Evidence of meeting #73 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was drugs.
A recording is available from Parliament.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I have a number of questions around that, but I'll start with the most important one, I think, which is, what we would have spent in that year without a net pharmacare system? In other words, what would be the savings in 2021?
4:50 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
I believe it's in the report.
Mark, do you recall?
4:50 p.m.
Mark Mahabir Director of Policy (Costing) and General Counsel, Office of the Parliamentary Budget Officer, Library of Parliament
It's in the executive summary of the report. We use a baseline using the same factors, so the savings are exactly the same: $4.2 billion throughout the five-year period.
4:50 p.m.
NDP
4:50 p.m.
Director of Policy (Costing) and General Counsel, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
—of your five-year extrapolation into the future, based on these assumptions. Do I have that correct?
4:50 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you.
One question about the assumption of spending is that you assume we spent $19.3 billion in 2015-16, and then $22.6 billion.... That's $3.3 billion more. By my bad math, that's 17% more, which is about a 6% increase per year: 17% divided by three is 5.8% and something. I'm just curious. That seems like a fairly high annual percentage increase. What went into that assumption?
4:50 p.m.
Director of Policy (Costing) and General Counsel, Office of the Parliamentary Budget Officer, Library of Parliament
Thank you for the question.
We used cost drivers that were published by the PMPRB over the previous four-year period. Multiple factors were considered in the growth. The major one was the cost of biologics, which was a large driver. For patented drugs, there was actually a decrease over the last four years of 1.8%. Most of the increase was due to extraordinary drugs to treat hep C: the direct-acting antivirals. That was a large proportion of the costs. The biologics were another large proportion.
We did factor in a decrease in the overall yearly cost for the direct-acting antivirals, but for biologics we factored in an increase over the five-year period. That's due to the higher costs of biologics when compared to other drugs.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I want to get in one last quick question, because I think this is the fundamentally critical part of this whole study and I want to make sure I have this correct. This is all assuming that 12% of Canadians who effectively have no coverage now would be covered under this system, as well as achieving the annual cost savings of $4.2 billion a year. Do I have that right? We'd save $4.2 billion a year and it would cover an additional 12% of Canadians who aren't covered.
I see you're all nodding, so that's a yes?
4:55 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
4:55 p.m.
NDP
4:55 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Thank you, Mr. Chair.
Ms. Malanik, I'd like to get back to something you said at the very beginning of your presentation. You talked about out-of-pocket expenses. You said that in your analysis the figures for out-of-pocket expenses did not include paying out for insurance premiums.
4:55 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes, that is correct.
4:55 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Okay. I'm not going to ask for any numbers regarding that, but I have a question regarding trends, overall societal trends. In managing our economy, we have employers who have to deal with payroll taxes, and there's always the criticism that a payroll tax can hurt the economy because you have employers having to pay this.
Here's what has not been included in this: would you not say this would be relieving a lot of private employers of a proportion of their payroll tax?
4:55 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes, it should, potentially. Again, we don't know what would happen to wages and salaries that would be paid out in lieu of this benefit no longer being offered by employers.
4:55 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
I understand that, yes. I know that would be too much to.... As I say, it's beyond...so we're into guesswork by then, but just the binary.... Would it relieve employers of paying this portion of a payroll tax?
4:55 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
4:55 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
All right. Thank you.
I still have some time. Does anyone have more to ask? Okay. There are no more questions.
Thank you.
4:55 p.m.
Liberal
The Chair Liberal Bill Casey
Thanks very much. That completes our extra round.
We are going to have bells for a vote, so I'm going to suggest that we wind up. Is that...?
Mr. Van Kesteren.
4:55 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Leamington, ON
I just want to clarify something about that, Ms. Malanik. The question by Mr. Eyolfson was about how this would decrease the cost for the employer, but wouldn't it also be safe to say that in a deficit position—our government is in a deficit position—the overall cost to Canadians would be $4 billion? I'm looking for some balance there. On the one hand, it sounds really great, but am I wrong in making the assumption that there will be an increased deficit?
This is the thing that would drive me crazy when I was on the finance committee as well: we never look at who we owe that money to when we owe $700 billion. Canadians owe that money, so wouldn't that—