Ann Silversides is a freelance writer living in Toronto.
Canadian Medical Association Journal 1995; 153: 827-828
[résumé]
The cost of health insurance has increased by an average of more than 15% a year for the past 5 years, Charles Black told the 8th annual conference of the Centre for Health Economics and Policy Analysis (CHEPA) at McMaster University. The increases are much higher than for life insurance.
An estimated 20 million Canadians, about 70% of the population, already have some kind of private supplemental health care insurance -- 96% of participants are members of group plans -- and the market is mature, Black said.
The rising costs are primarily due to price increases for insured services, such as prescription drugs or semi-private hospital coverage, and the expansion of private coverage into areas vacated by public health insurance, he said later in an interview.
With the cost of supplementary health insurance rising, employers are taking a more active interest in the debate about health care costs, he said, noting the formation of employers' committees on health care in Ontario, Alberta and Quebec.
"For many years there was an expectation that the government would look after things and no one needed to worry. Now there is an awareness of costs and there is a real need for attention by private insurers and employers."
In his response to Black's presentation, Dr. Morris Barer, the director of the Centre for Health Services and Policy Research at the University of British Columbia, noted that the rate of increase in the cost of private insurance is "dramatically different" from the growth in the public-sector segments of health care.
"The fastest-growing segments within health care are those largely outside the public plans," said Barer, who questioned the insurance industry's claims that it had played a role in improving efficiency and controlling costs.
Until fairly recently, the main objective of supplementary health care insurers was quick payment, with some reviews to catch glaring fraud, Black said. Cost increases were typically passed through directly to policyholders.
But in the last 3 or 4 years, "there has been a growing emphasis on managed care and a search for value-added services," largely because of rising costs and competition, and "insurers are just beginning to realize the scope."
Health care insurance is both competitive and voluntary, Black said, so there is wide variety in the marketplace as carriers draft plans to suit clients' wishes. About 40 insurers offer health care insurance, with the 10 largest companies accounting for about two-thirds of the coverage.
To date, most cost-control initiatives are related to prescription drugs, such as limiting the dispensing fee paid to pharmacists, capping the reimbursement for such drugs at the price of the generic instead of the brand-name product, and introducing mail-order prescription drug plans. Preferred-provider plans have also been introduced.
Black told the spring conference that changes "that redefine the scope of the Canada Health Act create niches for private insurers -- for example, insurance for travel outside of Canada." The rush to provide out-of-country health insurance has led to a bewildering array of options.
Barer acknowledged the legitimate role of private health care insurance in areas such as out-of-country travel. "I don't think there is anyone in any province who seriously believes that this is an area of health care where the public system should have a larger role," he remarked.
But he warned of the implications of Black's observation that there is a common interest between those who provide public and private funds for health care.
The wider public interest may well be ignored as provincial governments, primarily interested in relieving fiscal pressure, move services out of public plans and create "opportunities" for private insurance, Barer noted.
The interplay of private and public plans can be complex. For example, the move to increased day surgery, which results in less time spent in hospital, has led to increased pressure on private plans because prescription-drug costs are typically covered by public plans only during hospital stays.
In Ontario, Black said, the insurance industry convinced the province that a new government plan to protect citizens from catastrophic prescription-drug costs should have a high threshold based on out-of-pocket, not insured, expenses. The new Trillium Plan has not to date had any effect on private insurance, he said. (Under the plan, Ontario families facing high drug costs can have their expenses covered after they have spent a predetermined amount of money.)
Black told the conference that replacing expenditures in public plans with expenditures in private plans is clearly "just cost shifting."
But Barer suggested the issue is more than cost shifting. Because the first allegiance of the private for-profit insurance sector is to shareholders, the sector "has perfected the skills of minimizing risks, minimizing claims paid and maximizing the black ink. . . . We need to think carefully about who benefits from the expansion of private insurance and the contraction of public coverage."
Experience suggests that an expanded role for private insurance in Canadian health care will lead to an increase in overall health care costs beyond what we would experience under the current public coverage, Barer said. There would be an increase in administrative costs as a share of total health care costs, as well as pressure for public subsidization of private insurance coverage, and a greater expense will be borne by those who can least afford it.