The economic argument for universal health care

Occupy Nova Scotia/Occupy Wall Street drums may be silenced but when Canada’s provincial health ministers met with the federal minister in Halifax in November different drums were beating. A coalition of groups led by the Council of Canadians urged more taxes to pay for increased health care. Their opponents pushed back recommending more privatization in the health care system as the solution.

Both positions are wrong.

I think it’s irresponsible to urge more money for the current system until we – all Canadians – get off our asses, pay attention to what’s going on and demand accountability. It’s not enough to sit at Tim’s grumbling that government should give health care more money. That’s lazy and simplistic. If money were the answer we could have bought our way to better health long ago.

The problem with our system is deeper than cash. If you want a better system pay attention to how the money is spent and how the system is managed. Where is the money going? How can health care executives justify where and how they spend it – and why are administrative costs and operating procedures so secret? National Defense doesn’t keep a secret as well as these people do. Administrative secrecy is so bad that in Quebec the government passed a law detailing how information has to be collected and reported. More than a year after the law came into effect hospitals still hadn’t complied.

And why don’t they have to obey the rules and regulations? They count on two things: their ability to bully politicians and the public’s short attention spans. If we want a better health care system it’s the responsibility of those who pay for it to pay attention. Don’t give it more money until you know what they’re doing with it. And in case you missed it elsewhere on this blog, here are some examples of where they’re spending it: $7,000 lunches, $500 overseas telephone calls, $3500 hotel bills in Singapore, and $100,000 raise for a single executive who retired from a hospital job, qualified for his pension and came back 30 days later to consult on what he used to do.

Until either side can justify their position we should give no more increases to health budgets or allow any more privatization of health care services and delivery. Those promoting privatization either have a vested interest in it, are uninformed or are in positions – like politicians and lobbyists – to receive any benefit of speedy service without having to pay for it because it will be part of the compensation package provided in one form or another by taxpayers. It’s an example of the 1% vs 99% that the Occupy kids were talking about.

What are the benefits of universal health care? For one thing when you look at OECD countries the worst performing country in terms of health care is the one country without a universal care system. That’s the United States. They pay the most money for health care and have the worst health. Click here for details:

According to the World Health Organization in 2007 Canadians had a life expectancy of 81.4 years, while Americans could expect 78.1 years. That’s a 39 month difference. Our infant mortality rate was 3.9 percent, while America’s was 6.7 percent. It’s astonishing that their newborns die at almost twice the rate ours do. They do have slightly more doctors: 2.4 doctors per 1,000 people compared to 2.3 in Canada. Per capita expenditures are also telling. Those who believe the private sector can do better are wrong. In Canada while we spent $3,895 per person, the Americans spent $7,290. As a percentage of GDP our cost was 10.1 percent and theirs was 16 percent.

Some medical specialists say Canadians are healthier than Americans because we believe in preventative care and since individuals don’t pay to see a doctor, we go to a doctor earlier in an illness. Americans, because they do have to pay for their doctor visits, tend to save up their illnesses so they can maximize their medical appointment.

A Congressional commission headed by Senator Rockefeller found if the United States spent $2 billion a year on pre-natal care they would save $10 billion a year on the extraordinary measures spent treating premature babies, babies born with addictions and other illnesses to mothers who didn’t see a doctor during their pregnancy and didn’t know not to drink, smoke or take drugs while pregnant.

The numbers show we have a better system. If you’re rich, your cheque book gets you to the front of the line in the American system. I’m not against wealthy Canadians becoming medical tourists traveling, as former Newfoundland Premier Danny Williams did for heart surgery, to the US or any other country for fast treatment. However, it’s not in the broader public interest to alter our system to accommodate the wealthiest one percent. Their money gives them choices so let them use it to rush around the world in pursuit of that faster service. The benefit of removing them from the line up is a further reduction in wait times for those who don’t have such options.

What are the costs for a privatized system? I checked with several colleagues on their health care costs. One 63-year-old self-employed woman told me she pays $1270.56 every three months for a policy that has “fairly minimum coverage”. Her policy has a $2,500 deductible. A 40ish mother of two, pays $1200 per month for her coverage. Her deductible is $3,600 per year. She works two jobs to provide for health care coverage for her family.

A high school friend works for an employer who subscribes to an HMO (Health Management Organization). She pays $400 a month, her employer pays $400 a month. She is really dissatisfied with their coverage because most of the illnesses she or her husband experienced haven’t been covered. They are also limited to which doctors they can see and which hospitals they can go to. Imagine sitting in an ambulance and having to bypass hospitals because it’s not on your allowed list! Since my friend has had to use their health care coverage she’s been trapped in her job for 29 years because she can’t risk having another company’s health care insurer refuse her coverage.

A former co-worker who works for a small company in New England pays $980 a month for his coverage. That was the single employee rate for his former employer – married people cost the company $1440 a month for coverage. My friend noticed, “We haven’t hired any married people in five years. It’s not a formal policy, it just happened.”

What these people are paying for health care coverage is a mortgage or car payment without the house or car.

Any Canadian who has any type of private health care coverage should also wonder – maybe fear – where their monthly costs will go were we to adopt a different system.

Interestingly, the number one reason for personal bankruptcy filings in the United States is health care costs.

Our universal health care system also aids our economy because employers, even when paying for additional coverage (vision, dental, drug care), aren’t paying what American companies pay. That gives us a competitive advantage. We’ve seen how many jobs have been lost due to the impact of the higher Canadian dollar on exports. We’re told that payroll taxes and higher minimum wages impede job creation, so imagine what an extra $400-$1000 (or more) per month per employee would do to our costs, prices and employment prospects.

In 1988 a vice president at Chrysler in Windsor told me they could produce a car in Canada for $700 a unit less than in the United States because of health care costs alone. More recently, before the economic downturn in the United States, General Motors moved 3,500 jobs from Michigan to Ontario because they could save $1,500 per unit thanks to the difference in health care costs.

There is a statistic that 30 percent of new jobs in Canada are among the self-employed. Having a universal health care system allows people to risk self-employment and entrepreneurship. Would they dare if they had to directly pay for treatment or high insurance premiums?

And a private system isn’t any better for the medical profession. While US doctors may at first glance have a higher income than their Canadian counterparts, they also have substantially higher practice costs. In Canada most doctors can operate their office with a nurse/receptionist. In the US, doctors need whole billing departments. Our doctors send one bill to the government. In the US doctors have to chase payment from patients or an insurance company – if the patient is covered by insurance and the claim is allowed.

In 1993 when President Clinton tried to reform the US health care system, former CBS news anchor Walter Cronkite produced a special for the Public Broadcasting System. In one segment where he talked about administrative costs he had cameras outside a hospital in Detroit. The camera pointed at a building, which Cronkite identified as the actual hospital. The camera then panned right and showed an identical building. That, he said, was their billing department. As much floor space was dedicated to management and billing as to patient care.

If we went to a two-tiered health care system we seriously run the risk of wrecking our economic model and sending more jobs overseas to low-cost labour markets. And those lost jobs will only add to our revenue deficit and further strain our system.

The simple solution is to radically alter the management of our health care system. In Nova Scotia, as one example, we could redirect $50 million from executive salaries to front-line care. How many citizens would that aid? In Ontario cutting health care consultants would free up over $110 million a year for front line care. It’s time to break the addiction to big bureaucracy.

Health care administration is the one element of our system which is rarely – if ever – scrutinized or cut back. Yet, no matter how much money we budget for health care, the old problems continue and grow.

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4 Responses to The economic argument for universal health care

  1. Thankful RN says:

    I am a nurse, and I cannot thank you enough for the articles you have published recently in the Chronicle Herald. I am glad someone out there is making the effort to inform the public as to the problems front-line health care workers face. Our resources to help people are being cut shorter and shorter, and its about time the public really looks at the management instead of blaming us. Keep up the good work.

  2. Ed Fedora says:

    i agree with your comment about how throwing more money at it will not deliver the intended outcome. There are problems throughout the system but few real changes. My expertise is in the area of prescription drug savings and there is a lot of need for improvement there but little action.

  3. Joanne MacPherson says:

    Part of my letter writing campaign now is directed at the Premier’s office. I want to know why bricks and mortar announcements are being made for new hospitals in Pugwash and Shelburne when both communities have sent out the SOS for family doctors.

    I have no clue who has the power to make these decisions but it is clear there is little opposition. Most folks have the misguided notion that any dollars spent on healthcare must be good for the community, somehow.The truth is we have an urgent critical care need for family doctors and the system is not hiring them. There is no transparency either. We don’t even know if positions are being advertised, the terms of the employment, how many candidates applied, why these were rejected. All we hear is how difficult it is to recruit doctors to rural areas. I spoke with a nurse practitioner last summer who told me she could not make plans to practice in Pugwash permanently until something other than a temporary contract position was offered. That shed some light on the problem.The system doesn’t need more money, it is needs transparency and accountability.

  4. Graham Hardy says:

    I agree with your comments. A two tiered health care system would be detrimental to our health care system. In Great Britain they tried that, the private clinics set up to do the easy procedures and charged well for them, leaving the more complicated health care and procedures to the public system. The public system experienced significant cost increases as a result. What other industry charges for fixing something they messed up. I am sure the auto repair industry would never get away with it, but our health care system does.
    I agree there is a lack of accountability and awareness of what the true costs are, and I am speaking as a health care administrator.

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