Good morning.
My name is Victor Elkins. I'm the president of the Hospital Employees' Union and a regional vice-president for B.C., sitting on CUPE's national executive board.
It's my pleasure to speak to you this morning on behalf of the 630,000 CUPE members across the country, which includes 150,000 members in the health care sector, working in hospitals, long-term care residences, and community health centres or providing home care.
I want to share with you why CUPE members support a national health care program and why we most certainly do not support simply patching up the status quo.
You have already heard from many witnesses who spoke of the gaps that exist in our current prescription drug regime. Canadians are paying way too much for prescription drugs, and too many people are falling through the cracks, with no coverage or simply inadequate coverage.
Some have suggested that all we need to do in response is extend the current system so that everyone has coverage of some kind, whether public or private. This kind of model exists in Quebec today, but a hybrid model is not the answer, because if we rely on private insurance, drug coverage costs are simply unsustainable. Private coverage is highly inequitable, inadequate, and needlessly expensive.
Let's go over each of these points in more detail.
Private coverage is fundamentally inequitable. The lower a person's income and the more precarious their work, the less likely they are to receive benefits from their employer. In fact, according to an analysis by the Wellesley Institute, nearly all employees in Canada earning $100,000 or more a year receive health benefits, but of those earning $10,000 or less, only 17% get benefits. Since those with lower incomes are also at greater risk of health problems, such as cardiovascular disease, depression, and diabetes, this means that those who are most likely to need prescription drugs are the least likely to have employer-related coverage.
Unionized workers are also more likely than non-unionized workers to receive benefits. However, while CUPE and other labour unions have been highly effective at achieving prescription drug costs and other health-related benefits for our members, that doesn't mean the solution to Canada's prescription drug problem lies at the bargaining table. Obviously, we want to see our members, and all Canadians, have good drug coverage, but ideally decisions about what kind of medications people have access to shouldn't depend on the outcome of negotiations between employers and unions: they should be decisions made by patients and their doctors.
We want medically necessary health care, such as medications, to be available to all Canadians, regardless of where they work or whether they do not work. Prescription drugs should be provided on the same basis as any other form of treatment recommended by a doctor. We are calling for this based on principle, but also because the rising cost of prescription drugs is not sustainable and cannot be addressed without a national drug plan.
Prescription drugs represent the largest portion of employee-paid health benefits, and the rising cost of prescription drugs is placing an increasing burden on employers and employees. The current patchwork system cannot contain these costs. Part of the problem is that the very nature of the system gives it no mechanism or incentive to contain costs. There are 24 separate insurance companies negotiating individually with the large pharmaceutical companies over the price of each individual drug, and the costs of those drugs are simply passed on to employers and employees, so where is the incentive to keep the costs low?
The current system also allows drug companies and pharmaceutical companies to play Canadians against each other. For instance, there is some evidence that cost savings demanded by public drug plans are just being passed along to private plans. In Quebec, documents that were leaked to the media revealed that when the public plan negotiates a decrease in the price of generics, pharmaceutical companies compensate by passing these costs off to the private plans. As a result, the average cost of a public plan for generics decreases by 5.5 %, but the average cost for private drug plans increases by 6.4%.
Private insurance is also more expensive because of high administration costs and the necessity to provide profits to shareholders. Because of these two expenses, there is a significant gap between what Canadians pay in premiums to private insurance companies and what they receive back in benefits. In 2011, this gap was nearly $6.8 billion.
This gap is also growing over time. If the ratio between premiums and benefits had stayed at the same level that it was in 1991, Canadians would have saved $3.2 billion in 2011. This difference in cost is going to administration and the pockets of shareholders, not to better drug coverage for Canadians.
Finally, as costs increase, private plans aren't moving to contain them but are shifting them to workers instead. The number of plans with maximum annual or lifetime limits is growing. Thirty per cent of employers now have a maximum limit of some kind on their drug plans. This just means that people who actually need the drugs the most are the ones who are cut off and forced to either turn to a public plan for catastrophic coverage or pay out of pocket. More employees are now also required to make copayments or to pay dispensing fees.
Some employers are turning to flexible plans, which require workers to guess at their level of need and to pay out of pocket if they had the misfortune of guessing wrong. Some employers have cut off benefits entirely for certain employees or for retirees, as U.S. Steel Canada has recently done to pensioners in Hamilton.
The solution to all these challenges for Canadians, for workers, and for employers is a comprehensive public drug plan that covers all Canadians, regardless of where they live, where they work, their age, or their income.
However, we are concerned that recent trade deals the Canadian government has negotiated, though not yet ratified, will limit the federal government's ability to contain costs and ensure the safety of Canadians. Both the TPP and CETA are projects that could cost Canadians about $850 million to $1.6 billion annually in increased prescription drug costs. The provinces will be reimbursed for the extra costs, but private plans and Canadians who pay out of pocket will have to swallow them.
You can read more about our recommendations in our written submission, but briefly, what CUPE recommends is that the federal government create a national drug plan that provides Canadians with universal, equitable access to prescription drugs with no copays or deductibles. The program should be publicly administered and publicly delivered. We also urge you not to ratify the TPP and CETA trade deals.
We thank you for your time. I look forward to your questions.