The Wall Tumbles

The equivalent of the Berlin Wall came tumbling down in Montreal today as the Supreme Court of Canada struck down a Quebec law that had banned private health insurance for services covered under medicare, Canada’s socialized health care program.

“This is indeed a historic ruling that could substantially change the very foundations of medicare as we know it,” Canadian Medical Association president Dr. Albert Schumacher said after the ruling. The ruling means that Quebec residents can pay privately for medical services, even if the services also are available in the provincial health care system.

“Access to a waiting list is not access to health care,” the court said in its ruling.

We featured a New York Times article about the case in a recent newsletter, explaining that a courageous Canadian doctor, Jacques Chaoulli, was challenging the constitutionality of the Canadian ban on private payment. He argued that long waiting times for surgery contradict the country’s constitutional guarantees of “life, liberty, and the security of the person.”

He was joined in the case by his patient, Montreal businessman George Zeliotis, who waited a year for hip replacement surgery. Zeliotis, 73, tried to skip the public queue to pay privately for the surgery but learned that was against the law. He argued that the wait was unreasonable, endangered his life, and infringed on his constitutional rights. The court agreed!

The case involved the Quebec Hospital Insurance Act and technically only applies to that province, but it will shake up the system in all of the other provinces, where private insurance also is banned. The court split 3-3 over whether the ban on private insurance violates the Canadian Charter of Rights and Freedoms (like our Bill of Rights). Clearly this was a difficult decision since the court delayed a year in issuing its verdict.

The United States has been a safety valve for Canadians unwilling or unable to tolerate the long waits for medical care in their country. Now, the Canadian government must face the music about the long waiting lines, lack of diagnostic equipment, and restrictions on access to the latest therapies, including new medicines.

In an almost laughable defense, “Lawyers for the federal government argued the court should not interfere with the health-care system, considered ‘one of Canada’s finest achievements and a powerful symbol of the national identity,'” according to the Canadian Broadcasting Corp. Dr. Chaoulli had persevered in spite of two lower court rulings against him that had ruled the limitation on individual rights was justifiable in order to prevent the emergence of a two-tier health care system.

Supporters of the prohibition against private contracting in Medicare in the United States should take note because our own law has the same effect, making it almost impossible for Medicare recipients to pay privately for services covered by the program.

We already had invited Dr. Chaoulli to Washington on June 21 for a meeting and are organizing a public event to give you a chance to hear from him directly. We will alert you to the time and place of the event in our next newsletter.

Grace-Marie Turner


  • There’s no place like home
  • Milliman Medical Index 2005
  • Variations in the impact of health coverage expansion proposals across states
  • Catastrophe in care
  • Biotechnological and pharmaceutical research and development investment under a patent-based access and benefit-sharing regime

Author: David Asman
Source: The Wall Street Journal, 06/08/05

David Asman, an anchor at the Fox News Channel, provides one of the best inside views we’ve seen of the British and United States medical systems following a stroke his wife suffered while vacationing in London. “Neither system is without its faults and advantages,” Asman concludes. British doctors were kind and hardworking, displayed better teamwork, and showed less of a tendency to make decisions out of fear of being sued. However, he found that the British hospitals were old and dirty, and newer stroke treatments used in the U.S. were not even mentioned as an option. The Asmans also were compelled to use a private British hospital to get a needed heart procedure. “Checking into the private hospital was like going from a rickety Third World hovel into a five-star hotel,” writes Asman. But the bill for his wife’s month-long stay in the British public hospital was $25,752, while the cost of 10 therapy sessions at a hospital in New York after they returned was $27,000! “[W]hile costs in U.S. hospitals might well have become exorbitant because of too few incentives to keep costs down, the British system has simply lost sight of costs and incentives altogether,” concludes Asman.
Full text:

Source: Milliman Inc., 06/05

The average annual medical cost this year for a typical American family of four covered by an employer-sponsored PPO program will be $12, 214, an increase of 9.1% from the year before, according to the 2005 Milliman Medical Index. The study, conducted by the consulting and actuarial firm Milliman Inc., assesses changes over a five-year period and looks at key drivers and components of medical spending, including inpatient and outpatient hospital services, physician services, and prescription drugs. The report concludes that, as costs continue to rise, many employers will look to consumer driven health plans as a way “to improve healthcare quality and reduce costs by sharing information aimed at educating their employees about the costs and efficacy of various medical services.”
Full text (pdf):

Authors: Sherry Glied and Douglas Gould
Source: Health Affairs Web Exclusive, 06/07/05

Expanding health insurance coverage may require different policies for different states because of the wide variation in needs and resources among the states, according to a new study by Sherry Glied and Douglas Gould of the Mailman School of Public Health at Columbia University. Among the states, there are differences in insurance coverage rates, costs of private coverage, poverty levels, and available state programs. The authors examine the effects of five proposals to expand insurance coverage in each state, including tax credits and Medicaid expansion. They find that 4.6 million people, or 11% of the uninsured, would gain health coverage with tax credits. Medicaid expansion to low-income adults would increase the number of insured Americans by 11.5%. “States with relatively low health care costs and moderate incomes (such as California, Oregon, and Washington) would do better with tax credits than with public expansions; lower-income states with moderately high health costs (such as Alabama, Kentucky, and West Virginia) would do relatively better under public expansions,” conclude the authors. [Editor’s note: The numbers for tax credits would have been even better if a study by the White House Council of Economic Advisers had also been used in their calculations.]
Full text:

Author: Leo W. Banks
Source: Tucson Weekly, 06/02/05

The Emergency Medical Treatment and Active Labor Act of 1985 (EMTALA) has had a disastrous effect on U.S. hospitals, contributing to cutbacks in services and closures of hospitals across the country, writes Leo W. Banks, reporter for the Tucson Weekly. The federal mandate, which requires hospitals to treat anyone who comes into the emergency room without regard to citizenship or ability to pay, “has become a kind of federal health insurance program for [illegal aliens,] and its rising costs?[have] created a financial nightmare for border hospitals,” writes Banks. A study commissioned by the U.S.-Mexico Border Counties “found that 24 counties in four states bordering Mexico had $190 million in unpaid medical bills caring for illegal immigrants in 2000 … California spent $79 million of that; Texas, $74 million; Arizona, $31 million; and New Mexico, $6 million.”
Full text:

Authors: Timothy Wolfe and Benjamin Zycher
Source: Pacific Research Institute, May 2005

A group of developing nations is promoting an Access and Benefit-Sharing (ABS) proposal for the Convention on Biodiversity which would have a significant adverse economic impact if implemented, according to a new study by Benjamin Zycher of the Pacific Research Institute and Timothy Wolfe of QueryLogic Corporation. The proposed ABS regime would “give nations the right to litigate over patent rights for biotechnological and pharmaceutical goods developed with their natural resources and traditional knowledge,” the authors write. By the year 2025, “the patent-based ABS regime would reduce the biotechnological and pharmaceutical research and development capital stock by about $144 billion (in year 2004 dollars), or almost 27 percent, for the 27 nations,” they conclude. Between 2005 and 2025, the loss to the United States would be $21.6 billion while the loss to the 15 EU countries would be $79 billion.
Full text:


2005 Health Care Conference
Washington Policy Center Event
Thursday, June 16, 2005, 7:30 a.m. – 1:30 p.m.
Seattle, WA

For additional details and registration information, go to:

Tax Reform as the Road to Health Reform
Sponsored by The Heritage Foundation and the Galen Institute
Monday, June 20, Noon
Room 2261, Rayburn House Office Building
Washington, D.C.

For additional details and registration information, go to:

Canadian Supreme Court Strikes Down Private Health Care Law
Featuring Dr. Jacques Chaoulli
Sponsored by The Heritage Foundation and the Galen Institute
Tuesday, June 21
Washington, D.C.

Watch next week’s newsletter for time and location.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at

If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.