Fwd: qotd: Canada is paying more and getting less from private insurers

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-------- Original Message --------
Subject: qotd: Canada is paying more and getting less from private insurers
Date: Fri, 28 Mar 2014 12:31:55 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Medical Xpress
March 24, 2014
Canadians spend more on private health insurance for smaller payouts

Spending by Canadians on private health insurance has more than doubled
over the past 20 years, but insurers paid out a rapidly decreasing
proportion as benefits, according to a study published today in the CMAJ
(Canadian Medical Association Journal).

The study, by University of British Columbia and University of Toronto
researchers, shows that overall Canadians paid $6.8 billion more in
premiums than they received in benefits in 2011.

Approximately 60 per cent of Canadians have private health insurance.
Typically obtained as a benefit of employment or purchased by
individuals, private health insurance usually covers prescription drugs,
dental services and eye care costs not paid by public health care.

Over the past two decades, the gap between what insurers take in and
what they pay out has increased threefold. While private insurers paid
out 92 per cent of group plan insurance premiums as benefits in 1991,
they paid only 74 per cent in 2011. Canadians who purchased individual
plans fared even worse, with just 38 per cent of their premiums returned
as benefits in 2011.

"Small businesses and individual entrepreneurs are the hardest hit –
they end up paying far more for private health coverage," says study
lead author Michael Law, an assistant professor in UBC's Centre for
Health Services and Policy Research, "It's essentially an extra health
tax on one of our main economic drivers.

"Our findings suggest that private insurers are likely making greater
profits, paying higher wages to their executives and employees, or
spending more on marketing," Law adds.

http://medicalxpress.com/news/2014-03-inefficiency-private-health-canada.html

CMAJ article (first page, paywall for rest)
http://www.cmaj.ca/content/early/2014/03/24/cmaj.130913.extract


Comment by Don McCanne

Although Canada's single payer system provides excellent coverage for
most health care, a market for private health insurance sprung up to
cover prescription drugs, dental services and eye care that were not
covered by the original program. The for-profit insurers did what they
are expected to do. They began by retaining 8 percent of premiums for
administrative costs and profits. But after two decades, they now retain
as much as 62 percent of premiums for profits, high executive
compensation, marketing and other administrative costs.

Although some are calling for more regulation of Canada's private
insurers, they should have learned from the experience in the United
States. No amount of regulation will eliminate their inefficiencies and
waste. Coverage for these services should be rolled over into the public
single payer system.

Opponents protest that Canada cannot afford to offer these benefits in
their public program. Nonsense. Most Canadians are already receiving
drugs, dental care and eye care, and it is being paid for out-of-pocket
or through private insurance. The money is already being spent; it just
needs to be spent better. Placing these benefits into the public program
would do the following things: 1) administered pricing would ensure
value, 2) financial barriers to care would be reduced, 3) financing
would be more equitable, and 3) the excesses and waste of the private
insurers would be eliminated.

When we enact our single payer system here in the United States, we'll
need to be sure that we don't make the same mistakes as Canada, though
they are far fewer than our blunders.