Federal public servants will move toward a 50-50 cost-sharing arrangement for the Public Service Health Care Plan under a deal announced Wednesday.
Treasury Board President Tony Clement, who had threatened in February to implement the arrangement through legislation if unions failed to sign on, said the deal was negotiated in good faith with public sector unions.
“Quite frankly, we both put some water in our wine and that’s the nature of negotiated settlements but this is definitely a win for taxpayers to the tune of $6.7-billion over the next six years,” said Mr. Clement.
The savings announced Wednesday are roughly $700-million less over six years than the $7.4-billion listed in the 2014 budget. Yet when asked about the fiscal impact of the concessions the government offered during negotiations, Mr. Clement described the impact as “fairly infinitesimal.”
The voluntary plan for current and retired public servants helps cover the cost of medical expenses that are not covered by provincial health plans. Mr. Clement said the direct impact for members of the plan will be an increase in monthly frees from $24 to $48, with an exemption for low-income members.
The deal implements a budget promise to increase from two to six the number of years of service required to be eligible to participate in the plan in retirement.
Mr. Clement said he initially wanted to phase in the change over three years, but agreed during negotiations to stretch that to four years.
The Public Service Alliance of Canada – the largest union of federal public servants – said some changes were secured through negotiations.
“While we are against these changes, it was clear from our discussions with Treasury Board that if we didn’t come to an agreement, these changes would be legislated,” the union said in a statement. “In this context, we got a deal which has a number of substantial improvements to the plan.”
Among them, unions negotiated coverage of up to $1,000 for a one-time payment toward laser eye surgery, up to $300 per year toward repair and replacement parts for sleep apnea machines and an increase in the cap for psychological services from $1,000 to $2,000.
Mr. Clement – who is the government’s lead minister responsible for finding internal savings – said the $6.7-billion over six years is in addition to the $5.2-billion a year in savings from the 2012 budget and the $900-million a year in savings from the 2013 budget.
Further, the minister indicated that his work to cut costs is not over.
“I believe more savings can be found without risking core services to Canadians,” he said. “With the right leadership, now balanced budgets for a generation are possible.”
Mr. Clement was asked about the fiscal impact of putting water in his wine by agreeing to details that are different from the budget language, including a longer phase-in period and later start date.
“It’s fairly infinitesimal. I got to say, when you look at the total savings, it’s a fraction of a fraction. So I wanted to be fair. I’d already signaled to the union earlier on in the negotiations that we were looking at a phase-in of three years, so to have a phase-in of four years does not make a meaningful difference in the bottom line.”
Mr. Clement’s office later clarified that his comment about the cost of changes was only referring to the difference between a three-year and four-year phase in period. A spokesperson for the minister said the main reason why the savings will be about $700-million less than announced in the budget is due to the decision to eliminate deductibles for plan members.