Talking About Financial Matters That Affect You and Your Organization
OHIP+ Children and Youth Pharmacare
May 5th, 2017
One of the centerpieces of the Ontario 2017 budget released last week, Thursday April 27th, is a new OHIP+ Children and Youth Pharma-care benefit. Please find below a summary and potential impact of this new program.
The budget includes the first provincial plan in Canada to cover prescription drugs for children and young people.
A few quick highlights:
- Effective January 1, 2018
- "Free" prescription drugs for children and young people
- Called ‘OHIP+’, a new drug benefit that covers 100% of the cost of prescription drugs for anyone aged 24 and under
- Uses the same Ontario Drug Benefit formulary as currently available to Seniors, covering 4,400 medications
- OHIP+ is not tied to income levels, meaning all Ontario families are eligible, and there are no co-payments, deductibles, or dispensing fee charges
- OHIP+ is the 'first-payer', prior to private / group insurance plans
- Estimated government cost is $465 million per year
- The only similar plan in Canada is in Saskatchewan, though the age limit is age 14, and the drug cost is not fully covered
Benefits Plan Impact
Dependent children and young workers typically represent a relatively small portion of plan Drug costs, and the Ontario Drug Benefit formulary does not cover a range of available medications including some high-cost drugs. At the same time, this will certainly have a cost-mitigating impact on Benefits plans, as dependent children eligible Drug claims will now instead be covered by OHIP+, with the cost removed from your Benefits plan.
Although it is very early, there are a range of impacts, including:
- It will be important to ensure carriers apply co-ordination of benefits in the correct order, as OHIP+ is the first payer
- For Fully-Insured plans, Selectpath will be watching closely how insurers respond to this. It is unclear whether insurers will reduce Family monthly premiums. This includes, for example, whether insurers will build in a renewal decrease factor reflecting the expected cost reduction, or will simply have the reduced claims reflected in the claims experience.
- For Administrative Services Only (ASO) and Refund plans, the savings will flow through the plan to the financial surplus results, securing the full savings
- The impact will be specific to each plan based on actual dependent children Drug claims. As a high-level assumption, generally, the total claims impact could range from -0.5% to -3%, to as high as -5% on some programs.
For more information please visit the Government of Canada website here.