Canadian company sees hurdles in American health system
Canadian company sees hurdles in American health system
Dan Graveson was unprepared for the costly reminder of the differences between the American and Canadian health-care systems that businesses face.Graveson, a native of Manchester who has lived in Canada for more than three decades, is an executive for Montreal-based TASK Micro-Electronics, a contract manufacturing firm. In a bid to win more U.S. defense contracts, TASK put him in charge of an American subsidiary, which opened an office a few months ago in Portsmouth.TASK, which Graveson said is a private company with revenues in the $15 million to $20 million range, makes customer-specified components for hearing aids, robotics, lasers and optics, sensors, cameras, diagnostic devices for the medical and defense industries. He said that TASK expects to begin contract manufacturing in the next few months and will concentrate on the defense industry in the United States, though it eventually could branch out into the medical devices field, given the concentration of defense and medical manufacturing companies in New England.The Portsmouth operation has 10 workers and is preparing for initial defense contracts with 20 assemblers, technicians and engineers on standby.“We are trying to offer competitive wages,” Graveson said. “But we have found that in some cases, it (health insurance) doubles the cost of labor.”The original health plans the company had budgeted for were consumed by rising insurance premium costs even before a contract could be signed, he said. And, Graveson said, the health premiums — not an issue at all for companies in Canada — are more of a burden to the firm’s competitiveness than first gauged.“We are trying to be competitive and if we can’t plan for increases, our pricing will have to increase and we might not be able to bid for projects or will impact our margins,” Graveson said. “We don’t want to price ourselves out of the competition.”Graveson said that “no system is perfect,” but the Canadian model (which is called Medicare and was established as a nationwide collaboration between the provinces and federal government in 1966) protects businesses. Firms like TASK offer extra coverage (for prescription drugs which aren’t covered under Canada’s single-payer system) as a benefit.“Yes, we are taxed higher but we have come to expect it,” Graveson said.Compare and contrastGraveson’s concerns about health insurance are nothing new to many small-business owners in New Hampshire.According to a summer survey of 200 small-business owners in New Hampshire, health insurance affordability continues to be a major issue, and controlling costs is a top priority.The survey, which was one of 14 conducted nationally by the pro-reform Small Business Majority, showed that 84 percent of small businesses not offering health insurance to their employees say it is unaffordable, while 76 percent of those who do offer insurance are struggling to provide it.Altogether, an estimated 48 percent of small businesses in New Hampshire offer some form of health insurance, which is higher than the national average of 42 percent.Alan Gayar, a retired management consultant in New Castle, has a unique perspective on the health-care needs and differences between Canada and the United States. He has been a hospital chief executive in both countries and says that each system — the single-payer system in Canada and the employer-based, free-market approach in the United States — has unique strengths and weaknesses.“Businesses (in Canada) don’t worry like they do here about the cost of health insurance,” said Grayson, who headed hospitals for children in Atlanta and Toronto in the 1990s and earlier this decade after working for years with the international McKinsey & Company consulting firm. “But there are holes in the coverage, and politics plays a bigger role in health-care funding.”Canada also faces the same issue of rising health costs due mostly to the increase in costly technologies. He added the significant administrative cost savings that single-payer supporters in America trumpet would provide a one-time savings but would not in itself solve the issue of rising costs.The American model is far more complex because it includes as many as four different types of systems with varying levels of access and state and federal government involvement, according to Gayar. The result creates contradictions, inefficiencies and no universal coverage.“My view is that our biggest problem is that we never resolved the moral question of providing universal coverage,” Gayar said. “We have a flawed system because we don’t insist that everyone have insurance and we have little or no insurance regulation.”Gayar said reform that moves toward universal coverage, exchange-type offerings and more insurance industry regulation would provide an innovative and financial boost to the system because it would enlarge the pool of insured Americans while ending practices such as pre-existing conditions or lifetime caps on coverage.Gayar may be one of the few Americans familiar with the health-care conundrum who isn’t concerned that the $2.7 trillion health-care industry is taking up too much of the gross domestic product. He believes that right-minded reform will lead to greater innovation and a healthier country.Nevertheless, wasted resources is one trend both Canada and America share, Gayar said.“What we have isn’t very efficient. We have lots of expensive equipment sitting around not being used,” he said. “We have competition on small components of service rather than who does the best job keeping us well. But I don’t think it runs a whole lot better in Ontario.”To Graveson at TASK, however, “None of our workers has financial concerns about their health-care coverage.”He said, “Everyone complains about the government (in Canada), and I think there’s even less trust there about the government than here (United States). But no one talks much about health care or loses any sleep over it, and of course no one goes bankrupt because of medical bills. If one of our employees has open-heart surgery, it doesn’t affect the health-care coverage of other workers.”As Graveson sees it, for all the cost, he doesn’t think Americans are getting a very good deal on the health insurance they pay for, especially when judged by his experience as both a business executive and consumer in Canada.“Frankly, we find the health insurance plans here unacceptable,” he said.
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This article appears in the December 31 2009 issue of New Hampshire Business Review