What if social insurance could pay for prescription drugs?

Sara AllinReport co-authors: Mark Stabile and Carolyn Tuohy

What is the problem?

Unlike most high-income countries, prescription drugs are not universally covered under the health care system in Canada

Why is a medically necessary form of healthcare publicly insured in hospitals, but not otherwise?

Possible policy option?

Raising revenues through a social insurance model could be a possible way to achieve universal coverage of prescription drugs

What is social insurance? A method of raising revenue

Contributions are usually related to salaried wages (and are always independent of risk)

Contributions may be shared between employers and employees

Revenue is earmarked for health care

Collection agent is usually arms length from government

Participation is mandatory (for the population or specified groups)

What are the potential benefits? A universal system addresses equity concerns

arising from the current fragmented financing model

Increased transparency with links between revenues and benefits could be more politically acceptable than general tax increases

A diversification of the public system’s funding stream may increase public willingness to pay for rising health care costs

What are the challenges?

Concerns with financial sustainability among SI programs that draw only on employment income

Unless there is a single collection agent/risk pool, sophisticated risk adjustment mechanisms are needed to reduce incentives to select risks

Regulation is vital to ensure universal coverage and standard benefits, and to integrate private (commercial) and not-for-profit insurers

Thank you

sara.allin@utoronto.ca