Thank you for inviting me to address this committee.
Allowing parents and grandparents to travel to Canada is clearly beneficial to their families. My comments today, therefore, focus on a few insurance-related issues that will likely need to be addressed, or at least considered, assuming this bill moves forward. The matters I will raise are forward looking and concern implementation.
My comments focus on the health insurance required by current ministerial instruction, although this may have implications for other aspects of the bill.
The insurance focuses on emergency care and is required to be valid for at least one year from the date of entry. My understanding is that, in practice, it's difficult to purchase this insurance at present for a period of longer than one year. If a stay lasts longer than one year, the insurance needs to be renewed or new insurance needs to be purchased. At present, as I understand it, the federal government does not monitor renewals and related issues.
The purpose of insurance is to pool payments and costs so as to reduce risk. However, one risk that's not mitigated in the current framework is the year-to-year risk. Although we hope this does not occur, if, for example, a parent or a grandparent experiences an expensive health event in the first year of a stay, the price of insurance in the second year would almost certainly be much higher. This risk is, perhaps, manageable for a two-year stay, but if the duration of the stay is increased, the risk of a very large year-to-year increase in health insurance prices grows. If the length of stay is to be increased, the non-trivial risk associated with large price increases for insurance renewal needs to be considered now.
One option would be to require a longer minimum period of coverage. Indeed, the coverage could be for the full length of the stay, with an opt-out clause for parents and grandparents who decide to return home early. Of course, payment need not be up front. I can imagine various alternative sets of requirements regarding the structure of multi-year contracts. Perhaps, for example, minimum price increases across the years could be required as a prerequisite for ministerial approval.
This would give some amount of multi-year certainty to the sponsoring families, as well as their parents and grandparents. Obviously, this goes well beyond the text of the legislation, but the issues—even if you disagree with my points for discussion—are ramifications of the proposed legislation. They're likely going to be quite important for some families and are best considered in advance.
As an economist, I'm all in favour of competition to bring down prices for the benefit of consumers. A key issue in expanding health insurance purchase options to include international competitors is to ensure that the change achieves its desired goal with minimal negative side effects. As a health economist, I recognize that one of the strengths of Canadian health care is that it has modest administrative costs. If the new extended-stay super visa insurance market is not well designed and regulated, the associated administrative costs might increase noticeably and the legislation's goal of reducing insurance costs for consumers might be partly or even largely undone.
In particular, one way that insurers in some jurisdictions seek to keep insurance prices low is to—how shall I say this—interact rather aggressively with health care providers. Canadian hospitals and other health care providers have limited experience with aggressive insurance providers. Such activities increase administrative costs. In considering implementation, someone needs to think very carefully about guidelines for the minister-approved list of insurers that are appropriate for the Canadian context so as not to generate excessive administrative costs. This is because, in the end, I expect that those buying insurance for parents and grandparents and/or Canadian taxpayers would need to pay such administrative costs.
Finally, my expectation is that adding insurance companies to the proposed ministerial list of approved firms will not be nearly as difficult as removing such companies for cause. Anyone developing guidelines for adding insurers to some approved list needs to think carefully and, again, in advance about the process of removing insurers from the list. One challenge is that this requires monitoring non-payment and related issues, which requires the co-operation of provincial governments.
Of course, any insurance guidelines for foreign insurers, especially American and Mexican, need to meet all the requirements of USMCA and other trade agreements. This could also have important implications for Canadian insurers.
In conclusion, my view is that good intentions do not, on their own, make good policy. Careful and diligent advanced planning and high-quality execution are also usually required. I am attempting to think about some of the challenges that might arise where advanced planning can improve outcomes.
Thank you very much.
