As the COVID-19 crisis deepens, more and more people are losing their workplace health insurance. Even before the pandemic, an estimated 10 to 20 percent of Canadians were not enrolled in either public or private drug plans and 35 percent lacked similar coverage for dental care. 1.6 million Canadians reported unmet mental health needs. The federal government should move to fill this gap by providing an annual cheque to uninsured individuals, which they must use to purchase coverage from health insurers.
For medical services delivered outside a hospital or by a non-physician, Canadian health care looks just like that in the US. With the exception of individuals who are mainly retirees and social assistance recipients, most working-age Canadians’ insurance for drug, dental and mental health is tied to their jobs. Losing a job means losing this insurance. Based on comparable US data, for every percentage-point increase in the unemployment rate the rate of employer-sponsored insurance coverage will drop by 0.6 percentage points. Many of those who lost their jobs during the pandemic are joining the ranks of Canadians who cannot afford necessary health care.
The federal government should fix this by negotiating with Canadian health insurers on a bundle of needed services, including a list of insured prescription drugs and coverage for dental and mental health services. This means that the federal government must decide what services should be covered, defining the number of annual dental visits, the type of psychotherapy services, and the annual coverage maximums for each service.
Eligible Canadians – those not enrolled in a public or private plan – would receive an annual cheque that they must use to purchase insurance. The cheque would be similar to a tax return or a GST/HST credit. The size of the cheque would be geared-to-income. People with higher incomes would fully or partially repay it when they file their income taxes. The lowest-income Canadians would receive an amount equal to the full cost of the annual premiums.
Health insurers would not be allowed to reject anyone who wants to purchase insurance from them, regardless of health history. In return, the federal government would compensate insurers that take on those with the greatest health risks. Still, the negotiation with insurers over the premium to pay for the plan will be a productive exercise, helping to lay the foundation for progress toward a cost-effective mix of services. The federal government already has to engage in these negotiations for the private coverage of its employees.
This program is based on the expectation that it would lead to competition between insurers for new clients. This is how universal health insurance works in the Netherlands and Germany, and this plan in some ways resembles the spirit of the Obamacare reforms. Public health insurers, like provincial drug and dental insurance plans, should be encouraged to offer packages that can compete with those of private insurers. With the ability to offer low administrative costs, public insurers should be able to compete with private insurers by offering services over-and-above the basic coverage included in the plan. Private insurers, on the other hand, might be able to offer better online services and app-based options to make a claim. The resulting competition, and regulated constraints on any individual insurer, should cause a number of innovations that are valuable to Canadians.
Estimates suggest that covering uninsured gaps in drug coverage nationwide would cost around $5.4 billion a year. A recent estimate from the Parliamentary Budget Office pegs the ongoing annual cost of covering those without dental insurance at $1.5 billion. Fewer people would, however, skip a prescription or dental filling because of cost, reducing the need for more expensive health interventions in the future.
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Some might say that we should instead expand medicare and perhaps accelerate the current government’s commitment to a universal pharmacare plan in Canada, which should be completed around 2027. Nothing in this plan, however, dictates that any federal government wishing to do so should abandon its efforts. But since prior federal governments reneged on their arrangement to cost-share health care with the provinces, provinces are opposed to engaging in a new deal. As the federal government racks up major deficits responding to short-term needs, it should also start to fill the holes in our social safety net that we knew about well before the pandemic.
By targeting those not enrolled in public or private insurance plans, the federal government would not interfere with the operations of provincial health programs. This plan is modelled along the lines of the Quebec drug plan, which is the only province in Canada that compels those not enrolled in public or private drug plans to pay premiums to enrol. As a result, Ottawa would need to develop an arrangement to align with Quebec’s plan.
Currently, those who do not have private coverage in British Columbia and Manitoba must pay out of pocket, up to a certain threshold that is based on their income (income-based deductible), before they qualify for any public drug plan benefits. Because these provincial plans cover residents of all ages, the federal government could restrict access to its plan to those who are uninsured and under 65 years old. This would allow for cost savings to these provinces, which could then use these savings to lower the out-of-pocket costs for retirees. Further, cost savings would result for all provinces that offer some catastrophic drug coverage for un- or under-insured residents who must spend a high share of their income on drug prescriptions.
A large, growing number of Canadians do not have insurance for drug, dental and mental health. The time is now – not in 5 or 10 years – to ensure that every Canadian is covered. The federal government has the tools to get the job done promptly and could count on the support of Canadians to see it through.