Leaked health ministry document shows cost transfer to sick, elderly

March 1, 2002

When the provincial government announced the sweeping income tax cuts last June, it promised British Columbians more money in our pockets. It sounded good on the surface, but ten months later it is becoming apparent that we are paying a high price for the tax cuts through reductions in government services. The leaked budget documents from the Ministry of Health Services, released by the Hospital Employees' Union last week, reveal the degree to which these reductions simply transfer costs from government onto the shoulders of individuals and employers.

A long list of health services, including eye exams and supplementary benefits for rehab services like physiotherapy and chiropractic, had already been cut from health care coverage by the provincial government. We are now paying for these services individually (assuming we can afford them) or through our workplace health plans (if we're lucky). At $196 for a course of physiotherapy, many will no doubt simply have to suffer. Like the increase in MSP premiums, reducing or eliminating coverage for important health services clearly hurts those of modest means and forces people to go without necessary medical treatment.

A similar story is found in the leaked health ministry documents. Changes made to the Pharmacare program in January already increased out-of-pocket costs for those covered by Pharmacare. The leaked document outlines the government's plan to move to means testing.

This change will be particularly harmful for seniors. While some have argued that "Jimmy Pattison shouldn't get his prescription drugs for free," means testing is not just going to affect those seniors who are financially well-off. The Ministry's estimates reveal that all but the very poorest seniors will in fact be paying more for prescription drugs.

According to the leaked document, means testing will result in 400,000 seniors "paying more," suggesting that these seniors will see a reduction in their Pharmacare coverage. That's approximately 78% of all BC seniors. And make no mistake--most aren't in the same league as Jimmy Pattison. Two thirds of all seniors have taxable incomes of less than $25,000. To exclude more than three quarters of seniors from full coverage means that the means testing bar is going to have to be set punishingly low.

The cost to seniors excluded from Pharmacare coverage will be high. The vast majority of seniors use prescription drugs. The average annual cost of those drugs per senior was $629.93 in 1999. Goodbye tax cut.

The irony of all this is that shifting costs onto the sick and elderly will actually increase overall health costs for the public system, something the Ministry's leaked document fails to account for in its calculations of cost savings to government. In the case of Pharmacare, this increase in overall costs happens in two ways. First, overall per capita drug expenditures (public and private combined) are lower in BC than in any other province. The fact that we have chosen to pay for more drugs collectively saves money, since governments can control costs through bulk purchasing. In contrast, if the share of expenditures borne by the public system decreases, Pharmacare will lose influence over drug prices.

The second way that overall costs for public health care will increase is in higher acute care costs. The experience of Quebec--where a deductible and 25% co-insurance charge were imposed on the elderly--clearly shows that when seniors have to pay for drugs themselves, many simply go without. They get sicker, and costly emergency room visits rise. By refusing to pay for rehabilitation services in clinics, the government may also encourage doctors to keep patients in hospitals longer so that these services are covered.

Shifting health care costs onto the sick and elderly contradicts the fundamental tenets of our Medicare system. There are good reasons for paying for health care collectively, and these reasons apply to all medically necessary treatment, including prescriptions and rehabilitative services. It is more cost effective overall and it ensures that everyone has access to treatment, regardless of his or her income.

The government's changes in health care funding undermine both efficiency and equity. Paying for tax cuts in this way represents a wealth transfer from the sick to the healthy, and from the poor to the wealthy.

Sylvia Fuller is the public interest researcher with the BC Office of the Canadian Centre for Policy Alternatives.