Group Chap 10: Health Benefits in Canada Flashcards
Canadian Medicare System
- Nearly every person covered by Medicare of his province of residence
- Provides benefits for physician, surgery, and hospitalization in a public ward
- There are no comprehensive managed care organization (such as HMOs or PPOs)
- All private plans are underwritten or administered by insurers
The Canada Health Act
- Primary objective: “to protect, promote, and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers”
- Establishes criteria and conditions for health services and extended the services that must be provided by provinces to get full federal cash contributions
- Aims to ensure all eligible residents have reasonable access to care on a prepaid basis - For the federal subsidy, provincial Medicare plans comply with Canada Health Act
- Comprehensiveness: All medically required hospital and physician services
- Universality: Uniform terms and conditions
- Accessibility: Reasonable access to hospital and physician services
- Portability: May not impose waiting period in excess of 3 months and coverage maintained when resident moves or travels
- Public Administration: Non-profit basis by a public authority - Extra-billing and user charges are discouraged by provisions that reduce federal grants
- Government must allow private insurance for procedures for which the waiting list is too long
- Private insurance is minimal at this time
- Private Health Care
- Two areas where private health care can exist
(1) Services available free of charge under Medicare rendered by physicians outside Medicare
(2) Services not available under Medicare are the main focus of group health insurance plans
Provincial Medicare Plans
1. Hospital and Medical
2. Most physicians paid on a FFS basis
- Out of country paid on reimbursement basis
3. Any resident can be treated by any physician in his province as long as physician is enrolled
4. Some specialized services no available in every province
5. Eligibility and Coverage
a. All permanent residents of a province are eligible
b. Coverage free for services other than prescription drugs
c. A person who moves becomes eligible in new province as soon as coverage terminates under former province
6. Benefits
a. Hospital Services
- Room and board
- Physicians, diagnostics, nursing, drugs
- Room and board in nursing home
b. Physician services, including GP, specialist, surgeon
c. Other professional, optometrists, chiropractors
d. Physiotherapist services
e. Prescription drugs for social assistance recipients and over age 65
f. Prostheses and therapeutic equipment
g. Other diagnostic services
h. Dental care
- Oral and dental surgery in hospital. Extractions and fillings usually not covered
- Diagnostic, preventive, out of hospital covered for children and social assistance recipients
i. Out-of-province coverage
- Hospital and medical expenses incurred in other provinces usually amount payable in province where treated
- Hospital incurred out of Canada reimbursed only in part; medical out of Canada reimbursed up to amount for treatments in the province of residence
7. Financing
a. Financed through general revenues, paytoll taxes, resident premiums (via income tax in Quebec and Ontario) and transfer payments from federal government
b. 2019 - health expenses in Canda of $264 billion (11.6% of GDP)
c. In 1996, federal grants for Medicare were combined with other social transfer into the Canda Health & Social Transfer
- As a result, user fees or extra-billing penalized up to the full amount of the Canda Health & Social Trasnfer
d. In 2004, Canada Health & Social Transfer replaced by Canada Health Transfer and the Canada Social Transfer
8. Challenges for the Canadian Medicare System
a. Provinces had to cut their spending on health
b. Provincial boards cut benefits not required under the Canada Health Act
- Rationing schemes put in place, such as reducing the number of physicians and nurses, limiting compensation, or reducing the number of hospital beds
- Resulted in longer delays
c. Medicare system concerns
- Waiting months to see a specialist
- Shortages of equipment, specialists, and technicians cause waiting for for diagnostic procedures
- Waiting for non-emergency surgery, due to lack of operating room time and beds
- Emergency room overcrowded, due to unavailability of clinics, non-emergency use, poor distribution of caseloads
- People who need long-term care wait because of shortage of beds, insufficient housing alternatives, non-standardized admission criteria
- Technology-intensive services are not available everywhere
- Demand for services exceeds the supply
- Services that are essential are not covered by Medicare
d. Response to these Challenges
- Scope
(1) Requirements of Canada Health Act unchanged or expand them
(2) “Single Payer” universal healthcare model for provincial healthcare
(3) Expanding the scope of provincial public healthcare to include home care and prescription drugs
(4) Expanding Medicare to cover drugs that exceed 3% of income
(5) Expanding Medicare to cover home care
(6) Establishing national long term care insurance
(7) Redefining comprehensiveness under Canada Health Act
- Philosophy
(1) Primary care focus on patients instead of services
(2) Emphasizing prevention of illness and promotion of good health
(3) Changing compensation of physicians from FFS to capitation
(4) Incentives to attract health providers
(5) Basing health care spending on Canadian values - Delivery
(1) Multi-disciplinary primary health care groups, 24 hours a day, 7 days a week
(2) More choice, competition, and accountability
(3) Quality a top priority
(4) Private sector to deliver health services, within framework of public Medicare
(5) Expansion of care initiatives
(6) Expanding use of nurse practitioners
(7) More health services in communities or at home - Administration
(1) Information technology for making health decisions, while guaranteeing privacy
(2) Giving more powers to regional health authorities
(3) Guarantee of access to services within a reasonable time frame
(4) National Health Care Commissioner report annually on Canada’s system - Research and Analysis
(1) National Health Council to measure performance, collect information, report on quality
(2) Indicators to measure performance and health outcomes
(3) Determining what the community can afford to spend - Treatment
(1) More effective diagnostic tests
(2) Evidence-based decision-making - Funding
(1) Shifting from lump sum service-based
(2) Increasing revenues for the health care system
(3) Predictable, long-term funding arrangements with clearly defined rules
e. The Quebec Prescription Drug Act (1997)
- Mandatory coverage of drugs for all residents of the province
- Resident, under a private group plan, must be covered by such plan
- All other residents enroll in drug plan managed by the province
- Private plans must cover drugs covered by provincial plan at least at same level of coverage
f. National Pharmacare
- 2019 report - A Prescription for Canada: Achieving Pharmacare for All depicts Canada’s current state of Pharmacy Care
(1) 1 in 5 don’t have Rx drug insurance or are under-insured
(2) 1 in 5 households have a member who hadn’t taken prescribed medicine due to cost in the past year
(3) 3 million people (8% population) nto able to afford one or more medications last year
(4) 1 million people cut back on food or home heating to pay for medication
(5) 1 million people borrowed money to pay for prescriptions
- Degree of financial burden came as surprise for a country with “free health care”
- Recommended creation of National Pharmacare Program (by 2027)
(1) Follow five principles of Canada Health Act
(2) $2 copay (essentials) or $5 copay for drugs on national formulary
(3) Private plans would cover drugs not on national formulary
- Government (at time of writing) appeared committed to bring this initiative forward
g. Canadian Drug Insurance Pooling Corporation (CDIPC)
- For industry to collectively protect the small to medium-sied plan sponsors from financial hardship of catastrophic costs drugs
- Covers fully insured plans (plans with ASO only or self-insured should have ability to absorb these costs)
- Six Underlying Principles of Canadian Drug Insurance Pooling
(1) Availability - continue to purchase coverage needed to meet the group’s needs
(2) Affordability - reasoable price
(3) Transferability - able to select insurer of choice and not tied to current insurer due to large recurring drug claim
(4) Viability - no solution should undermine ability of insurer to continue
(5) Participative - solution should be available to all interested eligible insurers
(6) Competitive - encourage competition in the market
h. Pooling liits at inception
- Certificate (policy of EE and dependents) with claims of at least $50,000 for two consectuive years is eligible
- When eligible, any certificate with claims over $25,000 will be pooled up to mx pooled amount of $400,000 per certificate per year - limits for both criteria will increase annually
Private medical Plans
- Extended Health Plans Include Six Benefits
a. Hospital, prescription drugs, health practitioner, miscellaneous expenses, vision and out-of-Canada emergency
- Hospital and drug on a direct-pay basis
- Other benefits on an indemnity basis
- Reasonable and customary charges, except for health practitioners who may be a scheduled amount per treatment - Deductible
a. Deductible much lower than in US
b. Apply to all covered expenses except hospitalization, out of country, and drug
c. Some employers index the deductible
d. Some implemented high deductibles with HSA - Coinsurance
a. Hospital charges usually paid in full
b. Out-of-Canada emergency generally 100%
c. Some plans implemented progessive coinsurances (70% of the first $1,000 and 100% of remainder)
d. Some implemented two-tier coinsurance (generic reimbursedat 100% while other drugs a lower coinsurance) - Overall Limits
a. Unlike US, no overall limit
b. Insured plans are not exposed to catastophic claims (expensie treatments covered by provincial Medicare)
c. Maximum applicable to charges out of Canada - Eligible Expenses
a. Eligible Expense Requirement in Canada Health Plans
- Incurred in Canada (accident or unexpected sudden illness starting on trip outside of Canada also covered)
- Not payable under a provincial medical and hospitalization plan (even if insured is not eligible or insured under the provincial plan)
- Medically required
b. Hospital Charges
- Room and board, up to maximum per diem (either a flat dollar amount, or difference between a semi-private room and the cost of public ward)
- No maximum benefit
- Chronic care not covered
c. Prescription Drugs
- 60% and 70% of the cost of medical plans
- Variou definitions of eligible drugs
(1) Drugs prescribed by a phyisicna
(2) Drugs for which coverage is mandated by law
(3) That require prescription from a physician
(4) Prescribed by a physician, up to the cost of the generic substitute
(5) Prescribed by a physician, up to the cost of the substitute covered by provincial Medicare
- Excluded from most plans: salt, sugar, or milk, dietary products, vitamins, proteins, minerals, hormones, cosmetics, soaps, shampoos, antacids, laxatives, “natural” products, vaccines, contraceptives other than oral
- Prior authorization plans exist where certain expensive drugs must be pre-approved where Medicare plan provides full or partial reimbursement
- Direct-pay plans prevalent
(1) Real-time claims adjudication
(2) Generic and therapeutic substitutions are encouraged
- Deferred-pay drug plans
(1) Adjudication on-line
(2) Insurer makes payment to insured afterwards
(3) Advantage is tahat cost less than direct-pay
- Mail-order drugs
(1) Savings on “maintenance drugs”
d. Health Professional Practitioners
- “Paramedical” practitioners - physiotherapists, chiropractors, registered massage therapists, audiologists, speech therapists, dietitians, optometrists, naturopaths, osetopaths, podiatrists, acuptuncturists, psychologists, and social workers
- Needed physician’s note to access some of these, but now quite rare to be required
- Eligible expenses usually subject to maximums
(1) Annual dollar max per practitioner is most common
(2) Annul dollar max for all practitioners becoming increasingly common
e. Miscellaneous Expenses
- Eligible only if prescribed by a physician
(1) Ambulance Transportation
(2) X-ray
(3) Oxygen
(4) Blood and blood products
(5) Wheelchairs, hospital-type beds
(6) Artificial limbs and eyes
(7) Casts, splints
(8) Hearing aids
(9) Confinement in a convalescent home
- Private duty nursing out of hospital
- Dentist’s treatment because of accidental injury to mouth
- Confinement in convalescent home
f. Vision Care
- Eye exams are generally included in extended healthcare portion of plan
- Glasses or contacts may be included in medical (same deductible and coinsurance) or provided on stand-alone absis (no deductible and high coinsurance)
- Laser surgery usually has same limits as glasses
g. Out-of-Canada Coverage
- Eligible expenses are beyond what is reimbused by provincial plan
- Two main areas: Emergency coverage and referrals
- Emergency coverage: hospitalization and medical care by a physician or surgeon
(1) Deductible waived on emergency coverage
(2) Coinsurance is frequently 100%
(3) High maximum benefit, per trip or per calendar year
- Referrals for services not available in province of residence rarely covered by private plans, since most already covered by pronvincial Medicare
h. Exclusions
- Services covered by provincial Medicare generally excluded
- Expenses other than usual, customary and reasonable; self-inflicted, insurrection, war, service in the armedd forces; cosmetic surgery; experimental drugs
i. Other Provisions
- Coordination of benefits
- Benefits payable cannot exceed total allowed charges, and specifies order in which carriers pay
- Extension of benefits to dependents
- Premium waived after elimination period, if employee totally disabled
j. Funding
- Extended healthcare plans typically cost 2.5%-5.0% of employer payroll (before tax)
- Fully insured arrangements are most common for small employers (less than 100 EEs)
- Most large employers use retention or self-insurance, as their experience is fairly stable
- Premiums are experience rated
- Large drug amount pooling coverage by insurers
- Out-of-Canada claims may also be pooled
- Flexible benefits plans getting popular - most use a modular, or a “core-plus” approach, rather than pure cafeteria
(1) To provide a minimum safety net to employees
(2) workforce of most employers too small to justify administrative epxenses under a pure cafeteria plan
Dental Plans
- Dental coverage remains mostly private
- About 32% don’t have dental insurance
- Scheduled approach, under which eligible expenses based on the fee guide
- Code is assigned to each procedure and the suggested fee
- Plans define eligible expenses as a list of dental procedures or as a list of codes from the fee guide - Five main areas of dental coverage
- 1. Basic - Diagnostic and preventive care (oral exams, X-rays)
- 2. Minor restorative and surgery (fillings, extractions)
- 3. Periodontal and endodontal treatments (root canal therapy)
- 4. Major care - Prostheses and major restorative treatments (crowns, inlays, dentures)
- 5. Orthodontia - Diagnostic, preventive and minor restorative combined with peridontal and endodontal are referred to as routine care
- Prostheses and major restorative combined with periodontal and endodontal as major care
- Exclusions - similar to those in the US: dental implants, sports accessories (mouth guards), self-inflicted injuries, war, comsmetic, etc
- Deductible
- Typical $25 to $50 per person, or $100 for family
- Applies to all expenses except orthodontia and diagnosis and preventive
- Deductibles have remained stable despite inflation - ## Other Cost-sharing and Limits
Dental Plans
- Dental coverage remains mostly private
- About 32% don’t have dental insurance
- Scheduled approach, under which eligible expenses based on the fee guide
- Code is assigned to each procedure and the suggested fee
- Plans define eligible expenses as a list of dental procedures or as a list of codes from the fee guide - Five main areas of dental coverage
- 1. Basic - Diagnostic and preventive care (oral exams, X-rays)
- 2. Minor restorative and surgery (fillings, extractions)
- 3. Periodontal and endodontal treatments (root canal therapy)
- 4. Major care - Prostheses and major restorative treatments (crowns, inlays, dentures)
- 5. Orthodontia - Diagnostic, preventive and minor restorative combined with peridontal and endodontal are referred to as routine care
- Prostheses and major restorative combined with periodontal and endodontal as major care
- Exclusions - similar to those in the US: dental implants, sports accessories (mouth guards), self-inflicted injuries, war, comsmetic, etc
- Deductible
- Typical $25 to $50 per person, or $100 for family
- Applies to all expenses except orthodontia and diagnosis and preventive
- Deductibles have remained stable despite inflation - ## Other Cost-sharing and Limits
Dental Plans
- Dental coverage remains mostly private
- About 32% don’t have dental insurance
- Scheduled approach, under which eligible expenses based on the fee guide
- Code is assigned to each procedure and the suggested fee
- Plans define eligible expenses as a list of dental procedures or as a list of codes from the fee guide - Five main areas of dental coverage
- 1. Basic - Diagnostic and preventive care (oral exams, X-rays)
- 2. Minor restorative and surgery (fillings, extractions)
- 3. Periodontal and endodontal treatments (root canal therapy)
- 4. Major care - Prostheses and major restorative treatments (crowns, inlays, dentures)
- 5. Orthodontia - Diagnostic, preventive and minor restorative combined with peridontal and endodontal are referred to as routine care
- Prostheses and major restorative combined with periodontal and endodontal as major care
- Exclusions - similar to those in the US: dental implants, sports accessories (mouth guards), self-inflicted injuries, war, comsmetic, etc
- Deductible
- Typical $25 to $50 per person, or $100 for family
- Applies to all expenses except orthodontia and diagnosis and preventive
- Deductibles have remained stable despite inflation - Other Cost-sharing and Limits
- Diagnostic and Preventive paid in full
(1) Minor surgery and restorative care reimbursed at 80% to 100%, after deductible
(2) Prostheses and major restorative reimbursed at 50% to 80% after deductible
(3) Coinsurance on periodontal and endodontal 80% to 100% if routine care or 50% to 80% if included in major care
(4) Orthodontia reimbursed at 50%, no deductible
- Annual maximum reimbursement for all expenses except orthodontia, which is subject to separate, lifetime maximmum - Limit on frequency of diagnosis and preventive services
- Limits due to higher antiselection of dental benfits
(1) Limit on frequency of diagnosis and preventive services
(2) Replacement of prosthesis only eligible after 5 years after installation of prosthesis
(3) Lower annual max where dental coverage is a new benefit - Cost Controls
- Pre-certification
- Alternative treatment clause
(1) Insurer pays only the cost of the least expensive appropriate treatment
(2) Usually associated with a pre-certification clause
(3) Insurer informs claimant of amount of reimbursement and may propose an alternative, less expensive treatment - Funding
- Insurers write smaller plans either on pooled basis or on a retention basis
- Large employers self-insure
(1) With services of insurers on an ASO basis
(2) Often with an aggregate stop-loss
- Capitation
(1) Very few plans remain in effect
- Direct-pay Dental Plans
(1) Increasingly popular
(2) Insured given identification card the includes information relative to plan, with an expiration date
(3) Dentist uses card to submit card to the insurer
(4) Insured pays difference between total cost and amount payable by the plan
Tax Environment
- Tax charged on net premiums in all provinces
- Tax included in the gross premium
- Tax is also charged on benefits paid by self-insured plans (ASO) in Quebec, Ontario, and Newfoundland
- Quebec and Ontario sales tax on group insurance premiums
- Manitoba applies retail sales tax on group life, AD&D, critical illness, and DI (does not apply to health, dental, or self-insured plans)
- Goods and Services Tax / Harmonized Sales Tax (GST/HST) does not apply to insurance premiums but is charged on administrative expenses
- Applies to the supplies used by insurers and by providers, hence it does increase slightly the cost of group insurance
- Quebec income tax to employer contributions for health and dental (regardless if plans are insured or not)
- Other provinces do not tax employer contributions to health and dental
- Federal government and provinces charge income tax on employers’ contributions to group life
- British Columbia, Quebec, Ontario, Manitoba and Newfoundland and Labrador – also collect payroll taxes
