The Value of Health Insurance

Each year the Canadian Life and Health Insurance Association (CLHIA) publishes the Canadian Life and Health Insurance Facts which presents factual information about health insurance in Canada. The 2017 Edition is now available and we’re excited to share some highlights on the coverage provided by the industry in 2016 through extended health plans purchased by plan sponsors. These plans provide valuable support to employees so that they remain healthy, active, and productive both at work and at home, and include a variety of expenses such as prescription drugs, dental, hospital and medical expenses not covered by provincial government plans.

Most health insurance is purchased through group plans provided by employers, unions or professional associations. Canadians may also supplement government and group protection with individual plans.

The majority of Canadians are protected through extended health care, disability and other insurance provided by insurers. 80% of working Canadians and their families are protected by private health insurance plans - up from 67% a decade ago.

Read More: Helping members keep prescription drugs affordable

In 2016, the industry provided coverage to approximately 25 million Canadians through supplementary health insurance plans and paid benefits totaling about $32.5b which includes $11b for prescription drugs. As with other years, prescription drugs continue to be the top expenditure in benefit plans. The development of specialized drugs has led to a steep rise in drug costs over the last several years. While these drugs account for approximately 2% of claims, according to Express Scripts Canada Drug Trend Report, they accounted for 30% of prescription drug costs in 2016 and are expected to reach 40% by 2022. The federal government also believes prescription drug prices are too high and there is a commitment to reform the way in which Canada regulates the prices for patented drugs. The government has embarked on a fundamental review of the Patented Medicines Prices Review Board (PMPRB) and the changes that are being contemplated should help reduce prices for all Canadians to some degree. The industry is fully supportive of proposed reforms to the PMPRB, which will provide the tools they need to lower costs. The CLHIA will continue to work closely with officials to help in any way we can.

Read More: Exorbitantly priced drugs challenge Canadian families, benefit plans

For employers, the prescription drug benefit plan makes it possible to attract highly skilled employees, enhance engagement ad productivity, and reduce absenteeism and disability. For employees it means better health and less financial stress when illness strikes. As a matter of fact, the 2016 Sanofi-Aventis Survey[1] supports the value employees place on their benefit plan with 94% indicating that drug plans are very or somewhat important and 93% saying the same of basic dental services. One of the reasons employees value their prescription drug plan so highly is that new drugs are approved much more quickly in private plans, providing Canadians with faster access to new and innovative medicines. A 2016 study by the Canadian Health Policy Institute (CHPI) found that “of the 464 new drugs approved for sale by Health Canada during 2004 to 2013, 89% (413) were covered by at least one private drug plan compared to nearly 50% (231) that were covered by at least one public plan as of January 31, 2015.[2]” The study also found that “the average number of days to insure the new drugs that were approved by Health Canada during 2004 to 2013 was 132 days for private drug plans compared to 468 days for public drug plans, comparing only the drugs that have been covered by at least one public drug plan and at least one private drug plan, as of January 31, 2015.”[3]

Karen Voin is the Vice President of Group Benefits and Anti-Fraud at the Canadian Life and Health Insurance Association (CLHIA).

[1] The Sanofi-Aventis Healthcare Survey 2016

[2] Coverage for new medicines in public versus private drug plans in Canada, Canadian Health Policy Institute

[3] Coverage for new medicines in public versus private drug plans in Canada, Canadian Health Policy Institute