What U.S. Legislators Can Learn From Canadian Health Reform

Danny O’Connell
InsuranceNewsNet

In 1990, while most of you were rewinding your Wilson Philips cassette or trying to record Bel Biv Devoe off the radio, there were some major changes going on north of our border. This was the year the “Canadian Health Reform” was passed, in response to Canada moving to a universal healthcare system in 1967.

You see, it took only 20 years for the Canadian government to realize it was going bankrupt due to the health care plan and in 1987 they charged their government with “fixing the problem.” These changes proved to be a temporary band-aid – which, for the next 20 plus. years, would change the way people were treated for illness.

The budget deficit and debt that Canada saw in 1987 for their healthcare expenses was frightening. To remedy the situation, the Canadian government spent the next 3 years devising a way to reduce the financial burden. The best solution they devised was to slash 30 percent of the health care budget –across the board – for all services and treatments.

While we were still trying to figure out how to set our VCR clock, the Canadian health reform meant hospitals were forced to close, ambulances were not covered, lab work, imaging, mental healthcare, skilled nursing, chiropractor, outpatient pharmacy and anything not legislatively spelled out was no longer covered. Payments were reduced to doctors along with the hospitals starting to house 4 people to a room- with no regard to age, gender or illness. Now, there could be a pregnant woman, a child with leukemia, an old man with Alzheimer’s and someone with AIDS living in the same room.

Now, as the U.S. looks to take on a universal health insurance plan, like what was passed in the PPACA in March of 2010, we look to the same past as Canadians have endured. I was able to spend some time in Canada recently, interviewing Canadians and researching their system. This country is now on the brink of bankruptcy once again and many of their citizens are fed up, left to simply accepting this system as it is – much like the silent majority of our country or those who are unaware of the ramifications of PPACA.

Furthermore, the U.S. cannot effectively manage the Medicare population – reducing benefits again last year, after people have paid in for decades. But in Canada their problem is even worse:

- People who need treatment will legally enter Canada and, based on their condition, can get immediate treatment without ever paying a dime – jumping ahead of citizens who have paid for years.

- A young woman in Vancouver said their system was fine. And, when asked what they do when they need an MRI or major test, she replied, “Oh, you go to New York for that.” But what happens when you are the U.S. and there is no longer a “New York” to travel to for treatment?

- A Toronto man, when asked about health care, simply pulled a letter from his coat that said, “A 55 year old co-worker of yours has been diagnosed with cancer and the government has turned him down for treatment. If you would like, we will withhold a contribution from your paycheck to help with his bills.”

- A lifelong Canadian, who moved to the U.S., had his mother diagnosed with cancer. Her treatment started 29 days after she was diagnosed and was finally admitted to the hospital. Only because of all his effort and fighting to get her there. He had decided, however, that if she got to day-30 without resolve he would move her to the U.S.

How will these changes affect the U.S.? Well, we know one of two things (if not both) have to happen: raise taxes and cut benefits. Canadians currently have a 5 percent federal sales tax and the average teacher gets 50 percent of their pay taken for income taxes. Common goods such as gas, food and clothing are all taxed at much higher levels. Why is medication cheaper in Canada? Two reasons: Firstly, it is subsidized by their tax dollars, and secondly, their tort system limits liability of drug manufacturers and protects them in lawsuits.

In the end, we can expect the same thing in the U.S. – taxes to rise, abuse of the system and people to wait much longer for care. The bottom line is that the system is unsustainable and people in Washington know this.

Danny O’Connell is a partner at Benefit Resource Group. Over the past 35 years BRG has grown exponentially, while focusing on building relationships with and retaining clients. BRG continues to strengthen their role within the insurance industry, leveraging their expertise and extensive knowledge in everything insurance-related, whether personal or business policies. Their commentary specifically regarding universal health insurance, group benefits and beyond has helped to develop BRG into a trusted insurance resource.