Ontario’s new prescription drug plan misses the mark
The recent announcement from Queen’s Park about a new program (called OHIP+) that will provide “free” prescription drugs for Ontarians under 25 is a misguided exercise in rebranding that sets a dangerous precedent for future policy.
There’s certainly a case to be made for ensuring that anyone who’s financially vulnerable, irrespective of their age, can access necessary medication regardless of their ability to pay. Optimal public policy should aim to precisely identify these groups and target funding towards them as efficiently as possible, so as to maximize the benefits purchased with taxpayer dollars.
The thing is, the province already has a program that attempts to achieve that very goal. Ontario’s Trillium Drug Program provides coverage for individuals “who spend approximately 3 to 4% or more of their after-tax household income on prescription-drug costs.” By using a means-tested approach of this nature, the province is able to target funding to people whose prescription drug costs cause the greatest personal financial burden.
OHIP+, however, provides blanket subsidization for everyone under the age of 25. To explain why this is a problem, let’s break this group into two parts—young adults (18-25) and children (under the age of 18).
The first group (18-25) includes people of working age who are old enough to vote, drink, serve in the military and get married. That’s not to say that they shouldn’t receive financial assistance for their prescription drug costs, but that an income-based policy should work just as well for them as it does for anyone over the age of 25. That many people in this group may likely be low-income earners is not irrelevant, but rather precisely the point since they will already be eligible for coverage under pre-existing plans (after paying a means-tested deductible). Strangely enough, the new OHIP+ plan also creates a situation where a well-off 24-year-old may receive better access to prescription medications than the average 26-year-old. In such cases, policymakers should ask themselves why they think age, rather than income, would be a more direct indicator of financial need.
But let’s look at the group in OHIP+ that’s the real problem—children under the age of 18.
Stay with me here.
Children are just about never expected to pay the cost of prescription drugs—their parents or caregivers are. So let’s look at how much typical families with children earn. According to Statistics Canada, in 2014, the average income of couples in Ontario with children was $126,300 while the average income of lone-parent families was $55,400. Of course, while some families in this group may be low-income households (and eligible for coverage after a means-tested deductible is paid), others will be high-income households. In fact, under OHIP+ the average taxpayer could theoretically be responsible for paying for the entire prescription drug costs of children with millionaire parents who could easily afford the costs, and likely already have private insurance plans for their families. Again, an income-based means-tested approach would help make sure that scarce resources and hard-earned taxpayer dollars flowed to families in greatest need.
Admittedly, even with the pre-existing drug plans in Ontario (Trillium is just one of many) it’s always possible that there are people in legitimate need of financial assistance who fall through the cracks. In such instances, public policy should focus on amending existing programs to better target these groups. For example—make it easier for individuals to claim expenses under the Trillium plan, or re-examine the minimum deductibles for the lowest-income earners.
However, the new OHIP+ plan to provide free drugs to anyone under 25 is misguided, doing little for those in legitimate need while expanding coverage to families that don’t need it.
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