January 18th, 2005

Blurb: Canada's increasingly shaky public healthcare system is forcing consumers to supplement their coverage with private plans.

The key to private health insurance

By Peter Diekmeyer o Bankrate.com

Canadians look at free health care as more than just a birthright. It is one of the characteristics most often mentioned in surveys when we define ourselves as a nation.

Yet it's no secret that Canada's public health care system is on the ropes. Burdened with an aging population, public health care spending is suffering from a series of double-digit increases, with governments struggling to catch up. As a result, private sector services such as private health insurance, are expected to play an ever-expanding role in coming years.

Medicare has long been far from perfect. A wealth of items are excluded or just partially covered. These include dental and vision care as well as certain tests and medical procedures. Worse, getting timely access to existing services is an increasing challenge. By some estimates the government funded proportion of our nation's health bill has dropped to as low as 60 percent.

"If you need to get a non-emergency MRI scan from a hospital, you could end up waiting a long time," said François Boisjoli, vice-president (group insurance) at SSQ Financial Group. "And if you're not covered by a private plan, paying for the scans could cost you several hundred dollars."

Private health plans through work

By far the majority of Canadian private insurance coverage originates at the workplace. It is typically provided through group insurance plans administered by companies such as Quebec-based SSQ Financial Group, the nation's fifth largest provider with $743 million in premiums collected during 2003.

Group insurance plans usually comprise life and disability insurance, health and dental benefits, extended medical care and prescription drug coverage in most provinces. One important exception to insurance companies' liability is for pre-existing medical conditions such as AIDS.

The plan's costs are typically split between the employer and employees. In general, employees in a designated group are automatically accepted for the health portion of the coverage. Although most fill out a detailed medical questionnaire, this is usually for the life and disability portion of the group insurance.

Individual coverage

Those not covered at work, must resort to individual health coverage by companies such as Blue Cross. According to Guillaume Fauteau, a Blue Cross support counselor, coverage offered is fairly standard across the country, but there are some important regional differences.

"Health care is a provincial jurisdiction," Fauteau said. "And services that are covered by Ontario may not be in Quebec and vice versa."
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Individual plans tend to be more expensive to administer than group plans. As a result, they often cost more. Nevertheless the coverage offered is extensive. For example Blue Cross's Health Plus plan offers benefits that include a semi-private room upon hospitalization, (medicare typically only provides a common dormitory), extended health care coverage for physiotherapy, accupuncture and psychological treatment, as well as vision and dental care.

Before agreeing to any plan, make sure that you get written quotations from three suppliers and check the coverage that they offer carefully. Also be aware of the fact that health insurance rates increase significantly as you get older.

Independent worker groups

Some professional organizations, like the Periodical Writers Association of Canada, have sought to reduce the costs of individual health coverage by negotiating group rate deals for their members. These packages should be taken with a grain of salt.

Health care packages are notoriously hard to compare. By changing a few lines in the contract to amend exemptions or increase the deductible portion, insurance companies can drastically reduce their policy's selling price.

Smaller independent worker groups, which often only have one or two permanent staffers, may not have qualified and stable resources to negotiate, verify and follow-up on these large-scale discount contracts. Nor is there any way to ensure that the person who negotiated the plan isn't just steering the business to his brother-in-law.

The bottom line is that it pays to do your own research before blindly accepting the recommendation of a professional services organization that you may be a member of.

Travel Insurance

Although Canada's health care system may have its shortcomings, its strengths quickly become apparent when you travel. Canadians who require medical care while outside the country are responsible for covering their own expenses. These are typically only partially reimbursed by provincial health care authorities.

But the amounts can add up. Hospital stays can cost hundreds of dollars per day. In the case of major surgical interventions, the bills can run into the tens of thousands of dollars.

If you are going on vacation, -- or travelling outside the country on business,--- you'd be well advised to pick up some supplementary medical coverage. The cost is typically less than $100 for the first two weeks and additional days are much cheaper. You can order over the phone using your credit card.

The future

The picture for Canada's health insurance system is grim. Signs are that things will get worse before they get better. The bulging baby boom generation has voted itself free medical care coverage during their retirement years, creating a massive liability that it will be almost impossible to retract.

Worse, our governments have put no money aside to pay for these costs, which will create hardships even worse than those that afflict Canada's public pension plans.

Canada's young are going to be hit in two ways. They'll have to foot the bills of their retired parents, aunts and uncles. Worse, there will be fewer doctors available to see them when they need attention. As a result, Generations X and Y will increasingly have to turn to private sector services -- and private health insurance,-- to meet the gap.

peter@peterdiekmeyer.com

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