Romanow’s vision of healthcare challenged

“The future of critical illness coverage and long term care is assured, because I simply don’t see anything in [the Romanow report] that obviously takes care of those two concerns,” said advisor Jim Rogers of The Rogers Group Financial Advisors in Vancouver.

“I’m disappointed in general because I think, for the most part, his report was — except for the specific numbers and dates — fairly predictable,” he added.

Rogers applauds the recommendation to increase funding for home care, but argues that Romanow’s call to expand drug coverage does not speak to the needs of seniors. “The people that are most worried about drug costs are seniors and frankly the deductible that Romanow talks about, at least in the report, is sufficiently high that he’s not going to get at the people who are complaining the most.”

Romanow rejected the notion that the private sector can deliver healthcare services more effectively, but Rogers says he offered no evidence of having done real research into this area. “I think Mr. Romanow is showing his NDP stripes more than he is a rational analysis of the possibilities.”

“Why didn’t he do some better long-term cost protection analysis the same way they do with the Canada Pension Plan and other insurance plans, and run it on that basis?” said consulting actuary Darryl Leach of Towers Perrin in Toronto.

The Canadian Institute of Actuaries advocated the appointment of a medicare actuary to examine future liabilities, contributions and protection of the system. Leach said Romanow did not make mention of a medicare actuary, and suggests he took a short-term perspective on funding priorities. Future pharmacare costs alone could become a huge burden on medicare, Leach told Advisor.ca.

Leach believes the report did nothing to try to change the entitlement mentality of Canadians toward public healthcare. Nor did Romanow challenge the misconception that public healthcare is “free.” “I don’t see anything on [the accountability of the users],” Leach told Advisor.ca.

Romanow dismissed medical savings plans (MSAs), saying they could potentially block access to care. One suggested MSA model would see accounts used to purchase designated services from public or private medical providers.

“If individuals are required to pay once they have used all of their MSA allowance, it could cause hardships for people with lower incomes or higher healthcare needs due to chronic or life-threatening conditions,” countered the report.

A similar argument was used to reject tax-based alternative funding systems, such as copayments and credits. Romanow said making publicly healthcare a taxable benefit could bankrupt people with chronic health conditions or a catastrophic illness or injury. He said the sick or injured should not be taxed more and pay more for healthcare.

“Pretty well every country in the world, Canada being an exception, has some form of user fees or co-insurance payments or copayments. Romanow has flatly rejected those,” said Leach.

As for public-private partnerships in healthcare, Romanow said these are often too expensive for the taxpayer in the long term.

Eighty-three per cent of advisors polled in the Health and Wealth Survey supported the introduction of new products such as tax-assisted medical savings accounts. Many advisors also supported measures such as tax deductions for certain medical expenses and deductible health insurance premiums.

“For me, preparing for healthcare needs is considered defensive financial planning,” said Cynthia Kett, a Certified Financial Planner at Stewart & Kett Financial Advisors Inc. in Toronto. “The report doesn’t change what we will advise our clients to do, which is to plan for the worst.” (Click here for more advisor reaction.)

“We don’t know how the government will act on these recommendations, so advisors have to do their best to fill in the gaps and make sure their [clients’] healthcare needs are being properly met,” said Irene Klatt, director, health insurance policy, at the Canadian Life and Health Insurance Association, in an interview with Advisor’s Edge magazine.

The College of Family Physicians of Canada (CFPC) called on governments to move quickly to implement the Romanow recommendations. “The time for study is done,” said CFPC chief executive Dr. Calvin Gutkin in a statement.

Tell us what you think of the Romanow report by sending a message to the “Free For All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Jim MacDonald, Advisor.ca, jmacdonald@advisor.ca.

(11/28/02)