CLHIA makes case for healthcare overhaul

By Mark Noble | June 3, 2009 | Last updated on June 3, 2009
4 min read

The country’s preeminent life and health insurance association says Canada’s public healthcare system is in trouble and should work closely with private industry to solve impending problems.

Insurers make money on the gaps in public coverage, so it’s probably not surprising the Canadian Life and Health Insurance Association (CLHIA) — its member companies account for 99% of the country’s life and health insurance business — touts the role of public/private partnerships.

Public/private partnerships are already an integral part of the Canadian system, according to the CLHIA report on healthcare policy which was released on Wednesday. The report outlines that roughly 70% of the Canadian healthcare needs are covered by government, with the other 30% of healthcare costs either being covered by private insurance plans or funded directly out-of-pocket by the consumer.

CLHIA believes demands on the healthcare system are expected to rise exponentially over the coming decades as the population ages, putting undue stress on public healthcare and jeopardizing the quality of care Canadians will receive.

“Increasing healthcare costs are being driven by several factors: older age groups in the population, new technologies (i.e. diagnostic procedures, treatment regimes, drugs), more demanding consumers, new and emerging diseases and a rise in chronic diseases,” the report says.

Currently, healthcare spending is roughly 10% of GDP, about one percentage point higher than the average of 8.9% in OECD countries, the CLHIA highlights. Canada also ranks above the OECD average in terms of total health spending per capita, with spending of US $3678 in 2006 compared with an OECD average of US$2824.

If current trends continue, provincial government spending on healthcare will consume more than half of the total revenues from all sources in six of 10 provinces by the year 2020. Ontario government will spend 70% of its total revenues on healthcare by 2022, and British Columbia is projected to spend 71% of its revenue on healthcare by 2017.

According to CLHIA president Frank Swedlove, Canada’s current healthcare system is not sustainable at its current rate of spending.

“Governments need to recognize this and take positive steps to put our public healthcare system on a solid footing that will assure quality service to Canadians,” Swedlove says.

Most likely, if governments can’t fund it, Canadians have the right to find somebody who will. The landmark 2005 Supreme Court decision in the Chaoulli v. Quebec case, reaffirmed access to healthcare is a fundamental right, and where the public system fails to provide reasonable service, Canadians must be allowed to seek private care or private coverage for core services.

CLHIA says it’s firmly committed to the public healthcare system in Canada. It does provide a number of recommendations for policy changes in healthcare areas where insurers are already major service providers.

Mandated drug coverage, cheaper generics

CLHIA is recommending that federal, provincial and territorial governments work with the insurance industry to establish catastrophic drug coverage for all Canadians. In addition, it would like federal, provincial and territorial governments ensure equitable drug pricing in private and public programs.

In provinces like Ontario, CLHIA says the Transparent Drug System for Patients Act (Bill 102) created a “two-tier system” in which the government, the life and health industry, private employers and individuals are treated differently.

“For example, when it comes to catastrophic drug coverage, we say that there should be solutions in Canada that ensure no Canadian is unduly harmed by [a lack of catastrophic drug] coverage. In Quebec, there is a catastrophic drug plan, that provides coverage for all,” Swedlove says. “In Quebec, if you’re not a member of a private plan you’re a member of the public plan.”

CLHIA would also like to see a more competitive generic drug industry in Canada. The organization argues that generic drugs are much more expensive in Canada than in other developed nations.

“The Competition Bureau noted in a recent report that Canadian businesses, employees and individuals could save up to $800 million a year if private plans and provinces change their payment structure for generic drugs and “coordinate generic pricing and reimbursement policies to ensure they promote and sustain effective generic drug competition,” the report says. “Simply put, lower drug prices mean more affordable drugs for Canadians, savings for government plans, and more affordable supplementary insurance coverage, which in turn, will increase access to prescription drugs for more Canadians.”

Incentives for CI, LTC coverage

CLHIA would like to see the governments create financial incentives for Canadians who purchase private insurance polices that such as long-term-care policies and critical illness to care of aging or ill family members.

“Many continue to harbour the mistaken belief that all of their long-term care needs towards the end of their lives will be met by governments. They have yet to realize that, just like retirement, the responsibility remains largely with them to pay for such care. Statistics Canada reports that in 2006, Canada had 4.3 million seniors aged 65 and older, and will have 9.8 million seniors by 2036,” the report says.

Swedlove says a tax-deductibility feature that exists with registered accounts is one option. He believe the strain on Canadian healthcare that will result from long term care needs will necessitate much greater savings by individual Canadians to pay for the healthcare needs.

“We think there has to be a commitment to long term care. This is an issue that needs to be addressed earlier rather than later. We can’t wait to implement these incentives at the back end when a situation exists where Canadians will not be able to access long term care services,” he says. “Canadians need to either be saving for healthcare themselves or participating in private insurance plans that will alleviate demand in the future.”


Mark Noble