Wednesday, February 3, 2016

Pharmacare for Seniors - What's Really Changing

I have waited to weigh in on the recent Pharmacare changes. Politicians are famous for saying things like “I’ve never had more calls on any issue than this”. It’s really a hard thing to judge. Every big issue seems bigger than the last. In my office (and even at my house) the number of people contacting us far dwarfs the Film Tax Credit issue and the pre-decision Hydraulic Fracturing debate (every office is different but these were the two biggest issues by way of contact to my office in the past three years). In terms of e-mail, a quick count shows it also exceeds what we received when the HST was raised back in 2010. For all those issues, the e-mail and calls fell on all sides of the issues. On Pharmacare for Seniors there has been no one saying to my office or me that they largely support the changes. The closest it has come is a couple of people saying that changes were probably needed but these were the wrong ones. This is not to say some people haven’t spoken to other offices in favour. That might be so. I am sure there are people who fully support the changes and I don’t want to dismiss that possibility out of hand.

I’ve heard from people who will see their annual premiums go from $848 to $2,400 a year (for two people). I’ve had a number of people like one couple who sent me their detailed information showing they will see an increase to over $2,000 a year but are very low users of the system (one had a total prescription cost of $14 a month which amounted to a co-pay of $4.20 a month). Another couple had no prescriptions at all and will be opting out after seeing their premium increase to $2,400. The latter are among those I have spoken to who have called and received cheaper quotes with equal or better coverage from private sector insurers (not an option for everyone depending on pre-existing conditions).

Rather than jumping up and down and screaming like a banshee on day one of this debate, we have tried to analyze each situation which has been raised at the office. Were these one offs? People who fell through the cracks of an otherwise responsible change? Working with those who called to look at before and after scenarios we took the time to get the details of each situation. And each situation is unique, especially the way the changes are being implemented.

When the changes first were announced by government as an improvement, we even posted the government press release on our Facebook site to let people know. The Herald ran an editorial talking about how wonderful the changes were. More seniors not paying premiums. How could this be a problem? But we quickly started seeing inconsistencies with the information. So did others. The changes, and concerns with them, are now national news.


The organization representing retired teachers in the province also noticed inconsistencies. For them it was about a claim by the Minister that they supported the changes. The organization wrote Minister Glavine saying:

In your press release on January 15, 2016 you said “These changes were approved after discussions with organizations such as” and you go on to list the nine seniors organizations that make up the Seniors’ Advisory Council (Group of 1X), including the Retired Teachers Organization. Yes, the two RTO representatives on the Group of 1X, I and Bill Berryman, felt, based on what we knew then, that changes in the Seniors’ Pharmacare program were necessary in light of the increasing number of Nova Scotians turning 65 annually and the need to add new drugs to the formulary. We were, also, in agreement with premiums being more reflective of income levels. However, I can assure you that we raised many questions and objections to the scenarios presented for feedback and we are totally opposed to the program changes adopted by Cabinet. Your statement above would, I believe, imply that all nine organizations supported the new regime and that is not so.

Much of what I will discuss here has been reported already. I’m trying to separate the facts from the spin and put it in one place. Compiling the various reports and analysis we verified everything using data and statements from the Department of Health and Wellness. It’s long. This is because most news sites don’t have the space to put all the changes in one article. 


Will you pay more or less? Much like that amusing Facebook relationship status, “it’s complicated”.
I have included a chart showing the before and after for a number of scenarios.


The reality is the possible scenarios are now endless. This is part of what makes almost any claim about the new program accurate at some level. You can pick and choose the scenario that makes the changes look really good or really bad. To me this is about real people, and how it affects real people. People often on fixed incomes, and who have often planned their finances in excruciating detail before their retirement.

What was originally announced as making the system better for seniors and ensuring sustainability of the program is not so simple as the original press release would have had you (and me) believe. It morphed into becoming about changing the system for fairness. Then it was being sold as a change to income tested program (a note on whether this is even permitted in a provincial health program in a moment). Even the program sustainability measure is now questionable as under some scenarios the changes may make the program less sustainable, not more.

When changes were announced, Nova Scotians were told that the income for those exempt from paying the Pharmacare premium will increase from $18,000 to $22,986 (from $21,000 to $26,817 for couples).  A good thing right? The government said it meant 12,000 seniors currently paying Pharmacare premiums will stop starting on April 1. While this is technically true, it later turned out another group of 14,000 seniors who are deemed low income by the federal government (by way of receiving the Guaranteed Income Supplement) will now start paying premiums. The net effect seems to be an increase of 2,000 seniors paying premiums not a decrease of 12,000. It’s worth noting as well that the Health Department admits that 24% of those who are exempt from premiums today will start paying premiums on April 1.


The government also trumpeted the fact that the maximum co-pay was going down from 30% of drug cost, to 20% of drug cost. This is somewhat misleading (Canadian Press would probably call this some baloney). This will benefit some. But it seems to be a small number which includes the low volume users of the program getting few and inexpensive drugs. The Department hasn’t released the size of this group, which incidentally is one of the same groups who can most easily and cheaply get private coverage. This might very well be one group who disproportionately chooses to bow out of the program. This is because the maximum annual co-pay will stay the same at $382. I have visited quite a few pharmacists lately to discuss this and while I don't have the data from the Health Department, their view is a high percentage of their Pharmacare clients reach the maximum annual co-pay, so this will just mean they hit the maximum a little later in the year. An amount which stays the same.


With the program now moving away from what was essentially a flat rate program, if you wish to pay anything but the maximum premium of $1,200 per individual, you are required to disclose your financial income based on line 150 of your tax return (adjusted for income splitting at line 210). Some people say they simply won’t provide this information. This may sound surprising, but I've run into this frequently with seniors on other issues who don’t want to provide this information.  This problem has haunted some low income property tax rebate programs. It simply doesn’t recognize the fact people don’t always trust government with their private information as too many times it doesn’t stay private. 

As well, it has been rightly pointed out, and even acknowledged by the Department of Health,that line 150 may not always be a valid ongoing measure of income due to varying investment and retirement income types.

Moreover, it isn’t even clear whether an income tested health program is even allowed under the Canada Health Act. Serial social media poster and acclaimed business person and television producer John Wesley Chisholm rightly pointed out that the federal legislation requires everyone to be treated equally. The question is whether prescription drugs count as a necessary service. Even if they don't, its possible that if offered by a province, the principle of universality in the act kicks in. I would say it does since it would be a life and death issue for some people, but lawyers would undoubtedly argue otherwise. 

But the Canada Health Act is why you can’t charge fees to high income people to go to the Emergency Room even though they might be able to afford it. It’s why provinces can’t allow private General Practitioners in the province. The penalty is potentially severe. Health transfer payments by the federal government to provinces can be suspended. It’s a wonder that the MPs in the province haven’t yet been also inundated with calls.

Another concerning situation is the re-entry or late entry cost for seniors into Pharmacare. Depending on your read, this provision may also run afoul of the principal of universaility in the Canada Health Act. If you choose not to sign up for Pharmacare at 65, or you leave and return from the program, you are charged a fee, or higher premium (call it what you want, you pay more). There’s also a waiting period where you can’t access prescriptions at all through the program. You must wait 90 days after which you will be required to pay 1.5 times the premium for five years. As with everything now, the cost of the penalty varies. You could end up going from paying a penalty of $1,060 today over five years to $3,000.


The federal government introduced legislation to gradually change retirement age for CPP to 67. Many people are working even beyond then for financial or other reasons. Some people retire and go back to work. They are being told that in the event they can access a health plan at work, or continue an existing plan, they will be penalized substantially when and if they later join Pharmacare. This is troubling as it may leave some very vulnerable people out. It’s also a sign that for some seniors, especially in the higher income brackets, they may opt out of Pharmacare entirely and choose private plans, some of which may end up being more competitive. If higher paying seniors and low program users opt out of Pharmacare, the sustainability of the program will also be impacted.

(Update & Clarification: Despite what some people are being told, or believe based on information received, the Health Department called to let me know that if you are in a private plan, you have 90 days to switch to Pharmacare without penalty. Some seniors in the higher income groups may still opt out of course if private plans are found cheaper. Hmmm, someone does read my blog.) 


What also ends up being a strange situation with the new income based approach is people with disparate incomes could end up paying more money. I have spoken to seniors where one person has a high(ish) income compared to their spouse. In the bizarro world of how the new Pharmacare program is structured they would save money by divorcing and applying as two single people than staying married and applying as a couple.  It’s something which just doesn’t sit right with me. While it sounds like the beginning of a funny joke, it’s penalizing married people.Some will remember the story in New Brunswick last summer of the couple who divorced to address a similar situation with nursing homes so it does happen.

Retired teachers weighed in on this as well saying:

A single senior with an annual income of $35,000 will pay $480 per year. A married couple with a combined income of $40,000, only $5,000 more than the single person, will result in premiums of $480 for each of them. What if the two married people had incomes of $20,000 each, should not each be excused from paying any premium because neither met the single $22,986 threshold?


By the way, did I mention Nova Scotia’s Pharmacare was originally established under the Liberal government of John Savage recognizing the need to help older Nova Scotians? Really a national program would be better, but that isn’t happening any time soon, so in the meantime the provincial program is needed, and hardly qualifies as a frill, or outside the core mandate of government. Causing this level of concern among seniors and fundamentally changing a program important to so many across many demographics and regions just a year or so before an election is either brave, misguided, or a serious stumble. Causing such fear and angst is certainly not needed. Believe me, there is a lot of fear about the changes. 

There may very well be a need for program changes in Pharmacare for Seniors, but increasingly it appears the changes don’t do much for fairness or sustainability of the program
This was the chart the government released to media at the technical briefing

We will likely never know what discussions took place in the Health Department, with the Premier’s Office, or at cabinet about these changes. While Graham Steele has correctly stated the Health Minister could make these changes on his own at a stroke of a pen, it is highly unlikely this occurred. It would not have been done without sign off at the Premier’s Office. Likewise it was almost certainly presented at cabinet either officially or in-camera, and maybe even at the Government Priorities and Legislation Committee which includes all government MLAs. There is no way the press release went out on the day it was announced without weeks, and maybe months, of discussion on how to sell it and whether to do it at all.

A thousand protesting seniors outside the legislature come budget time is not likely to change things (despite the budget road show on right now, provincial budgets are largely determined by December with the exception of tweaks and addressing new information). Depending on where your own situation lies, and whether you are even in the Pharmacare program or have opted out, will likely impact your view on the changes.

Even this morning as e-mails and calls came into the office people asked, "how do we change this?" It's a difficult question asked more recently by those in the film industry. It seems there isn't going to be any significant walking back on this issue. That isn't to say "live with it"; it's still important that people are heard and on this I don't recall there being any public consultation, or even trial balloons floated publicly so people could comment. 

In my experience, the thing that gets noticed most of all in a party structure is lack of volunteering and dropping donations (though it’s debateable how many affected people are significant donors, and volunteering or not is often more impactful around election time by which point the changes will be done or, well… changed). Others have said this, but good old “showing up in-person at the MLA's office” with your own personal story and writing a hand written letter or personal note tends to also draw attention. Remember a week is a lifetime in politics, so anything can change.