Ontario’s Trillium drug plan has announced it’s modernizing its systems and infrastructure and has refocused efforts on altering the way co-ordination of benefits takes place with private drug plans beginning in the fall of 2017.
This development isn’t a change to Trillium regulations but is simply a refocused effort to make Trillium a first payer. According to the provincial government, that was always the intent for Ontarians who don’t have 100 per cent employer-paid drug coverage.
The changes have the potential of having an enormous impact on employer-sponsored drug plans in Ontario because Trillium has publicly stated its desire to be first payer on all drugs that are on the Ontario drug benefit formulary (both general benefits and limited-use products) and exceptional access program medications once employees have reached their annual out-of-pocket deductible. The annual Trillium deductible is between three and four per cent of net household income for most Ontarians.
The bottom line for plan sponsors of all sizes in Ontario is the change could lead to significantly more co-ordination of benefits for high-cost drugs. As a result, it will improve the financial picture for private plans it should also result in lower stop-loss pooling charges. The hope is the change will prevent employers from instituting controls on their plans, such as hard caps and exclusions for high-cost drugs, and that with a greater volume of high-cost claims moving through the provincial government, the Ministry of Health and Long-Term Care can attempt to negotiate better pricing.
Let’s consider a very basic example. An employee earns $68,500 per year and has a net income after taxes of $48,000. That would mean the Trillium deductible would be approximately four per cent of $48,000, which is $1,920 paid in quarterly installments.
If the member has a drug plan that pays 80 per cent of eligible drug costs and has obtained approval for a $15,000 specialty drug, the person would pay $3,000 out of pocket under the current plan (assuming the plan doesn’t have a maximum out-of-pocket amount for an employee).
Under the current plan with Trillium, the employee would only have to pay $1,920 for the medication, with the employer plan and the government program picking up the rest. The employer plan would have been on the hook for 80 per cent of the $15,000 cost ($12,000) and the provincial government would be on the hook for $0.
Under the changes proposed for late 2017, the plan member would pay $1,920, the employer would pay $7,680 (80 per cent of the initial amount needed until the member hits the deductible) and the government would pay the remaining $5,400.
Moreover, now that the member has reached the Trillium deductible, the provincial program would cover any other Trillium-eligible prescription (minus a $2 copayment), further reducing annual drug cost burdens to the individual and the employer.
If the drug is $30,000 instead, the savings increase. The employee would still pay $1,920 in deductibles, the employer would pay the 80 per cent of those claims (same $7,680) and the provincial government would be on the hook for $20,400 of the cost.
On a personal note, I worry the provincial government doesn’t fully realize what it’s getting itself into. This is the same government that backed down on a $70 annual increase to Ontario drug plan deductibles for seniors earlier this year and hasn’t increased that amount in 20 years. Where is the wealth coming from to fund this sudden desire to be first payer for all Ontarians who don’t have 100 per cent coverage today when the province already has the most generous seniors’ coverage in Canada by far?
The Ontario government has sworn it has the data and understands the risk it’s taking. But this is a complicated space, and I worry it hasn’t seen all of the relevant data (in particular what happens when you move past high-cost drugs and consider all medications that are eligible under the Ontario drug plan and the exceptional access program) and the situation could end up as an ugly mess in the years ahead.
Nevertheless, it’s nice to see Ontario aligning itself more closely with provinces like British Columbia, Saskatchewan and Quebec that have generous government first-payer programs. It’s also good to see the ministry and the Canadian Life and Health Insurance Association having active discussions and looking for ways to solve sustainability problems collaboratively.
These are the views of the author and not necessarily those of Benefits Canada.