“Nothing is free” – Quebec proposes health care fees
Communications consultant Steven Laird is the editor for Buck Exchange. He works with an advisory board with representatives from each of Buck’s consulting practices: Health & Productivity, Retirement, Investments & DC Plans, Communications, Global HR Technology, and Research & Compliance.
Feel free to comment on any of these stories; comments will be posted after a brief review. Or you can contact the editor directly at steven.laird@buckconsultants.com. Steven will direct your questions and comments to the appropriate consulting practice for response.
In this issue:
Health & Productivity
- “Nothing is free” – Quebec proposes health care fees
- Move carefully: Adverse changes are contentious
- Ontario vs Pharmacies: Round two
Health & Productivity
“Nothing is free” – Quebec proposes health care fees
by Editor
Along with increases in sales and fuel taxes, tuition and user fees, Quebec’s latest budget proposes the introduction of a health care fee as part of its plan to control the Province’s deficit.
The new fee, called a “health deductible,” would be introduced in July and phased in over the next two years. The budget states that it will be limited to $25 per adult in 2010, and then progressively increased to $200 in 2012.
Does this violate the Canada Health Act requirement that care must be provided “on a basis that does not impede or preclude, either directly or indirectly, whether by charges made to insured persons or otherwise, reasonable access”? The budget states: “In the coming months, the government will work with its partners to study the results in other jurisdictions that have successfully implemented a health deductible. In that respect, the Canada Health Act should not impede the search for solutions that will ensure long-term funding for our health-care system.”
The resulting protests in Montreal over the various increases sparked intervention by police in riot gear, according to a Canadian Press report. Finance Minister Raymond Bachand responded by saying “”Every adult benefits from the health system, perhaps every adult should pay for the health system. Nothing is free.”
Employers with employees in collective bargaining units can expect that, if the health care measure goes through, the unions will look to the employer to pay the additional fee.
For further details, see the budget document, “FOR A MORE EFFICIENT AND BETTER FUNDED HEALTH-CARE SYSTEM.”
Move carefully: Adverse changes are contentious
By Camille Coutu, Health & Productivity Consultant
Many employers are reviewing their retiree benefit programs in light of the rising costs associated with funding health and dental benefits for those retirees. They’re doing this not only because of the day-to-day cash costs, but – and primarily – because of the future liability associated with funding these benefits.
Practical Considerations
When considering making adverse changes to a retiree benefit plan, employers need to consider these points.
Legal review: Make sure your discussions with legal counsel include a review of the current legal environment and recent court decisions on entitlement. Review all written communication (employee booklets, collective agreement, employment letters) to determine if an actual written “promise of benefits” was ever made, and if so, was it made indefinitely. Look for any wording that might be perceived as saying that benefits are vested. Recent court cases in the U.S. and Canada have decided that post-retirement benefits are not vested in many instances. This makes eliminating them easier – even for current retirees. However, these same courts have often ruled that when a union is involved, these benefits might be vested.
Culture: Respect your organizational culture and work environment, and be abundantly clear on what the change involves and why it’s being made. Even if a Health Care Spending Account (HCSA) is created that has a benefit obligation equitable to the post-age-65 benefits elimination, this does not mean that each employee has a comparable plan. Any grandparented member would have significantly lower benefit entitlements.
Consider your benefits philosophy and its real intent around providing protection to retirees. Plan to provide proper advance notice to employees, and consider grandparenting benefits for employees who are close to retirement.
Replacement coverage: Research and reflect on the ability of an older retiree to find coverage on their own, if needed. Review the coverage provided by the provincial health insurance program, and other provincial programs, which is typically catastrophic-type emergency coverage.
Impact: Calculate and assess the financial impact and implications, both short and long term, by reviewing day-to-day cash costs, accrued benefit liabilities, and potential cost of litigation.
Options to adverse changes
There are other changes that could be made to retiree benefit programs.
The diagram here shows the spectrum of providing retiree benefits, starting at the low end of coverage and cost (no plan for current and future retirees) to the high end (traditional regular plan providing full coverage). As with most things, there is no “right answer” in designing a retiree benefit plan. The items shown on this chart can be combined for potential maximum impact.
Making an adverse change in a post-retirement benefit plan, such as eliminating post-age-65 coverage, typically carries the risk of employee litigation and other issues. Adverse changes – whether actual or perceived reductions in or elimination of coverage – are contentious: employers should always seek legal advice.
Ontario vs Pharmacies: Round two?
Ontario vs Pharmacies: round two
By Editor
Ontario plans to introduce a regulated pricing structure for generic drugs, to lower costs by at least half, to 25% of the cost of the original brand name drug. The new structure, proposed in the March 25th budget, would benefit Ontario’s public drug system, private employer drug plans, and people who pay for drugs out-of-pocket.
According to the province’s statistics, about 8.6 million Ontario workers and their families receive coverage through employee or union benefit plans at an annual cost of about $4 billion to employers. Meanwhile, close to 15% of Ontario’s population pay out-of-pocket. Ontarians pay 31% to 82% more for generic drugs that citizens in the U.S. and other developed countries, according to the Health Ministry.
Pharmacy and drug store associations say this will mean hikes in dispensing fees and charges for services now offered for free, including blood-glucose monitoring, blood pressure tests and patient counselling on medications. They had expected the price reductions to be introduced only for prescriptions covered by public health plans, which cover patients such as the elderly and the disabled. And since Ontario is a bellwether for other provinces, pharmacists are worried that the move will be more widely adopted across the country.
Further angering the pharmacists is the elimination of “professional allowances” – payments from generic manufacturers to pharmacies in return for selling their products: see McGuinty Government Reforming Ontario’s Drug System.
Tell us what you think about the initiative and the reaction from the pharmacists.
