Thursday, June 09, 2005

Got my first health insurance quote!!

I just got off the phone from a representative from State Farm banks in Minot North Dakota. My plan was to pose as a North Dakota resident and obtain a quote on my fictitious family of four (there are actually only three of us). My goal was to get an idea for what health insurance might cost if Canada actually does get a private health industry and compare that to the taxes we pay here in Canada.

My fake family has two parents in their 30s and two children.

After talking for several minutes to the friendly state farm insurance agent, I spilled the beans and told him that this was all an elaborate ruse. He laughed and fully cooperated with my scheme.

Here is the deal on health insurance:

The standard package:
The agent told me that most american families who do not get health coverage through work (not common) get a standard insurance package with a $500 deductible. After the deductible, the patient is responsible for 20 per cent of the cost to a maximum of $2,500 per year.

Monthly premiums: $459, or $5,508

Option 2:
Another option is to get the exact same coverage, except a total family deductible of $3,200 per year. That means you would be responsible for costs up to $3,200 per year, but after that the insurance company takes over.

You might say that $3,200 risk is too great a hit to take in any year. There is a partial solution. President Bush has launched a tax credit for putting money into a Health Savings Account (HSA). So you could stash away money in an HSA, benefit from a tax reduction, and access that money during the year if required.

Monthly premium: $315, or $3,780

As it stands, health care currently costs every man woman and child $3,000 per year, or $12,000 per year for a family of four (44 per cent of every tax dollar collected).

Now all of this means nothing here in Canada, as it is illegal for anyone but the state to provide medically necessary services (I figure dental and eyecare aren't essential, because they are privately delivered). And for the purposes of the experiment I chose an American insurer, as opposed to a European one. Nobody is advocating the adoption of the American health system, it's too litigious and too expensive.

The point is to show the anti-American crowd that things aren't what they say they are. People need to understand that money left in the hands of the individual is always spent better than when it is absconded by the state and spent on their behalf.


Toronto Tory said...

It's actually more than $3000 on a per person basis.

John Thacker said...

The thing that's always been kind of confusing to me is how Canadians seem fixated on the idea that any change in their system will inevitably give them "the American system," and this is used to choke off all debate. What about the French and Swedish systems, both of which allow private insurance, and both of which have user fees for government health care? (The French fees are refundable under certain conditions.) Does the "scary French system" or "Swedish system" simply not sound so bad?

David MacLean said...

Canada has formed a cargo cult around health care, we worship governments and not planes.

Anonymous said...

Nice meaningless comparison. Now try to get a quotation as a 60+ year old with preexisting medical conditions from a rational, and thus cherry picking, private US insurance company.

You are comparing premiums paid by a healthy low risk segment of population to the taxes paid for that covers all segments (including old, sick people where the vast majority costs are centered). Apples meet oranges.

David MacLean said...

Not an analysis anonymous, just a one-off quote. Those who can't afford health care in the US qualify for medicaid. Medicaid recipients still get better health care than Canadians. They get the same care as a millionaire.

Debris Trail said...

Interesting, very interesting. I've never swallowed the load of poo poo that the medi-scare crowd feed us, because I've dealt with a lot of American clients who were more than happy with their coverage. I never did though, actually find out what fully private coverage costs. Your post is a good start in educating us. I'll make sure I link to it today. Thanks.

P. M. Jaworski said...

This is great work, David. I wonder if we could somehow begin to get a range for the concerns that 'anonymous' raised. That is, can we find out how much it would be for an average family, a couple of seniors, and so on?

And by "we" I really mean, uhm, you...

Anonymous said...

Can somebody help me with something? Don't large corporations carry insurance on their executives to enable them to get care in the States if required?

Anonymous said...

Are all the prices you quoted in Canadian dollars?

Anonymous said...

What's so evil about just having a choice? Why not have a private clinic to go to if you can afford/prefer it? What's the big deal?

Larry said...

US insurance is a little more complicated than that.

Living in Massachusetts I had a Blue Cross Blue Shield policy covered by my employer. I paid only $150 per month. The same policy without subsidy was $798 per month. That was for two adults (late 30s) and two teenage children, and covered medical, chiropractic, drugs AND dental care, as well as providing $150 per person per year to join a fitness club and more. There was a co-pay (deductible) of $5 for doctor visit, $10 for clinic visit, and $25 for emergency room visit.

One time my doctor was five minutes late for an appointment and he apologized and refunded my co-pay. Service was excellent - hospitals actually compete for your business. When my wife's doctor was concerned about breast cancer she had an MRI at a private clinic the next day five minutes from home. The specialist called her on Saturday morning to give her the results - she was fine.

The Blue Cross Blue Shield policy allowed us our choice of doctors and healthcare facilities - not all plans allow this. HMOs can be particularly bad.

There is also Medicaid coverage available and many states (like Mass and Texas) by law cannot turn away patients who are unable to pay. This is displayed prominently in all hospitals.

When you receive a service you also get a bill. Sometimes you pay and are reimbursed. My plan paid them automatically, but you are always aware of the cost of the services you receive.

When I moved to Canada the increased tax I paid at the same salary level far exceeded the amount I paid for health care. I am astounded at what Canadians are willing to accept.

Though there are definitely problems with the American system, and healthcare does vary from state to state, it is nowhere near as bad as it is made out to be by the government.

Russil Wvong said...

David, I think you missed something in your comparison: 44% of US spending on health care is public, not private, so Americans have to pay taxes to support public health care spending, just as Canadians do. Surprisingly, they have to pay about the same amount as Canadians in taxes for public health care spending, as a percentage of GDP.

According to the OECD, total health care spending (public and private) in Canada in 2003 was 9.9% of GDP, which translates to an average of C$3800 per person. 70% of that was public spending (i.e. from taxes), 30% private.

In the United States in 2003, it was 15% of GDP, which translates to an average of US$5600 per person. 44% of that was public, 56% private.

So if you just look at taxes, the average Canadian paid C$2700 (per person, C$10800 for a family of four; 6.9% of GDP) for public health care in 2003, while the average American paid US$2500 (per person, US$10000 for a family of four; 6.6% of GDP). And then the American family has to pay for their own health insurance on top of that.

There may be reasons to consider American-style health care (e.g. no waiting times for those who have coverage), but I don't think lower cost is one of them. And to me, the lack of universal coverage is a huge problem with the US medical system. It's crazy: in total, they're spending much more than Canada is, but 15% of the population (44 million people) had no medical coverage whatsoever in 2002.

Mike said...

Did any of you guys singing the praises of US healthcare ever get something you insurance didn't cover? Did you get to pick your doctor? Do you have to pay upfront and get re-imbursed, only to find your coverage was not 100%?

My sister in Arkansas has experienced all these things. maybe for checkups and stuff it seems cheaper, but not for everything.

Also, I'd be curious where you got your per capita costs for healthcare. They don't jive with what I've seen.

David MacLean said...

Great post Russil, but I think you missed the point of the exercise. The CTF knows full well that the United States has the most expensive health care system in the world, and nobody wants that. And you right the the United States funds a very expensive universal health program. That said, their taxes are a fraction lower than ours.

The purpose of the post is more for my amusement than anything. The curiousity I had was just how much an insurance policy costs in the US.

No more, no less. What the CTF is calling for is a european style health system that provides a reasonable safety net for all, uses market forces to provide incentives, and gives people the right to spend their after tax dollars on health as they see fit.

David MacLean said...

Mike, the per capita figures for health costs comes from the Saskatchewan government's Budget 2005.

Many provinces spend more on health care than Saskatchewan. And then you also have to factor in federal transfers.

In all honesty, whenever someone tells me "Iknow somebody who lives in the United States.." I'm skeptical.

Because I know a lot of people right here in Canada. I know my parents -- both of whom waited in pain for surgeries that they would have had in weeks in most european countries.

Yeah, the US system has a lot of problems. It needs not be said.

Anonymous said...

Ignoring the fact that the US system does focus on rapid treatment, so by nature is better, this is a good debate about money. A few facts are being left out. I thought Americans could deduct mortgage interest and paid lower overall municipal, state and federal income taxes. These savings more than compensate for health insurance premiums. So they have more disposable incomes and better health care. The only Americans who complain are those who want the tax savings but don't want to pay insurance premiums.

Deanna said...

A little more information to add to your cost debate:

According to Health Affairs - The Policy Journal of the Health Sphere, in a comparison of health spending in OECD Countries (2001), total health spending per capita in US dollar purchasing power parities, the US spent $4,997 per capita. Canada spent $2,792.

That includes both public and private money.

Other countries of note:

Norway: $2,920
Switzerland: $3,322
Austria: $2,191
Germany: $2,808

OECD average (which includes countries like Mexico and Turkey, which really drag down the per capita spending average) is $2,161.

If there is a way to attach the chart I would, since you need a rather expensive subscription to see it. I could also email it to interested parties.

Russil Wvong said...

"Great post Russil, but I think you missed the point of the exercise."

Er, didn't you explicitly compare health-care costs in the US and in Canada?

"Monthly premium: $315, or [US] $3,780

"As it stands, health care currently costs every man woman and child [C]$3,000 per year, or $12,000 per year for a family of four"

My point was that this comparison is misleading, because you're not including the cost of publicly-funded health care in the US (in 2003, roughly US$10,000 per year for a family of four).

If no such comparison was intended, my apologies for misconstruing your post.

"People need to understand that money left in the hands of the individual is always spent better than when it is absconded by the state and spent on their behalf."

Not in this case, it seems. (Although I'm fine with the general principle. I'm just wary of arguing from the general to the specific: birds can fly, penguins are birds, therefore penguins can fly.)

Anonymous said...

Anonymous #1:
The coverage you are speaking of is the standard "Medi-Gap" policy, covering the 20% co-payment requirement of MediCare. Qulifying seniors use State-funded Medicaid to cover this co-payment, and get a number of other entitlements as well.As a 75-year -old Texan, Medi-Gap coverage from blue Cross/Blue Shield costs me ~USD100 per month. NOte that I am on dialysis for three four-hour sessions per week.
As you say, people like me are where a great deal of the costs arise, but the cost of our care are substantially met by government medicare, explaining the amount of Government medicare expnse ove and above the cost of individual health insurance coverage.
Sid Cochran
Tyler, Texas

Ian H said...

It's not like the Canadian government is just going to cancel health care taxes because some people go privately insured, either. Like education, you will still be paying into the public system even if you don't use it, and you will be paying on top of that for your extra coverage. It may be faster, but it sure isn't going to be cheaper...

CTI Info said...

Quite impressed with the site David MacLean. Not quite what I was searching for (Canada Car Insurance ) but that seems to be normal for me - start out looking for one thing and end up somewhere entirely different. Still, I was looking for Canada Car Insurance so not too bad after all. As we are operating in similar fields I shall bookmark you for future reference. Until then, my best regards and keep on blogging!

katlin said...

Dig deeper to find out what it is really like in the US system. Google "fighting health insurance companies". Also visit and see the cases he fights for. I have lived in both countries and think the Canadian system is made in heaven, especially before the 1980's. Try to revive that level of service. A lack of doctors and nurses is a big part of the problem. Therefore stop the brain drain to the US. As their education is subsidized by Cdn taxpayers they should not be able to head south until say after 25 years in Canada. Let more people into medical school! if that means building more so be it. Make some of schools rich in alternative therapy works, costs less etc. Stop the drug companies insane control over therapies!!! Stop funding cancer research, many inexpensive proven therapies have been developed and those physicians generally have their medical licenses removed due to the threat to the traditional system. eg. Dr. Tullio Simoncini

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