Truth

Posted February 5, 2016

The government’s process for communicating changes to seniors’ Pharmacare has been unfortunate, to say the least. It started with a news release on Jan. 15th.

“Changes to the seniors’ Pharmacare program mean Nova Scotians enrolled in the program will soon pay less each time they pick up a prescription.

Starting April 1, Seniors’ Pharmacare members will start paying a 20 per cent co-payment for each prescription, down from 30 per cent, to a maximum co-pay of $382 a year.

The changes also mean that seniors with lower incomes are no longer expected to pay the same premiums as those with higher incomes.”

Sounded like good news all around. “When we can have 12,000 more be exempt from the premium, that’s a very, very good day,” said Health and Wellness Minister Leo Glavine.

It turned out that some members will be paying a lot more than they do now, increasing from $424 to as much as $1,200 per year, and that other changes would mean that some low income seniors receiving the Guaranteed Income Supplement would begin paying premiums. Both the opposition and the media demanded more information, but the government at first resisted providing financial projections.

Almost two weeks after the original announcement, on Jan 28th, the government caved in and provided forecasting models that should have been freely available from the outset.

Before the policy changes, the $424 maximum premiums covered only 32% of the average per person cost. The new maximum premium of $1,200 could in theory cover more than 85% of costs. If everyone stayed in the program, the government would be $10 million better off in the first year—an amount that would gradually reduce as drug costs grew, while premium rates stayed the same.

In practice, this will not happen. Healthy seniors will drop out if their drug costs are less than the premiums they are asked to pay. The only ones who will be willing to pay $100 per month will be those with chronic conditions, like diabetes, with ongoing costs that are much higher.

So, as a practical matter, the government may experience less fiscal benefit than anticipated. Regardless, rising drug costs will mean that premiums have to rise periodically.

In the meantime, the changes have upset a great many seniors. The total contributions from the 75,000 who are continuing to make contributions will rise by $10 million, plus the cost of eliminating contributions for 12,000 low income seniors. A lot of middle income people are negatively affected.

The government was dealing with a program that was unsustainable in its present form. In principle, asking higher income people to pay more makes sense, but not if the level is so high that it creates mass defections from the program. Decreasing the copayment from 30% to 20% up to $382 was not a good choice for a program under fiscal pressure.

The government was seeking a response to a difficult problem, and has made choices that negatively impact a lot of people. Trying to position the changes as a good news story was a mistake.

The changes were imperfectly designed, and the initial communication was deceptive.

The real casualty in all this is the government’s credibility. For our health care system to be sustainable will require substantial and difficult changes. For them to succeed, Nova Scotians will need to feel that the changes have been well considered and honestly communicated.

Because of the Pharmacare experience, government may face a more skeptical audience for future announcements, no matter how well considered. The government has demonstrated the courage to make tough but necessary choices in many areas. Packaging them as good news is a mistake.

The right way to do it is open communications about the challenges and the impact of the possible responses before a decision is announced.

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  • Referencing one of the comments below- it is interesting how private industry can provide a more encompassing health care plan for about the same cost that government provides a drug care program. Although, as identified, it is easy to do that when industry has a pretty firm grip on one of the nipples leading from the gravy train.
    In line with Bill’s article, the government has approached this in its normal fashion— give us more especially from those with higher incomes. I believe Bill is correct, many with higher incomes will depart the plan, because they will decide to self fund/ insure. A couple can buy considerable drugs with $3000.($ 2400 premium and $600 deductible) That is $30,000 over 10 years.
    The government has totally lost sight of what the higher income seniors want from their drug plan. They want protection from the “devasting” prescription. The $100 prescription is within their means. So if the government asked the “high income earners” not to pay more but to take out less, they might be able to produce a win, win situation. For instance increase the deductible to 60% with an annual limit of $600, would encourage “high income earners” to stay in the plan by provided insurance that meets their “devastating” scenario. I do not know what the correct numbers are, but increasing premiums based on income is a losing proposition and I think Bill’ prediction of mass defections of all but the chronically ill is correct.
    If the government thinks the current plan is unsustainable just wait until the new plan kicks in. And now we know why they hid the facts from us. The facts display their incompetence. There is a difference between repairing a refrigerator and repairing Pharmacare.

    barry | February 7, 2016

  • The Government wants us to believe that even with all their efforts the Pharmacare Plan is unsustainable. I think that before they go trying to deem a plan unsustainable it would be wise to educate the public and understand all the conditions of the plan that make it unsustainable.
    One example is eligibility. To be eligible one must not be in a private group plan. That is fiction: there are thousands of seniors in the plan who have private insurance with benefits far beyond the benefits offered by Pharmacare. At least one , maybe more , private insurer threatened their members with being kick out of the group plan if they did not enroll in Pharmacare when they were eligible on their 65th birthday. Seniors who had been part of a group plan, probably through their employer, were faced with paying double premiums for the same coverage. ( a couple paying $900 for the group plan was now paying $1750 the day they turned 65.) So a government/ taxpayers subsidized program was and is now paying out significant expenditures for thousands who are not eligible to be in the plan, and who do not want to be in the plan. In a subsidized program you want as few participants as possible!!!
    The plot however does not end there. The private insurer deemed Pharmacare was the 1st payer. As a result, what would normally be the private insurers costs were transferred to Pharmacare. So how many millions are being transferred to Pharmacare? Wouldn’t we like to know. Is the government complicit in this cozy arrangement?? Wouldn’t we like to know?
    In summary, we have seniors ineligible for Pharmacare being forced into Pharmacare at double the cost, Pharmacare paying out a subsidy for expenditures which are ineligible, we have Pharmacare paying out expenditures that rightly belong to private insurers and we have Private insurers going to the bank with our money.
    You would think that the Plan Administrator would identify this and do something to protect the integrity of Pharmacare. Who is the Administrator??? Please don’t tell me they are a private insurer!!! Wouldn’t that be a potential conflict of interest. If the administrator was also a private insurer that would create competing interests that one could abuse and benefit from. Scary or what.
    What I do know is that there are many seniors now living in NS, who were not members in a group plan with this private insurer, who just continue on paying their group plan premiums and have not received any threats.
    So there is a tremendous disparity. One thing for sure, seniors in the Pharmacare plan are being hosed and the government wants us to believe the plan is unsustainable. I do not know whether it is unsustainable but it is definitely out of control and the government wants us to pay more to cover their incompetence… (and complicity?)
    Thank you Mr. MacNeil

    H L | February 6, 2016

  • For exposing this govt’s ‘sleight of hand’ method of presenting these generally ‘unwelcome’ changes we can credit the detailed and early analysis of Tim Houston, MLA, Pictou east.

    bob nackenzie | February 5, 2016

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