The annual conference of provincial and territorial leaders came and went last week at lovely St. Andrews, New Brunswick. As is often the case, there was a yawning divide between what the media focused on and the official record of the event. Most media reporting dealt with carbon pricing, equalization and interprovincial trade barriers. None of those items made it into the seven-point final communiqué, a document dominated by health issues, particularly pharmacare.
Carbon pricing had prevailed in coverage leading up to the meeting, bred by speculation Ontario’s Doug Ford would convince other provinces to join him and Saskatchewan’s Scott Moe in a court challenge of Ottawa’s jurisdiction to impose national carbon pricing. Not only did the two newbie premiers fail to gain new recruits to their misbegotten cause, sources reported that the topic wasn’t even discussed during the two-plus days of closed meetings.
The Saskatchewan premier was also primarily responsible for some pre-meeting media buzz about equalization, a consequence of his proposal for reforming the program by cutting it in half. If that wacky idea received any attention at the formal meetings, there’s no evidence of it. As for interprovincial trade, the premiers reportedly agreed in principle to freer interprovincial flow of booze, but spent time wrangling about how much beer, wine and spirits should be allowed to cross boundaries. Lacking consensus, they decided to boot the issue down the road to a fall meeting with the prime minister.
If the closing communiqué is a guide, however, the meeting was mainly about a much thornier and substantive matter than liquor sales – namely a national pharmacare plan to replace the inadequate patchwork that now exists across the country. The issue is solidly on the federal political agenda going into the 2019 election. The NDP got out in front on it, announcing it would make universal pharmacare the centrepiece of its platform. The Liberals are giving off conflicting signals, but may be inching towards the same position.
After announcing in his February budget speech the appointment of former Ontario Health Minister Eric Hoskins to chair an advisory council on national pharmacare, Finance Minister Morneau mused that perhaps the exercise was really about filling gaps in the existing system – adding additional patches to the patchwork. Morneau was contradicted by Pharmacare Now, the majority report of a parliamentary committee chaired by Nova Scotia MP Bill Casey. With Conservatives on the fence, committee members called for a universal single payer plan, to provide both better coverage and lower costs. The federal Liberal convention in Halifax in April endorsed the committee position.
What plan the Liberals ultimately decide upon won’t be known until next spring. In the meantime, however, the issue was given prominence at the St. Andrews gabfest. Eight of the Premiers (not including Ford) received one sales pitch from Hoskins, and a second, with price tag attached, from Kevin Page. The former Parliamentary Budget Officer (PBO), now head of the Institute of Fiscal Studies and Democracy at the University of Ottawa, cited forecasts that universal, single-payer pharmacare will produce substantial overall cost savings.
However, governments will need to spend money to save money. “We must not forget that the cost will migrate from consumers and employers to various orders of government.” Page indicated that the migrating cost involved in implementing national pharmacare (pegged at about $15 billion from consumers and employers by the PBO) would require either an increase in the federal deficit or a tax hike equivalent to a two-points on the GST.
Page’s estimate of a GST increase from five to seven per cent may be high. The PBO has estimated overall savings of about 20 per cent from having a single national system, and a universal plan would also recapture tax expenditures benefitting participants in employer-sponsored drug plans. And Page was adamant that as he put it, “ the case for a national public pharmacare program is pretty strong, even from a fiscal perspective.”
That case is based on the PBO finding that having a single national purchaser of drugs would knock about $5 billion a year off what Canadians and their governments spend every year on prescription drugs. And a recent report from Toronto’s Mowat Institute suggests overall savings to the health care system would be much greater than that – up to $14 billion a year. The argument is that with free drugs, people will no longer skip filling their prescriptions because they can’t afford it. The Mowat report claims that unfilled prescriptions land people back in hospital, costing $7 to $9 billion a year.
Despite such indications that a national drug plan will save money for Canadians – largely at the expense of much-despised Big Pharma – most of the news headlines went straight to the possibility of tax increases. For example:
- “National program will cost taxpayers: ex-watchdog” – Chronicle-Herald
- “Taxes will rise if Canadians want national pharmacare” – CBC
- “Canadians will have to pay the price for a national pharmacare program, warns former watchdog” – National Post
- “Public pharmacare will require higher taxes”- Toronto Star
In these times, few politicians want to be seen as advocating higher taxes, even when it makes them, as the old saying goes, penny-wise and pound-foolish. And with the newly-arrived tax-averse Conservative presence of Doug Ford and his ally Scott Moe in the room, it’s no surprise the final communiqué by premiers and territorial leaders was lukewarm in support of national pharmacare,
By contrast, following the 2017 annual meeting in Edmonton the premiers had called on Ottawa to “engage actively in discussions about establishing a National Pharmacare Plan to ensure Canadians have access to the medications that keep them healthy.” Now that the feds have in fact agreed to engage, the premiers have gone all cagey. The top health-related item in the St. Andrews communiqué was a call to “restore health care funding to sustainable levels.” Fair enough, given the Trudeau government’s poor record on transfers for existing health services. But on a national drug plan, the Premiers were low key, praising their own modest money-saving efforts through the pan-Canadian Pharmaceutical Alliance, while re-asserting the long-established right of any province to opt-out of any national plan with full financial compensation.
So anyone looking for gung-ho leadership from the Premiers for a national drug plan will not find it coming out of last week’s Premiers’ meeting. The federal parties will have to take charge of the debate, and after the wide publicity given to Kevin Page’s analysis, vague platform promises won’t be enough. They’ll need to explain how they plan to pay for pharmacare and do so during an election season that may also feature a national debate about carbon pricing, regarded by too many as a simple tax grab.
So here’s an idea for making lemonade from these lemons. Instead of fully rebating the carbon levy to Canadians as now proposed, earmark a portion of the proceeds to a universal drug plan.
An Ipsos poll from a few months ago reported by Global News claimed seven out of ten Ontarians think that carbon taxes are a tax grab. Clearly, the message about rebating the tax isn’t getting through to many people. Perhaps the carbon tax would be more saleable if Canadians knew it would be used to bring down the price of prescription drugs and make them accessible for all. As a bonus, the plan can be pitched as a populist poke at both Big Oil and Big Pharma.