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Let's Compare Universal and Private Health Care Out-of-Pocket Costs, eh?

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Message Dominique Lord

Reprint from Open Salon.

The Obama Administration has recently put forward a proposal to cut health care costs. In response, private health care providers have offered to cut down costs by about $2 trillion over the next decade. According to these providers, the proposed costs could lead to about $2,500 in savings per year for a typical American family by the fifth year of the program. On paper, this proposal looks very attractive (and ambitious), but I sincerely doubt it helps uninsured or under-insured families.

A few posts ago, I did a cool comparison of the private and Universal health care systems in the US and Canada (see the links below).I decided to put the subject aside for awhile, but given the wild misconceptions about Canadian health care I've been reading in the comment sections at Salon, Slate and The Huffington Post, I figured it was time for me to weigh in again.

This time around, I decided to focus on what it would cost someone to go to the emergency room of a typical hospital after an accident, directly comparing the costs a person would have to pay under a public (also known as 'single-payer' or Universal health care) and private medical insurance systems.

Before I get into it, I want to make it clear that systems like Medicare and Medicaid are not the same as the Canadian Universal system I'm talking about. Medicare and Medicate actually operate the same way as the private medical insurance industry, with co-pays, deductible and all that jazz.

As I discussed in Part IA and Part II of my first posts about this stuff, in a public health care system (such as the one in Canada), the provincial government spends on average between three and four thousand dollars US per person per year (similar to France, BTW). Don't forget, though, that the Universal health care system in Canada isn't free. On average, a Canuck (or Kanuk, eh) pays between three and four thousand dollars in taxes every year to get this benefit (some pay more while others pay less). For the table below, I'm saying that it's four thousand. (Please remember that this is a simplification. See Part II about the caveats related to income taxes and public health care coverage).

Okay, here's the comparison:

For the hospitalization costs, I used this nifty website. According to the site, the average inpatient charges for fractures are about $9,500 (in 2005). Soliel (yes, that is her login name), a Salon reader who is very concerned (and a little bit clueless) about the Universal health care system, has a monthly premium payment for her private plan of about $350. This is very close to what a single person would pay under my own health insurance plan, and I've used it for the table as well. For the insurance coverage, I used my plan, which has an automatic $300 deductible (that means I pay the first $300, fellow Canadians), and requires me to pay an additional 20% of all medical costs above and beyond that 300 bucks. Ice cream's on Blue Cross/Blue Shield, everybody.

In case you're wondering, I am aware that not all health care plans are like mine. I have friends who use a different insurance company, and their hospitalization costs are very low (<$500). However, their plan only works for two local hospitals. If they have a tragic blimping accident in Delaware, for example, the hospitalizations would be referred to as out-of-network expenses (remember those?), and would be (much) more expensive than the values shown in the second column.

All right, here's the comparison. This time I really mean it:

* Twice a week for 10 weeks plus 4 medical visits with a specialist
* Cost for each physio appointment: $175 (co-insurance is $25 - beyond the first $300)
* Cost for each appointment with a specialist: $200 (co-pay is $45)

(These costs come from statements for my own physio and medical visits, detailing the costs billed to my insurance company.)

#If we include the portion my employer pays for the annual premium, this value becomes about $8,400. Thus, the final cost would be $11, 220 at the bottom of the column.

Looking at the table, it's obvious that under a true Universal health care system (unlike Medicare or Medicaid), you pay less for the hospital visit. (Guess how much the difference would be for multiple hospital visits and medical consultations; the out-of-pocket costsunder the Universal health care system would still be equal to $4,000 + $500/ambulance ride, if we include those.) And as I discussed in a previous post, in the case of an emergency a Canadian would receive the same medical care as an American, though the Canadian might have to wait longer for non-vital follow-up care.

I recently wrote a follow-up article (Dec 9, 2009), which focused on health care costs and delivery:

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Dominique is an Associate Professor in the Zachry Department of Civil Engineering at Texas A&M University. His research work aims at reducing the negative effects associated with motor vehicle crashes. When he's not developing mathematical and (more...)
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