagement: principles and practice” (2000), 162 C.M.A.J. 1297; N. E. Mayo, et al., “Waiting time for breast cancer surgery in Quebec” (2001), 164 C.M.A.J. 1133.

213 It is therefore convenient to look further into the expert evidence, not to dispute the existence of waiting list problems or to understate the level of public anxiety they create, but simply to illustrate the complexity of the situation and the dangers of oversimplification.

(b) The Experts Accepted by The Trial Judge Relied on More Than Just “Common Sense”

214 Our colleagues the Chief Justice and Major J. dismiss the experts accepted by the trial judge as relying on little more than “common sense” (para. 137). Although we agree that the experts offered “common sense”, they offered a good deal more. The experts heard by the trial court included Mr. Claude Castonguay, who was Quebec’s Minister of Health in 1970 (the [translation] “father of Quebec health insurance”) and who chaired the Commission of Inquiry on Health and Social Welfare, as well as a number of other public health experts, including Dr. Fernand Turcotte, a professor of medicine at Laval University, who holds degrees from the University of Montreal and Harvard and has been certified by the Royal College of Physicians and Surgeons of Canada as a specialist in community medicine; Dr. Howard Bergman, Chief of the Division of Geriatric Medicine at Montreal’s Jewish General Hospital, Director of the Division of Geriatric Medicine and a professor in the departments of Internal Medicine and Family Medicine at McGill University, and a fellow of the American Geriatrics Society and an associate professor at the University of Montreal in the department of health administration; Dr. Charles J. Wright, a physician specialized in surgery, Director of the Centre for Clinical Epidemiology & Evaluation at the Vancouver Hospital & Health Sciences Centre, faculty member of the University of British Columbia and of the British Columbia Office of Health Technology Assessment; Professor Jean-Louis Denis, a community health doctor of the University of Montreal’s [translation] “health services organization”; Professor Theodore R. Marmor, a professor of public policy and management and of political science at Yale University, who holds a PhD from Harvard University in politics and history and is a graduate research fellow at Oxford; and Dr. J. Edwin Coffey, a graduate of McGill University in medicine who specializes in obstetrics and gynecology, a fellow of the Royal College of Physicians and Surgeons of Canada and of the American College of Obstetricians and Gynecologists, and a former associate professor in the McGill University Faculty of Medicine. The respondent’s experts testified and were cross-examined. The trial judge found them to be credible and reliable. We owe deference to her findings in this respect.

215 The trial judge, having heard the evidence, concluded as follows:

[translation] . . . although some of these specialists indicated a desire to be free to obtain private insurance, none of them gave their full and absolute support to the applicants’ proposals, as they explained that it was neither clear nor obvious that a reorganization of the health system with a parallel private system would solve all the existing problems of delays and access. On the contrary, the specialists who testified remained quite circumspect about this complex and difficult question. [Emphasis added; p. 796.]

The exception to the consensus was the appellants’ expert, Dr. Coffey, who stated that in his opinion the development of a private insurance scheme would not affect the public health scheme. This is the argument accepted by our colleagues the Chief Justice and Major J. However on this point the trial judge observed, as on others, [translation] “that Dr. Coffey stood alone in both his expert evaluation and the conclusions he reached” (p. 808) (emphasis in original)).

216 In addition, the court was presented with a number of government reports and independent studies. They bear out the wisdom of the comment in Un avenir pour le système public de santé (1998), at p. 20 (“Denis Report”): [translation] “It is important that we quickly distance ourselves from a position advocating simple solutions to complex problems.”

© The Lack of Accurate Data

217 How serious is the waiting-list problem? No doubt it is serious; but how serious? The first major evidentiary difficulty for the appellants is the lack of accurate data. The major studies concluded that the real picture concerning waiting lists in Canada is subject to contradictory evidence and conflicting claims (Romanow Report, p. 139, and the Kirby Report, vol. 4, p. 41, and vol. 6, pp. 109-10). This can also be seen from the evidence of the experts who testified at trial in the present case (see Waiting Lists in Canada and the Potential Effects of Private Access to Health Care Services (1998), p. 7 (“Wright Report”); Le temps d’attente comme instrument de gestion du rationnement dans les services de santé du Canada (1998) (“Turcotte Report”)), and from the available literature (see Waiting Lists and Waiting Times for Health Care in Canada: More Management!! More Money? (1998) (“McDonald Report”)). At trial, Dr. Wright also discounted the value of random opinion surveys:

The information is based on no formal structured data collection of any kind and has no credibility whatever with any health service researcher or epidemiologist.

(Wright Report, p. 8)

218 In a commentary for the Canadian Medical Association Journal, S. Lewis, et al. observed:

The waiting-list “nonsystem” in Canada is a classic case of forced decision-making in the absence of good management information. There is a surfeit of nonstandardized data and a dearth of usable, policy-oriented information about waiting lists. The most serious consequence is that information and management defects are almost always prematurely diagnosed as financial shortages. [p. 1299]

219 Professor Marmor also subscribed to the view that waiting lists cannot serve as a “simple indicator” of a failing health care system (Expert Witness Report (1998), at p. 11 (“Marmor Report”)) in part because studies of waiting lists have demonstrated that up to one third of patients on lists no longer need to be on them because the procedure has already been performed elsewhere; the patient has already been admitted on an emergency basis; the patient no longer wishes the procedure to be performed; the procedure is no longer medically necessary; the patient has already been called in to have the procedure but refused for personal reasons or due to inconvenient timing; or the patient is on multiple waiting lists at different hospitals thereby inflating numbers (Wright Report, at pp. 7-8).

(d) The Impact of Waiting Times on Individual Patients

220 It is even more difficult to generalize about the potential impact of a waiting list on a particular patient. The most comprehensive overview of the literature on waiting lists available to the trial judge was the McDonald Report, p. 14. It presents a review of studies of patients’ experiences while awaiting surgery. That review prompted the authors to conclude, among other things, that patients awaiting care for a range of procedures - including knee and hip replacement, cardiac care and cataract care - may experience “emotional strains such as increased levels of anxiety due to a range of factors including lack of information and uncertainty regarding the timeline for care” (p. 267 (emphasis added)) or the “normal” anxiety or apprehension felt by anyone faced with a serious surgical procedure. In other words, waiting lists may be serious in some cases, but in how many cases and how serious?

(e) The Need to Ration Services

221 Waiting times are not only found in public systems. They are found in all health care systems, be they single-tier private, single-tier public, or the various forms of two-tier public/private (see, e.g., Kirby Report, vol. 1, p. 111). Waiting times in Canada are not exceptional (see Kirby Report, vol. 4, p. 41). The consequence of a quasi-unlimited demand for health care coupled with limited resources, be they public or private, is to ration services. As noted by the Arpin Report, Constats et recommandations sur les pistes à explorer: Synthèse, at p. 37:

[translation] In any health care system, be it public or private, there is an ongoing effort to strike the proper balance. . . . For a public system like our own, waiting lists, insofar as priority is given to urgent cases, do not in themselves represent a flaw in the system. They are the inevitable result of a public system that can consequently offer universal access to health services within the limits of sustainable public spending. Thus, to a certain extent, they play a necessary role.

222 The expert witnesses at trial agreed that waiting lists are inevitable (Expertise déposée par Howard Bergman (1998), p. 5 (“Bergman Report”); Marmor Report, p. 11). The only alternative is to have a substantially overbuilt health care system with idle capacity (Wright Report, p. 6). This is not a financially feasible option, in the public or private sector.

(f) Who Should Be Allowed to Jump the Queue?

223 In a public system founded on the values of equity, solidarity and collective responsibility, rationing occurs on the basis of clinical need rather than wealth and social status (see e.g., Turcotte Report, at pp. 4 and 10; Denis Report, p. 11; Clair Report, p. 135; Rapport de la Commission d’enquête sur les services de santé et les services sociaux (1988), at p. 651 (“Rochon Report”)). As a result, there exists in Canada a phenomenon of “static queues” whereby a group of persons may remain on a waiting list for a considerable time if their situation is not pressing. Patients who are in greater need of health care are prioritized and treated before those with a lesser need (Kirby Report, vol. 5, at pp. 56-57; see also Turcotte Report, at p. 12). In general, the evidence suggests that patients who need immediate medical care receive it. There are of course exceptions, and these exceptions are properly the focus of controversy, but in our view they can and should be addressed on a case-by-case basis.

(g) Availability of Public Funding for Out-of-Province Medical Care

224 Section 10 of the Health Insurance Act provides that in certain circumstances Quebeckers will be reimbursed for the cost of “insured services” rendered outside Quebec but in Canada (Regulation respecting the application of the Health Insurance Act, R.R.Q. 1981, s. 23.1), or outside Canada altogether (s. 23.2). There is no doubt that the power of reimbursement is exercised sparingly, and on occasion unlawfully; see for example Stein v. Tribunal administratif du Québec, [1999] R.J.Q. 2416 (S.C.). One of the difficulties in assessing the effectiveness of this individual remedy is that neither Dr. Chaoulli nor Mr. Zeliotis is before the Court with an actual medical problem. (The trial judge, as stated, dismissed Mr. Zeliotis’ personal health complaints as unsubstantiated.) The reimbursement scheme for out-of-province services exists as a form of safety valve for situations in which Quebec facilities are unable to respond. As Stein shows, there are lapses of judgment, as there will be in the administration of any government plan. The existence of the individual remedy, however, introduces an important element of flexibility, if administered properly.

(h) The Evidence Relied on by the Chief Justice and Major J. Did Not Satisfy the Trial Judge and Is Not, in Our View, Persuasive

225 The Chief Justice and Major J. cite Dr. Lenczner as an authority at para. 114 but the trial judge pointed out that Dr. Lenczner had not been qualified as an expert witness and counsel for Mr. Zeliotis agreed (A.R., vol. 11, at pp. 330-31). Dr. Lenczner’s comments were largely anecdotal and of little general application. He described a patient who was a golfer, and thus lost his access to his golf membership for that season. He also stated that a tear can increase over time and get to the point of being irreparable, but no studies or general evidence was adduced to show the incidence of such cases in Quebec. Our colleagues comment at para. 112 that “a person with coronary disease is [translation] ‘sitting on a bomb’ and can die at any moment”. This is true, of course. He or she can die at home, or in an ambulance on the way to a hospital. Again, our colleagues write, “patients die while on waiting lists” (para. 112). This, too, is true. But our colleagues are not advocating an overbuilt system with enough idle capacity to eliminate waiting lists, and such generalized comments provided no guidance for what in practical terms would constitute an appropriate level of resources to meet their suggested standard of “public health care of a reasonable standard within reasonable time” (para. 105).

226 We have similar concerns about the use made by the appellants of various reports in connection with other OECD countries. These “country” reports were included in an Interim Kirby Report but not in its final version. The Final Kirby Report’s recommendation was to stick with a single-tier system. We think the Court is sufficiently burdened with conflicting evidence about our own health system without attempting a detailed investigation of the merits of trade-offs made in other countries, for their own purposes. A glance at the evidence shows why.

227 Our colleagues the Chief Justice and Major J. state, at para. 142, that in Sweden only a very small minority of the population actually utilize private insurance. Yet, the Interim Kirby Report goes on to take note of more recent trends:

The growing rate of the number of insured, or people on private health care insurance, is some 80% or something like that now. It is growing very fast due to the normal waiting lists and the problems within the system today. [Emphasis in original.]

(Interim Kirby Report, vol. 3, at pp. 31-32)

228 With respect to the United Kingdom, the Interim Kirby Report states:

One of the major reasons given by people who take private insurance is they want the peace of mind of being able to have elective operations for themselves or their families more quickly or at more convenient times than if they must depend on the National Health Service. That is seen, of course, as a cause of unfairness, which is one of the reasons that the government is committed to bringing down waiting times for National Health Service patients as rapidly as it can. [Emphasis in original.]

(Interim Kirby Report, vol. 3, at p. 38)

In fact, in the actual conclusion of vol. 3 of the Interim Kirby Report on Health Care Systems in Other Countries, the report’s authors state (at p. 73):

Canadians may find some consolation in the fact that Canada is not alone in confronting complex health care issues. Everywhere in the industrialized world health care policy is thoroughly intertwined with the political, social, and even cultural life of each country. As such, every health care system is unique. Therefore, no single international model constitutes a blueprint for solving the challenges confronted by the Canadian health care system. However, experts told the Committee that careful consideration must be given to the repercussions in Canada of introducing, on a piecemeal basis, changes undertaken in other countries.

229 We are not to be taken as disputing the undoubted fact that there are serious problems with the single-tier health plan in Canada. Our point is simply that bits of evidence must be put in context. With respect, it is particularly dangerous to venture selectively into aspects of foreign health care systems with which we, as Canadians, have little familiarity. At the very least such information should be filtered and analysed at trial through an expert witness.

230 Taking the good with the bad, the Final Kirby Report recommended continuation of a single-tier health system (as did the Romanow Report). The authors of the Kirby Report were fully aware of the extracts from their interim report relied upon by our colleagues McLachlin C.J. and Major J., yet they specifically rejected two-tier health care:

Repeated public opinion polling data have shown that having to wait months for diagnostic or hospital treatment is the greatest concern and complaint that Canadians have about the health care system. The solution to this problem is not, as some have suggested, to allow wealthy Canadians to pay for services in a private health care institution. Such a solution would violate the principle of equity of access. The solution is the care guarantee as recommended in this report. [Emphasis added.]

(Kirby Report, Vol. 6 at p. 321)

We thus conclude that our colleagues’ extracts of some of the tour d’horizon data published in the Interim Kirby Report do not displace the conclusion of the trial judge, let alone the conclusion of the Kirby Report itself. Apart from everything else, it leaves out of consideration the commitment in principle in this country to health care based on need, not wealth or status, as set out in the Canada Health Act.

(2) Arbitrariness

231 Our colleagues the Chief Justice and Major J. take the view that a law which arbitrarily violates life or security of the person is unconstitutional. We agree that this is a principle of fundamental justice. We do not agree that it applies to the facts of this case.

232 A deprivation of a right will be arbitrary and will thus infringe s. 7 if it bears no relation to, or is inconsistent with, the state interest that lies behind the legislation: Rodriguez, at pp. 619-20; Malmo-Levine, at para. 135. As Sopinka J. explained in Rodriguez, at pp. 594-95:

Where the deprivation of the right in question does little or nothing to enhance the state’s interest (whatever it may be), it seems to me that a breach of fundamental justice will be made out, as the individual’s rights will have been deprived for no valid purpose. … It follows that before one can determine that a statutory provision is contrary to fundamental justice, the relationship between the provision and the state interest must be considered. One cannot conclude that a particular limit is arbitrary because (in the words of my colleague, McLachlin J. at pp. 619-20) “it bears no relation to, or is inconsistent with, the objective that lies behind the legislation” without considering the state interest and the societal concerns which it reflects. [Emphasis added.]

233 We agree with our colleagues the Chief Justice and Major J. that a law is arbitrary if “it bears no relation to, or is inconsistent with, the objective that lies behind [the legislation]” (para. 130). We do not agree with the Chief Justice and Major J. that the prohibition against private health insurance “bears no relation to, or is inconsistent with” the preservation of access to a health system based on need rather than wealth in accordance with the Canada Health Act. We also do not agree with our colleagues’ expansion of the Morgentaler principle to invalidate a prohibition simply because a court believes it to be “unnecessary” for the government’s purpose. There must be more than that to sustain a valid objection.

234 The accepted definition in Rodriguez states that a law is arbitrary only where “it bears no relation to, or is inconsistent with, the objective that lies behind the legislation”. To substitute the term “unnecessary” for “inconsistent” is to substantively alter the meaning of the term “arbitrary”. “Inconsistent” means that the law logically contradicts its objectives, whereas “unnecessary” simply means that the objective could be met by other means. It is quite apparent that the latter is a much broader term that involves a policy choice. If a court were to declare unconstitutional every law impacting “security of the person” that the court considers unnecessary, there would be much greater scope for intervention under s. 7 than has previously been considered by this Court to be acceptable. (In Rodriguez itself, for example, could the criminalization of assisted suicide simply have been dismissed as “unnecessary”? As with health care, many jurisdictions have treated euthanasia differently than does our Criminal Code.) The courts might find themselves constantly second-guessing the validity of governments’ public policy objectives based on subjective views of the necessity of particular means used to advance legitimate government action as opposed to other means which critics might prefer.

235 Rejecting the findings in the courts below based on their own reading of the evidence, our colleagues the Chief Justice and Major J. state (at para. 128):

We are of the opinion that the evidence before the trial judge supports a finding that the impugned provisions are arbitrary and that the deprivation of life and security of the person that flows from them cannot therefore be said to accord with the principles of fundamental justice.

We note that our colleagues refer to the evidence before the trial judge rather than the view taken of that evidence by the trial judge. The trial judge reached a contrary conclusion on the facts, and deference is due to her view of that evidence; see Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33. In any event, with respect, we accept the contrary conclusions of the trial judge and the Quebec Court of Appeal. We approach the issue of arbitrariness in three steps:

(i) what is the “state interest” to be protected?

(ii) what is the relationship between the “state interest” thus identified and the prohibition against private health insurance?

(iii) have the appellants established that the prohibition bears no relation to, or is inconsistent with, the state interest?

We will address each question in turn.

(a) What Is the “State Interest” Sought To Be Protected?

236 Quebec’s legislative objective is to provide high quality health care, at a reasonable cost, for as many people as possible in a manner that is consistent with principles of efficiency, equity and fiscal responsibility. Quebec (along with the other provinces and territories) subscribes to the policy objectives of the Canada Health Act, which include (i) the equal provision of medical services to all residents, regardless of status, wealth or personal insurability, and (ii) fiscal responsibility. An overbuilt health system is seen as no more in the larger public interest than a system that on occasion falls short. The legislative task is to strike a balance among competing interests.

237 The appellants do not challenge the constitutional validity of the objectives set out in the Canada Health Act. Thus our job as judges is not to agree or disagree with these objectives but simply to determine whether the means adopted by Quebec to implement these objectives are arbitrary.

(b) What Is the Relationship Between the “State Interest” thus Identified and the Prohibition Against Private Health Insurance?

238 The relationship lies both in principle and in practicality.

239 In principle, Quebec wants a health system where access is governed by need rather than wealth or status. Quebec does not want people who are uninsurable to be left behind. To accomplish this objective endorsed by the Canada Health Act, Quebec seeks to discourage the growth of private-sector delivery of “insured” services based on wealth and insurability. We believe the prohibition is rationally connected to Quebec’s objective and is not inconsistent with it.

240 In practical terms, Quebec bases the prohibition on the view that private insurance, and a consequent major expansion of private health services, would have a harmful effect on the public system.

241 The trial judge put her conclusion this way (at p. 827):

[translation] The Health Insurance Act [HEIA] and the Hospital Insurance Act [HOIA] are pieces of legislation whose purpose is to create and maintain a public health care plan open to all residents of Quebec. These enactments are intended to promote the overall health of all Quebeckers without discrimination based on economic circumstances. In short, they constitute a government action whose purpose is to promote the well-being of all the people of the province.

Plainly, s. 15 HEIA and s. 11 HOIA erect economic barriers to access to private health care. However, these measures are not really intended to limit access to health care; rather, their purpose is to prevent the establishment of a parallel private system. These provisions are based on the fear that the establishment of a private health care system would rob the public sector of a significant portion of the available health care resources. The Quebec government enacted s. 15 HEIA and s. 11 HOIA to guarantee that virtually all the existing health care resources in Quebec would be available to all the people of Quebec. That is clear.

The purpose of the impugned provisions is to guarantee equal and adequate access to health care for all Quebeckers. The enactment of s. 15 HEIA and s. 11 HOIA was motivated by considerations of equality and human dignity, and it is therefore clear that there is no conflict with the general values expressed in the Canadian Charter or in the Quebec Charter of human rights and freedoms. [Emphasis in original.]

We agree.

© Have the Appellants Established that the Prohibition Bears No Relation to, or Is Inconsistent with, the State Interest?

242 The trial judge considered all the evidence and concluded that the expansion of private health care would undoubtedly have a negative impact on the public health system (at p. 827):

[translation] The evidence has shown that the right of access to a parallel private health care system claimed by the applicants would have repercussions on the rights of the population as a whole. We cannot bury our heads in the sand. The effect of establishing a parallel private health care system would be to threaten the integrity, proper functioning and viability of the public system. Section 15 HEIA and s. 11 HOIA prevent this from happening and secure the existence in Quebec of a public health care system of high quality.

As well, the Court finds that s. 15 HEIA and s. 11 HOIA are not overbroad. The only way to guarantee that all the health care resources will benefit all Quebeckers without discrimination is to prevent the establishment of a parallel private health care system. That is in fact the effect of the impugned provisions in the case at bar. [Emphasis in original.]

These findings were explicitly adopted by Forget J.A. of the Court of Appeal and implicitly endorsed by the other judges of that court. The trial judge relied on the reports available to her in rejecting the appellants’ constitutional challenge, and none of the material that has since been added (such as the Romanow Report) changes or modifies the correctness of her conclusion, in our view. We therefore agree with the trial judge and the Quebec Court of Appeal that the appellants failed to make out a case of “arbitrariness” on the evidence. Indeed the evidence proves the contrary. We now propose to review briefly some of the evidence supporting the findings of the trial judge.

(i) A Parallel Private Regime Will Have a Negative Impact on Waiting Times in the Public System

243 The appellants’ argument in favour of a parallel private regime is one of a “win/win” prediction; i.e. that waiting times in the public regime will be reduced if those who can afford private insurance leave the public waiting lists in order to receive private health care. However, the Kirby Report states flatly that “allowing a private parallel system will … make the public waiting lines worse” (vol. 4, at p. 42 (emphasis added)). This conclusion is supported by the Romanow Report (p. 139: “[P]rivate facilities may improve waiting times for the select few … but … worse[n them for the many]”), the Turcotte Report (p.13-14), and the expert witnesses at trial (Marmor Report; Wright Report; Bergman Report).

244 A study of a Manitoba pilot project found that in the case of cataract operations, public health patients who went to surgeons working in both private and public clinics waited far longer than patients who went to surgeons working only in the public system. The same private sector patient preference is evident from other studies and experience: See Wright Report, at p. 17; Bergman Report, at p. 8; J. Hurley, et al., Parallel Private Health Insurance in Australia: A Cautionary Tale and Lessons for Canada (2002); C. DeCoster, L. MacWilliam and R. Walld, Waiting Times for Surgery: 1997/98 and 1998/99 Update (2000); W. Armstrong, The Consumer Experience with Cataract Surgery and Private Clinics in Alberta: Canada’s Canary in the Mine Shaft (2000); Canadian Health Services Research Foundation, Mythbusters: Myth: A parallel private system would reduce waiting times in the public system (2001); Le financement privé des services médicaux et hospitaliers (2003), p. 30.

245 The Australian experience, as reported by Dr. Wright, is that at present delays in the Australian public system are caused largely by surgeons’ reluctance to work in public hospitals and by their encouragement of patients to use the private system on a preferential basis (Wright Report, at p. 15; Hurley, p. 17).

246 The same is true for the United Kingdom, which has a two-tier health system where physicians who want to practise privately are required to practise a minimum number of hours in the public system. There, an Audit Commission of the National Health Service reported that surgeons do on average a third to half again as many operations for private fees as they do in the public system, and that they spend less time than they are contracted for working in the public system in order to conduct private practice (Wright Report, at p. 16; see also Le financement privé des services médicaux et hospitaliers, p. 30).

247 Both the Romanow Report and the Kirby Report examine the current shortage of health care professionals in Canada (Kirby Report, vol. 2, at pp. 75, vol. 4, at pp. 7 and 107; Romanow Report, at pp. 92), and in rural parts of Canada in particular (Kirby Report, vol. 2, at p. 137; Romanow Report, at pp. 166). Dr. Wright testified that the experience in all jurisdictions with two-tier health care systems (e.g., the United Kingdom, Australia, New Zealand and Israel) demonstrates a diversion of energy and commitment by physicians and surgeons from the public system to the more lucrative private option (Wright Report, at pp. 15 and 22). This evidence is supported by the Romanow Report (at pp. 92), the Kirby Report (vol. 1, at p. 105) and a 2003 Quebec report (Le financement privé des services médicaux et hospitaliers, at p. 6). See also Marmor Report (at p. 5) and Denis Report (at p. 14). Furthermore, the experts testified that there are no firm data whatsoever showing that a parallel private system would enhance potential for recruiting highly trained specialists (see Wright Report, at p. 19).

(ii) The Impact of a Parallel Private Regime on Government Support for a Public System

248 The experience in other OECD countries shows that an increase in private funding typically leads to a decrease in government funding (Le financement privé des services médicaux et hospitaliers, at p. 7; Marmor Report, at p. 6). At trial, Dr. Bergman explained that a service designed purely for members of society with less socio-economic power would probably lead to a decline in quality of services, a loss of political support and a decline in the quality of management (Bergman Report, at pp. 6-7; see also Marmor Report, at pp. 6 and 8; Denis Report, at p. 5).

(iii) Private Insurers May “Skim the Cream” and Leave the Difficult and Costly Care to the Public Sector

249 The evidence suggests that parallel private insurers prefer to siphon off high income patients while shying away from patient populations that constitute a higher financial risk, a phenomenon known as “cream skimming” (Wright Report, at p. 17; Kirby Report, vol. 6, at p. 301). The public system would therefore carry a disproportionate burden of patients who are considered “bad risks” by the private market by reason of age, socio-economic conditions, or geographic location.

250 Similarly, private insurers may choose to avoid “high-risk” surgery. The public system is likely to wind up carrying the more complex high acuity end of the health care spectrum and, as a consequence, increase rather than reduce demand (proportionately) in the public system for certain services (Wright Report, at p. 18).

(iv) The U.S. Two-Tier System of Health Coverage

251 Reference has already been made to the U.S. health care system, which is the most expensive in the world, even though by some measures Americans are less healthy than Canadians (Kirby Report, vol. 1, at p. 101, and vol. 4, at p. 28; Romanow Report, p. 14). The existence of a private system has not eliminated waiting times. The availability, extent and timeliness of health care is rationed by private insurers, who may determine according to cost, not need, what is “medically necessary” health care and where and when it is to occur (Kirby Report, vol. 3, at p. 48; Denis Report, pp. 12 and 16). Whether or not the private system in the U.S. is better managed is a matter of debate amongst policy analysts. The point here is simply that the appellants’ faith in the curative power of private insurance is not borne out by the evidence put before the Court.

(v) Moreover the Government’s Interest in Fiscal Responsibility and Efficiency May Best Be Served by a Single-Tier System

252 The expert witnesses at trial (other than the appellants’ witness Dr. Coffey) and the Romanow Report and the Kirby Report all agree that the most cost-effective method of providing health care is through public single-tier financing. Dr. Wright testified at trial that the “public administration criterion [of the Canada Health Act] renders the Canadian health care system one of the most efficient in terms of the ratio of productivity to administrative costs in the world” (Wright Report, at p. 2; see also Marmor Report, at p. 9; Denis Report, at p. 8; Kirby Report, vol. 3, at p. 67, and vol. 4, at p. 23; Romanow Report, at p. 43; The World Health Report 1999: Making a Difference (1999); Report of the National Advisory Council on Aging, The NACA Position on the Privatization of Health Care (1997), at p. 14).

253 In particular, much is saved in a single-tier public system as a result of lower administrative costs and advertising expenses, the absence of overhead and the fact that the risk is spread over the entire population (see Romanow Report, at pp. 60ff; Kirby Report, vol. 4, at p. 31).

254 Not only is there “no evidence [that the] adoption [of a private health care system] would produce a more efficient, affordable or effective system” (Romanow Report, at p. xxiv), there is also no clear evidence that private surgical services are more efficient or less costly (Wright Report, at p. 14; Romanow Report, at p. 8; Le financement privé des services médicaux et hospitaliers, at pp. 23 and 33).

255 With respect to the impact on the financial resources of the public system, the experts testified that the introduction of a parallel private health regime would likely increase the overall cost of health care to Canadians (Marmor Report, at pp. 8 and 10; Bergman Report, at p. 7; Turcotte Report, at p. 11; see also Le financement privé des services médicaux et hospitaliers, at p. 24).

(vi) Conclusion on “Arbitrariness”

256 For all these reasons, we agree with the conclusion of the trial judge and the Quebec Court of Appeal that in light of the legislative objectives of the Canada Health Act it is not “arbitrary” for Quebec to discourage the growth of private sector health care. Prohibition of private health insurance is directly related to Quebec’s interest in promoting a need-based system and in ensuring its viability and efficiency. Prohibition of private insurance is not “inconsistent” with the state interest; still less is it “unrelated” to it.

257 In short, it cannot be said that the prohibition against private health insurance “bears no relation to, or is inconsistent with” preservation of a health system predominantly based on need rather than wealth or status, as required by the Rodriguez test, at pp. 594-95.

258 As to our colleagues’ dismissal of the factual basis for Quebec’s legislative choice, the public has invested very large sums of money in a series of authoritative reports to analyse health care in this country and in other countries. The reports uniformly recommend the retention of single-tier medicine. People are free to challenge (as do the appellants) the government’s reliance on those reports but such reliance cannot be dismissed as “arbitrary”. People are also free to dispute Quebec’s strategy, but in our view it cannot be said that a single-tier health system, and the prohibition on private health insurance designed to protect it, is a legislative choice that has been adopted “arbitrarily” by the Quebec National Assembly as that term has been understood to date in the Canadian Charter jurisprudence.

(3) The Morgentaler Case Is Not Applicable

259 Our colleagues the Chief Justice and Major J. rely substantially on comments made by Beetz J. (concurred in by Estey J.) in Morgentaler when he invoked a principle of “manifest unfairness”. Nowhere in his analysis pertaining to the principles of fundamental justice did Beetz J. use the words “arbitrary” or “arbitrariness”. Moreover the context for his remarks was the prospect of a criminal prosecution of a pregnant woman. Section 251(2) of the Criminal Code stated that a pregnant woman who used “any means or permit[ed] any means to be used” for the purpose of procuring her own miscarriage was guilty of an indictable offence punishable with imprisonment for two years. Parliament provided a defence if the continued pregnancy would or would be likely to, in the opinion of a therapeutic abortion committee, “endanger her life or health” (s. 251(4)©). The Court struck down the criminal prohibition because the prohibition was designed to operate only with the statutory defence, and the Court found that in practice these committees operated unevenly and that the statutory scheme “contain[ed] so many potential barriers to its own operation that the defence it create[ed would] in many circumstances be practically unavailable to women who would prima facie qualify …” (at pp. 72-73, per Dickson C.J.). For Beetz J., too, a key issue was that a significant proportion of Canada’s population is not served by hospitals in which therapeutic abortions could lawfully be performed (pp. 94-95).

260 At page 81, Beetz J. went on to say that “s. 7 of the Charter must include a right of access to medical treatment for a condition representing a danger to life or health without fear of criminal sanction” (emphasis added). The context of this appeal is entirely different. This case, on the contrary, invites the application of the dictum of Dickson C.J. in Morgentaler “that the courts should avoid ‘adjudication of the merits of public policy’” (p. 53).

261 There were two aspects of s. 251 which caused Beetz J. particular concern. Firstly, s. 251 required that abortions be performed in an “eligible hospital”, and not in clinics like those operated by Dr. Morgentaler (p. 114). This limitation, he found, had no logical connection with the state’s avowed interest “in the protection of the foetus” (p. 115), i.e. the termination of the foetus would be the same wherever the abortion was performed. Secondly, Beetz J. objected to “the requirement that the committee come from the accredited or approved hospital in which the abortion is to be performed” (p. 119). He said:

It is difficult to see a connection between this requirement and any of the practical purposes for which s. 251(4) was enacted. It cannot be said to have been adopted in order to promote the safety of therapeutic abortions or the safety of the pregnant woman. Nor is the rule designed to preserve the state interest in the foetus. [p. 119]

262 There is, we think, a world of difference between the sort of statutory analysis conducted by Beetz J. in Morgentaler and the re-weighing of expert evidence engaged in by our colleagues the Chief Justice and Major J. in this case. Having established that the s. 251 requirements had nothing to do with the avowed state interest in the protection of the foetus, all that remained in Morgentaler was to show that these requirements were inconsistent with the competing state interest in preserving the life and health of the mother. We see no parallel between the analysis of Beetz J. in Morgentaler and what is asked of the Court by the appellants in this case.

263 On the contrary, given its goal of providing necessary medical services to all Quebec residents based on need, Quebec’s determination to protect the equity, viability and efficiency of the public health care system is rational. The chosen means are designed to further the state interest and not (as in Morgentaler) to contradict it.

264 The safety valve (however imperfectly administered) of allowing Quebec residents to obtain essential health care outside the province when they are unable to receive the care in question at home in a timely way is of importance. If, as the appellants claim, this safety valve is opened too sparingly, the courts are available to supervise enforcement of the rights of those patients who are directly affected by the decision on a case-by-case basis. Judicial intervention at this level on a case-by-case basis is preferable to acceptance of the appellants’ global challenge to the entire single-tier health plan. It is important to emphasize that rejection of the appellants’ global challenge to Quebec’s health plan would not foreclose individual patients from seeking individual relief tailored to their individual circumstances.

(4) Conclusion Under Section 7 of the Canadian Charter

265 For the foregoing reasons, even accepting (as we do) the trial judge’s conclusion that the claimants have established a deprivation of the life and security of some Quebec residents occasioned in some circumstances by waiting list delays, the deprivation would not violate any legal principle of fundamental justice within the meaning of s. 7 of the Canadian Charter. On that point, too, we share the opinion of the trial judge and the Quebec Court of Appeal, as previously mentioned.

D. The Appelants’ Challenge Under The Quebec Charter

266 The Quebec Charter is a major quasi-constitutional instrument. Our colleague Deschamps J. finds a violation of s. 1, which provides:

1. Every human being has a right to life, and to personal security, inviolability and freedom.

He also possesses juridical personality.

267 Section 1 of the Quebec Charter must be read with s. 9.1:

9.1 In exercising his fundamental freedoms and rights, a person shall maintain a proper regard for democratic values, public order and the general well-being of the citizens of Québec.

In this respect, the scope of the freedoms and rights, and limits to their exercise, may be fixed by law.

268 The factual basis of the opinion of our colleague Deschamps J. seems to rest largely on her view of the problem of waiting lists in Quebec, a matter we have already discussed, commencing at para. 210.

269 As to the legal principles applicable under the Quebec Charter, our Court in Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927, noted a functional analogy between s. 1 of the Canadian Charter and s. 9.1 of the Quebec Charter. However, s. 9.1 has the added feature of placing on the claimant the obligation to exercise Quebec Charter rights with “proper” regard to “democratic values, public order and the general well-being of the citizens of Québec”. These limitations have particular relevance to the public health system context of the present claim.

270 Within the legislative jurisdiction of the National Assembly of Quebec, absent an express provision to the contrary, other statutes may not derogate from its ss. 1-38 (s. 52). It was adopted and came into force several years before the Canadian Charter. It applies not only to state action but also to many forms of private relationships. It often covers the same grounds as the Canadian Charter. Nevertheless, it remains distinct in its drafting and methodology (A. Morel, “La coexistence des Chartes canadienne et québécoise: problèmes d’interaction” (1986), 17 R.D.U.S. 49, at pp. 80-81; Godbout v. Longueuil (Ville de), [1995] R.J.Q. 2561 (C.A.), at p. 2568, per Baudouin J.A.).

271 Section 1 of the Quebec Charter, in essence, covers about the same ground as s. 7 of the Canadian Charter, but it does not mention the principles of fundamental justice. As stated earlier, it reads:

1. Every human being has a right to life, and to personal security, inviolability and freedom.

He also possesses juridical personality.

272 Under s. 1 of the Quebec Charter, as at the first stage of a s. 7 analysis, the claimant bears the burden of establishing, on a balance of probabilities, that the impugned law infringes his or her protected rights and interests. If such a claim is made out, the focus of the analysis may shift to s. 9.1 of the Quebec Charter in order to determine whether the claimed exercise of the right is made with due regard for “democratic values, public order and the general well-being of the citizens of Québec”.

273 In our view, on the evidence, the exercise by the appellants of their claimed Quebec Charter rights to defeat the prohibition against private insurance would not have “proper regard for democratic values” or “public order”, as the future of a publicly supported and financed single-tier health plan should be in the hands of elected representatives. Nor would it have proper regard for the “general well-being of the citizens of Québec”, who are the designated beneficiaries of the health plan, and in particular for the well-being of the less advantaged Quebeckers.

274 Those who seek private health insurance are those who can afford it and can qualify for it. They will be the more advantaged members of society. They are differentiated from the general population, not by their health problems, which are found in every group in society, but by their income status. We share the view of Dickson C.J. that the Charter should not become an instrument to be used by the wealthy to “roll back” the benefits of a legislative scheme that helps the poorer members of society. He observed in Edwards Books, at p. 779:

In interpreting and applying the Charter I believe that the courts must be cautious to ensure that it does not simply become an instrument of better situated individuals to roll back legislation which has as its object the improvement of the condition of less advantaged persons.

The concern, of course, is that once the health needs of the wealthier members of society are looked after in the “upper tier”, they will have less incentive to continue to pressure the government for improvements to the public system as a whole.

275 The comments of Dickson C.J. are even more relevant to the Quebec Charter given its broad scope and its potential application to a wide range of private relationships.

276 This is not a case, in our view, where the onus of proof determines the outcome. The evidence amply supports the validity of the prohibition of private insurance under the Quebec Charter. The objectives are compelling. A rational connection is demonstrated. The decision boils down to an application of the minimal impairment test. In respect of questions of social and economic policy, this test leaves a substantial margin of appreciation to the Quebec legislature. Designing, financing and operating the public health system of a modern democratic society like Quebec remains a challenging task. It calls for difficult choices. In the end, we find that the choice made a generation ago by the National Assembly of Quebec remains within the range of options that are justifiable under s. 9.1. Shifting the design of the health system to the courts is not a wise choice.

277 In this respect, we should bear in mind that the legislative provisions challenged under s. 1 concern all citizens of Quebec. They address concerns shared by all and rights belonging to everyone. The legislative solution affects not only individuals but also the society to which all those individuals belong. It is a problem for which the legislature attempted to find a solution that would be acceptable to everyone in the spirit of the preamble of the Quebec Charter:

WHEREAS every human being possesses intrinsic rights and freedoms designed to ensure his protection and development;

Whereas all human beings are equal in worth and dignity, and are entitled to equal protection of the law;

Whereas respect for the dignity of the human being and recognition of his rights and freedoms constitute the foundation of justice and peace;

Whereas the rights and freedoms of the human person are inseparable from the rights and freedoms of others and from the common well-being;

278 The evidence reviewed above establishes that the impugned provisions were part of a system which is mindful and protective of the interests of all, not only of some.

279 We would dismiss the appeal.

APPENDIX A

Health Insurance Act, R.S.Q., c. A-29:

15. No person shall make or renew a contract of insurance or make a payment under a contract of insurance under which an insured service is furnished or under which all or part of the cost of such a service is paid to a resident or a deemed resident of Québec or to another person on his behalf.

. . .

Hospital Insurance Act, R.S.Q., c. A-28

11. (1) No one shall make or renew, or make a payment under a contract under which

(a) a resident is to be provided with or to be reimbursed for the cost of any hospital service that is one of the insured services;

(b) payment is conditional upon the hospitalization of a resident; or

© payment if dependent upon the length of time the resident is a patient in a facility maintained by an institution contemplated in section 2.

(2) This section does not apply for such time after a person arrives in Québec as a resident as he is not an insured person.

. . .


Appeal allowed with costs, Binnie, LeBel and Fish JJ. dissenting.

Jacques Chaoulli, on his own behalf.

June 27, 2005

One Nation, Uninsured: Paul Krugman Series, 7 of 7

By Paul Krugman
New York Times
June 13, 2005

Harry Truman tried to create a national health insurance system. Public opinion was initially on his side: Jill Quadagno’s book “One Nation, Uninsured” tells us that in 1945, 75 percent of Americans favored national health insurance. If Truman had succeeded, universal coverage for everyone, not just the elderly, would today be an accepted part of the social contract.

But Truman failed. Special interests, especially the American Medical Association and Southern politicians who feared that national insurance would lead to racially integrated hospitals, triumphed.

Sixty years later, the patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.

So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.

But special interests will, once again, stand in the way. And the big debate among would-be reformers is how to deal with those interests, especially the insurance companies. These companies played a secondary role in Truman’s failure but have since become a seemingly invincible lobby.

Let’s ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.

A system in which the government provides universal health insurance is often referred to as “single payer,” but I like Ted Kennedy’s slogan “Medicare for all.” It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly. It shows that we’re talking about government insurance, not government-provided health care. And it makes it clear that like Medicare (but unlike Canada’s system), a U.S. national health insurance system would allow individuals with the means and inclination to buy their own medical care.

The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don’t devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured.

Nonetheless, most reform proposals out there - even proposals from liberal groups like the Century Foundation and the Center for American Progress - reject a simple single-payer approach. Instead, they call for some combination of mandates and subsidies to help everyone buy insurance from private insurers.

Some people, not all of them right-wingers, fear that a single-payer system would hurt innovation. But the main reason these proposals give private insurers a big role is the belief that the insurers must be appeased.

That belief is rooted in recent history. Bill Clinton’s health care plan failed in large part because of a dishonest but devastating lobbying and advertising campaign financed by the health insurance industry - remember Harry and Louise? And the lesson many people took from that defeat is that any future health care proposal must buy off the insurance lobby.

But I think that’s the wrong lesson. The Clinton plan actually preserved a big role for private insurers; the industry attacked it all the same. And the plan’s complexity, which was largely a result of attempts to placate interest groups, made it hard to sell to the public. So I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained.

We need to do this one right. If reform fails again, we’ll be on the way to a radically unequal society, in which all but the most affluent Americans face the constant risk of financial ruin and even premature death because they can’t pay their medical bills.

Higher costs related to rising prevalence of chronic disease

The Rising Prevalence Of Treated Disease
Effects On Private Health Insurance Spending To contain spending, the U.S. health care system needs to address rising rates of treated disease instead of requiring higher cost sharing from consumers
By Kenneth E. Thorpe, Curtis S. Florence, David H. Howard, Peter Joski
Health Affairs
June 27, 2005

Abstract:

In this paper we present a new framework for understanding the factors driving the growth in private health insurance spending. Our analysis estimates how much of the rise in spending is attributable to a rise in treated disease prevalence and spending per treated case. Our results reveal that the rise in treated disease prevalence, rather than the rise in spending per treated case, was the most important determinant of the growth in private insurance spending between 1987 and 2002. A rise in population risk factors and the introduction of new technologies underlie these trends.

From the Discussion:

Much of the current cost containment debate has ignored the role of the rise in treated disease prevalence in driving the growth in private health care spending. Efforts by major health plans and larger employers to slow the growth in spending have focused on increasing consumer cost sharing, negotiating discounts with providers, and managing chronic illnesses better. These are largely approaches designed to control the cost per treated case. On the other hand, these interventions do little to control the growth in treated disease prevalence—the leading cause of the rise in private insurance spending. Other analysts have suggested that higher copayments and deductibles and broader use of medical savings accounts will slow the growth in health care spending. Although these approaches may prove useful, they also appear mismatched with respect to the key driver of private health care spending: the rise in treated disease prevalence.

Other aspects of the health care debate have focused on “value”—whether the additional spending for treating diabetes, heart attacks, and depression among other conditions yields substantial improvements in health. Outcomes have improved for many of these conditions, which suggests that the additional spending is worth it. Yet as our analysis indicates, the main driver of higher spending is not a rise in the cost per treated case, but rather the rise in the number of cases treated. As a result, efforts to slow the growth in private insurance spending must target the population risk factors along with other factors that have led to the rise in treated disease prevalence.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.317

Comment: This study is receiving considerable media attention because of its conclusion that obesity has significantly increased the costs of health care in the United States. This message is certainly important although, from a policy perspective, we need to be concerned about the implications of this study for controlling costs and improving population health.

It is often stated that the most important cause of higher health care costs is the greater use of technology. This study confirms that greater application of technology does add significantly to health care costs, but an even greater factor is the increase in chronic disease prevalence, especially obesity and associated disorders such as hypertension, hyperlipidemia and diabetes. What is the significance of this from a policy perspective?

One of the more important considerations is that efforts to control health care costs by increasing out-of-pocket spending may not produce the desired effect of obtaining greater value. Chronic disease interventions that are effective should be encouraged, whereas consumer-directed cost sharing would reduce utilization of these beneficial services.

Some argue that cost sharing causes people to take better care of themselves - through a healthier diet and more exercise - in order to avoid future out-of-pocket expenses that might result from neglected attention to healthy habits. It defies logic to suggest that the risk of increased out-of-pocket spending at some vague point in the future serves as a greater motivator of following a healthy life style than the more obvious motivator of simply not wanting to be fat and sick.

Another consideration is that interventions are now commonly based on studies that demonstrate statistical significance in large population groups, but when applied to a single patient, the probability that the outcome would improve may be very, very small. As an example, a statistically significant study might show that an intervention reduces the incidence of adverse outcomes from 37% of the population group down to 35%. Such a result would provide the rationale for long-term treatment, but then patients might not elect to embark on a life-long treatment program if they were told that they have a 97% or 98% probability of receiving no benefit beyond the anticipated potential outcome without the intervention. More attention needs to be given to distinguishing policies that benefit populations as opposed to those that clearly benefit the individual.

Perhaps the most important policy consideration is how best to apply preventive measures to avoid the high costs of treating chronic diseases.

It’s obvious that effective preventive interventions must first be identified. Everyone knows that good nutrition and exercise are important, yet this study indicates that the prevalence of disorders related to poor diets and inadequate exercise are increasing. Platitudes from providers are not adequate. Our health care delivery system is better suited to intervene after problems become manifest, whereas maintaining a healthy population through prevention is more suited to a strong public health program. We need more applied research that would result in behavior in which an apple would be consumed in place of a Twinkie.

Public policies such as instruction and food accessibility in the school systems, tax and regulatory policies influencing the food industry, community design to entice more to exercise, and other such measures would certainly be more effective than being scolded for making bad choices.

Note: The Quote of the Day messages will be relatively infrequent this summer because of our travel schedule.

June 22, 2005

Medi-Share: the Cadillac of uninsurance

Christian cost-sharing health insurance gaining subscribers
By Bob Jones IV, with Joe Maxwell
Church Central
June 21, 2005

The members of Medi-Share conduct a 24-hour, seven-day-a-week prayer chain for fellow members who have suffered sickness or injury serious enough to require filing a claim. At least, they would have filed claims with traditional insurers. At Medi-Share they file “needs,” which bring not only the traditional reimbursement check, but also a card or letter from another member who has prayed for them.

Proponents of Christian cost-sharing ministries say they shouldn’t have to support with their premium dollars the destructive conduct of others. Medi-Share president, John Reinhold, said his healthcare program is based on a model of Christian community found in the New Testament.

“Our members believe in sharing and caring,” he said, “but they do not wish to subsidize those Christians or non-Christians who choose to live in a way which inevitably leads to a premature breakdown in mind and body, i.e., using tobacco, taking drugs, gluttony.”

Medi-Share ask(s) members to send their monthly dues to the main office, which then redistributes the resources to those who have needs that month. Members then receive a notification from the main office informing them of the specific person whose need they helped to meet, and they are encouraged to write and pray for that member as well.

Medi-Share boasts that, “to date, no member has ever been refused treatment by any medical entity.”

Or as Medi-Share’s Robert Dixon put it, “Those who join are grateful that behind us is a multi-billion dollar ‘safety-net’ entity and beneath us are the everlasting arms.”

http://www.churchcentral.com/nw/s/id/23379/template/Article.html

And from the Medi-Share website:

What’s Medi-Share?

Medi-Share is an exciting non-insurance healthcare alternative bringing together healthy, caring Christians to share medical costs, saving families thousands of dollars each year. And it works! Over the past decade, Medi-Share Members have shared over $100,000,000 in healthcare costs!

What is health sharing?

Health sharing is a biblical alternative to conventional healthcare programs. Medi-Share is a not for profit Christian program that provides Christians the opportunity to share health expenses. Medi-Share members agree to faithfully send a specified amount each month to take care of their share of the eligible medical expenses of those members who experience accidents, sickness, or disease. Over the years these share amounts have been much less than the amount required for conventional health care programs.

How much is the monthly share amount?

The current monthly share for the Medi-Share 250 program is $346 for an entire family, $275 for 2 persons and $145 for a single.

What about medical conditions prior to membership?

Special attention is paid to any medical condition for which the member has within the twelve months prior to joining Medi-Share: a) incurred charges, b) received medical treatment, c) taken medication, and/or d) had symptoms which could have been diagnosed or for which a prudent person would have sought care. No expense for treatment of such a condition will be considered for sharing until the condition is documented by a physician and the member has gone at least twelve months without incurring charges, receiving medical treatment, taking medication, or experiencing symptoms for that or related conditions. The cure must be documented in the medical records and approved by the Medi-Share medical staff.

Will I benefit from choosing from a network of preferred providers?

So that Members can keep medical costs as low as possible, Medi-Share utilizes Beech Street, the nation’s largest independent preferred provider organization (PPO) network.

Are members required to call before using healthcare services?

Yes. Members must call 800-ASK-FIRST (800-275-3477) prior to non-emergency medical treatment or be assessed a penalty of $250.

http://www.medi-share.org/faqs.html

Comment: The following comments are directed exclusively toward the policy implications of this model of cost sharing. This policy discussion would apply equally to similar secular-sponsored programs as it would to this Christian-sponsored plan.

There is an intense campaign taking place in the United States to make health care coverage (premiums) more affordable by relaxing the regulations to which insurers must comply. Legislation is pending before Congress that would require compliance with only the least restrictive state regulations by allowing national marketing of health coverage products originating from minimally regulated states. Not only would that allow products with grossly inadequate benefits and cost sharing that is unaffordable, but it would also allow exclusion of precisely those individuals with greater health care needs. Obviously this would defeat the societal need to share health expenses.

Medi-Share is ahead of the game. It looks like an insurance company. It collects monthly share “premiums.” It excludes pre-existing conditions, marketing exclusively to healthy individuals with an exemplary lifestyle. It uses a PPO network. It requires preauthorization. The one crucial difference is that this organization escapes state regulatory oversight of insurers through the following disclaimer:

“Attention - This program is not supported by an insurance company, nor is it offered through an insurance company. This program does not guarantee or promise that your medical bills will be published or assigned to others for payment. Whether anyone chooses to pay your bills is entirely voluntary. This program should never be considered a substitute for an insurance policy. Whether or not you receive any payments for medical expenses and whether or not this program continues to operate, you are responsible for payment of your own medical bills.”

It’s obvious where all of this is headed. Are we going to allow the 80% who are healthy to protect themselves from the costs of the 20% who are not, who utilize 80% of our health care services? If so, how will the 60 million people who are utilizing $1.5 trillion in health care pay for that? That’s roughly $25,000 per person.

Don’t we have enough social solidarity to decide that we should have a single risk pool to which the great majority who are healthy contribute to ensure coverage for the minority who are sick?

Apparently not. Some even seem to believe that it’s not the Christian thing to do.

June 21, 2005

Paul Starr, "End of the Private New Deal"

End of the Private New Deal
As Republicans loudly threaten the public New Deal, the corporate version quietly slips away
By Paul Starr
The American Prospect
Online Edition
June 20, 2005

The old corporate America that took responsibility for workers’ pensions and health care is dying, and the nation’s political leadership has hardly taken notice of the implications.

The rise of corporate social protection had a huge impact, and so will its decline. Conservatives long touted employer-provided pensions and health plans as the private alternative to big government — the very epitome, supposedly, of the American way. Liberals were ambivalent: Although employer benefits provided security for many workers, especially in unionized industries, corporate America’s New Deal left out millions of other Americans and weakened support for national health insurance.

Now corporate social protection is shrinking — for many Americans, simply disappearing — and there is no immediate prospect of public programs filling the void.

The conservatives’ remedy is to take privatization one degree further by transferring obligations for retirement and health insurance from corporations to individual employees.

Health insurance works only because the healthy subsidize the sick; individual accounts enable those who are lucky enough to stay healthy to accumulate their own insurance money, separate from the pool. But just for that reason, the unlucky who get sick have to pay more out of their own pockets, or go without care. If your idea of health-care reform is to shift costs from the healthy to the sick, the health savings accounts are for you.

The individual-account model has had one great success: It has enabled conservatives to pretend to be reformers. But, amid the decline of employer-provided benefits, there is little chance this approach will provide a genuine, long-term solution to the problems of health-care costs and retirement security.

The decline of corporate social provision, however, is also a problem for liberal reformers who have sought to build on private-employer plans. It is one thing to propose building on a stable employer-based system, but quite a different thing when that system is failing, as it is in health care. Many companies have given up hope of controlling health costs and want a way out of their intermediary role; 5 million fewer jobs brought health coverage in
2004 compared with three years earlier. The Detroit automakers have long said they spend more on health care than on steel, and that the expense is a big competitive disadvantage. It’s not all their fault: The U.S. health system is by far the world’s most expensive, and firms that provide full family coverage pay for those that don’t (for example, when a GM employee’s spouse works at Wal-Mart).

Ironically, the private corporations that provided their own New Deal in health care would have been better off with the public one that Democrats offered years ago. Without governmental action to control costs and spread them fairly, the generous social benefits once provided by corporate America are unsustainable.

For the complete article:
http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=9882

Comment: Mere words can have much more meaning when they carry the weight of their noted creator. Many readers will recognize Paul Starr’s name as the author of one of the most important contributions in the past half century to the body of the health policy literature: “The Social Transformation of American Medicine,” recipient of the 1984 Pulitzer Prize. Recently, a special issue of the Journal of Health Politics, Policy and Law was dedicated exclusively to Transforming American Medicine: A Twenty-Year Retrospective on The Social Transformation of American Medicine.

Paul Starr’s words are now more prescient than ever.

The Social Transformation Of American Medicine, by Paul Starr:
http://www.perseusbooksgroup.com/basic/book_detail.jsp?isbn=0465079350

Transforming American Medicine: A Twenty-Year Retrospective on The Social Transformation of American Medicine
http://www.dukeupress.edu/books.php3?isbn=8223-6606-1

June 20, 2005

Health care is "the most important domestic issue"

The New York Times/CBS News Poll
June 10-15, 2005

15. If you had to say, which of these domestic issues do you think is MOST important right now — 1) the budget deficit, 2) health care, 3) education, 4) social security, OR 5) jobs? (Rotate answer categories)

14% Deficit
28% Health care
22% Education
14% Social Security
20% Jobs
02% DK/NA

http://www.nytimes.com/2005/06/19/national/19poll.html (Click on “Complete Results: The New York Times/CBS News Poll”)

Comment: Right now, all of these are very important domestic issues. The fact that health care ranked # 1 as the most important issue doesn’t mean that the poll respondents are not very concerned about the other issues as well. But with all of the hype about Social Security and the deficit, it is interesting to see that twice as many selected health care as being even more important than either of these two issues.

The point is that Americans are truly very concerned about our health care system. But we will not see significant change until we translate our concerns into political activism.

June 17, 2005

Industry consulting firm on CDHPs

Consumer-Directed Health Plan Report - Early Evidence Is Promising
By Vishal Agrawal, Tilman Ehrbeck, Kimberly O’Neill Packard, and Paul Mango
McKinsey & Company
June 2005

To gain early insights into what is, arguably, the most important development in health insurance since the widespread introduction of HMOs in the 1980s, McKinsey & Company recently completed extensive primary research on Consumer-Directed Health Plans (CDHPs). To our knowledge, this is the first research of its type to eliminate the possibility of major adverse selection bias because it studied the behavior of consumers whose employers had made the bold move of offering only a CDHP to their employees (i.e., they offered full replacement accounts). Overall, this research demonstrates the potential for CDHPs to alter consumer behavior in ways that could fundamentally change how consumers think about their health - and how they utilize health care resources.

Value consciousness:

Because our findings are based on consumers’ self-reported behavior, we cannot determine whether their decisions to forgo care or to select less extensive treatments were medically appropriate.

Satisfaction:

Less than half of the CDHP consumers we studied reported that they were at least as satisfied with their current plan as they had been with their previous forms of health insurance. (Specifically, the report states that 44% were “more” or “equally” satisfied with their CDHP than they were with their previous health plan. Although not specifically stated, presumably 56% were less satisfied with their CDHP than with their previous plan.)

Concluding remarks:

Our early research findings are surprisingly consistent with many of the arguments that CDHP proponents make. These findings suggest that the plans once again realign health insurance with the important insurance principles of avoiding (or discouraging) moral hazard. In doing so, CDHPs could begin to return health care coverage to the role of covering random, infrequent, and financially consequential events that are beyond the control of the individual. Under these plans, many types of medical expenses would revert to the control of market forces and consumer behavior. As a result, CDHPs could mitigate the seemingly inexorable increases in health care expenses - and health insurance premiums - while improving health outcomes.

Nevertheless, implementation will require a great deal of thoughtfulness, as we have shown. The design and implementation of CDHPs are still evolving, and several factors that could significantly influence the success of the plans are still under active debate. The key challenges will be to achieve the benefits demonstrated in our research while minimizing adverse affects on vulnerable groups, to ensure that CDHPs encourage clinically appropriate behavior, and to provide the right support that enables consumers to manage their increased responsibility for making health care decisions.

We believe the magnitude of the impact that CDHPs had on the behavior of the consumers we studied resulted from each employer’s bold decision to offer only a CDHP product to its employees. The question of how effective these plans will be if employers continue to allow their sickest employees to opt for traditional insurance remains open. We would hypothesize that this type of “slice” introduction would fail to achieve the true promise of fuller consumer engagement and medical expense trend mitigation. If CDHPs are widely adopted, there could be major changes in how consumers think about their health, how they use health care resources, how they seek value, and the basis on which they make their consumption decisions. In fact, we believe that our research findings and similarly encouraging early evidence will stimulate broader uptake. Stakeholders need to watch closely and prepare for the potential sea-change ahead.

http://www.mckinsey.com/clientservice/payorprovider/Health_Plan_Report.pdf

Comment: This report, from an industry consulting firm, makes the agenda of the CDHP movement very clear: “…mitigating the seemingly inexorable increases in health care expenses and health insurance premiums” by “avoiding moral hazard.”

Moral hazard refers to health care services that are utilized that would not have been had the individual been required to pay for them rather than having them covered by insurance. Policies designed to reduce moral hazard, such as creating CDHPs, are designed specifically to reduce health care spending without regard to whether or not that spending is for beneficial services. The policy literature is replete with studies that confirm that such policies do impair access to beneficial health care services, especially for individuals with limited income and/or poor health. Further studies on moral hazard are not needed to determine whether detrimental health outcomes would occur, but rather only to determine the severity of the negative impact on health.

Our last great experiment in containing health care costs, managed care, proved to be quite unpopular with patients. What will be the response to CDHPs? This preliminary study can give us a clue. This group, covered by employer-sponsored CDHPs, is a relatively healthy subset of our population, with less than average need to access the health care system. Yet 56% of these relatively healthy individuals were less satisfied with their CDHPs than with their previous coverage (presumably managed care).

Is our goal really to have patients who are both unhappy and unhealthy? Why continue with this inane, inhumane experiment?

June 16, 2005

Premium increases three times inflation is a victory?

CalPERS gives OK to HMO increase
By Victoria Colliver
San Francisco Chronicle
June 16, 2005

It’s a sign of the times when the state pension fund approves HMO rate increases roughly three times the rate of inflation and that’s considered a victory.

As expected, the California Public Employees’ Retirement System on Wednesday approved 2006 HMO rate increases averaging 8.7 percent (and 9.5% increase for PPOs, Los Angeles Times).

The single-digit increase for 2006 was the lowest rate increase since 1999, except for 2002, when there were major increases in co-payments and other out-of-pocket costs.

CalPERS is the nation’s third-largest purchaser of health care and is considered a leading indicator of future coverage trends.

Larry Levitt, a vice president with the Kaiser Family Foundation, said smaller employers are likely to be hit significantly harder than giant CalPERS.

“If I were a small employer with little bargaining leverage, I think I would have hoped CalPERS premiums would have come down even more,” he said. “It’s always good to be moving in the right direction, but I don’t think anyone believes an 8.7 percent increase is good news or even sustainable.”

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/06/16/BUGMDD97Q01.DTL

Comment: Think of it. The third largest purchaser of health care has increased patient cost sharing in order to slow the rate of premium increases, and this slowing still results in premium increases that are three times the rate of inflation!

All nations with universal insurance programs have been more successful in moderating cost increases than has the United States.

The tradeoff is not necessarily the formation of excessive queues since many nations have prevented such queues by attending to capacity needs.

The other common counter-argument advanced is that slowing costs would stifle technological innovation. Yet Great Britain, spending half as much of its GDP on health care, shared in the Nobel prizes for both CT imaging and MRI imaging. Their level of health care spending did not stop innovation.

Besides, what technological or pharmaceutical firm would walk away from trying to get their share of the $1.9 trillion that we are already spending on health care?

Much of the increase in spending is feeding administrative waste and non-beneficial technological excesses. Private plans already have proven their inability to control these excesses, and actually contribute to them.

By establishing our own monopsonistic, universal insurance program, we would be in a position to reduce this waste while being certain that new spending is providing us with value. If new advances are worth it, we can pay for them.

PNHP Statement on the Canadian Supreme Court Decision on Private Insurance

FOR IMMEDIATE RELEASE
Thursday, June 16, 2005

Contacts: Nicholas Skala (312) 782-6006
Don McCanne, M.D. (949) 493-3714

PNHP Statement on the Canadian Supreme Court Decision on Private Insurance

On June 9, 2005, the Supreme Court of Canada ruled that the Quebec government cannot ban private insurance that duplicates the coverage under Canada’s national health insurance system (known as Medicare) when clearly excessive waiting lists delay timely access to care and may impair health.

In both the United States and Canada, opponents of universal public programs of health insurance have used this decision to argue that private insurance provides a superior alternative to public insurance. Such arguments are fallacious and entirely unwarranted.

Long queues (waiting lists for health care services) result from inadequate capacity of the health care delivery system, not from the method of paying for care. Canada suffers from an inadequate supply of MRI machines and a shortage of specialists and technicians in some fields. These shortages have resulted in queues for a few high technology interventions. The appropriate remedy is to increase capital investment in the capacity of the system, both in physical plants and equipment, and in human resources.

In the effort to reduce queues to reasonable levels, it is crucial to avoid creating excess capacity in the system. Excess capacity results in over-utilization, which dramatically increases costs without a commensurate improvement in outcomes. Excessive interventions are sometimes even detrimental to health. Because of the dynamic nature of health care, not all capacity problems can be anticipated, and some queues are inevitable. An effective health care system monitors utilization and reacts with appropriate adjustments in capacity.

This has nothing whatsoever to do with whether insurance payments are made by a public or by a private insurance system. It defies logic to suggest that private insurance will correct the capacity deficiencies that result in queues. When a public health care delivery system has deficient capacity, the role of private insurance, as defined by this decision, is to authorize a larger payment for the services than the public insurance provides. This merely jumps those with private coverage to the front of the queue. Since the private coverage will not change the capacity of the delivery system, it will result in further delays for everyone else in the queue. Private insurance effectively offers providers a bribe if they are willing to place wealthy people at the front of the line.

The United States has served as a laboratory for private insurance. We spend far more than nations with public insurance. We have allowed the private insurance industry to profit by providing coverage primarily to the healthy.
We continue to tolerate tens of millions with no coverage, and tens of millions more have such inadequate coverage that a serious illness would lead to bankruptcy. Tens of thousands of Americans are suffering because of the lack of access to affordable coverage. At least 18,000 American adults die each year because of our failure to adopt rational policies for health care coverage.

The Canadian Supreme Court decision on queues and private insurance ignores a vast body of research data and demonstrates a total disconnect in logic.

The justices’ decision threatens to undermine the very foundations of Canada’s health care system, and would place Canadians at grave risk of unnecessary suffering and death. What Canada’s health care system needs is more money, not more private insurance and the rising inequities that would surely follow.

###

Physicians for a National Health Program is an organization of 13,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call (312) 782-6006

June 15, 2005

PNHP's response to the Canadian Supreme Court decision

PNHP Statement on the Canadian Supreme Court Decision on Private Insurance

On June 9, 2005, the Supreme Court of Canada ruled that the Quebec government cannot ban private insurance that duplicates the coverage under Canada’s national health insurance system (known as Medicare) when clearly excessive waiting lists delay timely access to care and may impair health.

In both the United States and Canada, opponents of universal public programs of health insurance have used this decision to argue that private insurance provides a superior alternative to public insurance. Such arguments are fallacious and entirely unwarranted.

Long queues (waiting lists for health care services) result from inadequate capacity of the health care delivery system, not from the method of paying for care. Canada suffers from an inadequate supply of MRI machines and a shortage of specialists and technicians in some fields. These shortages have resulted in queues for a few high technology interventions. The appropriate remedy is to increase capital investment in the capacity of the system, both in physical plants and equipment, and in human resources.

In the effort to reduce queues to reasonable levels, it is crucial to avoid creating excess capacity in the system. Excess capacity results in over-utilization, which dramatically increases costs without a commensurate improvement in outcomes. Excessive interventions are sometimes even detrimental to health. Because of the dynamic nature of health care, not all capacity problems can be anticipated, and some queues are inevitable. An effective health care system monitors utilization and reacts with appropriate adjustments in capacity.

This has nothing whatsoever to do with whether insurance payments are made by a public or by a private insurance system. It defies logic to suggest that private insurance will correct the capacity deficiencies that result in queues. When a public health care delivery system has deficient capacity, the role of private insurance, as defined by this decision, is to authorize a larger payment for the services than the public insurance provides. This merely jumps those with private coverage to the front of the queue. Since the private coverage will not change the capacity of the delivery system, it will result in further delays for everyone else in the queue. Private insurance effectively offers providers a bribe if they are willing to place wealthy people at the front of the line.

The United States has served as a laboratory for private insurance. We spend far more than nations with public insurance. We have allowed the private insurance industry to profit by providing coverage primarily to the healthy.

We continue to tolerate tens of millions with no coverage, and tens of millions more have such inadequate coverage that a serious illness would lead to bankruptcy. Tens of thousands of Americans are suffering because of the lack of access to affordable coverage. At least 18,000 American adults die each year because of our failure to adopt rational policies for health care coverage.

The Canadian Supreme Court decision on queues and private insurance ignores a vast body of research data and demonstrates a total disconnect in logic.

The justices’ decision threatens to undermine the very foundations of Canada’s health care system, and would place Canadians at grave risk of unnecessary suffering and death. What Canada’s health care system needs is more money, not more private insurance and the rising inequities that would surely follow.

Physicians for a National Health Program www.pnhp.org

June 14, 2005

Underinsurance is almost as bad as no insurance

Insured But Not Protected: How Many Adults Are Underinsured?
The experiences of adults with inadequate coverage mirror those of their uninsured peers, especially among the chronically ill.
By Cathy Schoen, Michelle M. Doty, Sara R. Collins, Alyssa L. Holmgren(Commonwealth Fund)
Health Affairs
June 14, 2005

Abstract: Health insurance is in the midst of a design shift toward greater financial risk for patients. Where medical cost exposure is high relative to income, the shift will increase the numbers of underinsured people. This study estimates that nearly sixteen million people ages 19-64 were underinsured in 2003. Underinsured adults were more likely to forgo needed care than those with more adequate coverage and had rates of financial stress similar to those of the uninsured. Including adults uninsured during the year, 35 percent (sixty-one million) were under- or uninsured. These findings highlight the need for policy attention to insurance design that considers the adequacy of coverage.

From the article:

Defining “underinsured.”

…we classified them as underinsured if they were insured all year but reported at least one of three indicators: (1) Medical expenses amounted to 10 percent of income or more; (2) among low-income adults (below 200 percent of the federal poverty level), medical expenses amounted to at least 5 percent of income; and (3) health plan deductibles equaled or exceeded 5 percent of income.

Two of three indicators (with deductibles as the exception) relied on current-year out-of-pocket costs and medical bills. As a result, unlike methods that simulate expenses based on analysis of insurance plans, age, and health, this “snapshot” approach will miss healthier adults with inadequate coverage who had little need for medical care during the year. The methodology thus likely underestimates the number of underinsured people.

Shifting trends.

The findings are likely to be symptoms of more to come. Given the public policy push and market trends toward higher deductibles, it will be important to track coverage adequacy and related care patterns over time.
The United States may well be on a path to where it becomes harder to distinguish the insured from the uninsured if insurance no longer provides either access or financial protection.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.289

Comment: The definition of underinsured used in this study was stringent enough to select out nearly 16 million individuals whose coverage left them almost as exposed to impaired access and medical debt as are the uninsured. One obvious conclusion is that health policy improvements must apply not only to the 45 million uninsured but also to these 16 million underinsured, or a total of 35% of the U.S. population.

Besides the uninsured and underinsured, there is another important category that we’ll call, for want of a better term, the “subinsured.” This is a very large group of individuals of moderate means who are healthy and have relatively infrequent needs to access the health care system. But the very reason that we have insurance is that anyone is vulnerable and could develop major health care problems.

And what could constitute subinsurance? Suppose an individual with an income of $52,000 had a significant medical event or developed a chronic problem and had to pay $5,000 in out-of-pocket medical expenses. That is under 10% of income, and therefore the individual is not underinsured by the criteria of this study. But most of us would believe that our coverage is not adequate under similar circumstances. Such a dent in our budgets would create difficulties in paying our bills, not to mention wiping out considerations such as voluntary contributions to our pension plans or replacement of that old clunker that you’re afraid to take out on the highway.

Insurance should prevent impairment to health care access, and it should prevent financial stress. Therefore we need policies that protect not only the uninsured and underinsured, but also the subinsured. Combined, that’s the majority of us. But at the cost of health care today, how could we fund the insurance pool without including the more affluent individuals who can easily accept the burden of contributing more to cover those who cannot fund their own share? We need the affluent as well.

We desperately need policies that would equitably fund an insurance pool that ensures affordable access for everyone, covering all important beneficial services. Is there really any other option than national health insurance?

Uninsured and Underinsured Adults Estimated at 61 Million

Embargoed until 12:01 a.m., Tuesday June 14, 2005

For further information contact:
Mary Mahon: (212) 606-3853 / mm@cmwf.org
cell phone (917) 225-2314
Kari Root: (301) 652-1558, ext. 112

NEW STUDY: AT LEAST 16 MILLION ADULTS WITH HEALTH INSURANCE LACK ADEQUATE COVERAGE; NUMBER OF UNINSURED AND UNDERINSURED ADULTS ESTIMATED AT 61 MILLION

Many Patients At Financial Risk; Cutting Back On Needed Medications And Treatment

Bethesda, MD - In addition to the 45 million uninsured adults in this country, at least another 16 million adults were underinsured in 2003, meaning that they did not have enough financial protection to cover their health care expenses, according to a Web Exclusive paper released today in the journal Health Affairs.

According to the paper, titled “Insured but Not Protected: How Many Adults Are Underinsured,” by Cathy Schoen and colleagues of the Commonwealth Fund, an estimated 61 million adults - 35 percent of Americans ages 19-64 - had either no insurance, sporadic coverage, or insurance that exposed them to catastrophic medical costs during 2003. The study is the first in more than a decade to assess the growing numbers of underinsured adults and how their lack of adequate coverage affects their health, as well as their finances and related stress.

You can read the paper at
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.289

Until now researchers have only surmised about the effects of being underinsured. This study, which surveyed more than 4,000 U.S. adults between September 2003 and January 2004, finds that the underinsured are almost as likely as the uninsured to go without needed health care and to incur medical debt.

Those most at risk for being underinsured are people with low or moderate incomes and those who suffer from chronic illnesses. Underinsured adults were more likely than those with more adequate coverage to face higher cost sharing and limits on what their plans would pay for treatment and to find that their plans did not cover care that they thought would be covered. Yet, despite more limited coverage, they also faced high annual premium costs. One-third had annual premiums of $1,500 or higher, while nearly half paid premiums that amounted to 5 percent of their incomes.

“In the past several years, this country has seen a relentless rise in insurance costs and a major shift in comprehensive insurance benefits toward plans with higher deductibles, more patient cost-sharing, and in some cases, restricted benefits,” said Schoen, lead study author and a vice president at the Commonwealth Fund. “The result is that significantly more people face real barriers to care as well as financial stress.”

According to the study, these changes in health insurance coverage are leaving more people without adequate financial protection. This increases their risk of not being able to obtain needed high-quality health care.

Compared to adults with adequate insurance coverage, underinsured and uninsured adults were significantly more likely to go without care because of costs, to lack confidence that they would receive high-quality care, and to rate their care experiences negatively. Findings related to access and care include the following:
- Half of the underinsured (54 percent) and uninsured (59 percent) went without at least one of four needed medical services?double the rate of those with adequate insurance
- Two-thirds of sicker adults who were underinsured and three-fourths of sicker adults who were uninsured went without needed care because of costs
- Nearly half of underinsured sicker adults with chronic diseases or poor health did not adhere to prescribed medications
-Thirty-eight percent of sicker underinsured adults did not see a doctor when sick, and one-third did not follow up on treatments or care recommended by their doctors because of cost.

Rates of medical bill stress among the underinsured were almost equal to those reported by the uninsured. Findings related to financial stress include the
following:
- Seven out of ten low-income adults (household income 200 percent below the federal poverty level) were either uninsured or underinsured during the year
- Nearly half (46 percent) of underinsured adults were contacted by a bill collection agency with regard to medical bills.

About 7 percent of continuously insured adults spent 10 percent or more of their income on family medical expenses during the year. The study highlights the importance of taking income into account in insurance plan design. This includes limiting out-of-pocket cost exposure to not more than 10 percent of income in general, and 5 percent for those with low incomes. Yet in today’s markets, income-related designs are rarely seen.

“Unless this country starts to pay attention to health insurance benefits design, it is going to be harder to distinguish the insured from the uninsured,” said Commonwealth Fund President Karen Davis. “What we are seeing is a health care divide between people who have adequate insurance, and those who have inadequate insurance. Without policy action the number of underinsured is likely to increase.”

The Commonwealth Fund is a private foundation supporting independent research on health and social issues. To read or download publications, visit its Web site, www.cmwf.org.

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PNHP occasionally posts press releases from other organizations with important news about the health care crisis or the single-payer option for health care reform.

June 13, 2005

Paul Krugman on single payer

One Nation, Uninsured
By Paul Krugman
The New York Times
June 13, 2005

Harry Truman tried to create a national health insurance system. Public opinion was initially on his side: Jill Quadagno’s book “One Nation, Uninsured” tells us that in 1945, 75 percent of Americans favored national health insurance. If Truman had succeeded, universal coverage for everyone, not just the elderly, would today be an accepted part of the social contract.

But Truman failed. Special interests, especially the American Medical Association and Southern politicians who feared that national insurance would lead to racially integrated hospitals, triumphed.

Sixty years later, the patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.

So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.

But special interests will, once again, stand in the way. And the big debate among would-be reformers is how to deal with those interests, especially the insurance companies. These companies played a secondary role in Truman’s failure but have since become a seemingly invincible lobby.

Let’s ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.

A system in which the government provides universal health insurance is often referred to as “single payer,” but I like Ted Kennedy’s slogan “Medicare for all.” It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly. It shows that we’re talking about government insurance, not government-provided health care. And it makes it clear that like Medicare (but unlike Canada’s system), a U.S. national health insurance system would allow individuals with the means and inclination to buy their own medical care.

The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don’t devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured.

Nonetheless, most reform proposals out there - even proposals from liberal groups like the Century Foundation and the Center for American Progress - reject a simple single-payer approach. Instead, they call for some combination of mandates and subsidies to help everyone buy insurance from private insurers.

Some people, not all of them right-wingers, fear that a single-payer system would hurt innovation. But the main reason these proposals give private insurers a big role is the belief that the insurers must be appeased.

That belief is rooted in recent history. Bill Clinton’s health care plan failed in large part because of a dishonest but devastating lobbying and advertising campaign financed by the health insurance industry - remember Harry and Louise? And the lesson many people took from that defeat is that any future health care proposal must buy off the insurance lobby.

But I think that’s the wrong lesson. The Clinton plan actually preserved a big role for private insurers; the industry attacked it all the same. And the plan’s complexity, which was largely a result of attempts to placate interest groups, made it hard to sell to the public. So I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained.

We need to do this one right. If reform fails again, we’ll be on the way to a radically unequal society, in which all but the most affluent Americans face the constant risk of financial ruin and even premature death because they can’t pay their medical bills.

http://www.nytimes.com/2005/06/13/opinion/13krugman.html?hp

Comment: Rather than distributing a couple of excerpts from Paul Krugman’s article, I’ve sent it out in its entirety, for a very important reason.

The debate on comprehensive health care reform is somewhat muddled, and that is because there are two debates taking place: one on consumer-directed health care, and the other on universal coverage.

The noisy but counter-productive debate is on consumer-directed health care. The proposals, such as high-deductible health plans, individual health savings accounts, and Spartan plans stripped of benefits, all move away from the concept of health insurance in that they shift the financial responsibility from a common pool in which we all share risk, transferring much of that risk to each individual. Although we hear much about these concepts, this debate is really very unimportant because it can never lead to a rational system of ensuring access to affordable care. In fact, the opposite would occur.

The opponents of egalitarianism and solidarity may have a few victories, such as the insertion of the HSA legislation into the Medicare bill, but it will soon become evident that we will not be able to tolerate the financial vulnerability of precisely those individuals most in need of health care. Even most of the libertarian health policy analysts concede that reform must pool risk in some manner (even if a conglomeration of various tightly and loosely structured pools), and that the government will have to be involved at least to the extent of ensuring coverage for those who cannot possibly fund their own share of their risk pool(s).

It is ironic that the lunatic element of the consumer-directed movement is proposing not only privatization of health care coverage, but they are already engaged in a process that weakens the protection afforded by private health plans. The majority of average-income Americans are already financially vulnerable in the face of significant medical needs because of the deteriorating coverage marketed by the private insurance industry.

Some speak kindly of the advocates of consumer-directed health care, suggesting that they are well motivated even if ill-advised, but I disagree. “Let them eat cake” policies can be conjured up only by the most uncaring, cruel, heartless advocates of class stratification with the few “haves” insulating themselves from any societal responsibility to ensure that the basic needs of the masses of “have nots” are met. (In this paragraph, I find my own rhetoric to be highly offensive, but not nearly as offensive as the attitude of those who don’t give a rat’s a** about their fellow man/woman.)

There is really only one genuine debate on reform. Do we continue to waste resources and perpetuate profound inequities in our health care system by building on our highly flawed, fragmented model of private health plans and public programs, or do we adopt an efficient, equitable, affordable system of funding coverage for everyone? Paul Krugman has provided a concise answer in his article.

You should delete my emotional and ill-advised tirade and then reproduce Krugman’s article and distribute it as widely as possible. It’s time for us to get real about health care reform.

And be sure that the debate is properly framed. In Paul Krugman’s words:

“Let’s ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.”

June 10, 2005

Always Low Wages. Always.: Paul Krugman Series, 6 of 7

By Paul Krugman
New York Times
May 13, 2005

Last week Standard and Poor’s, a bond rating agency, downgraded both Ford and General Motors bonds to junk status. That is, it sees a significant risk that the companies won’t be able to pay their debts.

Don’t cry for the bondholders, but do cry for the workers.

Standard and Poor’s downgraded GM and Ford sooner rather than later because it believes that the public is losing interest in S.U.V.’s. But the companies were vulnerable because they still pay decent wages and offer good benefits, in an age when taking care of employees has gone out of style. In particular, they are weighed down by health care costs for current and retired workers, which run to about $1,500 per vehicle at G.M.

So the downgrade was a reminder of how far we have come from the days when hard-working Americans could count on a reasonable degree of economic security.

In 1968, when General Motors was a widely emulated icon of American business, many of its workers were lifetime employees. On average, they earned about $29,000 a year in today’s dollars, a solidly middle-class income at the time. They also had generous health and retirement benefits.

Since then, America has grown much richer, but American workers have become far less secure.

Today, Wal-Mart is America’s largest corporation. Like G.M. in its prime, it has become a widely emulated business icon. But there the resemblance ends.
The average full-time Wal-Mart employee is paid only about $17,000 a year. The company’s health care plan covers fewer than half of its workers.

True, not everyone is badly paid. In 1968, the head of General Motors received about $4 million in today’s dollars - and that was considered extravagant. But last year Scott Lee Jr., Wal-Mart’s chief executive, was paid $17.5 million. That is, every two weeks Mr. Lee was paid about as much as his average employee will earn in a lifetime.

Not that many of them will actually spend a lifetime at Wal-Mart: more than 40 percent of the company’s workers leave every year.

I’m not trying either to romanticize the General Motors of yore or to portray Wal-Mart as the root of all evil. GM was, and Wal-Mart is, a product of its time. And there’s no easy way to reverse the changes.

What should be clear, however, is that the public safety net F.D.R. and L.B.J. created is more important than ever, now that workers in the world’s richest nation can no longer count on the private sector to provide them with economic security.

When they reach 65, most Wal-Mart employees will rely heavily on Social Security - if the privatizers don’t kill it. And many Wal-Mart employees already rely on Medicaid to pay for health care, especially for their children.

Indeed, a growing number of working Americans have turned to Medicaid. As the Kaiser Family Foundation points out, that’s why children have for the most part have retained health coverage, despite a sharp decline in employer-based health insurance since 2000.

Yet our current political leaders are trying to privatize Social Security and reduce benefits. And they are slashing funds for Medicaid even as they give big tax cuts to people like Mr. Lee.

The attack on the safety net is motivated by ideology, not popular demand. The public isn’t taken with the vision of an “ownership society”; it seems to want more, not less, social insurance. According to a poll cited in a recent Business Week article titled “Safety Net Nation,” 67 percent of Americans think we should guarantee health care to all citizens; just 27 percent disagree.

The question is whether the public’s desire for a stronger safety net will finally be seconded by corporations that haven’t yet adopted the Wal-Mart model of minimal benefits and always low wages.

Last year Richard Wagoner Jr., G.M.’s chief executive, gave a speech about the costs of America’s “Kafkaesque” health care system that sounded a lot like my recent columns. And his company has made it clear that it likes Canada’s system: in 2002 the president of General Motors of Canada and the head of the Canadian Auto Workers signed a joint letter declaring that “it is vitally important that the publicly funded health care system be preserved and renewed.”

But according to The Journal Register News Service, which covered Mr. Wagoner’s speech, he “stressed later to reporters that he was not proposing a national health care plan.” Why not?

A Serious Drug Problem: Paul Krugman Series, 5 of 7

By Paul Krugman
New York Times
May 6, 2005

There was a brief flurry of outrage when Congress passed the 2003 Medicare bill. The news media reported on the scandalous vote in the House of Representatives: Republican leaders violated parliamentary procedure, twisted arms and perhaps engaged in bribery to persuade skeptical lawmakers to change their votes in a session literally held in the dead of night.

Later, the media reported on another scandal: it turned out that the administration had deceived Congress about the bill’s likely cost.

But the real scandal is what’s in the legislation. It’s an object lesson in how special interests hold America’s health care system hostage.

The new Medicare law subsidizes private health plans, which have repeatedly failed to deliver promised cost savings. It creates an unnecessary layer of middlemen by requiring that the drug benefit be administered by private insurers. The biggest giveaway is to Big Pharma: the law specifically prohibits Medicare from using its purchasing power to negotiate lower drug prices.

Outside the United States, almost every government bargains over drug prices. And it works: the Congressional Budget Office says that foreign drug prices are 35 to 55 percent below U.S. levels. Even within the United States, Veterans Affairs is able to negotiate discounts of 50 percent or more, far larger than those the Medicare actuary expects the elderly to receive under the new plan.

After the drug bill’s passage, Jacob Hacker and Theodore Marmor of Yale University estimated that a sensible bill could have delivered twice as much coverage for the same price.

Needless to say, apologists for the law insist that the prohibition on price negotiations had nothing to do with catering to special interests - that it was a matter of principle, of preserving incentives to innovate. How can we refute this defense?

One way is to challenge claims that the pharmaceutical industry needs high prices to innovate. In her book “The Truth About the Drug Companies,” Marcia Angell, the former editor in chief of The New England Journal of Medicine, shows convincingly that drug companies spend far more on marketing than they do on research - and that much of the marketing is designed to sell “me, too” drugs, which are no better than the cheaper drugs they replace. It should be possible to pay less for medicine, yet encourage more real innovation.

Another answer is to point to the haste with which key players in the drug bill’s passage cashed in - making the claims that they wrote a pharma-friendly Medicare bill out of genuine concern for the public’s welfare look ludicrous.

Let’s look at just two examples.

Billy Tauzin, who shepherded the drug bill through when he was a member of Congress, now heads the Pharmaceutical Research and Manufacturers of America, the all-powerful industry lobby group, for an estimated $2 million a year. In his new job, he’s making novel arguments against allowing Americans to buy cheaper drugs from Canada: Al Qaeda, he suggests, might use fake Viagra tablets to get anthrax into this country.

Meanwhile, Thomas Scully, the former Medicare administrator - who threatened to fire Medicare’s chief actuary if he gave Congress the real numbers on the drug bill’s cost - was granted a special waiver from the ethics rules. This allowed him to negotiate for a future health industry lobbying job at the very same time he was pushing the drug bill.

If all this sounds like a story of a corrupt deal created by a corrupt system, it is. And it was a very expensive deal indeed. According to the Medicare trustees, the fiscal gap over the next 75 years created by the 2003 law - not the financing gap for Medicare as a whole, just the additional gap created by legislation passed 18 months ago - will be $8.7 trillion.

That’s about three times the amount President Bush proposes to save by cutting middle-class Social Security benefits.

In fact, I have a suggestion for Mr. Bush. One way to prove that he’s really sincere about addressing long-run fiscal problems, that his calls for benefit cuts aren’t just part of an ideological agenda, would be to put Social Security aside for a while and fix his own Medicare program. Oh, never mind.

Nonetheless, someone will eventually have to take on the health care special interests. Who might do that? I’ll write about that in the next installment of this series.

A Private Obsession: Paul Krugman Series, 4 of 7

By Paul Krugman
New York Times
April 29, 2005

American health care is unique among advanced countries in its heavy reliance on the private sector. It’s also uniquely inefficient. We spend far more per person on health care than any other country, yet many Americans lack health insurance and don’t receive essential care.

This week yet another report emphasized just how bad a job the American system does at providing basic health care. A study by the Robert Wood Johnson Foundation estimates that 20 million working Americans are uninsured; in Texas, which has the worst record, more than 30 percent of the adults under 65 have no insurance.

And lack of insurance leads to inadequate medical attention. Over a 12-month period, 41 percent of the uninsured were unable to see a doctor when needed because of cost; 56 percent had no personal doctor or health care provider.

Our system is desperately in need of reform. Yet it will be very hard to get useful reform, for two reasons: vested interests and ideology.

I’ll have a lot more to say about vested interests and health care in future columns, but let me emphasize one key point: a lot of big companies are essentially in the business of wasting health care resources.

The most striking inefficiency of our health system is our huge medical bureaucracy, which is mainly occupied in trying to get someone else to pay the bills. A good guess is that two million to three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck to other people.

Yet any effort to reduce this waste would hurt powerful, well-organized interests, which have already demonstrated their power to block reform. Remember the “Harry and Louise” ads that doomed the Clinton health plan? The actors may have seemed like regular folks, but the ads were paid for by the Health Insurance Association of America, an industry lobbying group that liked the health care system just the way it was.

But vested interests aren’t the only obstacle to fixing our health care system. We also have a big problem with ideology.

You see, America is ruled by conservatives, and they have a private obsession: they believe that more privatization, not less, is always the answer. And their faith persists even when the evidence clearly points to a private sector gone bad.

I could cite many examples of this obsession at work. But a particularly good illustration of ideology-induced obliviousness is the 2004 Economic Report of the President, which devotes a whole chapter to health care that can be read as a sort of conservative manifesto on the subject.

The main message of that report is that U.S. health care is doing just fine. Never mind the huge expense, the low life expectancy, the high infant mortality; it’s a market-based system, so it must be good.

The report even takes a Panglossian view of uninsured Americans - one that is completely at odds with the grim statistics I cited above - suggesting that “many of them may remain uninsured as a matter of choice,” perhaps because “they are young and healthy and do not see the need for insurance.”
The president’s economists had only one criticism of the system: insurance is too comprehensive, which encourages people to consume too much health care. As they see it, insurance covers too large a percentage of medical costs. The answer to this problem is the creation of, you guessed it, private accounts, which have now superseded tax cuts as the answer to all problems.

Indeed, a new paper by Martin Feldstein of Harvard, which clearly reflects the administration’s views, suggests that Social Security privatization and health savings accounts - tax shelters designed to encourage people to pay medical costs out of their own pockets - are only the beginning. “Investment-based personal accounts,” he says, are the way to go for unemployment insurance and Medicare, too.

O.K., let’s not turn this into a Bush-bashing session. President Bush didn’t cause the crisis in American health care. His health care policies have made things only a little bit worse.

The point, instead, is that even though all the evidence suggests that we would be much better off under a system of universal coverage, any such move will be fiercely opposed, on principle, by conservatives who want us to move in the opposite direction.

And reform will also be opposed by powerful vested interests - my next subject in this series.

Passing the Buck: Paul Krugman Series, 3 of 7

By Paul Krugman
New York Times
April 22, 2005

The United States spends far more on health care than other advanced countries. Yet we don’t appear to receive more medical services. And we have lower life-expectancy and higher infant-mortality rates than countries that spend less than half as much per person. How do we do it?

An important part of the answer is that much of our health care spending is devoted to passing the buck: trying to get someone else to pay the bills.

According to the World Health Organization, in the United States administrative expenses eat up about 15 percent of the money paid in premiums to private health insurance companies, but only 4 percent of the budgets of public insurance programs, which consist mainly of Medicare and Medicaid. The numbers for both public and private insurance are similar in other countries — but because we rely much more heavily than anyone else on private insurance, our total administrative costs are much higher.

According to the health organization, the higher costs of private insurers are ”mainly due to the extensive bureaucracy required to assess risk, rate premiums, design benefit packages and review, pay or refuse claims.” Public insurance plans have far less bureaucracy because they don’t try to screen out high-risk clients or charge them higher fees.

And the costs directly incurred by insurers are only half the story. Doctors ”must hire office personnel just to deal with the insurance companies,” Dr. Atul Gawande, a practicing physician, wrote in The New Yorker. ”A well-run office can get the insurer’s rejection rate down from 30 percent to, say, 15 percent. That’s how a doctor makes money. It’s a war with insurance, every step of the way.”

Isn’t competition supposed to make the private sector more efficient than the public sector? Well, as the World Health Organization put it in a discussion of Western Europe, private insurers generally don’t compete by delivering care at lower cost. Instead, they ”compete on the basis of risk selection” — that is, by turning away people who are likely to have high medical bills and by refusing or delaying any payment they can.

Yet the cost of providing medical care to those denied private insurance doesn’t go away. If individuals are poor, or if medical expenses impoverish them, they are covered by Medicaid. Otherwise, they pay out of pocket or rely on the charity of public hospitals.

So we’ve created a vast and hugely expensive insurance bureaucracy that accomplishes nothing. The resources spent by private insurers don’t reduce overall costs; they simply shift those costs to other people and institutions.
It’s perverse but true that this system, which insures only 85 percent of the population, costs much more than we would pay for a system that covered everyone.

And the costs go beyond wasted money.

First, in the U.S. system, medical costs act as a tax on employment. For example, General Motors is losing money on every car it makes because of the burden of health care costs. As a result, it may be forced to lay off thousands of workers, or may even go out of business. Yet the insurance premiums saved by firing workers are no saving at all to society as a whole: somebody still ends up paying the bills.

Second, Americans without insurance eventually receive medical care — but the operative word is ”eventually.” According to Kaiser Family Foundation data, the uninsured are about three times as likely as the insured to postpone seeking care, fail to get needed care, leave prescriptions unfilled or skip recommended treatment. And many end up disabled — or die — because of these delays.

Think about how crazy all of this is. At a rough guess, between two million and three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck for that care to someone else. And the result of all their exertions is to make the nation poorer and sicker.

Why do we put up with such an expensive, counterproductive health care system? Vested interests play an important role. But we also suffer from ideological blinders: decades of indoctrination in the virtues of market competition and the evils of big government have left many Americans unable to comprehend the idea that sometimes competition is the problem, not the solution.

In the next column in this series, I’ll talk about how ideology leads to ”reforms” that make things worse.

The Medical Money Pit: Paul Krugman Series, 2 of 7

By Paul Krugman
New York Times
April 15, 2005

A dozen years ago, everyone was talking about a health care crisis. But then the issue faded from view: a few years of good data led many people to conclude that H.M.O.’s and other innovations had ended the long run of rising medical costs.

But the pause in the growth of health care costs in the 1990’s proved temporary. Medical costs are once again rising rapidly, and our health care system is once again in crisis. So now is a good time to ask why other advanced countries manage to spend so much less than we do, while getting better results.

Before I get to the numbers, let me deal with the usual problem one encounters when trying to draw lessons from foreign experience: somebody is sure to bring up the supposed horrors of Britain’s government-run system, which historically had long waiting lists for elective surgery.

In fact, Britain’s system isn’t as bad as its reputation — especially for lower-paid workers, whose counterparts in the United States often have no health insurance at all. And the waiting lists have gotten shorter.

But in any case, Britain isn’t the country we want to look at, because its health care system is run on the cheap, with total spending per person only 40 percent as high as ours.

The countries that have something to teach us are the nations that don’t pinch pennies to the same extent — like France, Germany or Canada — but still spend far less than we do. (Yes, Canada also has waiting lists, but they’re much shorter than Britain’s — and Canadians overwhelmingly prefer their system to ours. France and Germany don’t have a waiting list problem.)

Let me rattle off some numbers.

In 2002, the latest year for which comparable data are available, the United States spent $5,267 on health care for each man, woman and child in the population. Of this, $2,364, or 45 percent, was government spending, mainly on Medicare and Medicaid. Canada spent $2,931 per person, of which $2,048 came from the government. France spent $2,736 per person, of which $2,080 was government spending.

Amazing, isn’t it? U.S. health care is so expensive that our government spends more on health care than the governments of other advanced countries, even though the private sector pays a far higher share of the bills than anywhere else.

What do we get for all that money? Not much.

Most Americans probably don’t know that we have substantially lower life-expectancy and higher infant-mortality figures than other advanced countries. It would be wrong to jump to the conclusion that this poor performance is entirely the result of a defective health care system; social factors, notably America’s high poverty rate, surely play a role. Still, it seems puzzling that we spend so much, with so little return.

A 2003 study published in Health Affairs (one of whose authors is my Princeton colleague Uwe Reinhardt) tried to resolve that puzzle by comparing a number of measures of health services across the advanced world. What the authors found was that the United States scores high on high-tech services — we have lots of M.R.I.’s — but on more prosaic measures, like the number of doctors’ visits and number of days spent in hospitals, America is only average, or even below average. There’s also direct evidence that identical procedures cost far more in the U.S. than in other advanced countries.

The authors concluded that Americans spend far more on health care than their counterparts abroad — but that they don’t actually receive more care. The title of their article? ”It’s the Prices, Stupid.”

Why is the price of U.S. health care so high? One answer is doctors’ salaries: although average wages in France and the United States are similar, American doctors are paid much more than their French counterparts. Another answer is that America’s health care system drives a poor bargain with the pharmaceutical industry.

Above all, a large part of America’s health care spending goes into paperwork. A 2003 study in The New England Journal of Medicine estimated that administrative costs took 31 cents out of every dollar the United States spent on health care, compared with only 17 cents in Canada.

In my next column in this series, I’ll explain why the most privatized health care system in the advanced world is also the most bloated and bureaucratic.

Ailing Health Care: Paul Krugman Series, 1 of 7

By Paul Krugman
New York Times
April 11, 2005

Those of us who accuse the administration of inventing a Social Security crisis are often accused, in return, of do-nothingism, of refusing to face up to the nation’s problems. I plead not guilty: America does face a real crisis — but it’s in health care, not Social Security.

Well-informed business executives agree. A recent survey of chief financial officers at major corporations found that 65 percent regard immediate action on health care costs as ”very important.” Only 31 percent said the same about Social Security reform.

But serious health care reform isn’t on the table, and in the current political climate it probably can’t be. You see, the health care crisis is ideologically inconvenient.

Let’s start with some basic facts about health care.

Notice that I said ”health care reform,” not ”Medicare reform.” The rising cost of Medicare may loom large in political discussion, because it’s a government program (and because it’s often, wrongly, lumped together with Social Security by the crisis-mongers), but this isn’t a story of runaway government spending. The costs of Medicare and of private health plans are both rising much faster than G.D.P. per capita, and at about the same rate per enrollee.

So what we’re really facing is rapidly rising spending on health care generally, not just the part of health care currently paid for by taxpayers.

Rising health care spending isn’t primarily the result of medical price inflation. It’s primarily a response to innovation: the range of things that medicine can do keeps increasing. For example, Medicare recently started paying for implanted cardiac devices in many patients with heart trouble, now that research has shown them to be highly effective. This is good news, not bad.

So what’s the problem? Why not welcome medical progress, and consider its costs money well spent? There are three answers.

First, America’s traditional private health insurance system, in which workers get coverage through their employers, is unraveling. The Kaiser Family Foundation estimates that in 2004 there were at least five million fewer jobs providing health insurance than in 2001. And health care costs have become a major burden on those businesses that continue to provide insurance coverage: General Motors now spends about $1,500 on health care for every car it produces.

Second, rising Medicare spending may be a sign of progress, but it still must be paid for — and right now few politicians are willing to talk about the tax increases that will be needed if the program is to make medical advances available to all older Americans.

Finally, the U.S. health care system is wildly inefficient. Americans tend to believe that we have the best health care system in the world. (I’ve encountered members of the journalistic elite who flatly refuse to believe that France ranks much better on most measures of health care quality than the United States.) But it isn’t true. We spend far more per person on health care than any other country — 75 percent more than Canada or France — yet rank near the bottom among industrial countries in indicators from life expectancy to infant mortality.

This last point is, in a way, good news. In the long run, medical progress may force us to make a harsh choice: if we don’t want to become a society in which the rich get life-saving medical treatment and the rest of us don’t, we’ll have to pay much higher taxes. The vast waste in our current system means, however, that effective reform could both improve quality and cut costs, postponing the day of reckoning.

To get effective reform, however, we’ll need to shed some preconceptions — in particular, the ideologically driven belief that government is always the problem and market competition is always the solution.

The fact is that in health care, the private sector is often bloated and bureaucratic, while some government agencies — notably the Veterans Administration system — are lean and efficient. In health care, competition and personal choice can and do lead to higher costs and lower quality. The United States has the most privatized, competitive health system in the advanced world; it also has by far the highest costs, and close to the worst results.
Over the next few weeks I’ll back up these assertions, and talk about what a workable health care reform might look like, if we can get ideology out of the way.

RAND report on consumer-driven health plans

“Consumer-Driven” Health Plans: Implications for Health Care Quality and Cost
By RAND
California HealthCare Foundation
June 2005

Confronted with double-digit increases in health insurance costs and consumer dissatisfaction with managed care, employers are looking for new ways to contain health care costs. The solutions that are emerging increase consumers’ financial responsibility and involvement in their own health care choices.

One new approach - “consumer-directed health plans” or CDHPs - involves increased incentives to make consumers financially responsible when they choose costly health care options.

This report is an overview of the current state of knowledge on the effectiveness of these approaches and tools. Each of three sections addresses one of the three benefit-design approaches - high deductibles, personal spending accounts, and tiered-benefit designs. (Another section) examines point-of-use decision-support tools.

… this literature review produced the following conclusions with regard to consumer health care use decisions and health outcomes:

* High-deductible plans can be expected to reduce health care spending, but it is unclear that they will lower the rate in growth of costs over time.

* Early evidence suggests that the availability of personal health spending accounts does not eliminate the incentive effects of higher cost sharing; but how consumers will respond as account balances accrue is unknown.

* The role of cost sharing on health outcomes is uncertain. The HIE (RAND Health Insurance Experiment) suggests that modest cost sharing does not have deleterious effects for most people, but other research indicates there is some level of cost sharing that may lead to adverse outcomes, especially for the poor.

* Little is known about how tiered-network plans will affect consumer choice of provider, although some studies suggest that price is not a large factor in provider choice.

* There is mixed evidence on whether the financial incentives in the new plan designs will decrease use of necessary and desirable services as well as unnecessary care.

* It is not known whether decision-support tools can and do promote more appropriate health care use decisions or help consumers purchase value.

http://www.chcf.org/documents/insurance/
ConsumerDirHealthPlansQualityCost.pdf

Comment: Thus the beginning of another prolonged and profoundly expensive national experiment on controlling health care costs…

At the outset, there is little evidence that CDHPs will have more than a very modest impact on global health care spending since most spending is concentrated amongst the few with the greatest needs. The great majority, who are healthy, are responsible for only a small portion of overall health care spending. On the other hand, considerable early evidence does indicate that CDHPs will have a negative impact on health care access and outcomes for individuals with modest incomes and with significant health problems; the important unknown is just how much suffering and death that will result from these policies.

The RAND HIE has been used as a basis for increasing patient cost sharing because it demonstrated that deductibles and co-payments do decrease health care utilization. Studies of large, healthy populations have shown that the decline in utilization has had a negligible impact on global health outcomes. But the subsets of individuals with significant problems clearly fare worse with cost sharing. Costs can be contained without using the blunt instrument of CDHPs that harms those with the greatest needs.

The importance of this RAND report is that it demonstrates there is not enough evidence to move forward with an approach to cost containment that will cause harm, especially when it will delay, most likely by a decade, the beginning of a process to ensure that everyone would have affordable access to beneficial health care services. We do know that CDHPs will never accomplish that.

Why proceed with such a wasteful experiment, especially when we know it will result in more suffering and death? Isn’t that what we’re supposed to be preventing?

B. Capell on RAND's conclusions on CDHPs

Beth Capell, Ph.D. on the RAND conclusions on CDHPs:

Don:

There is a rather substantial literature (about 12 inches deep on my desk) demonstrating that people with high out of pocket costs fail to seek necessary and appropriate care.

To quote Health Access California:

Deductibles of $1000, $1500 or even $5000 per person exist. Out of pocket costs may be capped at several thousand dollars-or not at all. Numerous studies have shown that high deductible policies deter necessary care and put at risk the credit and solvency of average families. People with high deductible plans were:

· Twice as likely to skip medications,

· Twice as likely to fail to fill prescriptions,

· Twice as likely to avoid visiting a doctor for a problem, and

· Twice as likely to fail to get physician-prescribed care.

A deductible of only $1,000 caused a third of patients to spend more than 10% of income on out of pocket costs. Not surprisingly, patients with higher deductibles had more financial problems. Medical costs are involved in over half of bankruptcies—and most of those with medical bankruptcies were initially insured.

Beth Capell, Ph.D., for Health Access California

Comment: Dr. Capell is certainly correct. The RAND report is actually incorrect when it states that there is “mixed evidence on whether the financial incentives in the new plan designs will decrease use of necessary and desirable services.” The evidence is very clear. Financial disincentives do decrease access to beneficial health care products and services.

June 09, 2005

Canadian Supreme Court ruling a step toward two-tiered care

Top court strikes down Quebec private health-care law
CBC News (Canada)
June 9, 2005

The Supreme Court of Canada ruled Thursday that the Quebec government cannot prevent people from paying for private insurance for health-care procedures covered under medicare.

The plaintiffs in the case are a Montreal patient and a doctor. They wanted Canada’s top court to strike down sections of the Quebec Hospital Insurance Act that prevent people from buying health insurance for medical procedures covered by the public health plan.

In its ruling Thursday, the court said the provincial policy violates the Quebec charter. But they split 3 - 3 on whether it violated the Canadian Charter of Rights and Freedoms, meaning there is no immediate impact on the Canadian health-care system as a whole.

http://montreal.cbc.ca/regional/servlet/View?filename=qc-health20050609

Comment: Private health insurance in Canada has been limited to care not covered by their medicare program. The citizens in Canada emphatically agree with the concept that parallel private insurance for medicare covered services should not be allowed because it would allow wealthier Canadians to buy their way to the front of the queue (waiting time for non-urgent services). They support the egalitarian view that their health care system should be shared by everyone.

At the same time, they are not pleased with the development of excess queues and believe that the government should fund adequate capacity in the system.
Prime Minister Paul Martin was reelected on the promise of increasing federal funding to the provincial health systems. That process has begun.

Today’s decision represents a collision of those views. Although the complex ruling is still under study, the Court did rule that, when queues are truly excessive, a patient should be able to bypass the queue through private payment and a physician should be able to provide those services under a private fee arrangement.

The great fear is that this decision will allow affluent Canadians to buy their way to the front of the queue, and, in so doing, diminish their support of public funding of the system. For the average Canadian, diminished funding would result in longer queues and other problems that can arise from chronic underfunding. Such policies would result in a two-tiered system: for the wealthy the best that money can buy, and for the rest, mediocrity or worse.

It will be interesting to see if Canadians will accept this shift from an egalitarian system to one more like ours in the United States: if you don’t have money, don’t get sick.

June 08, 2005

British Doctor Opposes Corporate Healthcare in UK

Privatisation of the NHS is accelerating
Both patients and staff can resist the creeping corporate takeover
By Allyson Pollock
Tuesday May 24, 2005
The Guardian

When Malcolm Glazer took over Manchester United, fans reacted with horror. Some wore black at the FA Cup final, while others are boycotting the club’s merchandising and demanding the resignation of those board members they hold responsible.

Glazer took over United on May 10 - the day the Adam Smith Institute hosted a conference in the Commons for 100 of the country’s most senior NHS and private healthcare executives. Patricia Hewitt was represented by Stephen O’Brien, the NHS strategy director, who used to run the corporation that owns B&Q, and the Texan Ken Anderson, the NHS commercial director and formerly an employee of Amey, a PFI company that specialises in private finance initiatiatives.

“We created a market place,” a senior NHS official told the gathering. “It’s up to you now … Together we’ve created a new era of healthcare provision which can only get wider.”

Much has been made of the fact that the Department of Health has set aside £3bn to buy 1.7m operations from the private sector over the next five years; the emphasis has been on patient choice and extra capacity. But corporate representatives at the meeting were given a frank account of New Labour’s plans to privatise NHS services.

A transfer market is now emerging in doctors, clinical services and even patients (healthier ones are worth more than sick ones). As in football, there will be a premier league of foundation trusts and independent sector treatment centres (ISTCs) lording it over the rest. And as in football, commercial interests will prevail over all others.

Consider first the ISTCs, which will cream off £3bn of taxpayers’ money. At present the Department of Health does not require the same level of training for doctors working in ISTCs as in NHS units. Six surgeons working for the private sector on NHS cases have already been suspended for what are termed serious surgical errors.

ISTCs create incentives to direct care to the comparatively well at the expense of the comparatively less well. There have been reductions in waiting times for cataract surgery, but there have been dramatic increases for chronic eye conditions such as glaucoma, diabetic eye disease and age-related macular degeneration. Easy, cheap operations such as cataract procedures are what the ISTCs want to focus on. If the easy cases and trained NHS staff get swallowed up by the private sector then the market will indeed get “wider”, as more and more NHS providers get squeezed out by rising costs.

As for primary care, Department of Health officials told the businessmen on May 10 that private-sector involvement in elective surgery - the diagnostic and treatment centres - was “very much the starting point for the direction we now want to travel in primary care”. Under the Health and Social Care Act 2003, primary care trusts can contract out all aspects of primary medical services: from cancer screening and family planning to maternity services and minor surgery. By the end of 2005, 55% of GP out-of-hours services are expected to be delivered by companies like GP Plus and Asda.

Meanwhile, the government is creating opportunities to hand over services for multiple sclerosis, alcohol and drug misuse and depression, intermediate care, diagnostics and radiology. Much of this will be accomplished through local improvement finance trusts (Lifts) - the counterpart of PFI in primary care. According to the department: “Lifts transfer ownership of primary care premises from the public sector or GP practices to private investors.” At present Lift partnerships own only GP premises, but health corporations are being encouraged to find new medical-service niche markets to link into Lifts. A Department of Health official reassured the industry that it would be “ringfencing 10% of primary care trust budgets for innovative programmes”. Drawing a parallel with the BBC’s requirement to commission around 20% of its programming from independent producers, the official said this would promote creativity across the NHS.

Doctors are now being offered golden hellos of several hundred thousand pounds to abandon their patients and leave the NHS for life as a salaried employee of a transnational healthcare corporation.

If this were football, the media would full of it. But, to paraphrase Bill Shankly, it’s only life and death. Supporters of the NHS should take a leaf out of the Manchester United fans’ book. Patients should insist on being treated in NHS hospitals; NHS staff should refuse to work in the newly privatised sector; journalists and academics should monitor the impact of the private sector on entitlements to healthcare. And they should be willing to depose the board members - such as Blair and Hewitt - who brought in the hundreds of Malcolm Glazers who will bestride British healthcare like colossi.

Allyson Pollock is professor of public health policy at University College London and the author of NHS plc

allyson.pollock@ucl.ac.uk

An Urgent Case For Fixing Health Care

By David S. Broder
Sunday, May 29, 2005

Nothing is more likely to be overlooked than news that breaks on a day when something totally unexpected occurs. That is exactly what happened last week when Senate negotiators struck the last-minute deal that averted a showdown vote over the “nuclear option” on judicial filibusters.

Earlier that day, the National Coalition on Health Care released a report on the potential savings to business, individuals and government from comprehensive reform of the beleaguered medical-insurance-hospital system.

The figures are startling — a projected saving of anywhere from $320 billion to $1.1 trillion in the first 10 years, even while insurance coverage is extended to every American and stronger quality measures are put in place.

Were it not for its source, this would seem like pie in the sky. But the organization that sponsored the briefing is one of the largest groups in the health care field, a coalition of 90 organizations with 150 million members or employees, ranging from AARP and the AFL-CIO to Blue Shield of California and such corporate giants as AT&T, Verizon and the Principal Financial Group.

The man who ran the numbers is Kenneth Thorpe, the former top economist at the Department of Health and Human Services and now chairman of the Health Policy and Management Department of Emory University in Atlanta. Few experts command broader respect in this field.

Thorpe took the principles laid down in the coalition’s blueprint for health reform — universal coverage, cost management and improved quality — and applied them to four “scenarios.”

One built on the existing employer-financed system, supplemented by requirements for individuals to self-insure. A second envisaged expansion of Medicare, Medicaid and other public programs. A third was a new program, with a variety of insurance options modeled on the current federal employees’ health benefits plan. And the fourth was a single-payer, government-financed design, similar to Canada’s or Britain’s.

The additional costs — primarily caused by covering the 45 million Americans currently without health insurance — run in the range of $75 billion a year. But the net savings — after deducting those costs — by the 10th year of such reforms range from $125 billion to $182 billion annually.

When everyone is insured, health problems can be dealt with at an early stage or prevented altogether, thus helping society avoid the expensive treatment that patients now find in emergency rooms or lengthy hospital stays. Universal coverage also can bring savings in administrative costs and, along with the introduction of information technology and systematic measurements of treatment outcomes, greatly increase the efficiency of health care delivery.

Underlining the advantage of systemic reform are Thorpe’s calculations of the likely consequences of doing nothing to change the current system. Without fundamental change, by 2015, the United States is likely to have 54 million uninsured — 20 percent more than today — and be spending 19 percent of its gross domestic product on health care, compared with 15.6 percent today.

Testimony from two top executives showed that this is not just an academic exercise. George Diehr, chairman of health benefits of the California Public Employees’ Retirement System (Calpers), whose $4 billion annual expenditure makes it the third-largest purchaser of health care in the nation, said that despite its bargaining power “we have been able to improve quality and control costs only at the margin.” Its costs are rising 10 percent a year.

S. Gary Snodgrass, executive vice president of Exelon Corp., one of the country’s largest public utilities, said health coverage for its employees and retirees is its fastest-growing expense. Between 2001 and 2004, he said, those costs rose 70 percent, forcing the company to shift more of the burden to its workers. “What I am here to tell you is that the steps we have taken are not enough” to fix “a health care delivery system that we perceive to be fundamentally broken. It will not be fixed by the incremental or piecemeal proposals that are on the table today” in Congress or the Bush administration.

More and more business leaders, academics and politicians are coming to the same conclusion. The Center for American Progress, a liberal think tank headed by former Clinton White House chief of staff John Podesta, recently outlined one approach to comprehensive health care reform. It would combine two of the scenarios tested in Thorpe’s analysis, with subsidies and cost controls for insurance policies purchased by employers and individuals and an expansion of the federal employees’ health care system to enroll outsiders.

When I interviewed Podesta recently, I told him that I thought that any such systemic reform would have to wait for a new administration. But Thorpe’s calculations, which I had not seen at that time, make the case for action now both more urgent and more practical.

davidbroder@washpost.com

HMO profits on Medical Assistance hurt many in state

By Kip Sullivan
May 28, 2005

The Star Tribune reported that Minnesota’s health maintenance organizations make more money from Minnesota’s Medicaid program than from employers (“HMOs profit from aid by state” May 18).

But the damage being done to the taxpayer is far worse than the article suggested. The gradual takeover of the Medicaid program by HMOs, which began in 1985, raised Medicaid’s costs. This would have been true even if the HMOs had made a zero percent profit off Medicaid

The reason is that HMOs have huge administrative costs compared with the Department of Human Services, the state agency that runs Medical Assistance (MA), as Minnesota’s Medicaid program is known.

Prior to privatization (that is, before the Legislature let HMOs run MA), Human Services spent 4 to 5 percent of the tax revenues allocated to MA on administration of the MA program. But HMOs spend 20 percent of their revenues on administration, including marketing, second-guessing doctors, perks for executives, and lobbying.

For example, Mike Hatch’s audit of Medica, the state’s largest HMO, found that Medica spends 18 to 19 percent of its revenues on overhead.

So do the math. Human Services was passing on 95 percent of its revenues to doctors and hospitals before privatization. Now it is passing on 95 percent of its revenues to HMOs (and possibly less because supervising HMOs is costly), and the HMOs scrape off 20 percent before passing on the remaining 75 percent to doctors and hospitals.

Something has to give. Either doctors and hospitals have to accept lower fees, patients have to get fewer services, or taxpayers have to raise the amount allocated to MA to cover the HMOs’ high overhead costs.

The evidence indicates that patients are getting slightly fewer services and taxpayers are paying a lot more money to support Medical Assistance.

Some evidence indicates HMOs have made a slight reduction in emergency room use by Medicaid patients, but because ER expenditures amount to only 2 percent of total health expenditures, the reduction in medical costs was negligible.

The Kaiser Family Foundation and other experts have concluded that HMOs have been unable to deliver more preventive care to Medicaid patients, in part because the turnover rate among Medicaid enrollees is so high. HMOs, in short, have been unable to reduce use of medical services substantially enough to offset their high overhead costs.

A study recently published by a University of Maryland economist named Mark Duggan concludes that the privatization of California’s Medicaid program raised costs by 20 percent without improving quality.

In a letter this past August, Rep. Matt Entenza, DFL-St. Paul, asked Human Services Commissioner Kevin Goodno whether the agency had ever done research to determine whether privatization of MA harmed providers, patients or taxpayers. Goodno replied, without offering any evidence, that the introduction of HMOs into the MA program did not harm doctors or patients. He noted that Human Services had no studies on the subject of whether HMOs saved MA money.

Years ago, the agency did try to study the issue. In 1993, a Human Services employee (who later went to work for Blue Cross and Blue Shield) completed a study which suggested that the agency was overpaying MA HMOs.

According to a March 13, 1994, exposé in the Star Tribune, this report was deep-sixed by Human Services at the urging of several HMOs (“Study shelved after HMOs complained”).

The Star Tribune article referred to “a memo from a [Human Services] staff member [that] said some HMOs ‘have a vested interest in keeping information from [the agency] because a large profit currently is being made [off Medical Assistance]…”

Although the suppressed Human Services report called for further research to answer definitively whether HMOs were raising MA’s costs, the agency eliminated the job of the report’s author and, thereby, Human Services’ ability to settle the issue.

Gov. Tim Pawlenty and the Legislature need to do more than to reduce the excessive profits HMOs are making off MA. They need to kick the HMOs out of MA, as well as General Assistance Medical Care and MinnesotaCare. And they need to do this before they debate cutting one more human being from the rolls of these programs.

Kip Sullivan sits on the steering committee of the Minnesota Universal Health Care Coalition.

The uninsured drive up premiums for the insured

Paying a Premium: The Added Cost of Care for the Uninsured
Families USA
June 2005

This study quantifies, for the first time, the dollar impact on private health insurance premiums when doctors and hospitals provide health care to uninsured people. In 2005, premium costs for family health insurance coverage provided by private employers will include an extra $922 in premiums due to the cost of care for the uninsured; premiums for individual coverage will cost an extra $341.

More than one-third (35 percent) of the total cost of health care services provided to people without health insurance is paid out-of-pocket by the uninsured themselves. Through this study, we found that the remaining $43 billion is primarily paid by two sources: Roughly one-third is reimbursed by a number of government programs, and two-thirds is paid through higher premiums for people with health insurance.

http://www.familiesusa.org/site/DocServer/Paying_a_Premium.pdf?docID=9241

Comment: The problem of cost shifting from the uninsured to others has long been recognized. This study adds to the understanding by quantifying the amount shifted to those paying insurance premiums. Because of the prevalence of employer-sponsored coverage, this study adds to pressures to reduce the obligation of employers to provide coverage for their employees.

To provide relief, the trend is to shift an inequitable and increasingly unaffordable portion of the costs to the employees themselves. Also, those purchasing individual plans are victims of cost shifting as well.

So what can we do about cost shifting? Many, including the leadership of Families USA, suggest that we merely need to cover almost everyone by expanding our present pluralistic system of funding care. But a parenthetical comment from this report should make us question that
approach:

”(These estimates do not include uncompensated care provided to insured people, who may be unable to pay because they face high deductibles, high copayments, uncovered services, and other out-of-pocket costs that people with insurance are sometimes unable to pay.)”

Individual plans are no longer adequate to ensure financial security in the face of significant medical costs. Because of the financial burden on employers, employer-sponsored plans also are shifting more costs to the employees. Medicare currently covers only about 45% of the costs of the beneficiaries. Medicaid is another source of cost shifting since it is chronically underfunded. Solutions that rely on the current system are fatally flawed for at least two major reasons. They fail to ensure affordable access to health care, and they are highly inequitable in determining just who would pay for our health care system.

A single payer system would not end cost shifting, but it would make cost shifting much more equitable by shifting some of the funding of the universal risk pool from those who cannot afford their share, to those who can easily afford far more than their share. Even more to the point, the common pool would shift costs from the fewer numbers of individuals who are sick and need more care, to the great multitude who are blessed with good health. Isn’t that what insurance is all about?

June 07, 2005

Targeting incremental reforms to states falls far short of goals

Variations In The Impact Of Health Coverage Expansion Proposals Across States
By Sherry Glied and Douglas Gould
Health Affairs
June 7, 2005

Abstract:

Most estimates of the consequences of alternative health insurance proposals focus on national impact, but the extent of cross-state diversity in uninsurance rates, economic and labor-market characteristics, and health care markets suggests that the impact of strategies will also vary. We illustrate this variation by comparing the effects of standard tax credit and Medicaid expansion proposals across states. Some states do well (or poorly) under all policies; others benefit under some but not others. Across policies, state effects on uninsurance rates vary by at least a factor of 2.5. Uniform national strategies that target the uninsured do not generate uniform national outcomes.

From the report:

In this paper we examine the impacts of five types of insurance expansion policies on coverage by state. First, we consider refundable tax credits for the non-group market, a proposal of the type that has been advanced by the Bush administration. Next, we analyze tax credits for small-firm workers and their dependents. Finally, we consider three types of policies that increase the eligibility limits for Medicaid or the State Children’s Health Insurance Program (SCHIP): an expansion of Medicaid eligibility to include all low-income adults, an expansion to low-income uninsured children not now eligible for SCHIP, and an extension of Medicaid eligibility to all parents of SCHIP-eligible children.

Results:

Tax credits. Declines in the uninsurance rate by state vary by a factor of nearly 5: from 4.4 percent in New Hampshire to 20.5 percent in Utah.

Small-firm tax credits. The effect across states varies by a factor of 2.4: from 2 percent of the uninsured in Washington, D.C., to 4.7 percent in Montana.

Low-income expansion. …the decrease in the uninsured population ranges from no effect in states with existing adult Medicaid eligibility limits above 133 percent of poverty, such as Vermont, Utah, and Massachusetts, to a high of 18.3 percent in Alabama and West Virginia.

SCHIP eligibility levels. The range of effects on the entire uninsured population is expected to vary from zero in states, such as New Jersey, Missouri, and Maryland, where eligibility already exceeds this level, to 4.7 percent in states, such as South Carolina, with very low existing SCHIP eligibility.

Medicaid for parents of SCHIP-eligible children. The effects by state range from 0.7 percent of the uninsured in Tennessee to 10.3 percent in Arkansas.

Effects on range of uninsurance rates. Each of the proposals considered here would narrow the range of uninsurance rates across the states. All would have their greatest effects in the states with the highest uninsurance rates. But the extent of narrowing is modest, even for the three policies with the largest national effects. Prior to reform, the nonelderly uninsurance rates among the states had a range of 17.1 percentage points, varying from 9.2 percent to 26.3 percent. Under the expansion to parents of SCHIP children, the range would narrow by 2.4 percentage points. The tax credit reform would have more than twice as large an aggregate impact but slightly less effect on the range, narrowing it by just 1.4 percentage points. The expansion to low-income adults would have the largest effect on the number of uninsured people and would narrow the range of uninsurance rates by 2.3 percentage points.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.259

And…

Study: States need help with uninsured
By Marguerite Higgins
The Washington Times
June 7, 2005

“The message is that there is no single solution that will work for all the uninsured, so we need a variety of solutions,” said Sherry Glied, head author and a health policy professor at Columbia University.

http://www.washingtontimes.com/business/20050606-101052-2922r.htm

Comment: Is the primary message really that we need a variety of solutions?
Well, let’s see.

This study measured the potential relative impact of applying five of the most frequently recommended incremental expansions to each state. It does demonstrate that the impact of each model would vary from state to state. But by targeting the most effective of each of these reforms to the various states, there still is only a modest reduction in the range of uninsurance rates.

No effort was made to estimate the costs of each of these proposals, though prior studies indicate that all of them increase health care spending. Also no mention was made of the fact that each of these proposals increase the administrative burden of health care funding, which is widely recognized as one of the greatest flaws in the U.S. system.

But what should be most alarming about this report is that the very best result obtained by targeting the most effective program to any given state still leaves four-fifths of the uninsured without coverage!

Obviously the most important flaw in this study is that they left out the single payer model which would cover everyone while controlling costs and reducing the administrative burden.

Unfortunately, the lead author, Sherry Glied, received the wrong message from her own study. We don’t need a variety of solutions that won’t work; we need the one solution that will: a single payer system of national health insurance.

June 06, 2005

Insurers reviving reputation of limited benefit plans

Second look: High costs and insurer interest are reviving limited benefit medical plan reputation
By Karen Lee
Employee Benefit News
May 2005

In only a few short years, limited medical benefit plans have risen in perception from a status as low-selling bare-bones programs marketed by niche vendors to potentially viable solutions to today’s health care problems, including punishing health care costs and millions of working uninsured.

Large insurance carriers certainly have noticed the turning tide, and they do not want to miss out.

Indeed, the plans themselves do not come close to covering what a standard health care plan does. For example, a sample Aetna plan might have a relatively low deductible - $250 for an in-network provider, $350 out of network, and a low premium. However, it also has a $10,000 maximum benefit and a prescription drug card that covers a monthly maximum of $35.

Now, though, things have changed. Some states are considering rollbacks of the health care mandates that many believe are largely responsible for soaring health care costs.

The truth is, as health care experts continually point out, most people — even those who do not have high salaries - generate less than $1,000 in health care expenses per year, so insurers believe limited medical plans can take care of low-wage employees’ non-catastrophic expenses.

http://www.benefitnews.com/detail.cfm?id=7432

Today’s Los Angeles Times also addressed this issue:
http://www.latimes.com/features/health/la-he-insure6jun06,1,2827471.story

And…

bizjournals
May 23, 2005

House Speaker Dennis Hastert endorsed legislation to allow individuals to buy health insurance from any state, regardless of where they live.

The legislation would lower the cost of health insurance by allowing individuals to get around their state’s coverage mandates and pick a less-comprehensive plan, says Rep. John Shadegg, R-Ariz., the bill’s sponsor (H.R.2355).

http://albuquerque.bizjournals.com/extraedge/
washingtonbureau/archive/2005/05/23/bureau2.html

And…

H.R.2355 would require the following disclosure by the health insurance issuer:

Notice

This policy is issued by (health insurer) and is governed by the laws and regulations of the State of (primary state), and it has met all the laws of that State as determined by that State’s Department of Insurance. This policy may be less expensive than others because it is not subject to all of the insurance laws and regulations of the State of (secondary state), including coverage of some services or benefits mandated by the law of the State of (secondary state). Additionally, this policy is not subject to all of the consumer protection laws or restrictions on rate changes of the State of (secondary state). As with all insurance products, before purchasing this policy, you should carefully review the policy and determine what health care services the policy covers and what benefits it provides, including any exclusions, limitations, or conditions for such services or benefits.

http://thomas.loc.gov/ (Enter H.R.2355 and check “Enter bill number”)

Comment: In the rush to provide affordable insurance options, the insurers are defeating the very purpose of coverage: providing financial security for individuals with health care needs. Aetna’s plans with a maximum benefit of $10,000 (or as little as $1000 maximum according to the Los Angeles Times) are almost worthless for catastrophic acute or chronic problems. This might provide adequate coverage for individuals who remain healthy and rarely access the health care system. But pulling large numbers of healthy individuals out of the risk pools that do cover high cost patients greatly compounds the funding problems for health care.

To cover the 20% of individuals who utilize 80% of our health care services would require an average of $26,000 per patient (a total of about $1.5 trillion just for this 20% of our population). An insurance policy providing adequate coverage for this group as an isolated entity would have to have a premium in excess of $26,000 per individual. Those who remain healthy but wish to have comprehensive coverage obviously would find these premiums to be unaffordable (the “death spiral” of health insurance premiums). Clearly the only way insurance can work is by diluting the costs by including all healthy individuals as well.

So what is Congress proposing? They would remove individual state requirements that do require that insurance pools truly dilute risk. They would do this by allowing permissive states to market worthless insurance products in restrictive states. Then comprehensive coverage would be unaffordable for almost everyone for the reasons mentioned above. So what would those with significant health care needs do? Well, that’s their problem, but at least now they would own their own health care.

June 03, 2005

Italians reject private health insurance

Health: Italians Pay for the Doctor, Not for Private Insurance
Agenzia Giornalistica Italia (AGI)
June 2, 2005

Between 1991 and 2002 the trend towards private insurance among Italian families has been steadily growing but they still remain “under-insured” compared to the international standards. Mainly families with higher income from central and northern Italy tend to stipulate insurance policies, their family head often has a university degree or equivalent and is a manager or autonomous professional and his financial portfolio comprises stocks and life insurance. These are the results of a recent Ania study analysing Bank of Italy surveys on the finances of Italian families. In 2003 the ratio between insurance policies and GDP in Italy equalled 2.6 pct., about one percentage point less compared to the major European countries. The difference results to be even higher excluding car insurance policies from this comparison. The ratio then hardly reaches 1 pct. in Italy, whereas other countries have a ratio twice as high. Particularly low the demand of families for health insurance, despite the fact that Italians, notwithstanding coverage by the national health system, spend large amounts in private health services. Only a very small part of private expenses (about 1 pct. of the total) is attributable to the subscription of insurance policies, funds or other schemes. The main part of private expenses is directly goes into specialised medical exams and diagnosis for which the public health system often foresees very long waiting times.

http://www.agi.it/english/news.pl?doc=200506021550-1142-RT1-CRO-0-NF30&page=0&id=agionline-eng.bnessitaly

Comment: No national health system covers 100% of health care costs. Italy is no exception. But the adequacy of the public system may be reflected by the size of the market for private health insurance.

It appears that a major purpose of private coverage in Italy is to purchase a place at the front of the queues for specialized care. The low uptake of private insurance suggests that queues are not at a crisis level in Italy. Of course, this is not to say that excessive queues can be ignored. Public efforts must continue to ensure the funding of adequate capacity in the health care delivery system.

What about the United States? We do have a program of social insurance: Medicare. Do we supplement Medicare for the purpose of bypassing queues? Not really. Although there may be patchy areas of deficient capacity, in general our high rate of health care spending has ensured a generous capacity in our system, in fact, often an excess capacity that results in over-utilization.

Although excessive queues are not a major issue in the United States, over two-thirds of Medicare beneficiaries have some form of supplemental insurance. Why is that? It is because Medicare covers only about 45% of the beneficiaries’ total health care services. Thus our reason for a private supplemental insurance market is not to circumvent queues, but it is to provide the financial capability for accessing beneficial health care services.

Many suggest that we should expand Medicare coverage to include everyone. But if we do, we need to increase the benefits to cover closer to 70% of health care services if we are to provide adequate financial security in the face of health care needs. But that 70% is not quite as bad as it would seem. With a universal system we would dramatically reduce administrative waste and non-beneficial high-tech excesses.

We are almost there since 60% of our total health care spending is already funded through the tax system. But what waste! If we bump that up to 70% and demand that we replace our wasteful fragmented system of funding care with an efficient single payer, then, like the Italians, we could reject the efforts of private insurers to displace our own public system of funding health care.

When it comes down to who is going to handle our pooled health care funds, I’ll trust our own public administrators long before I’d trust the private bureaucrats.

For an April 2005 Medicare fact sheet from KFF:
http://www.kff.org/medicare/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=52974

June 02, 2005

Job-based health coverage falling apart

FALLING APART - Declining Job-Based Health Coverage for Working Families in California and the United States
UC Berkeley Labor Center and Working Partnerships USA Health Care
Policy Brief
June 2005
By Arindrajit Dube, Ph.D., Ken Jacobs, Sarah Muller, Bob Brownstein and Phaedra Ellis-Lamkins

To put it in context, the average growth in premium prices during the most recent period was 11% nationally and 13% in California.

If premium rates (in California) continue to rise 10% annually… Looking at the entire non-elderly population (adults and children) with incomes below 300% of FPL (the median American family income), more will be uninsured than have coverage through an employer by 2010, if current trends continue. Only 29% of individuals with incomes under 300% of FPL will have job-based coverage, 36% will be uninsured and 28% will have coverage through a public program.

Policy implications:

* Without major policy changes, employer-based coverage will continue to erode. - What used to be a fundamental component of the social contract for American workers across the income spectrum is now becoming a benefit enjoyed primarily by higher-income families.

* A continued decline in employer-sponsored insurance will shift additional health care costs from employers to the public sector, and increase the numbers of uninsured. - Unless immediate steps are taken to stem the decline in job-based coverage, significant new revenues will be needed to cover the increased demand for public health programs.

* Proposed cutbacks to Medicaid will jeopardize coverage for low-income adults. - Any cuts to public programs will threaten access to coverage for millions of low-income adults.

* Private insurance options are mismatched to those losing coverage. - Policies that rely on private insurance, such as individual mandates or health savings accounts, are mismatched to the economic realities of those losing insurance today.

http://laborcenter.berkeley.edu/healthcare/falling_apart.pdf

And…

Toyota to build plant in Canada - Nikkei
Reuters
May 29, 2005

Toyota Motor Corp. plans to build another plant in Canada, its seventh in North America… Toyota had considered building the plant in the United States but selected Canada because of lower labor costs, it said. Meanwhile, Toyota has started investigating suitable sites in the United States or Mexico for its eighth North American plant…

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=8637099

Comment: The opponents of national health insurance (NHI) have this one right. Policies designed to protect and expand our system of employer-sponsored coverage are doomed to failure because they fail to address the issue of affordability for employers, employees and taxpayers.

Even if the rate of premium increases dips below 10%, the decline in coverage for Americans below the median income level may not accelerate as rapidly as predicted in this study, but it will still continue. But the opponents of NHI would shift much of the financial risk to individuals, and on this one, they’re wrong.

So who is supporting the protection and expansion of employer-sponsored coverage? To no surprise, it is the incrementalists who believe that single payer reform is not politically feasible, and who believe that the only possible political path to universal or near-universal coverage is to expand on our current fragmented system of funding care.

Employer-sponsored premiums can be made affordable only by allowing employers and insurers to shift the costs of care away from the common risk pools and onto the backs of those individuals who need care, a disaster for both financial and health security. It is time to abandon the search for policies that would reduce premiums for private health plans!

Are we ready to start demanding policies that would ensure heath care access for everyone through affordable, comprehensive, universal coverage (i.e., NHI)? Or are we going continue to tremble about the prospect of political feasibility, as we drive around in our Toyotas from Canada and Mexico?

June 01, 2005

W. Shoemaker on Nordstrom-quality care

Wells Shoemaker, M.D., responds on the Nordstrom-quality care proposal by San Diego ‘Volunteers in Medicine’

Wow.

Nordstrom sells a lot of overpriced merchandise to people who don’t need another jacket, dress, hat, or pair of shoes, and then makes them feel comfortable about their choices, if not a little superior to the Chevrolet-driving masses in the process. We have a bit of that in health care, too.

My old question would be—what happens if you get abdominal pain when the cute clinic isn’t open? What happens when the retired professional isn’t up to date, or uses the same practice principles which we know led to legion safety risks, omissions, and misjudgments?

My last dig relates to doctors who go on charity service junkets to third world countries, but who refuse to accept referrals of patients with poorly-reimbursing coverage here in their home communities. These tend to be the best heeled of American specialists, to boot.

You’re right, Don. We need a single, logical system.

Wells

'Volunteers in Medicine' misses the target

Volunteers will staff facility in El Cajon
By Anne Krueger
San Diego Union-Tribune
May 2, 2005

Almost four years after Dr. Gresham Bayne of Point Loma heard the pitch for a clinic staffed by volunteer physicians, the medical facility is close to becoming a reality.

Bayne said the clinic will serve thousands of El Cajon residents who can’t afford medical insurance but earn too much to qualify for low-income medical programs such as Medi-Cal.

The clinic will be the first in California to be opened by Volunteers in Medicine, a national organization that works to bring together retired health professionals and patients who don’t have medical insurance. Since 1993, when the group opened its first clinic in Hilton Head Island, S.C., 31 clinics have been set up nationwide.

John Hughes, who heads social service programs for San Diego County Methodist churches, said patients at the clinic will receive “Nordstrom-quality care.” When they arrive, they will be welcomed by a greeter. All services, including medications, are provided at no cost.

Bayne said opponents were concerned the clinic would attract homeless people to the area. He said all new patients will be screened by a social worker to determine whether they are eligible for care, and homeless people will be referred to community clinics.

“We don’t anticipate seeing homeless people except once by mistake,” he said.

http://www.signonsandiego.com/news/metro/20050502-9999-1m2vols.html

Comment: What was that again? Free Nordstrom-quality care but not for those as needy as the homeless?

Apparently the founders of this clinic acknowledge that community clinics should fulfill the role of providing services to the needy, as long as they’re the homeless type. Also they would probably agree that higher-income individuals, insured or not, should receive their care in the private sector. So what is their targeted patient population? Nordstrom-quality health care shoppers who happen to be uninsured? Is there really a sector of individuals who cannot afford private care, but who are of a social class that shouldn’t stoop to utilizing community clinics when private charity can enable access to Nordstrom-quality care?

As with so many other well intentioned efforts, it appears that these individuals have designed a solution without adequately defining the problems. Community clinics already exist and provide a safety-net access to at least basic care for the uninsured who cannot afford private services. We do not need special clinics that are designed to serve an elite sector of the uninsured. Instead, we need to enact policies that would ensure that everyone has insurance.

A proper framing of the problem would lead to solutions that would restructure the way that we fund health care. The obvious solution is universal health insurance. This would not only address the problems of the elite uninsured, it would also ensure that community clinics are adequately funded so that they can provide more comprehensive services in those communities that fail to attract an adequate number of private sector providers.

Let’s get real about fixing our broken system of funding health care. We can begin by first understanding the problems.