Chris Bonnett is principal at H3 Consulting.
Once upon a time, Canadians completed their educations and began a permanent, full-time career, complete with a pension plan and fringe benefits.
For many people today, that life is little more than a fairy tale. The world of work has changed dramatically, and those pension and benefit plans are no longer fringe – they’re now essential. Up to five million people in Ontario alone do not get health benefits from their employers.
Those people are most often in non-standard jobs. They’re self-employed, or have temporary, part-time or contract work. Digital platforms such as Uber or DoorDash added almost 700,000 gig jobs to the Canadian economy between 2005 and 2016.
Health services outside medicare are often required by most Canadians. Many people pay for drugs, dental, vision care and services from other regulated health professionals out of pocket, if they can afford them. Despite a continuing mental-health crisis, provincial health plans still only cover fees from psychiatrists, if you can find one. Social workers, psychologists and psychotherapists could help, but are only covered by private health plans, if you have one. For too many people, there is no safety net.
The average out-of-pocket share of total costs is high – most Canadians pay for 18 per cent of their own drug costs, 30 per cent of dental and 50 per cent of their vision care. But averages hide outliers. Those costs are especially tough on the 20 per cent of Canadians with incomes below Statistics Canada’s low-pay threshold. People with complex health needs are not well served either.
Consider also that health costs begin to accelerate after age 50. Employer health plans typically end at either the age of 70 or when a person retires, according to an analysis by employee-benefit software platform CloudAdvisors, which surveyed 7,000 of these plans. If benefits continue after age 70 or retirement, coverage is often dramatically reduced or the full cost must be paid by the retiree. Among younger boomers, Statistics Canada reported that in 2021, 45 per cent of men and 33 per cent of women were still employed at age 65.
One solution is to let benefits follow the worker, in the same way the Canada Pension Plan (CPP) follows us from workplace to workplace throughout our careers. In this scenario, a “portable health benefit” (PHB) plan would cover workers and their families in non-standard jobs.
A PHB can handle a wide range of worker situations. For example, an individual may need benefits while earning extra money doing food delivery for a short time, while self-employed professionals and independent skilled contractors would expect more from their benefits, and for longer.
The Ontario Ministry of Labour, Immigration, Training and Skills Development has established an advisory panel to consider whether a PHB plan could work in the province. Its report is due later this summer and represents novel thinking among governments in Canada.
I estimate in my recent C.D. Howe Institute report that between 3.5 and five million Ontarians may have no access to health and dental insurance. That’s one-quarter to one-third of 15 million people with unmet coverage needs. This could lead to very large PHB claim costs – between $3.2-billion and $4.5-billion annually. However, a PHB would still be affordable because costs would be shared between employers, workers and the government.
Any new benefit program would also need to be financially sustainable for the province. Assuming Ontario would take on one-third of the estimated claim costs, a PHB plan would still only cost 2 per cent or less of this year’s $75-billion provincial health budget.
A PHB plan is likely more acceptable than any other option that would improve access to health services in Ontario and elsewhere in Canada. For example, PHB plans could use existing insurance company administrative systems instead of the government operating a PHB program of its own.
In terms of potential challenges, some will say we should fix the existing health system before we introduce anything new. But a PHB plan would draw on different resources.
About half of small businesses do not currently offer health benefits, and the government could and should consider exempting the smallest and newest businesses from cost-sharing. There is also still time to consult widely and thoroughly test a PHB plan before it is introduced.
A portable health plan reflects the needs of today’s work force, and while the concept needs more research it appears to be a practical, affordable and sustainable approach to benefits for workers, employers and the government. The scope of need and associated costs are daunting, but the positive effects that a provincial PHB plan could have on employability, labour mobility and financial security are worth striving for. While the value is difficult to estimate up front, it would likely outweigh the costs over time.