Wednesday, July 31, 2002
National Post

Rise of a ‘zombie’

To prove medical savings accounts are a bad idea, Raisa Deber created a system so stupid in design — and so costly — it would be guaranteed to fail

By Lawrence Solomon

Put yourself in the shoes of Raisa Deber, a professor of health policy at University of Toronto and one of the medical establishment’s leading strategists and defenders of medicare as we know it.

Imagine that, like her, you are rock-sure of your position. And that your peers in Canada’s medical establishment — academics and administrators who have the ear of government bureaucrats — overwhelmingly share your perspective, particularly about the evils of anything that smacks of private sector involvement in health care. You and your peers, in fact, are so sure of yourselves that for years you have publicly and proudly labelled unwanted ideas as “zombies.” Rising to the top of the zombie list are medical savings accounts, a proposed reform to medicare that would give every Canadian an annual health-care allowance. Their proponents — many medical professionals as well as organizations like the prizewinning Atlantic Institute for Market Studies — favour medical savings accounts for different reasons. Some like medical savings accounts because they promise to contain health-care costs, others because the quality of health care would rise, others still because they promise to empower the poor — the group that suffers most under our paternalistic medicare system — by giving them more say in health-care decisions that affect their lives.

Medical savings accounts were once obscure notions, discussed avidly among policy wonks yet all but unknown to politicians or the public at large. Then David Gratzer, at the time a mere medical student, described medical savings accounts and their potential in a book called Code Blue. The description struck a chord in a country concerned about the direction of medicare, the book won a coveted award, and medical savings accounts were no longer obscure. The national press began to write about them, the public began to talk about them. An Angus Reid Group poll showed two-thirds of Canadians liked the concept of health-care allowances, and politicians began taking notice.

Out of the blue, it seemed, medical savings accounts became respectable, even though Raisa Deber and her peers were certain that the concept was bogus. Senate committees became receptive. The Alberta government’s Mazankowski report proposed them, and the Alberta government indicated it would adopt them. Even the federal government’s one-man commission into health care, run by medicare’s best-known public defender, Saskatchewan’s ex-premier, Roy Romanow, was now studying them. If you were Raisa Deber you couldn’t help but fear that he might open the door to them in his much awaited report. Worse, what if he, too, succumbed to this zombie notion, as have so many others?

To Raisa Deber, with important decisions about to be made, time was of the essence. A report from a Toronto-based consumer group, the Consumer Policy Institute, showed that medical savings accounts would work well in Canada, improving health care while saving $6-billion a year. This report — now in every provincial health ministry, used by Don Mazankowski and being analyzed by Romanow’s commission — had to be refuted.

Raisa Deber asked her colleagues to write a counter-study, to head off the decisions now being made. But her colleagues needed more time to attempt to refute the consumer group’s report — a major, $80,000 analysis — and they couldn’t easily trash its authors. The report happened to be produced by Milliman & Robertson, one of the world’s premier actuarial firms, famous in health-care centres for having discovered how to structure an earlier health-care innovation — HMOs. Milliman is the gold standard in health-care analysis.

What would you do in Raisa Deber’s shoes? At your canniest, you could not have proposed a scheme as brazen as hers. Instead of refuting the study that Milliman produced — the only feasibility study of health-care allowances conducted for Canada — she refuted a study that Milliman didn’t do, and never would have done. She and her colleagues created a system of medical savings accounts so stupid in design that it would be guaranteed to fail. Then she figured out the cost of her stupid system and published it last week in the Canadian Medical Association Journal.

How does the Deber design differ from the Milliman approach, which was designed to cost the same amount as our current medicare system? Under the Milliman approach, all Canadians — young or old, sick or healthy — would receive a tailor-made health-care allowance from the government that would be more than they’d ordinarily need to meet their routine health needs, and they would also have unlimited, free care for major illnesses, such as those requiring hospitalization. After paying for their routine medical expenses out of their health-care allowance, they would then return to the government half of whatever they saved (savings would occur three out of every four years on average) to allow the government to break even. Canadians would keep the other half of the savings for themselves, to spend on prescription drugs, dental work, chiropractic, acupuncture or any other uninsured health service. In unhealthy years, when the allowance wasn’t enough to meet their health-care needs, medicare would kick in after the patients paid a modest deductible ($99 in the case of a typical 30-year-old male; $351 for a typical 75-year-old woman). The poor would pay nothing, ever, even though they, too, would realize savings in three out of four years. In fact, the poor would save more than the rich under the Milliman plan, because they suffer from many more health problems, and would as a result receive much larger health-care allowances.

In contrast to the Milliman study, the Deber approach punishes poor people and sick people by giving them the same amount as healthy people. It also shortchanges the public purse by returning no savings to the government. Deber designed a plan that gave healthy people a windfall, that forced the sick to spend their entire allowance and more, and that gave the government no share in any savings. Not surprisingly, the Deber plan is utterly unaffordable.

Medical savings accounts aren’t perfect — what health system is? But evidence from around the world shows no other approach to health care comes close in meeting the needs of citizens, whether in rich industrialized countries, that can afford to spend large amounts on health care, or in poor, Third World countries that can’t. China experimented with medical savings accounts in two cities, found they worked impressively, and expanded the program to over 50. South Africa, after throwing off the shackles of apartheid, has made medical savings accounts a major vehicle for delivering health care. In Canada and the United States, employer health benefit plans commonly use medical savings accounts systems and the U.S. government is evaluating a pilot project involving several hundred thousand Americans.

Deber dismisses these diverse approaches from around the world, saying “Analysis of experiments, particularly in Singapore, yields mixed results.” What was she thinking about? On many if not most counts, Singapore outperforms Canada — it has lower infant-mortality rates, better-equipped hospitals, and short waiting times for surgery. The World Health Organization ranks Singapore’s health system as the world’s sixth best; Canada’s ranks 30th. And Singapore does all this while spending less than 4% of its GDP on health care, a fraction of what Canada spends.

Deber does get one thing right in her criticism of medical savings accounts for Canada: “What has been missing is Canadian data.” Like other countries, we need to experiment with new ideas, measure the results, and adopt what works. Alberta, to its credit, plans to be the first province to adopt medical savings accounts, and should, in the years ahead, provide the data honest researchers need in evaluating whether medical savings accounts can help all Canadians.