More MS news articles for August 2002

Canada healthcare savings plan no bargain: study

2002-08-14 16:00:50 -0400
Reuters Health
By Juhie Bhatia

TORONTO (Reuters Health) - A proposed new healthcare plan won't help alleviate Canada's healthcare funding woes, but could further stress the system, results of a recent study suggest.

Medical savings accounts (MSAs) have been touted as a way to cut Canada's healthcare costs. The accounts would replace direct public payments to healthcare providers and transfer the responsibility for expenditures to the patient.

Advocates of MSAs say they can reduce healthcare costs and consumption by making people financially responsible for their healthcare use, while providing greater consumer choice and control.

However, a University of Manitoba study reveals that most MSA formulations would lead to greater government spending on the population's healthiest members. The MSA model used by the researchers showed a 54% increase in public spending on hospital and physician costs, according to the report in the Canadian Medical Association Journal.

"MSAs can be formulated in many different ways," explained Dr. Evelyn Forget, professor of economics in the Faculty of Medicine at the University of Manitoba. "With this kind of MSA, total healthcare costs would be divided equally amongst the population, based on the average expenditure, or scaled according to age, sex, etc. Individuals would have a pot of money each year out of which to pay for their doctor and hospital care."

This lump sum, called an entitlement, would be supplemented with universal catastrophic health insurance for severe illness. Costs that fall between the entitlement and catastrophic level would be the responsibility of the individual.

Researchers examined the efficacy of this proposed system by calculating costs incurred by Manitobans for all physician visits and hospital admissions between 1997 and 1999. Information was gathered from the Manitoba Population Health Research Data Repository.

Results reveal that physician and hospital costs attributed to individual Manitoba residents averaged $730 (Canadian) each year during 1997-1999. However, most users accounted for very little expenditure--about 40% of Manitoba's population used less than $100 each, and 80% used less than $600. Even among the oldest individuals, most of the population fell into the low-usage category.

Since 80% of the population is spending less than the average cost, MSAs would end up costing more than the current system of universal insurance, Forget explained. "No matter how you set up MSAs, it always costs more, unless you set the entitlement so low and the catastrophic threshold so high as to eliminate universal coverage."

The study shows that government spending would increase 54% on hospital and physician costs if the entitlement for each Manitoban is set at $730 per year and the "catastrophic threshold" is set at $1,000 per year.

"This system isn't cost-effective or what most would consider equitable," Forget said. "As income rises, people tend to be healthier. So the healthy and affluent will be getting lower priority health services, while people such as those with multiple sclerosis and diabetes, and those really in need of healthcare, can't afford it."

Various types of MSAs are currently being implemented in countries such as the US, Singapore and China.

SOURCE: Canadian Medical Association Journal 2002;167:143-162.

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