No need for national drug plan in Canada

Focus should be on supporting individuals slipping through the cracks, not subsidizing those who don’t need it

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VANCOUVER, BC, May 8, 2015/ Troy Media/ – Calls for a national drug insurance program, commonly referred to as Pharmacare, can regularly be found in Canada’s media. While access to prescription drugs is an important component of any well-functioning healthcare system, there’s little evidence that an expanded government-run single-payer program is either necessary or ideal.

When it comes to concerns about access to medical goods and services, it makes sense to first examine those groups that are most vulnerable, such as low-income and chronically ill Canadians.

The case for national drug plan weak

Interestingly, a review of provincial drug programs reveals that such Canadians already have comprehensive prescription drug insurance coverage. While the levels of coverage vary by province, lower-income Canadians have access to at least catastrophic insurance for prescription drugs (limiting out-of-pocket costs to a small percentage of income), while those on social assistance have coverage at very low or zero cost. Coverage under current plans also tends to be more generous for lower-income children and seniors than for non-senior adults, particularly those without children.

national drug plan
The Dutch and Swiss models demonstrate there are many ways of achieving a national drug plan

Faced with these realities, and limited government resources, the case for expanding public drug insurance loses steam. This is especially true when we consider the fact that middle and higher income Canadians likely have effective private insurance through employment or direct purchase.

That being said, it’s certainly possible that some groups of Canadians may be slipping through the cracks. In such cases, public policy should focus on identifying and supporting these individuals, instead of subsidizing those who don’t need it.

However, some may still point to public drug plans in other countries and say “Well, if they have it, why don’t we?” Aside from the major questions of cost and efficiency, it’s vital to understand how drug plans in other countries actually work. For example, take a look at Switzerland and the Netherlands – two countries with well-respected universal healthcare systems.

More to the story: 4 ways to make pharmacare work for Canadians by Steve Morgan

Neither country has opted for a government-run insurance scheme for pharmaceuticals (or, incidentally, for healthcare in general).

Instead, they both provide universal access for all healthcare services (including pharmaceuticals) through private insurers in schemes which involve health insurance premiums as well as some cost-sharing in the form of co-payments or deductibles. Low-income citizens and those exposed to high drug costs still have access to pharmaceuticals, however, through premium discounts, cost-sharing exemptions, and other public-safety nets.

National drug plan only for those in need

So, while there is merit in pursuing policies to expand access to those legitimately in need, the Dutch and Swiss models demonstrate that several avenues exist between a government-run single-payer program and the current decentralized approach in Canada.

Importantly, before we get into hypothetical estimates of how much a national drug insurance system will cost, it’s critical to understand the status of current coverage already available to low-income Canadians. If, as research suggests, these groups are already well covered, we should focus on whether further expansion of government drug coverage to all Canadians (whether they need it or not) would be a sound use of taxpayer dollars.

As with the case of surgery, this is likely a situation where it’s prudent to use a scalpel instead of a baseball bat.

Bacchus Barua is a senior economist in the Fraser Institute’s Centre for Health Policy Studies.

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