Potential cost transfers to private group insurance plans in Ontario

In the 2016 Ontario Budget, the Ontario government confirms its intention to transform health care in the province.

As part of the “Patients First: Action Plan for Health Care,” the government plans to introduce a fully redesigned public drug program by 2019 to ensure the long-term sustainability of the program and making it easier for people who need prescription drugs to access them. The government also confirms its interest in coordinating the program with private group insurance plans and providing fair and equitable access to drugs.

The government will be publishing a discussion paper shortly, and public consultations intended to shape the program will take place in the spring of 2016.

Impact on private plans

The discussion paper and public consultations on the reform of the public drug program will be crucial in determining the potential impact on private plans. Because the Ontario government is currently the first to pay for seniors aged 65 and over and has announced its intention of coordinating the plan with private plans, it is highly likely that a reform will result in a cost transfer to private group insurance plans. 

In the short-term, the government is also revising certain parameters of the ODB for seniors aged 65 and over. The table below presents the applicable changes:

For low-income seniors, the annual deductible does not apply and the maximum co-payment per prescription is $2. Starting August 1, 2016, the low-income threshold for single seniors will be increased from $16,018 to $19,300 and from $24,175 to $32,300 for senior couples. Approximately 170 000 seniors will now benefit from the reduced program parameters.

Impact on private plans

These measures could have a direct impact on private plans, and in particular on plans covering retired employees. As of August 1, 2016, the new public drug program parameters will lead to a cost transfer to private plans for plans that cover the annual deductible and the maximum co-payment per prescription of the ODB. This transfer could also have an immediate impact on the financial statements of plan sponsors providing post-retirement benefits paid by the employer. 

Owing to the potential increase in the cost of this program, the government plans to revise the Assistive Devices Program. Continuous Positive Airway Pressure (CPAP) devices will be the first devices examined.

Impact on private plans

This program currently covers more than 8000 assistive devices. A revision of the program that would further limit access to these devices could result in a cost transfer for private plan sponsors that cover these devices. 

Through the 2016 budget, the government also expressed its intentions to improve the system and access to care.

• The government plans to extend the scope of practice of nurse practitioners to allow them to prescribe some medications directly to patients.
• The province is also proposing making vaccines directly available through pharmacists and authorizing pharmacists to administer them. In addition to facilitating access to vaccines, this measure should increase immunization efficiency. Travel vaccines are included in the vaccines that could be administered directly in pharmacies.
• The government will offer the shingles vaccine free of charge to seniors between the ages of 65 and 70, which will save them about $170.

Impact on private plans

If nurse practitioners are not compensated through the public plan for care provided to individuals insured under private plans, as is the case with the new pharmaceutical services provided in Quebec, costs could be transferred to private plan sponsors. 

Facilitating access to the shingles vaccine could be a potential gain for sponsors that cover this vaccine through their private plan. However, facilitated access to travel vaccines in the pharmacy could increase their use and thus increase costs for private plans that cover these vaccines.

The Normandin Beaudry consultants will continue to monitor developments relating to the 2016 Ontario Budget.
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