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national pharmacare would help canadians cope with rapidly changing job benefits
it seems highly probable that the proportion of workers covered by employer drug plans has been falling, and that the quality of these plans is eroding.
feb 10 2020
3 minute read
fewer and fewer canadians have robust drug coverage.
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by ed broadbent and andrew jackson
the influential life and health insurance industry contends that the great majority of canadians have adequate prescription drug coverage. it is claimed that this is achieved through a combination of public insurance for the elderly and social assistance recipients, and private insurance for the working age population.
according to a recent parliamentary committee report, some 80 per cent of the workforce do have private insurance coverage. and fewer than 10 per cent of the population, mainly the working poor, have no drug coverage at all.
this public/private mix is not, however, working well for canadians. on top of the unnecessarily high and rising cost of private insurance, the same parliamentary report reveals that 88 per cent of private insurance plans have co-pays or annual deductibles, which means that drug costs are partly covered out-of-pocket. further, as employer-sponsored drug plans are generally much better than plans paid for by individuals in terms of drugs covered and co-pays, the evidence also shows that private insurance coverage is well below average for younger and lower-income families.
good employer plans certainly still exist, notably for full-time permanent employees working in the public sector and for large employers. most unionized workers have decent coverage. but these kinds of jobs are increasingly difficult to find.
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while hard data are lacking, it seems almost certain that employer plans are shrinking compared to more costly and less generous individual private insurance plans.
back in 2000, statistics canada published “benefits of the job,” a detailed profile of employer health care plans. it found that just 50 per cent of all employees had comprehensive health, dental and life/disability insurance coverage, rising to 70 per cent for unionized workers, 58 per cent for full-time workers, and 57 per cent for those in permanent jobs. the large majority of canadian workers, however, are not in unions. just 30 per cent of non-union workers, 17 per cent of part-time workers and 14 per cent of temporary workers were covered by a comprehensive plan (a small proportion had just one kind of coverage.)
statistics canada no longer provide data on employer health plans. however, coverage has almost certainly eroded due to the changing job market.
the so-called gig economy has increased from 5.5 per cent to 8.2 per cent of all workers over the last decade and will likely continue to increase. looking at employees, between 2001 and 2018, the unionization rate fell from 30.4 per cent to 28.7 per cent, and the proportion working full-time and in permanent jobs fell as well.
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most striking is the sharp decline in the proportion of employees covered by a defined benefit workplace pension plan, which fell from 33.3 per cent to 25.2 per cent. this is a good indicator of the downward pressure on workplace benefits, which arises from rising costs, as is also the case with prescription drugs.
it seems highly probable that the proportion of workers covered by employer drug plans has been falling, and that the quality of these plans is eroding. the labour movement strongly supports a national pharmacare program not just to provide coverage to those who lack it, but also to reduce cost pressures on employers that work against increasing wages at the bargaining table. when companies provide drug plans, they have less income to allocate for wages for their workers.
employers should also support a national pharmacare program that would reduce drug costs and shift them away from payroll costs. total benefit costs, including pensions, can account for as much as one-third of total payroll costs for larger unionized employers. it is widely recognized that publicly funded medicare gives canadian companies a significant cost advantage over american competitors.
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yet business lobby groups seem to fall in behind the vested interests of the life and health insurance and pharmaceutical industries when it come to a national pharmacare program.
the introduction of a universal, single-payer, pharmacare system has many good arguments to commend it. one of the most powerful, though least mentioned, is that the current employer-based benefit system is eroding. we should deal with that problem rather than pretending it doesn’t exist. national pharmacare is needed as soon as possible before even more canadians find themselves lacking the means to afford the drugs they and their families desperately need.
ed broadbent is the chair of the broadbent institute, an ottawa think-tank. andrew jackson is the institute’s senior policy adviser.
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