Reply #41: a bit more [View All]

[iverglas]

Where someone sues as a result of an injury caused by someone else's negligence (e.g. the slip and fall in a retail business, or on my front porch), the provincial health insurance plan will generally be subrogated for any amount awarded for medical care. That is, OHIP (for example, the Ontario plan) will cover all the medical expenses, but will recover the costs from the insurance company (or uninsured defendant) as part of the damages award by the court, or settlement -- the medical expenses will be paid, but to the insurance plan, not the plaintiff, since the plaintiff had no expenses.

This means that the public, through the public health insurance plan, is not bearing the cost of individual or corporate negligence or wrong-doing. The defendant will pay the amount awarded by the court directly to the plan.

From the Ontario Health Insurance Act, for example:
http://www.canlii.org/on/laws/sta/h-6/20040503/whole.html#BK55

Subrogation

30. (1) Where, as the result of the negligence or other wrongful act or omission of another, an insured person suffers personal injuries for which he or she receives insured services under this Act, the Plan is subrogated to any right of the insured person to recover the cost incurred for past insured services and the cost that will probably be incurred for future insured services, and the General Manager may bring action in the name of the Plan or in the name of that person for the recovery of such costs.

Payment by Plan recoverable by insured

(2) For the purposes of subsection (1), the payment by the Plan for insured services shall not be construed to affect the right of the insured person to recover the amounts so paid in the same manner as if such amounts are paid or to be paid by the insured person.

<That is, the fact that the person hasn't had to pay out of pocket doesn't mean that s/he isn't entitled to sue for the expenses, they're just paid to the plan, instead of to the individual plaintiff, by the losing party.>

Cost of hospital services

(3) For the purposes of this section, the cost of insured services rendered to an insured person in or by a hospital or health facility shall be at the rate charged by the hospital or health facility to a person who is not an insured person.

<That is, the defendant doesn't get the benefit of the cheaper rates paid by the plan.>

This applies to everything except car insurance claims, which I assume is because of no-fault car insurance, which I've never understood the workings of.


So I expect that there is an effect in terms of the kind of liability insurance that businesses have to carry -- the costs of medical treatment in a public-payer system are far lower than in a US-style system (and there is probably less incentive and opportunity to inflate them), and so damage awards would generally be lower for that reason alone. (As noted, Canadians are also less litigious than USAmericans in private matters, although more litigious in constitutional rights&freedoms matters, and damage awards are much more realistic overall.)

This makes public-payer health insurance a good thing for yet another reason: it lessens the economic burden of liability insurance and pay-outs on small businesses, in particular.

Some time ago, a poster here pointed out another economic advantage of public-payer health care that's entirely unrelated to health per se. People in the US with jobs that provide health coverage are extremely reluctant to change jobs and especially to start their own business, since this will mean losing their family's group insurance coverage and having to purchase much more expensive individual coverage.

Few people with families are likely to take that risk, and so the US health care system is in fact a brake on entrepreneurial initiative. It is also an impediment to employee mobility between employers (e.g. innovative new employers will have trouble hiring skilled employees away from other employers if they can't afford to match health insurance coverage or if they can't guarantee job security, which is the only source of health coverage security).

Of course, higher unemployment will make employees less able to get good health coverage, since employers will not have to compete to the same extent to attract and retain employees. Obviously, low-skilled employees will be in this situation all the time, since the pool of available low-skilled labour in the US is large and growing (while market hegemony by large employers in some sectors increases), and an employer like Wal-Mart will not have to offer health coverage at all in order to attract employees.

In Canada, all employers are on a level playing field when it comes to basic health coverage, and compete for employees by, among other things, offering salary and benefit packages that include shared-cost supplemental insurance to cover things other than the "medically necessary services" covered by the plans, e.g. eyeglasses, perscription drugs (which of course are not the major cost factor here that they are in the US), dental, long-term disability and life insurance. This is a usual benefit (either mandatory or opt-in) at any major employer (and keep in mind that we have more unionized workplaces, I think, and unions will bargain these benefits) and at most established employers with more than a handful of skilled employees.