In my last post I commented that barely a day ever goes by without news on the rising costs of healthcare. This month, despite the attention being paid to the G20 Summit, has been no exception. On June 13, the Globe and Mail published an article that cited a study from the United States. The study determined that an estimated “30 per cent of more of health-care spending, or perhaps $700-billion a year, is wasted.”
The article made me wonder: How much are we wasting here in Canada? If Canadians knew how much their healthcare services actually cost, would they ask more questions and alter their behavior?
Take the example of my friend’s teenage son, who recently signed up for his first cell self paid phone plan. During the first month, he texted, e-mailed and called friends, and downloaded music and applications to his heart’s content. Then he received a shock; his first detailed monthly billing statement. The true cost of all of this activity – on what he thought was very inclusive plan – came as a complete surprise. Now that he knows the actual costs and coverage of his plan, he has changed his behavior and now consumes services in an educated fashion.
The consumption of emergency health services is not the same as texting on your cellphone; it is not usually discretionary unless it is used as an alternative for a walk in clinic. But many Canadians think of our healthcare as “free” which it is not.
How many times has a practitioner asked you if you are covered by an “insurance plan” before telling you the price of a product or service? It happens to me all the time. The dentist, massage therapist, chiropractor, eye doctor….all ask me that question. It is not wrong to ask the question. It is wrong for the participants in a transaction to make the assumption that if the transaction qualifies for “insurance” that it is “free”. We all pay whether it is through an employer health benefit plan or out of our pocket with after tax dollars. Any claim you make through your employer sponsored health benefit plan counts as part of the “claims experience”; the major driver of premiums! Your benefit plan is there either because your employer wants to help you to stay healthy, they don’t want you to worry about health expenses, or they need to offer this as a competitive part of your overall compensation. As a rational consumer receiving part of your compensation through a health benefit plan you should want to be as careful as possible with your claims and want to eliminate wasteful spending. But the practical reality of how we consume health benefits is very different. Most of us spend more time deciding where to buy our paper towels or gas than we do on expenditures for our health.
The Canadian government spends $129 billion on our health care system each year – that’s about 50% of your tax dollars. Yet, the average person is unaware of how much they consume. According to the Canadian Institute for Health Information (CIHI), in 2007, the latest year of available data, out-of-pocket expenses by individual Canadians represented 15% of total health expenditure, or $23.4 billion. Private insurance accounted for 12%, or $19.5 billion. With more transparency into the true costs of our healthcare services, individual Canadians can play a more effective role in reducing waste and freeing up more tax dollars to go towards improving and expanding delivery of our health care programs and reducing the burden on individuals.
