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Over the last 20 years, the price of health insurance has more than doubled, says a study by researchers from the University of Toronto and University of British Columbia.
The study, published in Canadian Medical Association Journal’s latest issue, also says insurers are decreasing payouts for insurance claims. With less money being paid to policy holders, insurance companies are keeping a larger portion of premiums. In 2011, insurers kept $6.8 billion worth of premiums, up from just $1.2 billion in 1991.
What is not clear is how this excess money is being spent.
With just under two thirds of the Canadian population insured, private health related costs totalled $22.7 billion in 2010 according to the Canadian Institute for Health Information.
With private insurers paying out more than 90 per cent of group insurance plan premiums as benefits in 1991, in 2011 only 74 per cent was paid out.
Kristina Sengvilay, accounts payable clerk for Manitoba Justice pays around $8 a month for Blue Cross health insurance with her work’s group plan.
Receiving just over the average coverage rate, Sengvilay receives 80 per cent coverage up to a certain dollar amount every year. Her $8 a month covers drug benefits, eye care, dental care, massage, and chiropractic work, all treatments that aren’t covered by provincial health care. Unaware of what others pay for insurance, Sengvilay was surprised when she heard many pay double what she does for the same coverage.
At only age 22, Sengvilay has only paid for coverage through Blue Cross at her government position.
“Oh wow. I had no idea people were spending that much,” Sengvilay says.
The study also reveals that individuals or small businesses buying their own health insurance plans are given an even worse deal with only 38 per cent of premiums returned as benefits in 2011.
In the US, the government monitors its insurance companies by making them rebate any excess money earned by premiums. For example, when only $250 is given back in benefits and more than $600 dollars was spent on premiums, the company must give back the difference under the Affordable Care Act, also known as Obama Care.
The study argues that Americans are getting a better deal than Canadians on private health insurance.
Michael Law, the study’s lead author, says he hopes the results will encourage governments across Canada to protect small businesses and individuals from rapidly escalating health insurance costs, like the US does.
“I think we need to start with two things,” says Law. “First, I think we need better transparency from private insurers so we can better understand where our money is going. Second, governments should seriously consider regulating what proportion of premiums must be paid back as benefits to policyholders.”