Mature Life Features

Cecil Scaglione, Editor

Costs Cut Into Government-Controlled Health Care

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By Cecil Scaglione, Mature Life Features

Government-cotrolled services  of any sort may focus on cost regardless of their intent.

You’d like to believe a politician who proclaims to be the crusader who will make sure you will never be deprived of health care or necessary medications. Especially when he or she pounds the podium with charges that the rising costs of both are caused by greedy medical- insurance companies, pharmaceutical firms, hospitals, doctors, and health-care providers.

Bring on the Canadian system, they say, where government has stepped in to keep the cost of personal health-care coverage down.  That’s fine, if you can get treated. And if you can get get a prescription for the best drug for your condition.

On a cable-Canadian televison show more than a dozen years ago, a panel of six Canadian and six American experts at McMaster University in Hamilton, Ontario, agreed on only one thing: Canada’s health-care system not only is bankrupt, it’s in debt and will never get out of debt.

The same could be happening to Medicare in this country.

Medicare funds come from four sources: payroll taxes on workers’ income, a tax on Social Security benefits, premiums paid by beneficiaries, and general tax revenues. In 2000, payroll taxes covered 65 percent of Medicare expenses. Payroll-tax revenue is expected to drop below 40 percent by 2025. That means money will have to be taken out of general tax revenues to cover Medicare expenses or it, too, will run out of money like the Canadian program.

This is translated into patient deaths for our northern neighbor because waiting lists have grown longer.

While Canadians don’t pay for health services when they receive them, they pay for this “free” care by waiting, according to Sally C. Pipes, president and chief executive officer of San Francisco-based Pacific Research Institute. “Between 1993 and 2001, the median waiting time from referral by a general practitioner to treatment increased by seven weeks, from 9.3 weeks in 1993 to 16.2 weeks in 2001,” she wrote.

That’s one reason why Canadians requiring surgical or other procedures expeditiously swarm into the United States and pay the full costs for such care on the south side of the U.S.-Canadian border.

While government intervention is designed to focus on costs to the patient, it also focuses on costs to the government.

“Consider Positron Emission Tomography machines, or PET scanners,” Pipes said. This piece of equipment that helps doctors predict disease when other tests are negative, saving a lot of pain and suffering for cancer patients, costs more than $3 million. By the fall of 2001, there were more than 250 of these machines in the United States, 48 in Japan, 45 in Germany and nearly 20 in Belgium. There were two fully operational in Canada.

Canadian hospitals are not free to develop services, such as open-heart surgery and transplants, or to purchase expensive equipment, such as magnetic resonance imaging (MRI) scanners, “without specific approval from provincial governments,” she said.

This government-controlled, budget-focused system leads to some absurdities.

A quota was set in 2001 at Queensway-Carlton Hospital in Ottawa on the number of babies it would deliver. While able to handle 2,700 “free” deliveries a year, the facility decided to cut that number down to 2,100. This was designed to save $600,000. Doctors who delivered too many newborns faced the loss of their jobs.

It was revealed in 1998 that St. Joseph’s Health Centre in London, Ontario, was renting access to its MRI machine to veterinarians after hours to provide cat scans for pets. The hospital was turning its idle equipment into a revenue producer because, while humans don’t pay when they use the machine, pet owners do.

Both federal and provincial governments also are involved in setting price controls for prescription drugs. This regimentation has several costs. Before doctors can prescribe drugs, they must wend their way through a bureaucratic morass, Pipes said. This is the result of the procedures overseen by the federal Patented Medicines Prices Review Board that is charged with monitoring manufacturers’ drug pricing. The labyrinthine labeling of the three categories of drugs permitted on the market make it almost impossible to determine what is a legitimate cost for drug therapy.

Compounding the problem is that the provinces step in before a drug is allowed to be prescribed. For example, 99 new drugs were approved by the federal government from 1994 to 1998, yet Ontario patients had access to only 25 of them. And, as Pipes points out, “The cheapest drug might not be the most effective, but that doesn’t matter to the government.”

She cites the example of a British Columbia senior who was admitted to hospital with internal bleeding three days after “the government switched him to an older, cheaper, and less-effective drug to treat his peptic ulcers.”

She also addressed what appear to be attractive bargains on drugs in Canada. “A study by the University of Pennsylvania Wharton  school business school professor Patricia Danzon found that U.S. consumers, if they purchased the same bundle of drugs they actually purchase in the U.S. in Canada, they would have paid 3 percent more.”

The reason is that generic drugs, which account for half of U.S. consumption, are less expensive under the competitive U.S. system than the price-controlled Canadian system.


Mature Life Features,  Copyright 2003


Written by Cecil Scaglione

February 8, 2012 at 12:05 am

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