How Ontario's proposed pharmacare plan could improve employee benefits

The province says its proposed youth pharmacare plan could bring changes to employee benefit programs. Will that lead to savings or expanded coverage?

Pharmacare will create large savings for insurance providers, offering room for greater coverage

The Liberal government's plan would provide Ontarians 24 and under with free access to around 4,400 prescription drugs (iStock)

Ontario's insurance industry says "significant changes" could be coming to employee benefit programs if the province's youth pharmacare plan is implemented.

The proposed program would provide Ontarians 24 and under with free access to approximately 4,400 prescription drugs.

If the 2017 budget is approved, the plan could relieve insurance providers from covering those drugs in benefit plans, potentially resulting in lower premiums, expanded coverage or both.

"I can't think of any analogous policy initiative that would have as much of an impact as this would have," said Frank Swedlove, president and CEO of the Canadian Life and Health Insurance Association.

"There are some significant possibilities for savings here," he added, explaining that it remains too early to tell exactly how extensive those savings might be.

Ontario expecting consumer savings

Ontario estimates the program will cost $465 million per year, resulting in significant savings for insurance companies and employers offering benefit plans.

Health Minister Eric Hoskins said discussions will soon begin to make sure that relief does not go to waste.

"We will be setting up a process — a table, with insurers, with employers, with employees, other stakeholders — to ensure that those savings are passed on," Hoskins said to reporters at a Toronto recreation centre.

Ontario Health Minister Eric Hoskins says possible savings for insurance providers should be passed on to consumers. (David Donnelly/CBC)

Hoskins said that employers pay the upfront cost of medication in around two-thirds of Ontario benefit plans, as well as additional administrative fees to process those purchases.

The introduction of a youth pharmacare program would be most acutely felt in those cases, he said, and the program would essentially eliminate the current overhead costs for those transactions.

"By taking that cost out of the cost of their benefit plan, they will see a reduction," Hoskins said.

To save or expand?

If the savings do materialize, insurers and employers will have to decide what to do with the extra money.

Some are already arguing that the savings should be directed toward new areas of health coverage.

"The savings, in my opinion, is going to be extremely high for these companies, and in turn they should open up access for further services," said Danielle Xavier, president of Conceivable Dreams.

Her organization is advocating for an expansion in access to fertility treatments.

Currently, the province provides help for an initial round of in vitro fertilization (IVF), but Xavier said employers and insurers would be wise to improve access to those treatments, since one in six Ontarians deals with infertility at some point.

"In this circumstance, it would be the employers and benefit providers who could do this and really make a substantial difference," she said.

The Canadian Life and Health Insurance Association said those decisions will ultimately lie with those employers and providers, though given Ontario's competitive insurance marketplace, the potential changes will likely be widespread.

"I would expect essentially all supplementary health plans in Ontario would be affected by this," said Swedlove.