The so-called Third Way in health care may be Premier Klein's "hobby horse" - but Health Minister Iris Evans shouldn't feel obliged to hop on board, says AFL president Gil McGowan.
In his presentation to the health care hearings being conducted by Evans, McGowan warned today that the Third Way could end up costing Alberta businesses a bundle.
"If the government shrinks the Medicare umbrella, workers - both union and non-union - will have no choice but to push for increased health benefits from their employers," said McGowan.
"And employers, especially in Alberta's current tight job market, will have no choice but to comply in order to attract and retain employees. For public sector employers, this will mean less money left in their budgets to pay for the services they provide. And for private sector employers, it will mean reduced profits."
To understand just how costly the Third Way might be to employers, McGowan asked Evans to consider that the average cost for health benefits in Canada is currently about $930 US per employee per year. In the States, the average cost is $5,500 US for single employees and more than $10,000 per year for employees with families.
"Private health insurance costs have been literally eating American businesses alive," said McGowan. "The bottom line is that Medicare, as it is currently constituted, lowers costs for our businesses and gives them a huge economic advantage when competing with their American rivals. Creating a new tier of private insurance in Alberta will substantially reduce that advantage."
For more information call:
Gil McGowan, AFL President @ (780) 915-4599
Fast Facts on Private Health Insurance
Private health care costs more. Canada's single-payer public system pools risk, thereby lowering cost. Our public health insurance system also has very low administrative costs (less than 2%). This helps explain why the Americans - who rely on private insurance - spend 16 percent of their GDP for a health care system that leaves 48 million people without coverage. We spend about 9 percent of our GDP on a much more comprehensive system.
Private health care has a much worse track record of cost containment than public health care. Costs in the public system have been going up, but not nearly as much as costs in the for-profit health care sector. In the U.S., private health insurance premiums have been rising at an average rate of more than 10 percent a year for each of the past seven years. The only way private insurers have been able to stop costs for completely spiralling out of control south of the border is by denying more people coverage, reducing the scope of coverage for those who are enrolled in plans and by charging ever-increasing deductibles and co-payments.
Private health insurance companies make money by not be giving people the care they need - but by denying it. In the U.S., people with pre-existing conditions are routinely denied coverage. Even with those with coverage, some studies suggest that up to 30 percent of claims are denied. This is already happening with supplemental coverage in Canada. In other words, private health insurers often exclude the people who need it most.
The companies most likely to step in and provide expanded private health insurance here in Alberta are the same American companies that have been found guilty of fraud on an almost mind-boggling scale. Columbia/HCA, for example, was fined $745 million for fraud. Tenet Health Care was fined $683 million. Even AON, the private insurance company that your government contracted to draft this framework, was fined $190 million. Are these really the people we want to turn to as saviours?
Private health insurance will hurt Alberta employers. The average cost for health benefits in Canada is currently about $930 US per employee per year. In the States, the average cost is $5,500 US for single employees and more than $10,000 per year for employees with families. Canadian Medicare, as it is currently constituted, lowers costs for our businesses and gives them a huge economic advantage when competing with their American rivals. Creating a new tier of private insurance in Alberta will substantially reduce that advantage.
Private health insurance will give an advantage to large employers over smaller employers when it comes to attracting and retaining workers - because the large employers will more easily be able to afford extended health benefits. This advantage will be particularly problematic for small business in the current tight labour market.
Less than 35 percent of Alberta workers (582,000) currently have access to supplemental health benefits through work. These are the people most likely to received increased benefits to cover the new tier of private service that the Third Way would create. Everyone else will have to make do with the second-class public system. Even if you add in the families of workers covered by private insurance, more than 50 percent of the Alberta population will be left without supplemental insurance.
Costs for extended private health insurance could easily run into the hundreds of millions. One way to estimate the cost would be to look at monthly cost being projected by Accure Health, the private insurance firm associated with Jim Dinning. They're planning to offer a plan that will cover access to services like hip and knee replacements - at a cost of $70 per month. So if all 582,000 Albertans who currently have extended health benefits are successful in getting that kind of coverage - that would translate into an extra cost to employers of about $41 million a month and more about $492 million a year. And that's just for the one procedure - costs would be higher if more services are de-listed or opened up for private payment.