Managed health care

Introduction

Managed health care is spreading like a virus through workplace benefits and Canada’s prized universal health care system. Managed health care is the driving force behind privatization of our health care system.

An import from the United States, managed health care, when adopted, transforms health care from a collective system based on meeting people’s needs, shared costs and risks, to an individualized system narrowly focused on cost containment. The United States, with a largely private health care system, is a clear model of how managed health care does not work.

The Canadian NewsWire reported in February 1998, that a nationwide study found 87% of Canadian employees covered by health benefit plans realize the importance of their employee-sponsored medical benefits and do not want reduced coverage.

In Canada, recent government cuts to health care has resulted in increased benefit costs to employers. Employers are saying they can no longer afford workplace benefits and are therefore shifting costs to employees. The increasingly competitive and unstable economy places many workers in a vulnerable position to concede benefits or risk losing their jobs.

Through years of wage freezes and downsizing, workers have born the brunt of government restructuring and fiscal restraint. However, workers realize the importance of benefits and are struggling for their preservation. The Canadian NewsWire reported in February 1998, that a nationwide study found 87% of Canadian employees recognize the importance of workplace benefits and do not want reduced coverage.

CUPE supports the position of no concessions. Concessions are a step backwards in years of progress and victories won to improve jobs and health. Once conceded, benefits will be extremely difficult to regain.

CUPE upholds that comprehensive employee benefits and universal health care, rooted in a collective approach, are essential to healthy individuals, families and communities. Mirroring the values of the Canada Health Act, CUPE strives for good collective agreements that include comprehensive medical coverage based on need and not ability to pay.
In an attempt to preserve our benefit packages and public health care, saying no to managed health care is essential.
What is Managed Health Care?
The broad scope of managed health care makes it difficult to clearly define. Primarily, managed health care is a term used to describe private, for profit health care that gives employers greater control over who, where, what and how services will be delivered. Cost containment is the driving force behind managed health care and is achieved through attempts to direct or influence medical resources prior to, during, or after care. Formularies or guidelines direct the most cost-effective coverage through managed health care plans. However, the pressure to generate profits creates the problem of diminished or denied services; therefore, resulting in poorer quality health care.

Many CUPE locals are being presented with managed health care plans at the bargaining table. These plans include benefit concessions. Managed health care and concessions can be viewed on a continuum. One end finds comprehensive benefits packages and fully funded public health care. Further along we see health care changes such as reducing dental coverage through adjusting dental association fee scales to previous years; limiting dental check-ups to 12 months for adults and nine months for children; complete oral exams changed from 1 to 5 years. Changes to medical coverage include adjusting formularies. The opposite end of the continuum we find Health Maintenance Organizations (HMOs) and privatized health care. Concessions lead us along the continuum to the slippery slope of managed and private health care found in the United States, such as HMOs, and a move away from Canada’s prized public health care program.
How is managed health care delivered?

Managed care systems determine control over service provision, deciding what areas such as drugs, medical treatments and hospital stays will be covered. As a result, access to health care providers and services are limited in managed care plans. For example, the employer or managed health care company may contract with certain doctors that provide service. Contact outside of this team may not be covered by the plan. Managed health care also often limits how often an individual may visit their physician.

In the U.S., managed health care often includes HMOs. HMOs are organizations established to deliver managed health care plans. Managed health care often requires plan participants to use the services of one particular delivery agent or HMO. The managed care company contracts services to doctors or other health care providers based on a capitation or flat rate basis. As a result, HMOs and managed health care create a system that is unable to meet the needs of individuals requiring service.
Public health care and comprehensive benefit packages are important

Public health care and comprehensive workplace group benefit packages are founded on accessibility, entitlement and grounded in a collective, cooperative approach. In Canada, public services strive for democratic choices were citizens’ needs are foremost. In a large public or group system, individuals have a wide choice of doctors, hospitals, pharmacists and other health care providers to meet peoples varied needs and ensure comprehensive medical coverage. Under a public and group funded system costs are kept down. Administrative expenditures are low due to the collective, large scale, nature of public programs and group benefits. Economies of scale maintain lower costs of service given the large number of participants.

Importantly, public health care and comprehensive workplace benefits provide a sense of security in medical emergencies, illnesses or accidents. Medical care is not based on ability to pay, as in the U.S, but on need.

Managed health care and the private sector offer limited choice. Private services are unable to replicate the benefits of the economy of scale. Fragmented, individualized and smaller economies often result in higher premiums, increased administration costs and greater individual risk.

The competitive nature of the profit sector duplicates services. Competition also contributes to increased costs through the need for advertising to generate business.

Health care companies in the United States (U.S.) are recording record profits. In 1994, the six largest HMOs in the U.S. showed a total profit of $5.6 billion.

In a private, profit system, a percentage of profits are allocated to care but a percentage also goes to fatten the wallets of health care providers. The focus on financial gain results in higher prices in order to generate income for services and create profit. The incentive for profit results in fewer dollars being allocated to services. Pat and Hugh Armstrong, in their book Universal Healthcare: What the United States Can Learn From the Canadian Experience, claim that health care companies in the United States are recording record profits. In 1996, the Merck Company, a drug manufacturer, rolled in $3.9billion net global profit. The Armstrongs also reported that, in 1994, the six largest HMOs in the U.S. showed a combined profit of $5.6 billion.
What services are provided under managed health care?

Managed health care restricts the services doctors and hospitals provide. For example, in the Armstrongs’ book, Universal Healthcare they report that a doctor working for an HMO in the U.S. refused a man an essential medical procedure. As a result he died. The company involved was happy, as the procedure would have been costly.

This same doctor reported that she was expected to deny services wherever possible or else be replaced.

In our Canadian public health care system doctors are generally autonomous in their ability to decide what care is medically necessary. Health care decisions do not focus on cost, but on need, quality of service and protection of life.

Within managed health care plans, if a plan member requires a service that is not included in the plan, they would have to pay for it out of their wages.

Managed health care attempts to control behaviour of employees and physicians to the interests of profit for employers. This includes not providing benefits for certain “lifestyle” illnesses or deaths. For example, smokers pay, on average, more than non-smokers for their group life and long term disability benefits. Group plans have historically distributed this cost among plan members. However, the present push is to individualize plans. Individual lifestyles may now be scrutinized and benefit costs adjusted to reflect the values established by the carrier and company. For example, smoking is determined as an unhealthy behaviour and, as a result, smokers pay higher insurance premiums. Companies and carriers may begin dictating what is an acceptable lifestyle. Once again individual choice is lost. This slippery slop could lead to discrimination against other lifestyle options such as meat eating or other behaviour.

The Canadian Health care Manager also reported in February 1998, that sophisticated lie detector mechanisms are often used to determine if an employee is faking injury.

With regards to worker productivity, employers want to get injured workers back to work as soon as possible. Employers report high costs of employee absenteeism due to illness and injury. Under managed health care the goal is to contain costs through rapid recovery of employees.

Traditionally, an employee’s general practitioner would determine length of time away from work and medical intervention, such as physiotherapy or other medical treatment necessary to prepare an employee for return to work.

However, physicians are being looked upon suspiciously by employers as serving employee interests concerning leave due to injury or illness. In February 1998, the Canadian Healthcare Manager magazine reported that employers are increasingly sending workers to rehab providers like Columbia Healthcare Inc. in Toronto, for a supposed impartial exam concerning the severity of the disability. Rehab centres, such as Columbia, strive to get employees back to work as quickly as possible.

Centres such as Columbia also create simulated work place environments, such as a construction site or an assembly line. A worker can proceed with treatment, such as physiotherapy and be tested regularly to determine employability. Keeping in mind that the Rehab centre is being paid by the employer to get the employee back to work as soon as possible. The Canadian Healthcare Manager also reported in their February 1998 issue, that sophisticated lie detector mechanisms are often used to determine if an employee is faking injury. This cattle prod approach to care, with money acting as the prod, can place the employee at risk of returning to work too soon and risking further injury and company expense.

Return to work after injury is another concern with managed health care. CUPE continues to fight discrimination and specifically, rights for disabled and injured workers. Modified work includes how work is adjusted to the needs of the employee. This involves implementing sound ergonomic principles that accommodate the employee. Managed care does not do this; instead it controls the worker and attempts to fit the worker to the workplace instead of altering the workplace to meet the workers needs.

Controlling workers is central to managed care. For example, a 1995 article in the Employee Benefits Journal claims employee costs are contained when employees understand the cost of benefits and can limit consumption. A common myth is that workers simply do not understand the cost and are therefore abusing benefits. Within managed health care, the employee is controlled by restricting coverage which the employer perceives as being unused or abused. In essence employees are being punished and told to lower their expectations and sense of entitlement to benefits.
Why managed health care?

Employers are vehemently looking for ways to cut increasing costs of benefits such as medical, hospital coverage, dental, drugs, long term and short term disability, and vision care. Managed health care is being presented as the solution to rising health care costs.

The Federal ax has chopped away at Canada’s health care system slashing funding to provinces and increasing health care costs. Some outcomes of reduced funding include:

• A de-listing of services previously covered by public, provincial health insurance plans. With less money, the government has decided fewer services can be funded.



• Drug Patent Legislation passed in the early 1990s by the Conservative Government. Bill C-91 prevents generic drug competition with brand name drugs. The result is astounding increased drug costs and drug company profits.



• Increased taxes on premiums in Quebec and Ontario.



• Profit Taking. Health care is worth over seven-five billion dollars every year in Canada. Private corporations recognize the large amount of money to be made in healthcare.



• Increased Need for Benefits. Downsizing and layoffs has produced jobs that require doing more with fewer resources. This has increased the stress to members who, not surprisingly, indicate a greater need for benefits.

Cuts to health care have come at a time when the need for coverage is great. Private corporations have employers cornered. Needing to provide services to employees and keep costs in check, employers are increasingly bargaining for managed health care.
What Does Managed Health Care Mean to CUPE members?

Managed health care means:

• Less medical, dental, drug, life insurance and disability coverage. For example, common concessions at bargaining include, 1 year lags in dental Association fee guide and reducing the number of complete oral exams to one every five years; drug coverage from 100 percent reimbursement to upfront two dollar deductible per prescription. CUPE has fought vigorously to obtain comprehensive coverage for workers on the principle that healthcare is a right. CUPE maintains the position of no concessions with regards to benefits.



• Restricted choice of doctors, health care providers, services, drugs.



• Barriers to more costly treatments and coverage for all illnesses.



• Poor quality health care.



• Discrimination and unequal accesses to health care fostering a tiered health care system. For example, high income earners will receive better care than lower income workers. High income earners are better able to afford additional care that is not covered by the workplace benefit plan or public system. Importantly, a disproportionate number of low income earners are the disabled, visible minorities and women. Moreover, more women than men rely on the health care system due to their increased longevity over men and their reproductive abilities.



• The disabled and people with ongoing medical difficulties will receive less necessary health care services as employers restrict coverage under managed care. Individuals and families with ongoing and/or substantial medical costs are penalized for their situation and unable to afford comprehensive coverage to meet their medical needs.



• Backtracking on the decades of CUPE fighting for employment equity and comprehensive health care coverage. This results in the employee having less decision making power and weakening the strength of the union.



• Shifting the cost of benefits from the employer to the employee.



• A direct attack to workers wages. If an employee wants service not covered under the managed care plan they must pay for it out of their wages.



• Increased administration costs. Employees are likely to hear about greater administration costs at the bargaining table. Greater employer costs are often brought back to the employee in the form of concessions. What effects the employer directly effects the employee.

Fighting managed health care

Managed health care masks the real issue of rising health care costs and the lack of necessary funding to our public health care system. As Canadian citizens, we need to become active lobbying to protect and promote universal health care. By refusing managed health care and demanding public health care we can work together for healthy future generations.

Stopping managed health care begins with collective bargaining and saying no to concessions. We want employers and members to understand the reasons for rising health care costs and that both parties want the same goal of lower benefit costs. Attaining this goal includes protecting and promoting our public health care system. This is a joint effort by union members, employers, other locals, labour organizations and communities. Through co-ordinated and joint bargaining, strategies for collective bargaining can be developed. Bringing issues of protecting public health care and benefits to the bargaining table is essential to our fight against managed health care.

The reality of increased health care costs needs addressing. However, managed health care is not the answer. As an alternative to managed health care, employers and unions may consider reviewing the workplace for savings in other areas. A joint union and employer benefits review committee may be useful for the review.

• Bargaining to maintain or establish group benefit plans. This may involve exploring multi-employer plans, where several employers come together to develop a large benefit plan. Sharing costs and risks provides lower costs, more security and more comprehensive coverage.



• Comprehensive health coverage can promote preventative health care. For example, dental coverage that includes bi-annual or annual oral exams is preventing possible costly future dental expenditures. As well, establishing long term disability plans that focus on assuring the employee is healthy enough to return to work and not solely on cost containment. Premature return to work can increase the possibility of re-injury and further time off and greater expenditure. Moreover, modification of the workplace is essential to meeting the needs of previously injured or ill workers that are returning to work.



• Look for ways of reducing stress and promoting the general health and well being in the workplace. Health promotion in the workplace through workshops and seminars addressing fitness, nutrition, stress management and general self-care. This could help to reduce absenteeism and injury and increase productivity and employee job satisfaction. The end result is reduced health care costs.



• Examine service costs from the present benefit plan carrier. Perhaps another carrier may be able to provide a better service and cost. For example, the non-profit Blue Cross and Green Shield may be alternatives.


• A preferred provider arrangement may be an alternative, giving plan participants the choice of using a designated dentist or pharmacist who agree to lower costs of services. Members should never be restricted in their ability to choose service providers. This view differs from the lack of choice provided by HMOs where doctors and services are restricted. Importantly however, this type of arrangement should only be used when it is assured that it will not jeopardize unionized and local businesses. Community interests need to be considered foremost before savings.



• Medi-Trust is a mail-order pharmacy, which provides prescription drugs in bulk for clients across Canada at a reduced rate. They specialize in drugs for chronic ailments or maintenance drugs. Service cannot be provided in emergencies or with short notice. However, under no circumstances should the benefit plan not provide for emergency prescription service. Medi-Trust estimates that the savings to the employer are approximately twenty to forty percent depending on usage. Importantly, relying on Medi-Trust should not put local or unionized pharmacies out of business.



• Where spouses or partners each have workplace benefit plans, coordination between the plans should occur. Through bargaining, a written agreement should be reached to maximize employee coverage.

Successes

Across Canada, CUPE locals are uniting to preserve and enhance their valued workplace benefit packages.

An example is the Standing Committee on Insured Benefits (SCIB) in New Brunswick. SCIB came together 10 years ago to improve and protect workplace benefits of 35,000 public sector employees. The committee is union and employer represented. SCIB’s mandate is to provide some level of standardization of workplace benefits. Locals continue to bargain separately for benefit packages according to standards established at SCIB. This process can provide considerable leverage and security for locals. For example, employers approached SCIB wanting to sanction a workplace attendance policy, in essence attacking sick time. SCIB refused the policy and set a precedent for collective bargaining.

SCIB is also able to negotiate multi-employer benefit packages; monitor generic substitutes for brand name drugs; hear appeals of individual situations which fall between the cracks of benefit plans and allow for flexibility of coverage and urge the government for a long term disability plan.

British Columbia and Manitoba are working towards jointly trusteed benefit plans.

In British Columbia, a multi-employer plan consisting of existing benefits packages where amalgamated and bargained for 100% coverage of benefits by employers. The result was increased benefit coverage at a lesser cost.

These are examples of co-operative, economy of scale approaches that provide the means to maintain low costs, regulate coverage and influence bargaining and political action.
Conclusion

We cannot ignore the larger issues contributing to rising health care costs. Funding cuts place Canada’s universal health care system in a vulnerable position to the private sector. Private health corporations recognize the money-making opportunities within Canada’s public health care system.

To save our health care system and crucial workplace benefits, we must take preventative action and look for a cure to rising health care costs. Managed health care is a component of privatization that is destroying public health care and workplace benefits. Demanding that health care funding be replaced is essential. As a union, collective bargaining is a good place to stop managed healthcare and fight for protection of our prized health care system and uphold the basic human right to healthy lives, families and communities.

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