see: Premium tax increase
Brief History on BC Health Insurance
following brief history demonstrates that the government
news release on the 50% increase in the MSP premium
tax and claims by Finance Minister Gary Collins during the
February 7th staged cabinet meeting are inaccurate. The
history of BC's Medical Services Plan demonstrates that
there has been no connection between hospital costs and
MSP premium taxes other than the relation that exists between
any tax in general and any expenditure in general. For the
first time in BC's history, the Campbell government has
established a link between the MSP premium tax and hospital
costs by promising to fund wages increases with the revenue
raised by the increase.
from the regressive MSP premium tax may at least offset
some of the consequences of the reckless high income tax
cuts announced the first full day the Campbell government
was in office. Think of it as paying a flat tax to thaw
part of the health freeze that followed from taking 5 points
off of the top income tax bracket (while
only 2 points came off the bottom bracket).
interest in public health insurance was demonstrated long
before many health services were safe, let alone effective.
In British Columbia, a Royal Commission to report on health
insurance was appointed in 1919. In 1922 the B.C. legislature
passed a motion urging "the Government of Canada to
give early consideration to legislation for an adequate
system of insurance against illness." In 1929, another
B.C. Royal Commission was appointed to report on health
insurance. A medical insurance plan was almost put into
place but it was stopped just days before in was to go into
effect in 1937. In its place a non-profit society, Medical
Services Association (MSA), was created in 1938 with the
support of the province's physicians. That society had nothing
to do with government but it was frequently confused with
the Medical Services Plan (MSP) that became responsible
for public medical insurance in B.C. in 1968 (thirty years
in the development of health insurance the term medical
insurance was used to mean insurance that paid doctors as
opposed to hospital insurance which, you guessed it, paid
hospitals. In 1948, British Columbia introduced provincial
hospital insurance. The plan was originally financed with
premiums. Financial difficulties were quick to appear as
premiums were not paid. In 1954 the premium system was eliminated
for provincial hospital insurance and replaced with a 2%
increase in the sales tax.
medical insurance for those not covered by private insurance
was first introduced for British Columbia in 1965 in the
form of the B.C. Medical Plan. Most people were covered
through one of two non-profit societies (MSA and CU&C)
but like for profit insurers the societies were unable to
provide insurance for those who needed it the most - the
poor and elderly. This is a case of what insurers call adverse
selection. That is a fancy way of saying that setting a
premium high enough to pay the costs for the people who
need the coverage the most results in them not being able
to afford the coverage. The government's B.C. Medical Plan
solved that problem by being an insurer of last resort (kind
of makes you think of what the Campbell government might
do to ICBC).
universal public medical insurance was introduced in B.C.
partially financed by a premium system. The Medical
Services Commission (MSC) was established to oversee
the plan. Initially the Commission oversaw both B.C. Medical
which had been established three years earlier and the new
Medical Services Plan (MSP) which took over coverage from
all private medical insurers. Eventually the different organizations
were merged into just one plan. MSA and CU&C (the two
non-profit societies) continued to exist by marketing dental
insurance. In 1996 MSA and CU&C merged to form Pacific
B.C. and Alberta
remain the only provinces that use premiums. Manitoba and
Ontario both replaced their premium systems with payroll
taxes. B.C.'s MSP premium has become a tax.
does not pay an insurance premium, then the coverage is
lost. If the uninsured person later wants to resume coverage,
premium payments start from that point forward. That is
NOT the way MSP premiums work. If you do not pay your MSP
goes after you with a collection agency.
Health Act requires that 100% of a province's population
be covered. That burden falls unfairly on emergency room
physicians and on some physicians in lower income neighbourhoods
because doctors are not paid by government when premiums
are not paid. Some physicians may refer patients who haven't
paid their premiums to clinics set up to deal with people
in poverty or to emergency rooms. Theoretically coverage
is continued when the premium isn't paid although it can
become a problem to find a provider before paperwork is
completed on an application
for temporary premium assistance.
Campbell government has said that it is not satisfied with
the collection record for unpaid MSP premiums. Responsibility
for collecting the premiums is being transferred to the
Ministry of Revenue - yet another indication that the premium
has become a tax.
Campbell government has tried to claim that the 50% increase
in the MSP premium tax effective April 1, 2002, is the result
of wage settlements with hospital workers (HEU, BCNU and
HSA). As the above history shows, until the February 7th,
2002, announcement the MSP premium was NEVER associated
with hospital costs. It does determine whether physicians
get paid but it is not supposed to determine whether service
gets denied. Collection tactics are now being used that
treat the MSP payment the same as an overdue tax.
Note: I managed CU&C Health Services Society from 1979-1988.
Part of this column is based on a draft I submitted in 1998
to the Encyclopedia
of BC for its section on the history of Medicare.