FOR IMMEDIATE RELEASE: April 30, 2002

CALGARY – The Alberta government’s plan to limit Medicare coverage will end up costing businesses in the province $500 million or more each year, says a presentation prepared by the Alberta Federation of Labour for Roy Romanow’s commission on the future of health care.

"The recommendations contained in the Mazankowski report aren’t just misguided – some of them are downright dangerous from an economic point of view," says AFL President Les Steel, who will be appearing before Romanow in Calgary today.

In its presentation to the commission, the AFL focuses on the impact of government plans to download health costs from the public sector onto the shoulders of individuals and businesses. In particular, the AFL says that plans to de-list services and introduce so-called Medical Savings Accounts will create a market for supplementary private health insurance.

"For those of us in the labour movement, our preference would be to maintain a comprehensive and fully funded public system," says Steel. "But make no mistake – if the Alberta government goes ahead with plans to limit what’s covered publicly, then unions will have no choice but to fight for supplementary private insurance at the bargaining table. It will become one of our top priorities."

As it stands right now, Canadian employers pay an average of $93 a month for extended health benefits to cover things like dental and vision care. That compares to the U.S. where employers pay as much as $600 per employee every month for health benefits. Steel says any move to limit Medicare coverage will result in dramatic increases to benefit costs for Alberta businesses.

"There are 275,000 unionized workers in this province," he says. "So if supplementary private insurance health insurance costs another $50 per month per employee that’s an extra cost to Alberta businesses of $165 million per year. If it costs an extra $100 per month, that’s a cost of $330 million per year. And if it costs an extra $150 per month, that’s an added cost to business of $495 million each year. And that’s just the unionized workforce."

In the end, the AFL says the Mazankowksi plan will saddle Alberta businesses with hundreds of millions – many even billions – in extra, on-going costs. This will drive up the cost of doing business in Alberta; it will reduce the competitive advantage that we currently enjoy because of Medicare; and it will probably mean the loss of thousands of jobs as companies scramble to pay the bills.

"The message for the Alberta business community is clear: wake up and smell the coffee," says Steel. "They should not be supporting this government’s health policy. It will be very bad for business."

For more information, please contact: 
Les Steel, AFL President @ (780) 483-3021
Gil McGowan, AFL Communications @ (780) 910-1137

AFL Backgrounder
The Economic Cost of Private Health Insurance

• In a recent study for the federal government, the consulting firm KPMG showed that it’s cheaper to do business in Canada than any other industrial country. A big part of this competitive advantage was provided by our public health care system. KPMG found that American business spent about 25 percent of their payrolls on benefits – with private health insurance making up the lion’s share. In contrast, businesses in Canada don’t have to pay for private health insurance, so their overall bill for employee benefits is much lower (less than 15 percent of total labour costs). This "Medicare Advantage" is helping to make Canadian businesses more competitive. (Source: KPMG, 2002)
• The Conference Board of Canada has concluded that American employers pay 2 to 2.8 times that of their Canadian counterparts for health care benefits.(Source: Conference Board of Canada, 1999)
• Lower employer health costs in Canada lead to an overall cost advantage for Canadian products. Industry Canada found that in the automotive sector, the labour costs for cars built in Canada are 30 percent lower than in the U.S. The majority of this advantage is due to lower health costs. In Canada, health benefit costs are only 41 percent of U.S. costs – $4.03 per hour compared to $9.82 per hour. (Source: Industry Canada, 1998)
• In the U.S. in 1998, the average monthly premium for employer based health coverage was $178 for singles and $460 for family coverage. Since then, premium increases have ranged between seven and 11 percent each year making estimates of current premium levels close to $600 per month for family coverage. (Source: Health Affairs, Vol. 18, No. 6, November/December 1999)
• In Canada, employers pay only $93 per month on average for extended health benefits for things like dental and vision care which are not covered by Medicare. If the Alberta government limits Medicare coverage and employers are forced to expand their private coverage, this figure is sure to rise dramatically. (Source: Canadian Life and Health Insurance Institute, 2002)
• Individual workers would also end up paying much more under the restricted public health system proposed in the Mazankowski report. Right now, the average Canadian worker with an extended health plan pays $21 per month in premiums for single coverage and $53 per month for family coverage. In the U.S. the comparative figures are $36 for singles and over $150 for families. And the expenses don’t stop there. The average American household spends $1,959 per year on health expenses, not including employer premiums and payroll taxes. The comparable figure for Canada is $806 per year. If the Alberta government goes ahead with its proposed reforms, Alberta workers can expect to pay premiums and extra fees that are closer those paid by their American counterparts. (Source: Conference Board of Canada, 1999)