Pharmacare report misses key issues
Is it feasible, desirable, and affordable to replace all existing private and public drug insurance plans?
The report by Dr. Eric Hoskins and the Advisory Council on Implementation of National Pharmacare addresses a definite need to expand drug coverage to include all Canadians. However, it overlooks several important issues.
About 10-20 per cent of Canadians are uninsured or underinsured for necessary prescription drugs. The rest of the population is covered by a patchwork of public and private plans. The problem is exacerbated by the aging population and part-time workers with few drug benefits. Drug costs are rapidly increasing.
The Hoskins report lists “Comparator Countries” — Australia, France, Germany, the Netherlands, New Zealand, and the United Kingdom. In virtually all, health delivery is national. By contrast, the Canada constitution requires that health be under provincial or territorial jurisdiction. Dr. Hoskins acknowledges that it may take some time before all provinces and territories opt in. This certainly applies to Quebec, which already has a comprehensive, universal but costly drug plan and its own agency to evaluate drugs.
Dr. Hoskins stresses: “The council recommends the federal government enshrine the principles and national standard of pharmacare in federal legislation separate and distinct from the Canada Health Act.”
Why does Dr. Hoskins wish to keep pharmacare separate? He recommends modest user fees and also that private insurers be allowed to provide private coverage for copayments, as well as for drugs not on the national formulary.
He fails to mention that all of the Comparator Countries also have a blended public/private health delivery system. These are kept fiscally sustainable with shorter wait times thanks to modest user fees and private coverage of some physician services also covered by the public system — all prohibited by the Canada Health Act.
When medicare was first implemented, the original intent was for Ottawa to pay for half of hospital and medical care costs. The federal share is now down to about 21 per cent. The Canada Health Transfer is based per capita, regardless of the needs of an older population in areas such as the Atlantic Provinces. Dr. Hoskins proposes closing the gap between what each province needs and what it now spends. Thus the pharmacare transfer for Newfoundland and Labrador would be $794 per person, for New Brunswick $759, but for Saskatchewan $344. Dr. Hoskins recognizes that provinces and territories demand secure federal funding before signing a new agreement. Ironically, when he was health minister, he unilaterally decreased (some by 30-50 per cent), revised, or totally deleted over 400 physician fees from the OHIP schedule.
How should we proceed? First, “filling the gaps of drug coverage” should be implemented soon at an estimated initial cost of $3.5 billion annually. Very expensive drugs for rare diseases should be covered for all Canadians. There should be tighter policing of kickbacks of generic drug companies to pharmacies, which now may be increasing costs to individuals, private and public drug plans.
What should be done about persons already covered by private and public insurance plans? Consider that in 2017, there was a total of $29.8 billion spent on prescriptions; $13.4 billion was from public plans, $11.5 billion from private plans, and $5 billion out of pocket.
Thanks to bulk-purchasing, drug prices would supposedly drop, resulting in a savings of $100 per year in drug premiums and for businesses, $750 annually per employee. Businesses would save over $15 billion from insurance costs and families would save over $5 billion in out-ofpocket costs. However, the marginal cost to Ottawa would be at least $15.3 billion annually by 2027. This at a time when the federal deficit is already about $20 billion.
Dr. Hoskins is vague as to how his program would be funded. He does not try to recoup any of the savings from businesses now relieved of paying for drug plans. By contrast, the NDP pharmacare plan proposes a wealth tax, plus steep corporate and income tax increases.
If it supports Dr. Hoskins’ plan, to avoid increased debt and higher tax rates, Ottawa should study and borrow ideas from successful blended systems in the Comparative Countries. It should then amend and modernize much of the Canada Health Act.
Both Dr. Hoskins’ report and a total reassessment — after 35 years — of the Canada Health Act should be on the agenda when the premiers and territorial leaders meet in Saskatoon from July 9-11.
Ottawa needs to put the universal national plan on the agenda with provinces