[CUPE healthcare list] FW: Fraser Institute Economist says private insurance will increase health care costs - released by Alberta NDP

["Heather Farrow" <hfarrow@cupe.ca>]

> (Alberta)
> For Immediate Release
> January 10, 2006
> Fraser Institute Economist, NDP agree: the Third Way will cost more
> Private insurance will > "> increase costs in both the private and public systems of care> ">  - report
> Edmonton - NDP Opposition leader and health critic Brian Mason today released an analysis by a Senior Fellow of the Fraser Institute of the likely outcomes of the Conservative government> '> s > '> Third Way> '>  private health insurance scheme. > "> This analysis concludes that introducing private health insurance will inevitably lead to a two-tier system, with a superior private tier, and an inferior public tier,> ">  says Mason. (See attached backgrounder).
> "> The conclusions reached by Dr. Herb Emery, a University of Calgary economist and Senior Fellow of the Fraser Institute, directly contradict Conservative claims that a parallel system will be beneficial to the public health care system,> ">  Mason emphasized.
> Higher costs and decreased political support for the public system are also likely results of the Third Way, according to Emery> '> s report. Both factors will lead to a reduction in quality of care for those unable to afford private health care, Mason says. > "> Higher income Albertans will only purchase private insurance if it means better care and/or shorter wait times,> ">  says Mason. 
> "> As higher income Albertans opt for the private system, political pressure to improve public health care will weaken. This will lead to deteriorating quality and access in the public system. Emery finds this a necessary pre-condition to expanding the market for private health insurance,> ">  adds Mason. 
> "> This analysis provides strong evidence that the development of a private second tier of health care services will be at the expense of the public system. That> '> s the bottom line of the so-called > '> Third Way> '>  - higher costs and poorer health outcomes for low and middle income Albertans > "> , says Mason.
> "> The > '> Third Way> '>  is really the American Way - allowing private insurance companies to profit off at the expense of the public Medicare system,> ">  concludes Mason.
> -30-
> Contact: Shannon Phillips, Communications Officer, 780.916.3937
> Backgrounder
> The Demand for Private Health Insurance in Alberta in the Presence of a Public Alternative
> Herb Emery, University of Calgary
> November 1, 2005
> Link:<http://jdi.econ.queensu.ca/Files/Conferences/HealthServicesconferencepapers/emerygerritsjdiconferencenov172005.pdf>
> Excerpts from Conclusions of Emery Paper:
> Political pressures to increase public health care expenditures could also weaken
> with the private insurance alternative for consumers> ...> . With lower demand individuals remaining in the public system, demands on the government to enrich or change the public system will weaken. By removing the political pressures on the government, the growth of the private system can lead to the degradation in the relative quality of the public system> ...> 
> Our estimate that private health care premium revenue would equal public health care premium revenues suggests that the government could eliminate the public premiums, but not without reducing per capita health care expenditures on the public system.
> For any private system to bring significant relief to the public system a large enough number of individuals must opt to consume the private good instead of the public good. The introduction of a private system would require the political will to institute a tiered health market and to maintain the current average level of service in the public health system> ...> 
> All of these considerations would probably increase costs in both the public and private systems of care, reducing the magnitude of any cost savings which might result with the introduction of a private health insurance market.
> While the increased revenue from private health care would likely be small and the fiscal relief to the public system transitory, allowing a for the development of a private health market to better match health services with individuals> '>  preferences is an efficient outcome. A private system will allow high demand, high income Albertans to better receive a level/quality of care which better matches their preferences and abilities to pay. This is likely to be to the detriment of quality in the public system, which may raise equity concerns. The movement of individuals whose preferences do not match the public system of health care to the private health system may reduce political pressures to improve service levels in the public health system. This could make it easier for the public system to offer an average quality level of care in the face of a superior quality private health system.
> Herb Emery is an Economics Professor at the University of Calgary and a Senior Fellow with the Fraser Institute. As such, his conclusions represent third party validation of the likely outcomes the Klein government> '> s private health insurance initiative.
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> Heather Farrow, M.A.
> Health Care Research Assistant
> Canadian Union of Public Employees (CUPE)
> National Office
> 21 Florence St.
> Ottawa, ON K2P 0W6
> hfarrow@cupe.ca
> www.cupe.ca
> Fax: 613-237-5508
> Tel: 613-237-1590, ext. 320
>