Alberta Premier Ignores Evidence that For-Profit Care Costs More
Globe and Mail Update
January 21, 2005
by Tammy Horne

Alberta Premier Ralph Klein has just unveiled the province’s latest health reform plan. He proposes a “third way” for Alberta’s health-care system, based on experiences of other countries around the world. He is especially interested in expanding private payment and for-profit delivery of health care. In his recent Calgary speech to the Canadian Club, Mr. Klein lauded a local for-profit operation, the HRC surgical clinic, while downplaying its higher costs to taxpayers. He said Alberta will not violate the Canada Health Act, but will encourage the health care sector to test its boundaries. Mr. Klein has consistently argued that Albertans be allowed to pay for faster hip and knee surgery at for-profit clinics. He also supports user charges within the public system. Federal Public Health Minister Carolyn Bennett and Ontario Premier Dalton McGuinty are correct to be skeptical of Mr. Klein’s vision. There is no evidence from other countries that suggests health care in Alberta or other Canadian provinces would be improved by allowing private sale of surgery,public-system user charges, or for-profit delivery. For instance, Premier Klein believes letting people buy private care will shorten public wait times.

A recent review from the University of Toronto concludes that parallel private systems in Britain and New Zealand have created longer public wait times. Waits only get shorter for those people who can pay to jump from public queue to private tier. Even in Australia, where private insurance is government-subsidized, the private system has not reduced public waits for most procedures. Australia’s private tier costs taxpayers $1.5-billion (Australian) a year. Canadian and Australian health economists, led by those at McMaster University, conclude that if that money had gone to hospitals, half to two-thirds of private demand could have been met in the public system.

Even without insurance subsidies, private parallel systems have extra administrative and regulatory costs. Health economist Robert Evans of the University of British Columbia explains that single-payer systems, such as Canadian medicare, control costs better than those with a public-private insurance. The McMaster team argues that private care can only save public dollars if the public system is allowed to deteriorate. Otherwise, people will not choose private payment over public services. The researchers also note that patients incurring complications on the private side use the public system for follow-up treatment, and private and public systems compete for scarce health professionals. The bottom line is this: Parallel private systems are costly for governments, businesses and individuals. A 2002 KPMG survey found Canada has the lowest business costs of nine countries, and universal health care is a key factor In controlling private benefit costs.

If Alberta allows a private-pay tier, and it leads to longer public wait times as in Britain and New Zealand, employees will demand insurance coverage to buy private care. And individuals without employer coverage may feel compelled to buy insurance or pay directly for care. The second type of private payment is user charges within the public system. Sweden has been promoted as a success story because it caps total user fees paid by patients each year. However, Swedish researchers conclude that fees discourage Swedes, especially the poor, from making timely doctor visits. This is consistent with research in other countries and in Saskatchewan, before doctor and hospital fees were dropped and eventually outlawed by the Canada Health Act. McGill University researchers recently found that Quebec’s drug-fee increases in the 1990s lowered use of essential drugs and led to poor health outcomes. This suggests we should eliminate existing fees, not add new ones. Alberta’s proposal of establishing a deductible part of health care benefits is a user fee by another name. Even Alberta’s 2002 Mazankowski report on health reform, which favours more user charges, acknowledges that taxing healthcare could create hardship for some Albertans. Premier Klein also supports more publicly-funded medical procedures being contracted to for-profit facilities. Yet the evidence is clear that not-for-profit delivery is more cost-effective and of higher quality. This research (including a large McMaster University study) is done in the United States because only that country has enough for-profit and not-for-profit facilities to do those comparisons.

Most acute care in Canada is not-for-profit. However, the U.S. comparisons are relevant to Canada because they involve facilities receiving public U.S. Medicare funds. For-profit delivery has also been problematic in Sweden. Daniel Cohn of Simon Fraser University documents how Stockholm County transferred operation of St. Goran’s Hospital to private hands in 2001 and started contracting services to for-profit facilities. Those facilities rejected seriously ill patients, who faced longer public wait times because public resources had been diverted to for-profit providers. For-profit facilities treated patients with minor problems a practice known as “cream-skimming.” Swedes who most needed care were least likely to get timely access. Sweden’s national government has halted further privatization. Canada can learn from international successes. Joel Lexchin of York University points out that Australia’s pharmacare program has resulted in drug costs 9 per cent lower than Canada’s, thanks to aggressive bargaining with drug companies. Canada’s patchwork of provincial plans limits bargaining power, bulk buying and administrative efficiencies. Our provincial and federal governments should make national pharmacare a priority for Canada. We could also look to Sweden, where 85 per cent of health care is publicly funded, compared to only 70 per cent in Canada. The Conference Board of Canada notes Sweden has extensive prescription drug coverage, health promotion programs and seniors’ health services. Sweden also has a comprehensive social-welfare system, including generous child care and free university tuition. There is lots to learn from Sweden about investing in both health care and in the social determinants of health, such as income, education and early childhood development. It’s also important to acknowledge Canada’s own health-care successes. Provinces are reforming public health systems to shorten wait times, improve access and promote health. These efforts need support. It would be counterproductive to get sidetracked by costly privatization experiments. Let’s learn from our own and other countries’ successes not repeat the failures.

Tammy Horne is a research associate of the Parkland Institute at the University of Alberta and lead author of the recently released report Public Remedies, Not Private Payments: Quality Health Care in Alberta.

An Address by Senator Edward M. Kennedy at the National Press Club
January 12, 2005

To revitalize the American dream, we also need to renew the battle to make health care affordable and available to all our people. In this new century of the life sciences, breakthrough treatments and miracle cures are steadily revolutionizing the practice of medicine and the quality of life. The mapping of the human genome enables us to understand far more about the molecular basis of disease, and to plan far-reaching cures that were inconceivable only a few years ago.

Sadly, in America today, the miracles of modern medicine are too often the province only of the wealthy. We need a new guarantee for the years ahead that the cost of these life-saving treatments and cures will not be beyond the reach of the vast majority of the American people. An essential part of our progressive vision is an America where no citizen of any age fears the cost of health care, and no employer refuses to create new jobs or cuts back on current jobs because of the high cost of providing health insurance. The answer is Medicare, whose 40th birthday we will celebrate in July. I propose that as a 40th birthday gift to the American people, we expand Medicare over the next decade to cover every citizen – from birth to the end of life.

It’s no secret that America is still dearly in love with Medicare. Administrative costs are low. Patients’ satisfaction is high. Unlike with many private insurers, they can still choose their doctor and their hospital. For those who prefer private insurance, we will offer comparable coverage under the same range of private insurance plans already available to Congress. I can think of nothing more cynical or hypocritical than a Member of Congress who gives a speech denouncing health care for all, then goes to his doctor for a visit paid for by the Federal Employees Health Benefit Plan.

I call this approach Medicare for All, because it will free all Americans from the fear of crippling medical expenses and enable them to seek the best possible care when illness strikes. The battle to achieve Medicare for All will not be easy. Powerful interests will strongly oppose it, because they profit immensely from the status quo.  Right wing forces will unleash false attack ads ranting against socialized medicine and government-run health care. But those attacks are a generation out of date – retreads of the failed campaign that delayed Medicare in the 1950s and 1960s. Today, we are immunized against such attacks by the obvious success of Medicare. It is long past time to extend that success to all.

The Democratic Party’s proudest moments and greatest victories have always come when we stand up against powerful interests and fight for the common good – and this coming battle can be another of our finest achievements. To make the transition from the current splintered system, I propose to phase in Medicare for All, age group by age group, starting with those closest to retirement, between 55 and 65. Aside from senior citizens themselves, they have the greatest health needs and the highest health costs, and need our help the most.

The first stage of the phase-in should also guarantee good health care to every young child. We made a start with the Children’s Health Insurance Program in 1997. It does a major part of the job, and it’s time to complete the job now. As we implement this reform, financing must be a shared responsibility. All will benefit, and all should contribute. Payroll taxes should be part of the financing, but so should general revenues, to make the financing as progressive as possible. We can offset a large part of the expense by a single giant step – bringing health care into the modern age of information technology. By moving to electronic medical records for all Americans when they go to the hospital or their doctor, we can save hundreds of billions of dollars a year in administrative costs while improving the quality of care.

Equally important, we should pay for health care based on value and results, not just the number of procedures performed or days in a hospital bed. We must also expand our investments in medical research, so that we can realize even more of its extraordinary promise. We must confront and defeat the misguided ideology that – in the name of life – denies life-saving cures by blocking stem cell research.

http://kennedy.senate.gov/~kennedy/statements/05/1/2005112713.html

An Address by Senator Edward M. Kennedy at the National Press Club
January 12, 2005

To revitalize the American dream, we also need to renew the battle to make health care affordable and available to all our people. In this new century of the life sciences, breakthrough treatments and miracle cures are steadily revolutionizing the practice of medicine and the quality of life. The mapping of the human genome enables us to understand far more about the molecular basis of disease, and to plan far-reaching cures that were inconceivable only a few years ago.

Sadly, in America today, the miracles of modern medicine are too often the province only of the wealthy. We need a new guarantee for the years ahead that the cost of these life-saving treatments and cures will not be beyond the reach of the vast majority of the American people. An essential part of our progressive vision is an America where no citizen of any age fears the cost of health care, and no employer refuses to create new jobs or cuts back on current jobs because of the high cost of providing health insurance. The answer is Medicare, whose 40th birthday we will celebrate in July. I propose that as a 40th birthday gift to the American people, we expand Medicare over the next decade to cover every citizen – from birth to the end of life.

It’s no secret that America is still dearly in love with Medicare. Administrative costs are low. Patients’ satisfaction is high. Unlike with many private insurers, they can still choose their doctor and their hospital. For those who prefer private insurance, we will offer comparable coverage under the same range of private insurance plans already available to Congress. I can think of nothing more cynical or hypocritical than a Member of Congress who gives a speech denouncing health care for all, then goes to his doctor for a visit paid for by the Federal Employees Health Benefit Plan.

I call this approach Medicare for All, because it will free all Americans from the fear of crippling medical expenses and enable them to seek the best possible care when illness strikes. The battle to achieve Medicare for All will not be easy. Powerful interests will strongly oppose it, because they profit immensely from the status quo.  Right wing forces will unleash false attack ads ranting against socialized medicine and government-run health care. But those attacks are a generation out of date – retreads of the failed campaign that delayed Medicare in the 1950s and 1960s. Today, we are immunized against such attacks by the obvious success of Medicare. It is long past time to extend that success to all.

The Democratic Party’s proudest moments and greatest victories have always come when we stand up against powerful interests and fight for the common good – and this coming battle can be another of our finest achievements. To make the transition from the current splintered system, I propose to phase in Medicare for All, age group by age group, starting with those closest to retirement, between 55 and 65. Aside from senior citizens themselves, they have the greatest health needs and the highest health costs, and need our help the most.

The first stage of the phase-in should also guarantee good health care to every young child. We made a start with the Children’s Health Insurance Program in 1997. It does a major part of the job, and it’s time to complete the job now. As we implement this reform, financing must be a shared responsibility. All will benefit, and all should contribute. Payroll taxes should be part of the financing, but so should general revenues, to make the financing as progressive as possible. We can offset a large part of the expense by a single giant step – bringing health care into the modern age of information technology. By moving to electronic medical records for all Americans when they go to the hospital or their doctor, we can save hundreds of billions of dollars a year in administrative costs while improving the quality of care.

Equally important, we should pay for health care based on value and results, not just the number of procedures performed or days in a hospital bed. We must also expand our investments in medical research, so that we can realize even more of its extraordinary promise. We must confront and defeat the misguided ideology that – in the name of life – denies life-saving cures by blocking stem cell research.

http://kennedy.senate.gov/~kennedy/statements/05/1/2005112713.html