Multi-payer pharmacare will fail Canadians

Private insurers and their consultants argue that national pharmacare should be modelled after Europe’s multi-payer social health insurance systems. This is a game of bait and switch: they want to sell private drug plans in a multi-payer pharmacare system without the regulations and accountability that makes social health insurance work in European countries. Buyer beware. There are three key features of social health insurance systems that make their pharmaceutical policies work reasonably well—albeit not as well as single-payer, public systems. First, social health insurance systems seamlessly integrate pharmaceuticals into the complete health insurance package provided for all citizens. They do not separate the financing and management of prescription drugs from other components of health care. Dr. Steve Morgan is an economist and professor of health policy at the University of British Columbia. He has studied pharmacare systems around the world for over 25 years. Photograph courtesy of Steve Morgan Pharmaceutical and other health benefits in social health insurance systems are managed jointly through processes overseen by representatives of patients, health-care providers, and government. This ensures drug coverage decisions reflect the country’s priorities for the health care system as a whole. Second, the vast majority of funding for social health insurance systems comes from taxes collected in proportion to income and pooled centrally either by government or an arms-length organization. Insurers receive their share of this funding based on the number, age, and health status of people they cover. This ensures that resources are collected on the basis of ability to pay, and allocated on the basis of need. In countries where centrally pooled funding is topped up by premiums paid directly by individuals, the premiums are modest and insurers cannot charge different people different amounts. They must provide coverage to everyone who seeks it at the regulated rates. This ensures that premiums are affordable for all and that nobody is denied coverage based on their age, health status, or income. Finally, social health insurance systems are run on a non-profit basis. Even in the Netherlands, where for-profit companies provide social health insurance, regulations prohibit profits on the package of health coverage that everyone is required to purchase and that insurers are required to offer on the terms described above. Systems also regulate the amount that insurers can spend on administration and marketing. Any excess revenues held by a social insurance fund must go back into health benefits for patients, not into the pockets of insurance company shareholders or executives. This prevents profit-motivated gaming of the system at the expense of patients and the health care system. The combination of water-tight regulations on the management, financing, and profits in social health insurance systems is complex, but necessary for any multi-payer system to achieve reasonable outcomes at reasonable costs. But private insurers in Canada are not asking for these forms of regulation and oversight. They want Canada to embrace a multi-payer pharmacare system without the tools necessary to protect public interests, promote equity, and ensure value. In 1997, the Quebec government took insurers up on this offer when it mandated private drug coverage through a multi-payer system involving none of the key features of social health insurance systems described above. It has not been a success in terms of access to medicines, financial equity, or system cost. Before 1997, prescription drug costs in Quebec were about the same as in the rest of Canada. Today, prescription drug costs in Quebec exceed the rest of Canada by $200 per capita. If Canada implemented a similar system, it would cost a whopping $43-billion annually, which is $5-billion more per year than Canadians are already spending on prescription drugs. It doesn’t have to be that way. Five national inquiries have concluded universal, public pharmacare is the fairest and most efficient way to provide all Canadians access to necessary medicines. Estimates from the most recent inquiry indicate that such a system will cost Canadians $10-billion less per year than the multi-payer system insurers are trying to sell. Let’s hope the government chooses wisely. Dr. Steve Morgan is an economist and professor of health policy at the University of British Columbia. He has studied pharmacare systems around the world for over 25 years. The Hill Times

Multi-payer pharmacare will fail Canadians

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Multi-payer pharmacare will fail Canadians

Private insurers want Canada to embrace a multi-payer pharmacare system without the tools necessary to protect public interests, promote equity, and ensure value.

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