Forget the Trans Mountain Pipeline. If Prime Minister Justin Trudeau is looking for a legacy project to secure his place in history, his advisory council on universal drug insurance has handed him a proposal that could one day have Canadians calling their drug plan Justincare.
Mr. Trudeau needs to first get re-elected this fall if he is to implement the ambitious plan laid out last week by the advisory council led by former Ontario health minister Eric Hoskins. But if the federal Liberals embrace the report’s recommendations, they might just succeed in changing the channel from pipelines and political scandals to set the ballot question and win again.
Dr. Hoskins called universal, single-payer pharmacare “our generation’s national project,” which sounds like a campaign-ready slogan. Canada remains the only country with universal health care that does not provide universal coverage for prescription medicines, even though drugs are the second-biggest component of health-care spending, costing $34-billion in 2018.
By seizing on the report’s recommendations, Mr. Trudeau might even succeed in forever attaching his name to a national pharmacare program, much in the way former U.S. president Barack Obama’s signature health-care initiative is commonly referred to as Obamacare.
Unlike Mr. Obama, who avoided a showdown with private insurers, Mr. Trudeau appears headed for a clash with Canada’s life- and health-insurance companies if he proceeds with the Hoskins plan. The latter calls for the replacement of more than 100,000 employer-sponsored drug plans administered by the insurance industry with a single national system administered by the provinces. That would deprive Sun Life Financial, Manulife and Great-West Life, which together control about two-thirds of the market for group benefits, of a big source of profits.
During the U.S. debate over Obamacare, in 2009 and 2010, many Democrats called for a government-run plan to cover the more than 20 million Americans who then lacked health insurance. At the time, about half of Americans had public-health coverage, either through the federal Medicare program for seniors or state-run Medicaid programs for the very poor.
Mr. Obama did boost federal grants to the states to enable them to expand their Medicaid programs. But the core of Obamacare involves providing subsidies to low-income Americans to purchase private health-insurance plans. As a result, the private-insurance industry has generally supported Obamacare, since it has provided them with millions of new customers.
The option of subsidizing Canadians without drug insurance to buy private coverage was never considered by the Hoskins council. It did examine the possibility of a more limited national pharmacare program to cover only Canadians without employer-sponsored or provincial coverage. But it rejected that idea, arguing it would cost more than a single national plan.
“We came to understand that a ‘fill the gaps’ approach was unrealistic since, like our current mixed public/private system, it would do little to lower drug prices or create fairness or uniformity in access across the country,” the report noted. “We were told by employers that private drug benefits for their workers were becoming less affordable to them.”
The Hoskins report estimates that the switch to a national public pharmacare plan would save the average Canadian business about $750 per employee. Overall savings might be much lower than that if the Liberals opt to raise corporate taxes to cover the estimated $15-billion it would cost annually to implement the Hoskins plan by 2027. The report recommends funding national pharmacare through general tax revenues, rather than premiums. Most of the new tax revenue raised would be transferred to the provinces, which would administer pharmacare.
The Canadian Life and Health Insurance Association warned last week that 7.7 million Canadians “would risk losing access to drugs for cancer, pain management, depression and diabetes if their private plan was replaced by even the most comprehensive government-run public plan.” Most private plans cover a wider range of drugs than existing provincial plans for seniors and the poor. A national plan would similarly pick and choose which drugs to cover based on their cost-effectiveness. Employers could still offer private coverage for drugs not covered by the national plan. But private insurers would lose the bulk of their business.
The Hoskins report argues that the current mixed public/private system has become unsustainable as private insurers increasingly seek to offload coverage for the most expensive drugs – such as those for rare diseases, which can cost hundreds of thousands of dollars a year – onto provincial governments. It concludes that overall prescription drug costs could be reduced by $5-billion annually by 2027 with a national plan that would pool all risks and possess greater bargaining power to negotiate discounts from drug manufacturers.
Mr. Trudeau will first have to take on the private-insurance industry if he wants his name on it.