By Randall Palmer

OTTAWA (Reuters) – Canada’s political leaders reached an 11th-hour funding deal on Wednesday aimed at preventing further erosion of the country’s ailing universal health care system but greatly expanding its coverage.

The federal government agreed to transfer an additional $8 billion to the provinces, while the provinces agreed to expand medicare over time to cover expensive drugs and home care.

The provinces, which were hit by federal spending cuts in the 1990s, quickly denounced the federal grant as insufficient and said they would be coming back for more.

“We will continue the battle, democratically of course,” said Bernard Landry, the separatist premier of French-speaking Quebec.

Landry denounced Canadian Prime Minister Chretien as a “predator” for not being willing to part with more of the federal government’s expected budget surpluses.

But in the end, the provincial premiers, most of whom face elections this year, could not walk away from the cash.

“At the end of the day, when you’re told ‘take it or leave it,’ the patients come first,” New Brunswick Premier Bernard Lord said.

Both sides recognized that the public wants repairs to a system that suffers from long waiting lines and a shortage of doctors and nurses.

Despite the system’s problems, Canadians often cite it as an important cultural difference between their country and the neighboring United States.

The expansion to cover costly drugs and home care, together with a commitment to expand group medical practices where nurses would see patients in some cases, were part of a reform package aimed at making the health system more efficient.

As part of the C$12 billion total new money, the provinces will get C$2.5 billion before the end of the fiscal year on March 31. They will receive a further C$7.5 billion over the following three years.

If Ottawa is still running a surplus above the normal contingency reserves next January–as it has regularly for the last several years–the provinces will get another C$2 billion.

The federal government helps fund the health system and the provinces administer it.

Health spending has eaten up an increasing share of provincial budgets, now around 40%. The provinces say that with the federal government running regular budget surpluses, it should turn over a lot more to the provinces.

Total health spending–including private spending for things not covered by medicare–amounted to an estimated C$112 billion last year.

The federal government is giving C$19.1 billion in the current fiscal year to the provinces as a general transfer for health and social spending.

In November, a federal health commission recommended an increase of C$15 billion in federal health spending over the next three fiscal years, and the provinces also demanded this amount.

In addition to the C$12 billion through 2005-06, the government committed a further C$11.8 billion in new money for the following two fiscal years.

While the premiers of all 10 provinces agreed to the federal arrangement, the premiers of the three sparsely populated northern territories refused to sign on. They will negotiate their grants from Ottawa separately.

National Journal,
February 5, 2003

Rep. John Conyers (D-Mich.), ranking member of the House Judiciary Committee, and Rep. Jim McDermott (D-Wash.), a member of the House Ways and Means Health Subcommittee, have introduced a bill that would create a national single-payer health system, CongressDaily reports.  According to McDermott, the bill would have the federal government finance but not administer the system and would keep the current system of private physicians and hospitals.  McDermott said it is “nonsense to suggest the nation cannot afford such a system,” noting that the federal government “already spends $2,600 per person” on health care through Medicare, Medicaid, other public health plans and tax exclusions for employers who provide workers’ coverage.  Conyers said, “Even the people who don’t like [a single-payer system] are moving to it.  There’s nothing else left” (Rovner, CongressDaily, 2/4).  According to a bill summary, the system would expand the current Medicare system to all U.S. residents. The system would be funded through the existing Medicare payroll tax and a new payroll tax and would provide coverage for a variety of services, including primary care, prescription drugs and dental and vision services (Bill summary).

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=15882

February 4, 2003
Washington D.C.

We are here today to introduce a national health insurance program. Such a program is no longer optional; it’s necessary.

Americans have the most expensive health care system in the world. We spend about twice as much per person as other developed nations, and that gap is growing. That’s not because we are sicker or more demanding (Canadians, for example, see their doctors more often and spend more time in the hospital). And it’s not because we get better results. By the usual measures of health (life expectancy, infant mortality, immunization rates), we do worse than most other developed countries. Furthermore, we are the only developed nation that does not provide comprehensive health care to all its citizens. Some 42 million Americans are uninsured – disproportionately the sick, the poor, and minorities — and most of the rest of us are underinsured. In sum, our health care system is outrageously expensive, yet inadequate. Why? The only plausible explanation is that there’s something about our system – about the way we finance and deliver health care – that’s enormously inefficient. The failures of the system were partly masked during the economic boom of the 90’s, but now they stand starkly exposed. There is no question that with the deepening recession and rising unemployment, in the words of John Breaux, “The system is collapsing around us.”

The underlying problem is that we treat health care like a market commodity instead of a social service. Health care is targeted not to medical need, but to the ability to pay. Markets are good for many things, but they are not a good way to distribute health care. To understand what’s happening, let’s look at how the health care market works.

Most Americans receive tax-free health benefits from their employers, who pay insurers a portion of the premiums for health coverage. But not all employers offer benefits, and when they do, the benefits may not be comprehensive. It’s entirely voluntary. When employers are competing for workers, they offer good benefits; when unemployment rises, they drop them.

The insurers with whom employers do business are mostly investor-owned, for-profit managed care businesses. They try to keep premiums down and profits up by stinting on medical services. In fact, the best way for insurers to compete is by not insuring high-risk patients at all; limiting the coverage of those they do insure (for example, by excluding expensive services, such as heart transplantation); and by passing costs back to patients by denying claims or as deductibles and co-payments. We are the only nation in the world with a health care system based on dodging sick people. These practices add greatly to overhead costs because they require a mountain of paperwork. They also require creative marketing to attract the affluent and healthy and avoid the poor and sick. Not surprisingly, the U. S. has by far the highest overhead costs in the world.

It’s instructive to follow the health care dollar as it wends its way from employers toward the doctors and nurses and hospitals that actually provide medical services. First, private insurers regularly skim off the top a substantial fraction of the premiums – anywhere from 10 to 25 percent – for their administrative costs, marketing, and profits. The remainder is then passed along a veritable gauntlet of satellite businesses that feed on the health care industry, including brokers to cut deals, disease-management and utilization review companies, drug-management companies, legal services, marketing consultants, billing agencies, information management firms, and so on and so on. Their function is often to limit services in one way or another. They, too, take a cut, including enough for their own administrative costs, marketing, and profits. I would estimate that no more than 50 cents of the health care dollar actually reaches the providers – who themselves face high overhead costs in dealing with multiple insurers.

What are the signs of the imminent collapse of this system? Private health insurance premiums are now rising at an unsustainable rate of about 13 percent per year – and as much as 25 percent in some areas of the country. Coverage is shrinking, as more employers decide to cap their contributions to health insurance and workers find they cannot pay their rapidly growing share. And finally, with the rise in unemployment, more people are losing what limited coverage they had. This is not a system that can be tinkered with. It needs to change.

The program we are introducing today is the very soul of simplicity and efficiency, compared with our private health care system. It is a single-payer system – that is, health care funds would be distributed by a single, public entity, so that health care could be coordinated to eliminate both gaps and overlap. In many ways, our program would be tantamount to extending Medicare to the entire population. Medicare is, after all, a government-financed single-payer system embedded within our private, market-based system. It’s by far the most efficient part of our health-care system, with overhead costs of less than 3 percent, and it covers virtually everyone over the age of 65, not just some of them. Medicare is not perfect, but it is by far the most popular part of the U. S. health care system, and in my opinion its problems would be relatively easy to remedy – but that is another subject.

What are the usual objections to the sort of national program we are calling for today? They are mostly based on a number of myths.

Myth #1 is that we can’t afford a national health care system, and if we try it, we will have to ration care. My answer is that we can’t afford not to have a national health care system. A single-payer system would be far more efficient, since it would eliminate excess administrative costs, profits, cost-shifting and unnecessary duplication. Furthermore, it would permit the establishment of an overall budget and the fair and rational distribution of resources. We should remember that we now pay for health care in multiple ways – through our paychecks, the prices of goods and services, taxes at all levels of government, and out-of-pocket. It makes more sense to pay just once.

According to Myth #2, innovative technologies would be scarce under a single-payer system, we would have long waiting lists for operations and procedures, and in general, medical care would be threadbare and less available. This misconception is based on the fact that there are indeed waits for elective procedures in some countries with national health systems, such as the U. K. and Canada. But that’s because they spend far less on health care than we do. (The U. K. spends about a third of what we do per person.) If they were to put the same amount of money as we do into their systems, there would be no waits and all their citizens would have immediate access to all the care they need. For them, the problem is not the system; it’s the money. For us, it’s not the money; it’s the system.

Myth #3 is that a single-payer system amounts to socialized medicine, which would subject doctors and other providers to onerous, bureaucratic regulations. But in fact, although a national program would be publicly funded, providers would not work for the government. That’s currently the case with Medicare, which is publicly funded, but privately delivered.

As for onerous regulations, nothing could be more onerous both to patients and providers than the multiple, intrusive regulations imposed on them by the private insurance industry. Indeed, many doctors who once opposed a single-payer system are now coming to see it as a far preferable option.

Myth #4 says that the government can’t do anything right. Some Americans like to say that, without thinking of all the ways in which government functions very well indeed, and without considering the alternatives. I would not want to see, for example, the NIH, the National Park Service, or the IRS privatized. We should remember that the government is elected by the public and we are responsible for it. An investor-owned insurance company reports to its owners, not to the public.

Some people say that a single-payer system is a good idea, but politically unrealistic. That is a self-fulfilling prophecy. In my opinion, the medical profession and the public would be enthusiastic about a single-payer system if the facts were known and the myths dispelled. Yes, there would be powerful special interests opposing it and I don’t underestimate them, but with courageous leadership, such as Representative Conyers is providing, and the support of the medical profession and public, I believe there is nothing unrealistic about a National Health Insurance Program.

I want to mention one final and very important reason for enacting a national health program. We live in a country that tolerates enormous disparities in income, material possessions, and social privilege. That may be an inevitable consequence of a free market economy. But those disparities should not extend to denying some of our citizens certain essential services because of their income or social status. One of those services is health care. Others are education, clean water and air, equal justice, and protection from crime, all of which we already acknowledge are public responsibilities. We need to acknowledge the same thing for health care. Providing these essential services to all Americans, regardless of who they are, helps ensure that we remain a cohesive and optimistic country. It says that when it comes to vital needs, we are one community, not 280 million individuals competing with one another. In seeking to ensure adequate health care for all our citizens, we have an opportunity today to reassert that we are indeed a single nation.

— Marcia Angell, M. D.
Senior Lecturer, Department of Social Medicine, Harvard Medical School
Former Editor-in-Chief, New England Journal of Medicine
February 4, 2003
Washington, D.C.