Published in the Edmonton Journal on March 20, 2013
By Steve Morgan
The Alberta government has announced major pharmacare reforms: the province is planning to move from a system where public drug coverage is available mainly for seniors to a system where coverage will be restricted for all citizens based on income.
Experience from other provinces suggests income-based pharmacare will not pan out well, and Alberta would be better to expand the current seniors-based system to cover all Albertans.
Offering public drug benefits only to seniors privileges a portion of the population based on age, leaving many with legitimate health needs unprotected. It also saddles government with a fast-growing financial burden as a growing number of people become entitled to the age-based benefit.
That said, the main advantage of an income-based plan — to get growing drug costs off the public books and offer some coverage to non-seniors who now have none — would come at the cost of deteriorating overall drug access and financial protection that would result in spillover costs to the broader public health system.
In an upcoming paper with the C.D. Howe Institute, my colleagues and I review evidence on pharmacare options in Canada and abroad. Provinces generally provide public funding for prescription drugs on the basis of age, income or employment. Income-based pharmacare, which the B.C. government adopted a decade ago, helped reduce public drug costs, yet also produced unforeseen consequences that call into question the overall success of such reforms.
All good drug plans must ensure access to needed medicines. At a recent national symposium, experts from the pharmaceutical industry, government, patient groups, health professions and academia ranked this as the No. 1 goal for pharmacare in Canada.
The trouble with income-based pharmacare is it doesn’t deliver on this essential goal because individuals must spend considerable sums on medicines before public benefits kick in. Evidence shows that out-of-pocket charges discourage individuals, even the relatively well off, from filling prescriptions that can improve their health and keep people out of doctor’s offices and hospitals.
Studies of B.C.’s move to an income-based drug program found that seniors’ access to essential medicines fell and their use of other health-care services increased. And contrary to claims, no studies have shown income-based pharmacare improved non-seniors’ access to medicines in B.C.
Just like medicare policy more generally, pharmacare policy should also aim to protect citizens against the financial consequences of an unforeseeable illness. This is where income-based pharmacare falls short.
Income-based pharmacare, like regular insurance, is suitable for protecting people against random, one-time losses. But drugs are different than most one-time health-care interventions — most drug prescriptions are for repeated, longtime use, where an ill patient requires ongoing treatment.
B.C. data show that prescription drugs required by the sickest 20 per cent of the population account for 80 per cent of all drug costs. Whether young or old, these people typically require significant pharmaceutical treatments year after year, often until death. Asking chronically ill people to pay a given percentage of their incomes toward their medicine needs year after year is tantamount to taxing them for their poor health.
Because health generally deteriorates with age, most seniors live with chronic needs for medicines. So they can expect to bear the financial burden of deductibles under an income-based pharmacare program. Given that fewer employers are offering retirement health benefits — because doing so with an aging workforce will put individual employers and their workers under significant financial strain — retirees can’t rely on employment-related insurance to help defray drug costs.
The Alberta government has announced an income-based universal plan will save $180 million a year by 2015. But is that really cost savings to Albertans or cost-shifting, meaning that sick Albertans will still need to pay for those costs but instead do so privately?
While B.C.’s income-based pharmacare program dramatically reduced government spending on prescription drugs, total prescription drug costs didn’t fall. Instead, they grew more rapidly than before. Patients, particularly the elderly, and the employers and workers who fund private insurance plans had to pick up a larger and faster growing share of drug costs as a result.
Albertans would be far better off if the government expanded public drug benefits to all segments of the population. Virtually every comparable foreign health-care system does so in a way that improves access and financial protection and reduces system-level expenditures.
Other countries’ governments have arguably done better in making the difficult case to the electorate that they would be better off if taxes were raised to offer comprehensive drug coverage. Such coverage is offered in France, Germany, the Netherlands, New Zealand, Switzerland and United Kingdom, just to name a few examples.
A small increase in income taxes today could fund a drug program for seniors and non-seniors that would improve access and would help reduce hospital visits from unfilled prescriptions. It would protect Albertans from the unforeseen private costs should they fall ill.
And in the future it would result in lower overall costs, especially to employers, who could pass on these costs savings as higher employee wages. For these reasons, Albertans should demand, contrary to proposed reforms, that pharmacare be expanded to cover the entire population.
Steve Morgan is an associate professor and associate director at the UBC Centre for Health Services and Policy Research and an expert adviser with EvidenceNetwork.ca.
