Unfunded health care looming over taxpayers: Fraser Institute

 

By Jenny Wagler Mon Dec 10, 2012 10:00am PST BV

Canadian taxpayers will be on the hook for Canada’s underfunded health-care system, according to a new Fraser Institute report that calculated that the system had a $537.7 billion shortfall as of the end of 2010. 

“The reality of this large and growing unfunded liability is that young Canadians will likely be hit with a significantly larger tax bill in future to pay for health care,” said Nadeem Esmail, Fraser Institute senior fellow and co-author of the report.

“In the absence of reform, governments will be forced to choose between further eroding non-health-care government services, further reducing available medical services, dramatically increasing taxes, or some combination,” Esmail added.

The report calculated that medicare’s unfunded liability increased by 2.1% to $537.7 billion in 2010 relative to 2006 levels.

According to the Fraser Institute, most Canadians view medicare as an insurance plan where individuals contribute funds when they’re younger and receive benefits later on. But it states that medicare is actually funded on a “pay-as-you-go” basis, where current contributions are used to pay the benefits of current recipients.

“Governments at both the provincial and federal level pay for medicare out of general revenue and neither level of government has assets or reserve funding to pay for promised future benefits,” Esmail said.

Esmail attributed the problem to an aging population and said today’s tax rates won’t cover the future needs of Canadians.

“Without fundamental reform to Canada’s health-care system, young Canadians will be digging much deeper to pay their future tax bills.”

The Mexican Health Care Solution?

Posted: 08/22/2012 Written by Matthew Dalstrom

Retirees are looking for a balance financial security with health security.

Rising health care costs, decreasing insurance coverage, and the great recession have made it increasingly difficult to afford health care. Retirees are particularly vulnerable because many live on fixed incomes and require more medical services than younger adults. Furthermore, Medicare, the primary insurer for Americans 65 and over, does not cover all the necessary medical procedures or expenses, and supplemental insurance plans can cost in the thousands. The result is that many seniors have to forgo care, become medically noncompliant, and/or spend all their retirement savings. Nevertheless, over the past few years, I have been researching a small, but growing number of retirees who are filling the gaps in their health insurance coverage by traveling to Mexico.

Mexico, most famous for its breathtaking scenery, cultural charm, and more recently intense cartel violence has been slowly growing its private medical system to attract not only tourists, but also patients. Over the past 30 years, Mexican medical providers have steadily moved their offices to border towns creating mini-medical destinations for Americans. One of the most popular locations is Nuevo Progreso, located in northeast Mexico between the cities of Reynosa and Matamoros. A small town by all accounts, with a tourist district of five blocks, Nuevo Progreso has bars, restaurants, and stores selling cheap tourist items (like so many other towns). However, it also has over, 70 dental clinics, 60 pharmacies, and 10 doctors' offices that advertise cheaper prices, English-speaking employees, and high quality health care.

Just to the northeast of Nuevo Progresso is the Lower Rio Grande Valley that stretches from South Padre Island in the east to Laredo, Texas in the west. The region is a very popular tourist destination for retirees known as winter Texans, snowbirds, and Q-Tips (because of their white hair and shoes), looking to escape the cold winters up north. Beginning in October and lasting until March, they move into mobile home parks that dot the landscape. For many, their arrival on the border marks the beginning of a medical vacation; not a hiatus from care, but a chance to use it. It is the time when all of the prescriptions, dental fillings, and surgeries that were postponed over the course of the year because of costs and insurance limitations in the U.S. are finally addressed.

By far the most popular type of medical care sought by winter Texans in Mexico is pharmaceuticals. Pharmaceuticals are significantly cheaper across the border and in many cases do not require a prescription. For example, Spiriva can cost $25, the Z-Pack $5, and a month's supply of Lipitor less than $30. The low prices are appealing to all, but they are definitely a life-line for those in the Medicare "donut hole." Many of the people who I interviewed mentioned that they "had to," or "could not afford medications in the U.S." However, others were concerned about the quality of those medications.

Aware of this, pharmacies actively compete for customers through low costs, large selections of medication, information about Mexican generic equivalents, and English-speaking employees. Seniors take advantage of the situation and frequently purchase a year's supply for themselves, and in some cases their friends and family. However, US Customs limits the importation of medications to a 90-day supply, so they either take multiple trips or hope that they are not stopped at the border. In situations where the medication cannot legally be imported such as schedule I and II controlled substances, the less discerning pharmacies will re-label the medication to appear legal.

Dental clinics are also very popular for retirees because Medicare does not cover preventive dental coverage. Similarly to pharmacies, dental clinics in Mexico attract customers primarily because of their prices ($25-35 for cleaning, $10 for x-rays), and also because of the amenities that come with the visit such as English-speaking staff and a transparent price list. In addition, some dentists offer massaging dental chairs and coupons to local bars and restaurants. It is not uncommon for seniors to wait the entire year to see a dentist in Mexico because it can be thousands of dollars less than in the U.S.

On occasion seniors will also get orthopedic, bariatric, cosmetic, and Lasik eye surgery performed in Mexico because either Medicare will not cover it, or because the deductible and/or co-pay is more expensive compared to Mexico. While less common, these types of surgeries are not preformed in Nuevo Progreso, but in the larger cities of Reynosa, Ciudad Juarez, and Monterrey where there are large private hospitals.

Through accessing medical care in Mexico, seniors can save thousands of dollars and improve their overall health because they can afford to access medical care. Nevertheless, there are inherent health risks from both the care they get in Mexico, and also from neglecting care in the U.S. While in Mexico, seniors may be given incorrect or counterfeit medication, suffer malpractice, be arrested for importing medications, or be victims of cartel related violence. While those problems could happen in the U.S. (although much less likely), postponing or rationing medical care, because of the high costs has its own set of health consequences. These are the choices that many seniors are faced with, and for many the risks of seeking care in Mexico are less than forgoing it in the U.S. While the U.S. Department of Health and Human Services has continuously warned people about the risks, the message seems ineffective to those who see Mexico as the only viable option to a medical system that threatens their economic existence. Therefore, it stands to reason that as long as the cost of medical care in the U.S. erodes the safety net of retirement that retirees will risk their safety and health in an attempt to balance financial security with health security.

Matthew Dalstrom is an Assistant Professor of Anthropology at Rockford College. He received his degree in cultural anthropology from UW-Milwaukee in 2010. Since 2007, he has been working on health disparities and access along the U.S./Mexico border and has published several articles on the topic.