Health Insurance: A Challenge for Obama

Posted on July 7, 2009 in Life Insurance Canada News
Health Care Rally by Neil Parekh
Health Care Rally by Neil Parekh

Remember the McCain and Obama health care plan battle? The main difference between the two plans was primarily the candidates’ stand towards the employer -based health care insurance. McCain’s core aim was to get people to switch from the employer-based system to individual plans by taxing the employer-based health insurance benefits and providing tax credits to individuals ($2,500) and families ($5,000), offsetting the purchase of an individual health care plan. Obama on the other hand had the opposite agenda – to get even more people into the employer-based system. Medium and large companies would be required to either offer a health care coverage or they would have to pay extra tax in order to contribute to public insurance plan (“pay or play”).

Obama’s program

Since the presidential campaigns are long gone and only Barrack Obama will get the chance to implement his program (in this presidential term anyway), let’s have a look at his health care reform in more detail.

The proposed reform was build around three main issues:

  • Health coverage for all

  • Lowering cost and improving the quality of the US health care system

  • Prevention: strengthening the public health

Let’s focus on the first goal. This is probably the most important feature of the proposed system. There are already various state-run programs that are supposed to provide some kind of health insurance to those unable to buy private insurance – typically the elderly, disabled or poor. Medicare (for those over 65 years of age), Medicaid (for poor/very poor, disabled), SCHIP (for children) or various veteran programs are the most noted. The trouble with those programs is that there are still millions of Americans left without any insurance at all. For example, about 60% of poor Americans are not covered by Medicaid. When those without an insurance get sick eventually, they wait until the later stage of the illness before seeing a doctor. The treatment is then more expensive than if the illness was taken care of in the earlier stages. This increased cost is of course paid by raising premiums of those properly insured.

Obama’s aim is to create another public program similar to Medicare that will be available to cover all those with no access to any other already existing option (the employer-funded plans or government programs). And this is where Canada comes into it: the Canadian health care system is often used as an example by both the proponents and opponents of the Obama’s reform. While the first group usually emphasize the lower cost, fairness and the accessibility of the Canadian system, its opponents generally come up with repetitious misconceptions, which I will now try to address.

US misconceptions;

So what are the most cited misconceptions of the Canadian health care system?

The Canadian health care system is too expensive – way more than the US system.

First of all there is this cost-related myth. It is often claimed that the Canadian system is more expensive than the US system, but in fact while Canada spends only 10% of its GDP, covering 100% of its population, the USA spends over 15% GDP, while at least 15% of the population is not covered at all and even more are people left with not enough coverage. For example in 2005, the US spent US$6,401 per capita on health expenditures – that’s almost twice the sum spent in Canada that year – US$3,359.

In Canada, it’s up to the government to decide who gets the treatment.

Another repeated misconception is that the Canadian government makes the decisions on who gets health care and when. That’s totally wrong: the only people making these decisions are in fact the doctors. Unlike in the US, where no matter what you doctor says – if your insurance administrator says you’re not getting it, then that’s it.

The plan only covers the bare basics, so you end up paying a lot on any extras anyway.

Every province has its own rules concerning what is and what is not covered by the public health insurance. But mostly it’s all the doctor’s fees, tests, everything that happens in the hospital. It usually doesn’t cover the medical equipment, dental and vision care and other extras. But since all the costly items are covered and these extra charges are quite predictable, there’s number of private insurance plans like Manulife’s FlexCare Program available, offering low premiums that take care of their extra expenses. All in all, you end up having access to any treatment you might need, paying much less for the public & additional health insurance combined than what the Americans has to pay for the same level of access.

It takes ages to get treatment in Canada. In fact, Canadians rather travel to the US for their treatment.

If you need some kind of specialist treatment, you might wait a few weeks or up to a month, and for selective surgery the waits are even longer. But if you need an urgent treatment, you get it fast. No matter if you’re poor or rich. If you need your treatment fast and it for some reason it isn’t available at the moment when you need it, you might be sent to the US, but that is also covered by your insurance! Only those Canadians who pay out of pocket for their treatment in the US wish to get the treatment faster than their doctor finds necessary.

In Canada, the doctors work for the government. And the government picks the doctor for you!

Nope… the doctors do not work for the government. The doctors have, just like in the US, their private practices, and only have to deal with one insurer, which is the provincial government. And of course you can pick the doctor yourself.

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