COST OF LOCAL HEALTH CARE: Who’s right: LGH, Medicare, or the Canadians?

Our publisher received the following statement from Medicare summarizing billings and Medicare reimbursements for a recent cataract operation on one eye:

Charge / Medicare Approved Amount

Anesthesia for lens surgery $300 / $60.78
Nurse administering anesthesia $300 $60.78
Physician care after operation $45 / $43.30
Measurement of corneal curvature $160 / $85.10
Removal of cataract with insertion of lens $1,371 / $520.15
Physicians Surgery Center $3,723 / $753.19

Totals: $5,899 / $1,523.30

That’s a difference of $4,376 between what was billed and what Medicare was willing to accept for total payment, mostly from Medicare and partly from the patient.

Note that an uninsured patient, perhaps someone who cannot afford insurance, would be required to pay close to four times as much as did Medicare. The Amish who do not carry insurance used to have to pay the full amount but now receive a discount from Lancaster General Hospital, but still pay almost three times as much as Medicare.

Health insurance companies have their own negotiated rates with physicians and LGH which presumably are more than Medicare but far less than the faux retail prices for services. However, the more LGH can charge insurance companies due to its ever growing monopolistic influence over hospital and physician services in the county, the higher insurance companies’ rate structures for the insured.

Our publisher reached out to a Canadian physician relative to find out what the same procedure would cost under the Nova Scotia Canadian Health plan, a Single Payer system operated by the Canadian authorities.

For cataract surgery:

Surgery: $650.00
Facility Fee (hospital): $2000.00
Anesthesiologist fee: $120.00

TOTAL: $2770.00

The province of Quebec pays even less.

Surgeon: $500
Facility fee: $650
Anesthesiologist fee $120

TOTAL: $1270

The United States is the only country that funds health care largely through employers. This anomaly occurred as a result of labor scarcity and wage price control during the Second World War. Employers introduced health care to attract workers and the approach grew over the decades.

In Canada as in most other advanced nations, health care is largely paid for by the government. Think in terms of “Medicare for Everyone.” It is largely funded through a Value Added Tax which has much of the effect of a general sales tax on the difference between and revenue at all levels of production.

The French health care system is one of universal health care largely financed by government national health insurance. In its 2000 assessment of world health care systems, the World Health Organization found that France provided the “close to best overall health care” in the world.[1] In 2011, France spent 11.6% of GDP on health care, or US$4,086 per capita,[2] a figure much higher than the average spent by countries in Europe but less than in the US. Approximately 77% of health expenditures are covered by government funded agencies.[3]

Value added taxes are common in Western nations.

Because the burden of health care cost is no longer borne by employers, prices of goods and service are lower and therefor more competitive for international trade.

And because the determination of health re-imbursement is not a struggle and accounting nightmare among health care providers, insurance companies, and patients, the total cost amounts to about 10% of Gross National Product, as compared to 18% in the USA. The 8% saved can then be used for investments in education, infrastructure, defense, other services or less taxation.
Studies have indicated that employer contribution to health care ultimately are reflected in lower wages. Higher resulting wages offset the cost of a Value Added Tax.

The World Health Care system currently rates Canada as 30th and the USA as 37th. Cuba is 39th. France, which a similar but even more efficient single payer system than Canada, is rated #1.

All the other advanced western nations, all with a form of a single payer system, are rated ahead of the United States for quality of medical care.

Here is a description of the Canadian Health Care System provided by Wikipedia:

“Health care in Canada is delivered through a publicly funded health care system, which is mostly free at the point of use and has most services provided by private entities.[2] It is guided by the provisions of the Canada Health Act of 1984.[3] The government assures the quality of care through federal standards. The government does not participate in day-to-day care or collect any information about an individual’s health, which remains confidential between a person and his or her physician.[4] Canada’s provincially based Medicare systems are cost-effective partly because of their administrative simplicity. In each province, each doctor handles the insurance claim against the provincial insurer. There is no need for the person who accesses health care to be involved in billing and reclaim. Private health expenditure accounts for 30% of health care financing.[5] The Canada Health Act does not cover prescription drugs, home care or long-term care, prescription glasses or dental care, which means most Canadians pay out-of-pocket for these services or rely on private insurance.[4] Provinces provide partial coverage for some of these items for vulnerable populations (children, those living in poverty and seniors).[4]

“Competitive practices such as advertising are kept to a minimum, thus maximizing the percentage of revenues that go directly towards care. In general, costs are paid through funding from income taxes. In British Columbia, taxation-based funding is supplemented by a fixed monthly premium which is waived or reduced for those on low incomes.[6] There are no deductibles on basic health care and co-pays are extremely low or non-existent (supplemental insurance such as Fair Pharmacare may have deductibles, depending on income). In general, user fees are not permitted by the Canada Health Act, though some physicans get around this by charging annual fees for services which include non-essential health options, or items which are not covered by the public plan, such as doctors notes, prescription refills over the phone.[4]

“A health card is issued by the Provincial Ministry of Health to each individual who enrolls for the program and everyone receives the same level of care.[7] There is no need for a variety of plans because virtually all essential basic care is covered, including maternity. Infertilitycosts are not covered fully in any province other than Quebec, though they are now partially covered in some other provinces.[8] In some provinces, private supplemental plans are available for those who desire private rooms if they are hospitalized. Cosmetic surgery and some forms of elective surgery are not considered essential care and are generally not covered. These can be paid out-of-pocket or through private insurers. Health coverage is not affected by loss or change of jobs, health care cannot be denied due to unpaid premiums (in BC), and there are no lifetime limits or exclusions for pre-existing conditions. The Canada Health Act deems that essential physician and hospital care be covered by the publicly funded system, but each province has some license to determine what is considered essential, and where, how and who should provide the services. The result is that there is a wide variance in what is covered across the country by the public health system, particularly in more controversial areas, such as midwifery or autism treatments.[4]”

Canada is the only country with a universal healthcare system that does not include coverage of prescription medication.[9][10]

Again according to Wikepedia:

“The French health care system is one of universal health care largely financed by government national health insurance. In its 2000 assessment of world health care systems, the World Health Organization found that France provided the “close to best overall health care” in the world.[1] In 2011, France spent 11.6% of GDP on health care, or US$4,086 per capita,[2] a figure much higher than the average spent by countries in Europe but less than in the US. Approximately 77% of health expenditures are covered by government funded agencies. [3]”

In France, everybody from birth is issued a card similar to a credit card with computer chip which contains his or her entire health care history including x-rays. A physician inserts the card into a computer to become fully acquainted with the patient. The doctor enters onto the card whatever treatment is provided. Payment from the government for all services rendered for all patients during a month is transferred to the doctor’s account by the government. The patients does pay a moderate portion of the bill until a deductible amount is reached, at which point the health care system pays all other charges.

Any visitor to a typical USA physician’s office will note that there at least two non-medical workers for each person actually treating the patient. The same trend can be found in hospitals. Then there are the multitudes working for the insurance companies.

Single Payer systems largely eliminate such redundancy, thus resulting in vast savings and better health care.