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Letter to Prime Minister Harper Re: Upcoming Speech from the Throne - Concerning prescription drugs and long-term care


Release Date: 09/09/2013
Staff Reference: Janice Hilchie

September 9, 2013


The Right Honourable Stephen Harper, P.C., M.P.
Prime Minister of Canada
House of Commons
Ottawa, Ontario K1A 0A6

Dear Prime Minister:

As your Government prepares to deliver the Speech from the Throne, I would like to take this opportunity on behalf of the Canadian Life and Health Insurance Association (CLHIA) to highlight two public policy issues, in the areas of prescription drugs and long-term care, where we believe the government could make great strides in bringing in much-needed reforms. In addition to providing better health results in Canada, our proposals would provide significant savings to the Government of Canada.

Our industry plays an important role in the health care of Canadians. The industry provides supplemental health coverage to more than 23 million Canadians which accounts for about 12 per cent of all health care expenditures in Canada. During 2012, life and health insurers reimbursed a total of over $22 billion to policyholders and beneficiaries in Canada to help cover their supplemental health needs, of which about $10.3 billion was for prescription drug costs.

The Canadian life and health insurance industry believes that the current system of prescription drug coverage is in need of major reform if it is to serve Canadians well in the long-term. The ongoing sustainability of employer sponsored plans cannot be taken for granted. Canada is the second highest per capita payer of drugs among 25 OECD countries. If we were at just the median level of these countries, Canadian governments, employers as plan sponsors and individuals would save almost $10 billion each year.

One of the critical areas in need of reform relates to how prices are regulated for new drugs in Canada. Simply put, Canadian prices are amongst the highest in the world and the broader policy benefits of sustaining such high relative prices are unclear. As the manager of the Non-Insured Health Benefits (NIHB) Program for First Nations Peoples and Inuit, which is the fourth largest public drug plan in Canada, the Federal Government itself would be a prime beneficiary from lower drug prices for Canadians.

As a priority, the Canadian life and health insurance industry believes that the overall mandate and operations of the Patented Medicines Prices Review Board (PMPRB), the federal agency that regulates prices for new drugs, needs to be fundamentally reformed in order to drive prices down. Committing to such reform would represent a very significant contribution towards improving the sustainability of the health care system in Canada while creating a positive impact on the federal treasury.

With respect to long-term care, many Canadians are not saving adequately for their long-term care needs. In June of 2012, the CLHIA conducted a detailed analysis that found that current government programs will only cover half of the estimated $1.2 trillion needed to provide long-term care to baby boomers. There is much work to be done to help Canadians prepare adequately for their potential long-term care needs.

To help address these gaps and encourage Canadians to save for long-term care, we believe that the Government must make it clear that Canadians have a responsibility to save to meet their own needs. However, most Canadians mistakenly believe that long-term care costs will be covered by governments. If governments were to encourage more home care and less hospital and long-term facility care, potential savings could be redirected to providing tax incentives for personal savings for long-term care by either RESP-style deposits or insurance. At a minimum, the Government could announce in the Throne Speech its intention to study this important issue of funding of long-term care.

We thank you for your consideration. As a not-for-profit association with member companies accounting for over 99 per cent of Canada’s life and health insurance business, the CLHIA stands ready to work with the Government in addressing these critical issues for the lives and prosperity of Canadians.

Yours sincerely,

Frank Swedlove