National pharmacare likely won’t help Canadians who need help the most
Sometime this fall, the Trudeau government will likely table a bill outlining “significant steps” towards a national Pharmacare plan, a key requirement of the government’s agreement with the NDP. However, and perhaps to the chagrin of NDP Leader Jagmeet Singh, the Liberals may take a more cautious approach despite earlier talk of a universal single-payer plan. Moreover, details of an internal memo suggest the government knows that Canadians are “sensitive to cost considerations as government health-related expenses continue to grow.”
This roll-back in rhetoric suggests the Trudeau government may have finally come to terms with the economic reality and the inefficiency of a national one-size-fits-all pharmacare plan.
To understand why, consider that previous estimates suggest a universal single-payer pharmacare program could cost anywhere between $15.0 billion and $32.7 billion annually (the difference between estimates stems in part from uncertainty regarding how successful the government would be at negotiating lower drug prices, and potential increases in the cost of new drugs more generally). Regardless, according to the government’s latest budget projections, the federal deficit will surpass $40 billion in 2023—that number excludes any funding for pharmacare. Increasing spending by tens of billions more, without a plan to pay for it, will drive up government debt and result in higher taxes in the future to pay for today’s spending.
Moreover, national pharmacare is not popular when Canadians face a direct cost. For example, support for a national prescription drug plan drops from 79 per cent to 40 per cent when a two-percentage point increase in the GST (from 5 to 7 per cent) is linked with the new program.
Beyond the crucial cost considerations, it remains unclear whether a national pharmacare program, which covers all Canadians—irrespective of income or existing coverage—will actually achieve what it intends. Two-thirds of Canadians already have private coverage for most outpatient drugs. And provincial plans already help low-income Canadians pay for prescription medications. In fact, all 10 provinces provide drug coverage for social assistance recipients at limited or no personal cost. Disabled individuals and Canadians with chronic conditions also receive provincial support to cover drug costs.
Some provinces even provide additional funding. British Columbia, for instance, covers 70 per cent to 100 per cent of the cost of eligible prescription medications for families through its Fair Pharmacare program. Alberta covers the majority of prescription drug costs for eligible residents below the age of 65 in the province’s Non-Group Coverage plan. Under this plan, Alberta families pay a monthly premium and 30 per cent of their prescription costs to a maximum of $25. Seniors do not pay any premiums and lower-income families receive additional subsidies.
Quebec’s universal pharmacare framework requires residents to have prescription drug insurance through the private or public system. If eligible, Quebecers must register for a private plan and incur associated costs. Otherwise, they must enroll in the Quebec government’s drug insurance plan (RAMQ) while generally still paying premiums and sharing some of the cost.
Despite the existence of these programs, however, many Canadians still struggle to pay for prescription drugs. But instead of introducing a new national program as a blunt instrument, the Trudeau government could specifically target the 8.2 per cent to 23 per cent of Canadians who struggle to pay for their medications. Expanding coverage through partnerships with the private sector is another option, like universal health-care countries such as Switzerland and the Netherlands.
Finally, because many Canadians are already covered with prescription drug plans by private organizations or through their provincial governments, national pharmacare would essentially shift the provider of coverage to the federal government for the majority of Canadians who are already insured. And this will come with either an expensive bill or potentially fewer medicines covered, and longer delays to get access to them. Without careful targeting, a national pharmacare plan will likely fail to assist low-income Canadians and seniors who already struggle to pay for prescription medications.
Clearly, a national prescription drug plan would increase government spending and debt substantially to subsidize many Canadians who do not need the support. Instead, the Trudeau government should target assistance to Canadians most in need.