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July 21, 2005

United States and Canada: A Tale of Two Medicares

By

In 1997, George Zeliotis, a Quebec citizen, learned that he needed hip-replacement surgery. But his troubles were just beginning.

As is standard in Canada for non-emergency surgery, Zeliotis was put on a waiting list behind everyone else in Quebec who needed the same procedure. When he learned that his wait would be a year and that he would have to endure the pain of an arthritic hip during that time, Zeliotis decided to pay for the surgery himself.

Then he made a disturbing discovery: He couldn't pay for it himself. Canadian law forbids private payment for a covered medical service.

Since its inception, Canada's Medicare has been the favorite model for single-payer healthcare among those who advocate socialized medicine in the United States. They tout that every Canadian is covered from cradle to grave and that all have equal access to the same level of care. The facts on the ground, however, are quite different.

While coverage is universal in Canada, most Americans would consider the Canadian system's limits on access to care unacceptable. As Zeliotis discovered, access to care in Canada is determined by where one is on the waiting list - and there's no getting around the waiting list. Private health insurance has long been illegal in Canada, as has been contracting with a doctor directly - that is, paying out of pocket - for medical services that are covered by Canada's Medicare program.

Zeliotis teamed up with Jacques Chaoulli, a Montreal physician, to challenge legally the province of Quebec over the ban on private payment for medical services. After two defeats in lower courts, they took their appeal to the Canadian Supreme Court. On June 9, the doctor and his patient won a major victory. In the 4-3 decision, Chief Justice Beverly McLachlin wrote for the majority, "Access to a waiting list is not access to health care."

The Canadian case illustrates a worldwide trend. Where there is a single payer for healthcare, delayed access to care - usually by queuing - is the easiest way to control costs. Wait times for non-emergency surgeries are several times longer in countries with government-dominated healthcare than in the United States.

A recent survey of hospital executives in five countries (Australia, Canada, Britain, New Zealand and the United States) found that none of the U.S. executives thought a 65-year-old man would have to wait six months or more for routine hip-replacement surgery. The numbers for other countries, which have greater government control of healthcare, were significantly higher: 81 percent of hospital executives in Britain, for example, thought the wait would be more than six months.

Such delays can be lethal, however. Take cancer: The sooner it's diagnosed, the sooner treatment can begin. Quick treatment, in turn, leads to higher survival rates. Small wonder that, in the survey cited above, only 1 percent of U.S. hospital executives believed that a 50-year-old woman "with an ill-defined mass in her breast but no adenopathy" would wait three weeks or more for a biopsy. Yet the wait in countries with greater government involvement in healthcare is likely to be much longer.

Because of Chaoulli and Zeliotis's stunning Supreme Court victory, Canadian citizens in Quebec are now free to contract with doctors and purchase private health insurance for the healthcare they need and want. But the legal situation for American senior citizens enrolled in Medicare is quite different.

While wait times are not an issue in U.S. Medicare, private contracting is. Under the terms of Section 4507 of the Balanced Budget Act of 1997, a senior can contract privately with a physician for a "covered" Medicare service if - and only if - the doctor signs an affidavit to the effect that he is contracting privately with the senior citizen, submits that affidavit to the secretary of the Department of Health and Human Services (HHS) within 10 days and agrees to forgo all Medicare reimbursement from all other Medicare patients for a period of two years.

It's true that seniors and their doctors can get around the tight statutory restrictions through the use of an advanced beneficiary notice (ABN). According to HHS, "An ABN is a written notice a physician or supplier gives to a Medicare beneficiary before items or services are furnished when the physician or supplier believes that Medicare probably or certainly will not pay for some or all of the items or services."

In other words, if a senior wants a procedure to be performed, either by choice or on a doctor's recommendation, and his or her doctor believes that Medicare may not deem it "medically necessary," the doctor can give the patient an ABN explaining that if Medicare won't pay for the procedure the senior will. This allows seniors to contract privately with their doctors without forcing their doctors to drop out of the Medicare program for two years.

But while this offers a welcome regulatory relief, it also adds an unnecessary bureaucratic step and saddles doctors and patients with unnecessary paperwork and expense. Even with the regulatory clarification, it's insulting to American seniors that this bizarre restriction on their personal freedom is still on the books.

The 1997 congressional restrictions on private contracting in Medicare may not appear to be a problem in practice because the vast majority of Medicare recipients don't need or want to pay for services out of pocket when Medicare would cover those services. But this one-size-fits-all regulation does not fit the infinitely varying circumstances of seniors.

In a free society, shouldn't a person's own reasons for deciding to spend his or her own money on a legal medical service without statutory or bureaucratic restrictions suffice? Privacy, personal convenience, the need for specialized care or the skills and talents of a preferred physician could explain a senior's wanting to purchase care outside of Medicare.

To address this issue, Rep. Sam Johnson (R-Texas) has introduced the Medicare Beneficiary Freedom to Contract Act of 2005. It would eliminate prohibitions on seniors' entering into private contracts with medical professionals for legal medical services, regardless of whether those services are covered by Medicare.

As Rep. Johnson explains, "This wacky law just makes no sense. If a senior wants to pay out of his pocket to visit his doctor, he should have that right. This common-sense bill empowers seniors to get the care they want, when they want, from whom they want."

American seniors should be at least as free as their Quebecois neighbors. Congress has the opportunity to improve seniors' healthcare choices and increase their freedom by repealing Section 4507 of the Balanced Budget Act of 1997. A repeal would restore the freedom of seniors to choose medical care any way they want and spend their own money in any way they choose - without government interference.

Derek Hunter is a researcher in the Center for Health Policy Studies at The Heritage Foundation.

First Appeared in The Hill

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