Health Care Economics
By Rich Daly
Psychiatric News
October 21, 2005
Volume 40, Number 20, page 16
© 2005 American Psychiatric Association

A study finds the largest number yet of Americans struggling with medical bills and medical debt. The burden deters many from seeking preventive care and chronic disease treatment.

Nearly one-third of working-age Americans struggle to pay their medical bills, according to a recent report, with African Americans and women the most financially strained.

A recently released analysis of the 2003 Commonwealth Fund Biennial Health Insurance Survey concluded that an estimated 77 million adult Americans-both insured and uninsured-have difficulty paying medical bills, have accrued medical debt, or both. The latest findings support the conclusions of earlier studies that have found medical debt to be a significant problem, even for those with health insurance (Psychiatric News, March 18).

“Medical bill and debt problems not only create financial hardship but can deter people from seeking further health care,” said Michelle McEvoy Doty, Ph.D., a study author and senior analyst at the Commonwealth Fund. “In the long run that situation puts a bigger burden on the health care system because you are missing out on preventive medicine and not managing chronic conditions.”

Working-age adults are much more likely to face medical bill problems than Americans aged 65 and older, since pensions and Medicare offer protections for older Americans. The survey found that nearly one-third of the working-age respondents (32 percent) reported struggles with medical bills, while just 14 percent of elderly respondents reported the same. Medical debt was reported by 16 percent of working-age adults compared with 4 percent among adults over 64 years old.

Doty said the larger impact of medical bills on working-age adults stems from private insurers’ “much more fragmented” approach to coverage, compared with Medicare’s “very reliable” assistance in paying medical bills.

The challenge for working adults trying to pay for health care was even greater than for seniors among those with low incomes. The report found that 48 percent of low-income, working-age adults reported medical bill problems in the 12 months prior to the survey, while only 20 percent of low-income seniors reported such problems.

Working-age women were strongly impacted by the cost of medical care, and 39 percent reported medical bill problems, compared with 25 percent of men.

The survey found that 52 percent of African Americans reported medical bill problems, in contrast to 34 percent of Hispanics and 28 percent of whites, according to the report.

The data stem from a national telephone survey conducted from September 3, 2003, through January 4, 2004, among a random, nationally representative sample of 4,052 U.S. adults. The survey had a 50 percent response rate.

Access Under Increasing Threat

Health care reform advocates, such as Physicians for a National Health Program (PNHP), said the data support long-held beliefs that the rising cost of health care reduces access to that care, especially among working-age Americans, who lack the Medicare or pension coverage that buffers costs for older Americans.

“Though some protection for the retired is afforded by pension funds, the much larger incomes of the workforce are not adequate to compensate for the deficiencies of private coverage,” according to a statement on the results issued by PNHP, which advocates a national, single-payer health system. “Obviously a universal Medicare program with expanded benefits would be much more effective in preventing medical debt.”

Crisis Acute for Uninsured

Those without health insurance coverage during the study period had significantly higher rates of medical bill problems and debt (60 percent) than did the continuously insured (35 percent).

Rates of medical bill problems for the uninsured were more than twice those of the insured, with 35 percent of those without insurance at some point in the year contacted by collection agents compared with 15 percent of the continuously insured.

However, the possession of health insurance was not enough to prevent large numbers of Americans from incurring a large burden of medical debt. Researchers found that 57 percent of adults with medical bill problems and 70 percent with medical debt were insured at the time their financial obligation was incurred.

“As employers continue to pass on health care costs to their employees, you are going to see more people struggling with their medical bills and accruing debt,” Doty said.

A survey of 1,800 firms released in September by Mercer Human Resources Consulting found more employers are struggling with ways to cover what is expected to be a nearly 10 percent increase in health insurance costs for 2006 and plan to shift more of the burden of paying for medical care to their employees. Despite the expected 10 percent increase, employers polled plan to increase their spending by only 6.4 percent and have their employees make up the difference.

Medical bill problems and inadequate insurance, said the Commonwealth survey analysis, were also linked by inadequate or absent prescription drug coverage. Nearly half of working-age adults without prescription coverage in their insurance plan had problems covering the medical costs, compared with one-third who did have prescription drug benefits.

The study also found that medical bill burdens and medical debt reduced Americans’ access to health care, with 63 percent of adults with medical debt problems forgoing needed care within the preceding year due to cost. Only 19 percent of adults without medical bill challenges avoided seeking needed health care.

The study found 43 percent of workingage adults experiencing medical bill or debt problems failed to fill a prescription because of cost, compared with just 9 percent of adults not enduring such problems.

Even after adjusting for insurance coverage, income, health status, and other variables, the researchers found that Americans with problems paying health care bills were much more likely to leave a prescription unfilled, forgo a needed physician’s visit, or skip recommended tests or follow-up visits than were adults less challenged by medical costs.

The study found as well that 23 percent of those struggling to pay medical bills did not see a specialist when needed, compared with 6 percent without such bill-paying challenges. Thirty-seven percent with medical bill problems skipped medical tests, treatment, or follow-up, while only 6 percent of those without bill problems did so.

Additionally, 42 percent of those with daunting medical bills had a medical problem but did not visit a physician or clinic for treatment, far more than the 8 percent without difficult medical bills and did not seek needed assistance.

“People who have bills and debt are more likely to have health care access problems,” Doty said.

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International Survey: U.S. Leads In Medical Errors

Patients in Six Nations Report High Error Rates, Lapses In Hospital Discharge Planning, And Lack Of Care Coordination

U.S. Has Highest Out-Of-Pocket Expenses And Rates Of Forgone Care Due To Costs

Bethesda, MD — One-third of patients with health problems in the United States report experiencing medical, medication, or test errors, the highest rate of any nation in a new Commonwealth Fund international survey. Assessing health care access, safety, and care coordination in Australia, Canada, Germany, New Zealand, the United Kingdom, and the United States, the survey found that while no one nation was best or worst overall, the United States stood out for high error rates, inefficient coordination of care, and high out-of-pocket costs leading to barriers to access to care.

The findings are published today in a Health Affairs article, “Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries,” whose lead author is Commonwealth Fund senior vice president Cathy Schoen.

You can read the article at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.509.

“While the consistently high error rates and lack of coordination are disturbing, the findings also highlight the potential for each country to improve,” said Commonwealth Fund president Karen Davis. “Some countries have been able to achieve timely access to needed care while reducing financial barriers. Each country could also gain through strategies to improve the quality and efficiency of care, such as implementing modern information technology systems, supporting patient engagement in care, and improving management of chronic conditions.”

The 2005 survey of adults with health problems is the eighth in an annual series of cross-national surveys conducted by Harris Interactive for the Commonwealth Fund.

One-third (34 percent) of U.S. survey participants reported at least one of four types of errors: They believed that they experienced a medical mistake in treatment or care, were given the wrong medication or dose, were given incorrect results for a test, or experienced delays in being notified about abnormal test results. Three of ten Canadian respondents reported at least one of these errors, as did one-fifth or more of patients in Australia (27 percent), New Zealand (25 percent), Germany (23 percent), and the United Kingdom (22 percent).

U.S. patients who saw four or more doctors in the past two years were especially vulnerable, with about half reporting at least one of these errors; this points toward lapses in communication during care transitions.

Although attention to patient safety has focused chiefly on care in hospitals, a majority of patients (60 percent or more) in each country who reported medical mistakes or medical errors said that these errors occurred outside the hospital, which highlights the need for policies to improve patient safety in ambulatory care settings.

“There were many symptoms of poorly coordinated care in every country, regardless of the type of delivery or financing system,” said Schoen. “Shortfalls were particularly evident for people when discharged from the hospital, and for patients seeing multiple physicians. Improved care coordination during transitions across sites of care and providers offer opportunities for significant improvement. These patients are the ‘canary in the coal mine’ of any health system.”

In all six countries, one-third or more of recently hospitalized patients reported failures to coordinate care during hospital discharge. Germany had the highest rate of patients reporting lack of follow-up care, with three-fifths (60 percent) saying that the hospital did not make arrangements for follow-up visits with a doctor or other health professional or otherwise give instructions about posthospital care, such as symptoms to watch for and when to seek further care.

The United States had the highest rate of patients reporting coordination-of-care problems that reflected inefficient care during doctor visits. One-third of U.S. respondents said that within the past two years, either their test results or records were not available at the time of a doctor’s appointment, or that a doctor had ordered a test that had already been done. Rates of care-coordination problems in the United States were higher than those in the other five countries, which ranged between about one-fifth to one-quarter reporting coordination problems.

Patients with chronic diseases in all of the countries often did not receive the care recommended to manage their condition. At best, about half of diabetics reported receiving all four recommended screening exams to manage their condition. Patients who had supports such as a self-management plan or a nurse included as part of their care management team were more likely than others to have received recommended care.

The United States was an outlier for its financial burdens on patients:
• Half of U.S. adults reported that they had gone without care because of costs in the past year
• In contrast, just thirteen percent of U.K. adults reported not getting needed care because of cost
• One-third of U.S. patients reported out-of-pocket expenses greater than $1,000 in the past year
• U.K. patients were the most protected from high cost burdens, with two-thirds having no out-of-pocket expenses. The variations were notable given the study’s design focus on sicker adults with recent intensive use of medical care.

Access—including after-hours access—and waiting times to see a doctor when sick differed markedly across the countries:
• Canadian and U.S. adults who needed medical care were the least likely to report fast access (same day) to doctors (30 percent or fewer of U.S. or Canadian patients)
• In contrast, majorities of patients in New Zealand (58 percent) and Germany (56 percent) reported that they were able to get same-day appointments, as did nearly half of patients in Australia (49 percent) and the United Kingdom (45 percent)
• Majorities of patients in Germany (72 percent), New Zealand (70 percent), and the United Kingdom (57 percent) also reported easy after-hours (nights, weekends, or holidays) access to a doctor
• In contrast, majorities of patients in the United States (60 percent), Australia (58 percent), and Canada (53 percent) said that it was very or somewhat difficult to get after-hours care
• The four countries with comparatively more rapid access to physicians—Australia, Germany, New Zealand, and the United Kingdom—also had lower rates of emergency room use, with Germany having the lowest rates
• One-fifth of Canadians and one-fourth of U.S. patients who reported going to the ER said that it was for a condition that could have been treated by their regular doctor if available

The findings highlight the need for improved access as well as coordination of care. The authors conclude that “these findings suggest that many of the problems with which policy leaders are grappling transcend specific payment or delivery systems and will require more fundamental transformation.”

The Commonwealth Fund is a private foundation supporting independent research on health care issues and making grants to improve health care practice and policy.

Health Affairs , published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. The abstracts of all articles are free in perpetuity. Web Exclusives are supported in part by a grant from the Commonwealth Fund.

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By Gregory P. Marchildon
Healthcare Quarterly
Vol 8, No 4, 2005

Abstract:
There has been considerable speculation about the potential impact of the Supreme Court of Canada’s judgment in Chaoulli v. Quebec. Even if those who are most friendly – or most hostile – to Canadian medicare are exaggerating the impact of the decision, its impact will be large. While the decision does not strike down any existing single-payer medicare system in any province, including Quebec’s single-payer system, it is certainly capable of becoming the Magna Carta for two-tier medicare through future judicial interpretation and extension. In any event, it has already become the battering ram of choice for medicare’s most tenacious opponents.

In recent years, the critics of medicare have become more vocal about what they invariably describe as the monopoly of single-payer health care, often comparing Canadian healthcare to the command economy of the former Soviet Union. This perception is not only misleading – it is fundamentally wrong on a number of counts.

In the first place, Canadians are awash in choices when it comes to medicare. We have the freedom to choose our physician. Within our respective provinces and territories, we are free to choose our health institutions – one hospital over another, one clinic over another, depending on our personal preferences. And in contrast to the imagery of a single government bureaucracy perpetuated by the critics of medicare, almost all of our physicians are independent professionals working on fee schedules or contracts freely negotiated with provincial and territorial governments. Many of our clinics are private (not-for-profit as well as for-profit) and the majority of our hospitals are either private not-for-profit institutions or part of regional health authorities that have varying degrees of managerial autonomy from government. This contrasts sharply with the history of the National Health Service in Britain, in which hospitals and their employees all became part of a central government bureaucracy.

In the second place, medicare refers to a quite narrow range of health services – mainly hospital, diagnostic and physician services that are provided on a universal basis and without direct payment by the patient. These services constitute about 43 per cent of total healthcare expenditures in the country. Almost all other healthcare, including home care, nursing home care, prescription drugs, vision care and alternative medicines, are outside the medicare basket. In other words, the so-called monopoly covers less than one-half of Canadian healthcare and does not at all apply to mixed and private sectors of healthcare – sectors in which private insurance, user fees and direct payment are the rule rather than the exception. Moreover, the mixed and private sectors – comprising over 50 per cent of health expenditures – have contributed far more than the public sector to the high rate of growth in healthcare expenditures over the last decades.

Finally, we have always permitted two small exceptions to our single-payer medicare regimes – one private, the other public. On the private side, no one is prohibited from purchasing private health services as long as they pay out-of-pocket for those services from providers who have chosen to be non-participating members of a provincial medicare scheme. On the public side, workers’ compensation health benefits predate medicare and were legally excluded from the operation of the Canada Health Act and provincial medicare laws. Of the two, at least until the Chaoulli decision, the public tier of workers’ compensation has been more problematic in terms of its damage to the principle of universality by allowing a segment of the population preferential access to medicare services, occasionally through non-participating physicians and private facilities.

In contrast, the private exception based upon private payment never really developed in Canada for a number of complex reasons, particularly the refusal of provincial and territorial governments to subsidize private care or encourage physicians to work both sides of the public-private street at the same time. Although I know it is contentious to do so, I would add that the generally high quality of Canadian medicare has also prevented a large private market from developing. At any rate, the very few Canadians who have wanted such services have always been free to purchase them in the United States, where a ready market for privately purchased services has always existed because of the truncated nature of public health insurance in that country.

This brings us to the nub of the Supreme Court’s decision. Despite the lack of evidence, opponents of Canadian-style medicare, including Dr. Jacques Chaoulli, have long argued that the inability to purchase private insurance for medically necessary health services has been the key factor in preventing a viable second tier from emerging capable of competing with publicly administered medicare for customers (Coffey and Chaoulli 2001). They often point to examples such as Australia, where public and private hospital and physician services co-exist. Of course, they conveniently ignore the fact that the Australian government has had to provide a huge public subsidy in the form of a 30 per cent deduction for private insurance premiums to keep the private system in business, an experience that seems common in countries with such two-tier systems. In other words, public funds are often diverted to the wealthier members of society in order to prop up the private tier where it exists.

Proponents of medicare have long argued that to preserve the universality of a system, with access based solely on need, government needs to discourage the emergence of a separate “upper” tier of care based on ability to pay. Most governments in Canada have done so because they wanted to prevent major exceptions to the principle that access should be based on urgency of need. They have also done so to prevent a parallel private system from robbing the financial and human resources needed to run a top-notch public system. To protect their single-payer systems, different provinces have selected different and various means to discourage a second private tier. These means include: not allowing non-participating physicians to charge more than the medicare fee schedule; refunding patients only the medicare portion of fees paid to non-participating physicians; and in the case of six provinces (British Columbia, Alberta, Manitoba, Ontario, Quebec and Prince Edward Island) prohibiting private health insurance for medicare services.

In Chaoulli, the Supreme Court decided that Quebec’s prohibition on private health insurance is contrary to the Quebec Charter of Human Rights and Freedoms when an individual’s lengthy wait for medicare services seriously compromises the health of that individual. The court provided little guidance, however, in helping governments, health organizations and physicians know at what point a waiting time is too long. Moreover, little or no consideration was given to the fact that many provincial governments and health organizations, through initiatives such as the Western Canada Wait List Project and the Saskatchewan Surgical Care Network, have focused their efforts at understanding and shortening wait lists. Indeed, while the degree of success varies across and within provinces, there has been considerable progress in reducing waiting times in many parts of the country in the last couple of years.

Contrary to the majority view of the court, which seemed to swallow the monolithic, monopoly view of the world, medicare is actually a highly local system depending on the management and decisions of individual physicians, hospitals and regional health authorities. It is up to these organizations, under a publicly administered framework provided by the provincial government, to balance the many priorities, from urgent to elective care, and from sickness care to illness prevention and health promotion. We must ask ourselves whether the court’s concern with one waiting list problem in one city in one province is going to end up dictating the priorities of health organizations and governments throughout Canada, even further tipping the balance in favour of downstream illness care and away from prevention and promotion efforts that will keep us all healthier (and at less cost) in the long run.

So, what next?

In the face of this decision, those governments that support medicare should act now rather than waiting for the inevitable offensive driven by the powerful interests supporting the radical privatization of Canadian medicare. Individuals and groups within those provinces can strengthen the resolve of these governments by expressing their support for universal medicare, their opposition to allowing a private upper-tier of care, and initiating their own litigation to support the principles of medicare.

Those provinces that have prohibited private insurance should consider amendments that clarify the reasons for prohibition and the merits of a single-tier system of medicare. The legislative debates will force everyone to make their positions and assumptions clear and will provide an opportunity for medicare-friendly governments to set out the evidence supporting a single-tier system. Once enshrined in law, each government’s legislative intent will have to be taken into consideration in future court rulings.

The provinces that have not previously prohibited private insurance have at least two options open to them. They can re-examine the combination of measures they have used in place of an outright prohibition on private health insurance to protect the integrity of their single-payer systems, and the extent to which their circumstances may be similar to, or different from, the provinces with express prohibitions. They can then amend their own medicare laws to make clear their legislative intent to continue to preserve the integrity of their single-payer systems.

Although unlikely because of the inherent cautiousness of the advice given by health bureaucracies to their political masters, it would be interesting to see at least one provincial jurisdiction carefully draft a new law prohibiting private health insurance for the express purpose of having it tested in the courts, perhaps through a reference case. I am quite sure that it would be relatively easy in such a case to demonstrate the broader point that the policy measures relied upon by any government to protect medicare are better determined by governments accountable to the public through the democratic process than by the courts.

The federal government could also take some long overdue action to enforce the Canada Health Act. There is a reason that Montreal has the largest number of private MRI clinics in the country – a market has been created because of the extremely long waiting lists in the public sector and the willingness of participating physicians to encourage their more well-off patients to jump the medicare queue by getting a private MRI. If the federal government had forced this issue into the public domain years ago through a (temporary) reduction in its transfer payments, the Quebec government might have better ensured timeliness of care through the public system and not relied so surreptitiously on its private release valve. In more general terms, while it is up to individual provinces to decide on how best to administer (and protect) their respective single-payer systems, the federal government needs to continue to ensure that it is effectively discouraging major exceptions to the fundamental principles of public administration, universality, comprehensiveness, portability and accessibility.

Finally, I would like to offer some unsolicited advice to Premier Klein of Alberta, given his comments following the Chaoulli decision. If he truly believes that the founding principles of medicare are fundamentally flawed, then this court decision should finally give him the courage of his convictions. If he truly believes that Albertans endorse his vision, then he should immediately introduce a two-tier system. He can bypass the Canada Health Act by simply refusing federal health transfers in the future. If Saskatchewan was able to go it alone for years when it first introduced medicare, then surely oil-rich Alberta can now afford to go it alone. Albertans could then pay directly out-of-pocket or indirectly through private health insurance for a portion of their medicare services. Access for the majority would be based mainly on “ability to pay,” while access for the very poor (often defined as those on welfare) would be determined by a safety net type medicare program. Where the working poor fit into this picture is a little harder to determine but all Canadians outside Alberta would have a home-grown point of comparison on how the systems stack up against each other.

In the 1960s, this option was called Manningcare because Premier Ernest Manning was convinced of its merits compared to the universal medicare model. Personally, I would be confident that single-tier medicare would prove itself more efficient, effective and equitable in the comparison, just as it has done so relative to the American system. Whether a majority of Albertans would willingly go along with Premier Klein on this trip back to the past is highly questionable. Indeed, I suspect the majority of Albertans remains as opposed to a two-tier system as all other Canadians, a stubborn fact that explains the gap separating Klein’s bravado from his government’s timid actions on the ground.

We all know that the demand for healthcare services is potentially limitless. After protracted debates almost a half century ago, we decided that, at least for medicare services, rationing should be based upon urgency of need rather than ability to pay. Though the majority of Canadians continue to support that democratic decision and the founding principles of medicare, the Supreme Court through its Chaoulli Magna Carta is doing its best to force us back to the drawing board again.

About the Author
Gregory P. Marchildon, is Canada Research Chair and Professor Graduate School of Public Policy, University of Regina and Fellow, School of Policy Studies, Queen’s University. Email: greg.marchildon@uregina.ca.

References
Coffey, J. Edwin and J. Chaoulli. 2001. Universal Private Choice: Medicare Plus. Montreal: Montreal Economic Institute.