THE HEALTH PLANS
How much do they really cost? What actual protection do they give you? Just how many people do they cover? What are the chances for a national scheme?
A GROWING number of Canadians are reaching the conclusion that some form of health insurance is essential to their financial security. Most of them recognize that no health plan—be it private or public, voluntary or compulsory, all-inclusive or limited in the benefits it provides—can offer anything for nothing. But for most families health insurance has two attractions: a chance to pay for their illnesses in advance, while they’re well and in possession of their full earning
power; a chance to spread the risk with other families, so that families that incur the High Cost of Being Sick will pool their bills with families that escape it.
Probably one Canadian in every two is already covered by some kind of hospital insurance. Perhaps one in every four is covered by some kind of insurance against doctors’ bills. In 1942 a poll of the Canadian Institute of Public Opinion showed seventy-five percent of the population in
favor of a national health - insurance scheme, administered by or under the auspices of the federal government and covering both hospital and medical care as well as other services not generally provided by the hundreds of public and private schemes now available. In 1949, when the poll was repeated, the number in favor had increased to eighty percent.
All three national political parties have endorsed such a scheme, at least in its broad outlines. So far its implementation has been Ldocked by the refusal of Ontario and Quebec to surrender to the federal government their right to administer health and welfare along with certain other rights and revenues which are theirs under the BN A Act.
Even should Ottawa succeed in reaching a workable compromise with the two largest provinces, a second major obstacle would remain to be cleared before a universal Canadian health plan could come into operation. Most doctors have modified their traditional opposition to compulsory health plans and the Canadian Medical Association, which speaks for nine thousand of Canada’s 13,873 physicians and surgeons, is now on record as a supporter of national health insurance. But the CMA, and presumably most of its members, still has serious and unresolved doubts about the desirability of allowing such a scheme to be administered by a government agency. The doctors, pointing to the many large health plans already organized and being managed by groups of doctors, contend that if we ever decide to have a national health plan it can and should be run
by doctors. The government’s viewpoint is that national health insurance, when and if it’s introduced, will cost the taxpayers a quarter of a billion dollars a year and the taxpayers i.e. the government—must have full and final control over the manner in which it’s to be spent.
In the meantime two of Canada’s provinces— Saskatchewan and British Columbia—have already taken the plunge into compulsory and universal health schemes. Two others, Alberta and Newfoundland, maintain partial health-insurance services. In varying degrees all the provincial plans confirm the same axiom to which all health plans — whether sponsored by private insurance companies, doctors’ groups, patients’ co-operatives or governments—are inexorably tied. The customer gets only what he pays for and he must pay for what he gets. Saskatchewan spends thirty-two percent of its provincial revenue on public health a sizeable part of it on a hospital plan which offers every resident of the province almost complete protection against hospital bills, and which most of its subscribers feel is giving them pretty much what they want. Alberta spends 14.3 percent of its revenue on health, but its hospital plan offers far fewer benefits than Saskatchewan’s. B.C.’s rate of health spending lies in between twentyfour percent of the provincial budget—and the subscribers to the B.C. hospital plan get a little less protection than the subscribers of Saskatchewan and a good deal more than the subscribers of Alberta.
The same fundamental choice faces the hundreds
of thousands of Canadians who have turned to non-governmental agencies within which to pool their health risks. How much are they willing to pay? How much protection do they want? If they want to keep down their premiums they must accept checks on the benefits which they will receive in times of trouble.
The complaints most commonly voiced about health plans reflect this fundamental dilemma. Often the people who most desperately need protection against medical bills—that is, the people whose health is most uncertain—cannot qualify for membership in an adequate plan simply because their health is uncertain. Often the people who are admitted to health plans as normal risks find the protection they actually bought was a good deal less complete than the protection they thought they were buying. Small type in the policy and extras in the operating room can often leave a patient who thought himself adequately insured with a bill for several hundred dollars.
During this survey I met one family which subscribed to two health plans and still had to pay four hundred dollars over and above its premiums toward its year’s medical bills of seven hundred dollars. A Montreal woman who paid premiums on her policy for five years found it was worthless when she had to go to hospital for a hysterectomy; she had received minor treatment for a related condition twenty years earlier. An Ontario man received not a penny for a bronchial complaint when officials of the health plan to which he subscribed discovered he had been
treated for asthma fifteen years earlier; when he re-examined his contract he discovered he had no protection against any of the respiratory diseases, including tuberculosis, influenza and pneumonia.
Notwithstanding grievances and misunderstandings such as these, there is every evidence that the vast majority of the health-insurance schemes available to Canadians are being run efficiently and honestly by responsible people. One of the oldest is the Associated Medical Services Inc. of Ontario, which recently celebrated its fifteenth birthday. Originally financed and sponsored by a group of Ontario doctors, it has now assumed a status closely resembling that of an independent co-operative. During 1950 AMS received from its eighty-six thousand subscribers $1,100,000 and paid out on their behalf eight hundred and seventysix thousand dollars. The cost of operating was a little more than two hundred and sixty-seven thousand, or twenty-five percent of the subscription income. The deficit was made up from reserves.
To stay within its budget and to keep its premium rates reasonably low, Associated Medical Services enforces many limitations and exclusions in its benefits. Its Plan 900, one of several kinds of protection offered, is available to families with four children at $70.20 a year. But subscribers are not entitled to any benefits until they have been enrolled two months. Tonsils and adenoids will not be removed until a year after the subscriber enrolls; if they were diseased before the subscriber’s enrollment AMS accepts no liability. No pregnancy benefits of any kind
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The Health Plans
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are paid until twelve months after the date (if enrollment. If menopausal disorders in women or prostatic disorders in men “or conditions related thereto” become manifest within two years of the in-force date on the contract. Associated Medical Services will accept no claim. The contract describes many other exclusions, including a blanket embargo on benefits for any illness “known or unknown to the subscriber” which existed before the date of the contract. No provision is made for home visits by a physician.
Associated Medical Services is one of eleven major medical-care plans sponsored or initiated by Canadian doctors. Altogether they have a million and a half members. Typical of the larger ones are the Physicians Services Inc. of the Ontario Medical Association, covering two hundred and eighteen thousand people, and the Medical Services Association of British Columbia, which covers one hundred and eighty-one thousand. Their average per-family rates are roughly comparable (seventy-five dollars under the Ontario plan; seventy-six dollars to eighty-two dollars under the B.C. plan).
Probably the most satisfactory of all the doctor-sponsored schemes, from the standpoint of its own subscribers, is that of Windsor Medical Services Inc., sponsored by the Essex and Kent Medical Societies. The Windsor scheme charges a single adult $22,20 a year and the most it charges a family, regardless of the family’s size, is eightyfour dollars a year. It permits doctors’ calls to the home, and there are virtually no exemptions for its one hundred and four thousand subscribers except the treatment of alcoholism, drug addiction, feehle-mindedness, epilepsy and acute venereal diseases.
But although the Windsor plan comes close to solving the problems of its subscribers, it hasn’t solved the medical problems of its community as a whole. The scheme’s cornerstone is Windsor’s heavy industrialization, its concentration of large numbers of workers in a relatively few factories and offices. Enrolled in employee groups, paying their premiums through payroll deductions, they avoid most of the costs of selling and servicing individual subscriptions and thus keep administrative costs to ten percent. But largely because it must exclude individual subscribers or sacrifice these advantages, Windsor Medical Services covers only half the families of Windsor and suburbs.
Of the eleven largest medical-care schemes under the sponsorship of medical groups, nine follow the same practice that is in effect in Windsor. Individual subscribers are not accepted. (Associated Medical Services is one of the exceptions and that explains its higher overhead.) Most private insurance companies, which sell medical-care protection to an estimated eight hundred thousand people and surgical-care protection to two million two hundred thousand in Canada, will insure either individuals or groups. In practice, however, they cover far more people in group schemes than on individual policies. Commercial insurance is subject to the same verities as noncommercial and government insurance: group policies are less expensive to sell and service and offer the buyer more for his money. Many employers help pay the group-insurance premiums of their employees and this adds to the relative attractiveness of group policies.
In Saskatchewan and Manitoba, the least industrialized provinces, some of
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the advantages of group insurance have been obtained by pooling doctor bills at the municipal level. More than two hundred towns, villages and rural municipalities operate local schemes similar to the one in force in Stonewall, twenty-five miles north of Winnipeg. For the services of Stonewall’s municipal GP, Dr. Fred Evelyn, property owners pay an additional tax on their holdings, while non-property owners pay a personal tax of eleven dollars per year which protects the entire ! family. Dr. Evelyn’s salary is six I thousand dollars per year, in addition to the cost of keeping a nurse and running his car and office; he also has revenue from extra services.
The fifty thousand people living in I Swift Current , Sask., and the surrounding area (known as the Swift Current Health Region) enjoy almost complete protection against doctors’ bills. Thirtyeight doctors, under contract, provide practically every known type of physicians’ services. The cost to the residents is a 2.2 mill property tax, as well as an annual lump tax of seventeen dollars per single person, twenty-seven dollars for a married couple, up to a maximum of forty dollars per family, j
These personal and property taxes raise ninety percent of the seven hundred thousand dollars a year it costs to maintain the Swift Current plan. The Saskatchewan government pays the extra ten percent. Together with provincial hospital insurance, the net effect of these expenditures has j been to make Swift Current the one district in Canada where the average j resident,, unless he runs into preposterously bad luck, can tell almost to a I penny how much his and his family’s j health is going to cost him in any given year.
The Swift Current plan is compulsory and its top authority is a board of twelve citizens. Considering its revolutionary nature, it has been relatively free from controversy. Doctors are paid on a fee-for-services basis at agreed rates. When the plan started in 1946 there were only nineteen doctors in the area it served. Now there are twice as many and it’s estimated that their typical income, before expenses, is in the neighborhood of thirteen to fifteen thousand dollars annually. Dr. A. D. Kelly, deputy general secretary of the Canadian Medical Association, said this about the plan after an on-the-spot study: “An observer gathers the impression that here is a successful experiment in the large-scale provision of medical care courageously applied, efficiently managed and remarkably free from attempts to make the facts preconceived ideas, financial or otherwise . . . The participating physicians appear to be satisfied with the operation of the plan, which differs so little from the conditions of private practice.”
The prepayment and pooling of hospital bills, like the prepayment and pooling of doctors’ bills, is a fastgrowing business which subdivides into | public business, semipublic busineas and private business. Policies underwritten by private insurance companies i now provide a degree of protection against hospital costs for around two million Canadians. The permutations of cost-and-coverage which they offer are almost endless. The one generalization that applies to all of them is that the fancier the benefits, the higher the premiums.
The most important group offering semipublic hospital insurance are the five Blue Cross plans, sponsored by the provincial hospital associations of Ontario, the Maritimesand Newfoundland, Quebec, Manitoba and Alberta. These j cover about 2.9 million people, comj
pared to the two million covered by private insurance and the three million covered by government hospitalization in Saskatchewan, British Columbia, Alberta and Newfoundland. (Many people are covered by two and occasionally more than two plans. It seems a safe guess, however, that even allowing for repeaters hospital insurance of some kind covers around seven million men, women and children, or one Canadian in every two.)
Largest of the Blue Cross plans is Ontario’s, with nearly two million members. For $46.20 per year, under the “Comprehensive Plan,” a family is entitled to the following benefits for each member: fifty-one days a year in a semiprivate ward, with ten days added for each year of continuous membership up to a maximum of two hundred and one days a year; use of operating room, anaesthetic equipment and material; routine clinical pathology and biochemistry service, oxygen therapy, basal metabolism tests and other services which many people never think of in their ordinary thinking about the costs of illness.
But in spite of these provisions, many Blue Cross subscribers still find that a trip to hospital can be expensive. If the subscriber isn’t feeling well and his doctor thinks he should go to hospital for a diagnosis, the trip is at the patient’s expense. In such circumstances, X-ray and laboratory tests, plus the cost of a bed, can sometimes cost the patient a hundred dollars in three days. Blue Cross will pay no more than twenty-five dollars for drugs. It doesn’t pay for blood transfusions, which come to twenty-five dollars each in hospitals not serviced by the Red Cross. Although it will pay X-ray examinations up to twentyfive dollars when the patient is clearly sick, it will not pay for X-ray therapy which, of course, includes the treatment of cancer. Also excluded are the fees of the anaesthetist ("usually fifteen dollars), ambulance (seven dollars a trip) and ward charges above the yearly maximums, even for the chronically ill.
Of the four provincial hospitalinsurance schemes, the five-year-old Saskatchewan Hospital Services Plan is the most expensive and offers the most protection. The plan is compulsory and it reaches an estimated ninetyfive percent of the population through its use of municipal clerks and treasurers as collection agents.
The annual premium, which is ten dollars for an adult, twenty for a childless couple, thirty dollars at most for any family, is misleadingly low, for the scheme runs four million dollars a year in the red and the deficits are met from provincial revenues.
In return most Saskatchewan residents receive almost complete protection against hospital bills. There is no limit on the patient’s stay in hospital; one patient has occupied a bed since the plan went into force on Jan. 1, 1947. Public-ward accommodation is the standard and the patient who prefers semiprivate or private accommodation must pay the difference. He receives use of the operating room and case room and gets free dressings and casts. X-ray, both for diagnosis and therapy, is free as are other laboratory services. Anaesthetic materials and equipment are provided, along with the services of an anaesthetist. Physiotherapists and other specialists attached to the staff' of his hospital treat him without extra cost. The patient is entitled to endocrine preparations, insulin, blood plasma, injectable penicillin and streptomycin and eight types of vitamins. The most important exclusions are special nursing care, whole-blood transfusions, hospitalization for diagnostic purposes
only, and drugs and biological preparations so new that they’re not considered beyond the experimental stage.
Administration costs of the Saskatchewan plan have decreased from 7.9 to 4.2 percent since its inception, although the over-all cost, largely because hospital costs themselves have skyrocketed, has increased in the five years from $7.5 millions to $13.7 millions. During its first three years the classic bugbear of compulsory health schemes - patients who aren’t really sick stampeding for hospital beds to cash in on “free” benefits—showed
some signs of becoming a problem. Between 1947 and 1950 hospital admissions jumped about twenty-five percent. Figures for 1951, however, showed a slight recession. The provincial government says it never was seriously alarmed by the early rush for beds, which it suggests was the result of genuinely needful patients making use of services they hadn’t been able to afford before.
In the early stages of the Saskatchewan scheme, the hospitals themselves took a much less optimistic view of t he added burden on t heir capacities.
But a revision in the system of payments from the plan to the hospitals appears to be working satisfactorily. Last year the Saskatoon City Hospital ended a million-dollar year three thousand dollars in the black.
The younger British Columbia Hospital Insurance Service has had a much harder row to hoe. Although the principle of government-underwritten hospitalization is no longer a major political issue in the coast province, the working mechanics of the B.C. scheme have been a chronic and violent source of contention in the provincial legis-
lature and on the hustings ever since it came into effect on Jan. 1, 1949. As this was written, another election campaign was under way and the scheme’s unexpected deficits, its methods of collecting from its subscribers and its methods of making payments to the hospitals were under fire from all sides.
The troubles of B.C.H.I.S. can nearly all be traced to two generic errors: it tried to move too far too fast and promised to deliver too much service with too little money. Although membership is compulsory by law, a legislative board of enquiry recently discovered that the hastily organized collection scheme — first conducted through sixty-three district offices, later revised to permit payroll deductions— was missing more than one wage earner out of every six. This has led to much antagonism between hospitals anti patients on one hand and between hospitals and the administrative authority on the other. The hospitals are not permitted, nor do they have any real inclination, to turn sick people away merely because they haven’t paid their premiums. But when such patients receive treatment, it becomes the hospital’s responsibility to collect. B.C.H.I.S., which subsidizes all. hospitals with an annual grant, does make some provision for bad debts, but when a hospital runs into a wave of premium evaders its whole economy can he threatened with disaster.
While A Man Lay Dying
Another source of financial trouble to some hospitals has been co-insurance. Under co-insurance, the patient pays a maximum of three-fifty a day for ten days for his year’s hospitalization, over and above his premiums. In theory this serves to keep free-loaders out of the wards and save the bed space for those who really need it. In practice some hospitals have found co-insurance difficult to collect and since their grants from B.C.H.I.S. are based on the supposition that virtually all co-insurance is collectible, their deficits have mounted.
B.C.H.I.S. was not designed to take care of the chronically ill, for whom the maximum is thirty days’ hospitalization a year (there’s no limit for the acutely ill). In drawing the line it has had to make difficult and sometimes cruel decisions. A man lay dying of cancer in the Jubilee Hospital at Vernon when word came through from B.C.H.I.S. that he was no longer entitled to hospitalization benefits and should be discharged. In Kamloops an old man lay under an oxygen tent, fighting for his life, when a similar order was transmitted from the plan’s higher echelons. A thirteen-year-old Vancouver girl was admitted to hospital with a spinal injury which left one leg three inches shorter than the other. Thanks to the skill of an orthopedic surgeon she left the hospital cured. B.C.H.I.S. refused to pay the hospital bill of seven hundred and fifty dollars on the grounds that the youngster was chronically ill. Cases such as these have left the B.C. College of Physicians and Surgeons to thunder: “It is intolerable that an arbitrary ruling can be made by a single medical civil servant in Victoria regarding how long a patient he hasn’t seen should stay in hospital.’’
Many suggestions for reforming B.C.H.I.S. were contained in a report tabled in the legislature by an enquiry board last February. Some of these are: A strict crackdown on premium evaders, administration to be placed in the hands of a three-man board, extension of benefits to the chronically ill, abolition of co-insurance, more generous and courteous treatment of
hospitals, more money from provincial funds and a streamlining of administrative procedures. Finally, it was recommended that Saskatchewan’s hospital scheme he studied.
Like the Saskatchewan plan, the B.C. plan has cost far more than its architects bargained for. Originally it was hoped that it could be sustained by yearly premiums of twenty-one dollars for single adults and thirtythree dollars for families. These rates have been increased to thirty dollars and forty-two dollars respectively and co-insurance has been added, but for the last fiscal year for which complete records are available the scheme went more than four million dollars in the red. Since the bookkeeping methods of the two schemes vary, exact comparison is difficult, but under the same system of accounting as that in use in B.C. the Saskatchewan plan in 1951 would have been eight millions in the red. ín each case, however, the deficits met from the provincial treasury included assistance to indigents, pensioners, etc. and grants to municipal hospitals which would have been paid whether compulsory hospital insurance was in force or not. In B.C. this “unavoidable” part of the operating deficit was almost three millions, in Saskatchewan slightly more.
Alberta’s much more modest plan calls on the provincial treasury for an annual subsidy of just under two million dollars, but it offers its voluntary subscribers a good deal less security. It has been estimated that not more than fifty percent of the province’s residents are enrolled in the scheme.
Municipal councils, by a majority vote, can bring their communities into the scheme. Ratepayers and their families are automatically insured by a property tax of two mills, which comes to thirty dollars on an assessment of fifteen thousand dollars. Nonratepayers may join by paying eight dollars a year for themselves and their families.
The subscriber pays only a dollar a day for a bed, but he is also charged for all extras, including the difference in ward charges if he prefers semiprivate or private accommodation. Since it’s much less comprehensive and expensive, the Alberta scheme has aroused neither the extremes of enthusiasm nor of criticism that have been aroused by the B.C. and Saskatchewan plans.
Another piece of Alberta health legislation, which is separate from the dollar-a-day plan, is the Maternity Hospitalization Act. ft provides all women in the province with free hospital care during childbirth. The people of rural Alberta are much happier about these benefits than are the administrators and boards of I governors of the city hospitals. To handle these maternity cases, the province pays a hospital like Edmonton’s Royal Alexandra a flat daily rate of $8.50. But it costs the hospital $12.54 a day to provide the care required. Last year the province’s generosity to mothers cost this hospital ! alone a total of eighty-six thousand dollars.
Probably the least publicized -and j the least expensive to the individual subscriber in direct payment of all health-insurance schemes is Newfoundland’s “cottage hospital plan” which is available in many rural areas. For five dollars a year (ten dollars per family) the Newfoundlander is entitled to home visits from a doctor, hospitalization in one of the seventeen provincially operated cottage hospitals as well as out-patient diagnosis and treatment. Because of Newfoundland’s acute doctor shortage (one to 2,417 population) twenty-eight districts are
served by registered nurses who perform many of a physician’s duties. Typical of these districts served by nurses (where the premium is dropped to three dollars a year per single adult, six dollars a year per family) is Musgrave Harbor where Joan Eydes, a London-born nurse, cares for fifteen hundred people within a radius of forty miles. Nurse Eydes delivers babies, extracts teeth, gives injections, copes with epidemics and patches up gun and axe wounds. This scheme is subsidized directly by the province to the extent of $352,276.43.
None of Canada’s many health plans is so badly managed or starved for funds that it fails to meet some of the needs of some of the people some of the time. None of them is so wellmanaged or well-heeled that it meets all of the needs of all of the people all of the time.
Whether the latter goal is possible of attainment or not, the country’s t hree major political parties are agreed that the next step toward it is a system of health insurance offering protection to all Canadians. At the 1945 dominionprovincial conference the Liberal gov-
ernment offered to underwrite approximately sixty percent of the cost if the provinces would give it the go-ahead to bring such a scheme into force. But the constitutional impasse between Ottawa on the one hand and Quebec and Ontario on the other has left the issue dormant, although Health Minister Paul Martin seldom misses an opportunity to make it clear that it hasn’t been forgotten. Recently Martin announced the government was considering the appointment of a House and Senate committee to inquire into the whole field of healt h insurance.