Canadian HR Reporter

CANADIAN HR REPORTER May 29, 2017 NEWS 3 Ontario to cover prescription drugs – with no co-pays – for residents under 25 Surprise budget announcement could save employers 10 per cent on claim costs: Experts BY MARCEL VANDER WIER ONTARIO'S new budget con- tained some good news for em- ployers across the province, ac- cording to experts. Released on April 27 by Fi- nance Minister Charles Sousa, it announced changes to Ontario's pharmacare strategy, with the provincial government commit- ting to become first payer on pre- scription medicines for residents age 24 and under as of Jan. 1, 2018. e move is expected to cost the government $465 million per year. "The changing nature of the workplace means that many On- tarians today do not have work- place benefits plans," said Sousa. "Youth pharmacare will com- pletely cover the cost of all medi- cines funded through the Ontario Drug Benefit Program, regardless of family income. ere will be no deductible, there will be no co-payment." Under OHIP+: Children and Youth Pharmacare, the govern- ment will begin paying for 4,400 different prescription medicines on the Ontario Drug Benefit for- mulary for the province's four million youth and young adult citizens. It's the first program of its kind in Canada, said Sousa. e news will be welcomed by employers of all types, said Na- tasha Monkman, pension and benefits lawyer at Hicks Morley's Toronto office. "When this dropped in the budget, it was a bit of a surprise," she said. "For citizens in general, it's very interesting to see the gov- ernment moving to first payer on coverage. But from an employer's perspective, in today's day and age, any relief that you can get un- der your benefits plan is going to be welcome cost relief." But Mike Sullivan, president of Cubic Health, a drug plan analyt- ics firm in Toronto, said the an- nouncement was unexpected and a tad strange. "For most employers, covering benefits for people under the age of 25 has not been a substantial financial hardship. People were never complaining about that," he said. "What's really been hitting em- ployers is really expensive, high- cost drugs for all employees. at's been the bigger issue." Savings expected Total savings will vary depending on the makeup of an employer's individual private health benefits plan, said Monkman. "If you have a plan that has, for whatever reason, a high us- age among dependants, then this would actually be good for that plan," she said. Employers should anticipate some savings via this measure — but nothing overly major, said Fabricio Naranjo, vice-president and benefits consultant at Collins Barrow in Toronto. at's because youth and chil- dren are a small portion (about 10 per cent) of any employer's over- all drug claims. e largest group is typically seniors using costlier speciality drugs for illnesses such as arthritis or cancer, he said. "When you look at the makeup of the drug claims for employers, that's why the children and youth claims seem to have a dispro- portionately small amount," said Naranjo. "Obviously, they con- sume less drugs, but their drugs are also less expensive." Examples of common youth prescription drugs include anti- biotics, asthma inhalers, allergy medicine and EpiPens, he said. Still, employers are expected to save on costs, but exactly how much will be determined by what type of plan is administered — ful- ly insured or administrative ser- vices-only (ASO), said Naranjo. Small and medium-sized com- panies typically use fully insured plans, simply paying a premium to the insurer that handles all claims. Larger employers, mean- while, often choose to pay an in- surer to process claims only, while handling the payment of claims themselves. "When you have enough mass of employees, you will have so many claims that you actually can get to a point where you can predictably assess what the claim amounts are, then pay them yourself," he said. "It ends up be- ing cheaper overall because the insurer doesn't take on the risk themselves, so there's a lot fewer costs to them internally." "(With this news), for large em- ployers with ASO plans, they will incur a cost savings immediately of 10 per cent of drug claims." GOVERNMENT > pg. 16

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