You have to hand it to Don Drummond and his team—they pulled no punches in their report from the Commission on the Reform of Ontario’s Public Services last week. And they likely didn’t make many new friends when they outlined their myriad recommendations.
But as the report relates to healthcare reform, it doesn’t matter what your political or economic affiliations are—it would be difficult to call most of their key recommendations into question.
The Drummond report offers some macro-level perspective of what healthcare plan sponsors across the country—not just in Ontario—need to be seriously considering. There are a number of drug plan insights that can be taken away from what the report offered. None of these insights are, by any means, novel or earth-shattering, but, coming from a respected panel of Canadians with the sole purpose of finding ways to make public services sustainable, they bear highlighting and consideration.
As a frame of reference, here are two pieces from the report’s introduction to Chapter 5, which deals with health:
- “If we cannot look to ‘easy’ answers to the problem, we are left with hard answers and difficult solutions. We are left with the challenge of reforming the healthcare system to make it operate more efficiently and give us greater value for money.”
- “The public debate in Canada has been poisoned in recent decades by widespread failure to comprehend the issues or trade-offs that must be made; by knee-jerk reactions to worthy ideas for change; by stakeholders in the healthcare system who, wishing to cling to the status quo, resist change; and generally by a lack of open-minded acceptance of the reality that change is needed now.”
The most controversial recommendation regarding prescription drug spending in Ontario is to increase the proportion of drug costs paid by Ontario’s highest-income seniors and to base cost-sharing for drugs on income levels across the board. This is not a novel idea—provinces such as British Columbia and Saskatchewan have already moved that way for their residents. However, drug reform in Ontario hasn’t changed appreciably in decades. In the report, Drummond highlights that affluent seniors pay only the first $100 of eligible drug costs every year, before qualifying for a $6.11 per prescription deductible thereafter. The report outlines one option in which if Ontario’s highest-income seniors were to see their cost-share increase by $1,000 annually, there would be hundreds of millions in savings available.
In the report, the commission highlights a study that calculated that the Ontario Drug Benefit (ODB) program has seen its costs grow by an average of 9.4% per year over the last 20 years—hardly sustainable figures when we look at the demographic profile of Ontario in the years to come. It’s also proof of the ridiculousness of Ontario’s public policy over these 20 years whereby drug costs have increased at nearly 10% per year but what Ontario seniors pay hasn’t budged.
The investments made by employers in covering healthcare costs have been noted, and employers are urged to be more proactive in managing their health plans. Interestingly, the three characteristics of a “reformed system” as it relates to pharmaceuticals (highlighted on page 168 of the report) are as follows:
- cost discipline through purchasing power;
- guidelines for conduct of practice; and
- greater control exercised by employers.
Insights for plan sponsors
The most obvious lesson is that a team of distinguished Ontarians, none of whom have any formal expertise in prescription drug plan management or managing employee benefits plans, have clearly stated that a reformed healthcare system in Ontario requires employers that are actively engaged in managing their plans. Given that the government in Ontario pays less than half the cost of prescription drugs in the province, Ontario needs employers to pay generous, yet sustainable, healthcare benefits.
I would be amazed if the people who are responsible for running Ontario’s Trillium Drug Program have not been flooding senior bureaucrats within the healthcare sector—particularly over the past two to three years—with stories of Ontarians coming to the program by the hundreds (and maybe soon by greater numbers) because their employer plans now contain an annual and/or lifetime dollar cap and they are seeking coverage. The learning here is that the provincial government is aware of a need for employer-sponsored health benefits plans (where the greatest proportion of spending relates to prescription drugs), and the government may make it more difficult over time for private plans to piggyback off of public programs.
If anyone reading this column is still waiting patiently (and hopefully) for a national pharmacare program to come and save the day, I advise you not to hold your breath. If Ontario even seriously considers raising the ODB deductible and decides to start cooking that sacred political cow, that is proof yet again of the inability of governments to fund this kind of drug infrastructure. Once again, the message is that employers are going to have to manage and fix their own problems as they relate to funding health benefits.
The next relevant insight for plan sponsors comes from Drummond’s very accurate comment that there are no “easy” solutions when it comes to health or, in our case, managing healthcare benefits for plan members. It would be hard to imagine Ontario’s Liberal government cranking up the ODB deductible tenfold for higher-income seniors, but if it were out of the realm of possibility, it likely wouldn’t have appeared in the Drummond report. Can you imagine how you would feel if you were a senior and somebody told you that what you have to pay is going up tenfold in the next year? How would you answer a senior if he or she asked how costs went up 1,000% in one year, or why we couldn’t have made manageable reforms over the last 20 years to safeguard the benefit and to be more cost-effective in an effort to avoid these kinds of cost increases to taxpayers?
Shouldn’t plan sponsors and their advisors be thinking the same way? Shouldn’t we all be focused on looking at ways now to make meaningful and responsible incremental changes to our plans to ensure that we don’t have to hit members with a significant and unpleasant surprise?
Lastly, the Drummond report laments the move by key stakeholders in the healthcare system to cling to the status quo and resist change. This is a not-so-subtle reminder to plan sponsors that they, too, need to open their eyes and pay closer attention. As a plan sponsor, you are the one paying the majority of the healthcare benefits bill. For the portion you don’t pay, your members are expecting you to safeguard their interests.
Think for a moment about your economic incentives as a plan sponsor, and those of the key stakeholders you and your members interact with in the delivery of health benefits. Are their economic incentives aligned with yours? As the person paying the bill, how much longer are you willing to tolerate that?
“Greater control exercised by employers,” says the report. There aren’t likely many people in the country with an economic IQ equal to that of Don Drummond, so those are words worth considering.