“Insurance” can’t fix Canada’s pharmacare problem
In my last post, I explained how Canadian provinces are moving toward a model of “catastrophic” drug coverage instead of a pharmacare model more comparable to our “Medicare” system. Depending on the province, public coverage against catastrophic drug costs means that patients must pay between 3% and 10% of their household income before any public subsidy kicks in.
Catastrophic coverage sounds like a good idea to many people: lower the cost of public drug programs by only covering people against medical “catastrophes.” The problem is that it is based on flawed logic in health care contexts.
The problem stems from thinking about public policies to cover prescription drug costs as though the problem to be fixed was just a matter of providing “insurance” against random catastrophes, like having one’s home burn down in a fire.
If health needs for prescription drugs occurred randomly and typically just once in a lifetime to people, then high deductible coverage might be viewed as a good way to make people pay for routine costs (e.g., maintenance on your home), while still insuring them against the random chance of an unfortunate catastrophe.
But insurance for drug costs is nothing like fire insurance. Population-based data from British Columbia and from Manitoba confirm that needs for high costs prescription drugs are seldom one-time events. People with the highest needs for prescription drugs require thousands of dollars’ worth of medicines, and they typically have such needs year-after-year, often until death.
People with chronic health needs do not need insurance against some unpredictable risk of illness; they need subsidies for their predictable health care needs. Asking them to pay from 3% to 10% of their family incomes out-of-pocket before subsidies kick in is tantamount to putting a tax on illness.
The ethics of this may be most acute in cancer care, where Canadians may be under the impression that they are fully covered for treatment costs. They are not.
As more and more cancer care leaves the hospital setting – owing to new drug development and deliberate policy decisions to reduce the use of hospitals – patients must bear more and more of the cost of the care. This can add up to thousands of dollars in out-of-pocket costs under catastrophic drug benefit programs.
Some people argue that this too is OK because private insurance can fill the gaps in coverage left by catastrophic drug plans offered by government. This is regrettably untrue.
A recent study found that one in ten Canadians don’t take their medicines as prescribed because of cost. Lack of insurance is the biggest reason that Canadians have such difficulties filling their prescriptions. Data from Statistics Canada indicates that only half of Canadian workers have supplemental medical coverage that might cover prescription drugs – and only a third of Canadians who work for small businesses have such coverage.
Those who don’t have insurance through work can find it hard to buy insurance on their own. People with pre-existing conditions – such as diabetes, asthma, or heard disease – may not be insurable and may even get kicked off of insurance plans when they change jobs or graduate from school.
These barriers to private health insurance cannot be overcome easily. Either the government has to provide universal health insurance – as we do with our “Medicare” system – or government must tightly regulate. Regulation must effectively make a standard package of insurance coverage mandatory for all citizens (the healthy and the unhealthy) and must prohibit firms from discriminating against patients on the basis of their health status. No country has ever overcome the insurance market failures in health care without one of those two solutions. Even the United States has embraced this reality with its Affordable Care Act.
Maybe it’s time that Canadians came to terms with this and developed a sustainable way to stitch the gaps in our pharmacare patchwork. That’s why experts from a range of backgrounds are coming together in February to start a national conversation about prescription drug coverage in Canada: Pharmacare 2020 – envisioning Canada’s future in this critically important component of health care.