Taylor Jackson: The single-minded pursuit of single-payer pharmacare puts costly ideology over practical common sense

When Dalton McGuinty became Ontario’s premier in 2003, one of his Liberal government’s early priorities was to purchase private MRI clinics already operating in the province. Their “repatriation” was supposed to reduce private health care as a matter of principle but all it did in practice was to reduce health care. In a world of scarcity, the decision left Ontario with fewer MRI machines than would have been the case if the government had used its public resources to expand the overall number. It was a classic case of ideology trumping common sense.

McGuinty’s determination to nationalize private health care wasn’t limited to MRI machines. He was also a big proponent of single-payer public drug coverage. In an August 2004 speech to the Canadian Medical Association’s annual meeting, he argued that pharmacare was needed to put an end to the so-called “patchwork” model of public and private drug coverage and ensure that the system was “equitable.” (His specific case was that a national pharmacare plan ought to be fully funded by the federal government.)

Twenty years since McGuinty’s speech, his arguments are now reflected in the Trudeau government’s pharmacare legislation. Its proposal to establish a “universal, single-payer, public pharmacare” would bring expression to what he then called for—though Ottawa will only pay part of the costs.

The main problem with single-payer pharmacare is the same one as the McGuinty government’s purchase of the MRI machines. It dedicates scarce public resources to “repatriate” well-functioning parts of the health-care system simply because they’re private. The result is to waste public dollars that could be better targeted to improve health outcomes for Canadians—particularly those who need drug insurance.

Presently, more than 60 percent of Canadians have private drug insurance—mostly provided through their employers. Another 20 percent (the majority of whom are seniors) are covered through public plans. These figures aren’t really in dispute. Even the Hoskins Report which endorsed single-payer pharmacare concedes that it’s somewhere between 10 and 20 percent of Canadians that’s uninsured or underinsured.

The Parliamentary Budget Office estimates that a universal, single-payer public pharmacare model as envisioned in the Trudeau government’s legislation would cause Canadian governments to spend roughly $40 billion per year on drugs by 2027-28. That includes about $14 billion in new, incremental public spending in the same year—or roughly 25 percent of the current Canada Health Transfer from Ottawa to the provinces.

Keep in mind that roughly 60 percent of Canadians have private drug insurance. If the goal is to achieve universal drug coverage, why wipe out the pre-existing coverage of this cohort and start over? Why not directly target those who face real financial and other barriers to accessing prescription drug coverage? What’s to be gained from such a transfer from the private sector to the public sector? The answer isn’t much.

Current insurance recipients will be deprived of their likely superior private plans. Unionized workers will lose hard-fought, collectively bargained benefits. Taxpayers will be stuck with a major new, unfunded entitlement program. This is another case of ideology prevailing over evidence and facts.

Think about it this way: if the Trudeau government instead sought to target its efforts on those who are uninsured or underinsured, it could meet this group’s needs at a fraction of the cost. The remaining resources could then be directed to other policy issues. Frankly, they could be used to boost the Canada Health Transfer if policymakers wanted to.

The key point here is that while universal coverage ought to be the government’s overriding goal, it’s foolish to pursue it through the single-payer model. McGuinty’s 2004 speech suggested that it was a mistake to exclude prescription drugs from the original Medicare model in the 1960s. It’s an interesting historical argument that one might agree or disagree with. But we’re not relitigating the Medicare decision here. Policymakers are dealing with the hybrid insurance model that’s been built up over the ensuing five decades or so. They must accept the world as it is rather than the one they wish it was.

A proper pharmacare policy ought to build on the current model. In practice this means that rather than replacing private insurance, it should extend the principle of universal, broad-based coverage to those who presently don’t have insurance or are underinsured. Put more simply: government policy should preserve what’s working for most people and help cover Canadians who need help.

There are various policy options to attain universality. It may come in the form of providing subsidies or incentives for the uninsured or underinsured to purchase private coverage. Alternatively, governments could expand pre-existing public plans to cover this group.

Whatever the approach, it must be underscored that there’s likely little to be gained and a lot to be lost if the Canadian government moves ahead to implement single-payer pharmacare. Fundamentally disrupting drug insurance for the majority of Canadians for whom it’s working in order to help a relatively small share of the population fails a basic common-sense test.

We need more common sense in Canadian public policy. That starts with repealing or repurposing C-64 and pursuing the goal of universality by building on the strengths of our hybrid model of drug coverage.

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