Complementary Coverage in Canada’s Medicare Program

Complimentary private insurance improves utilization of medication among Canadian seniors with Medicare.

Medication non-adherence is a large factor affecting health and ultimately the cost of care. One reason that patients may not take medications may be because they are unable to afford them. Given that many senior citizens have fixed incomes and take several medications, seniors nationwide are faced with the difficult choice of filling their prescriptions or paying other important bills.

In Canada, seniors must pay for a portion of the publicly funded prescription drugs that they take: either directly to the public insurance plan or through voluntary private insurance that is complementary to public insurance. Private insurance programs cover the costs of deductibles, co-payments, and user fees for non-formulary drugs thereby reducing the amount paid by the patient. Ultimately, this might increase utilization for the public insurance plan.

Higher income individuals, who tend to be healthier, disproportionately hold private insurance and are less likely to face the economic choice between medication and paying other bills.

Prior to this study, the effect of private insurance on the utilization of publicly funded prescription drugs in Canada was unknown. The authors hypothesized that, after controlling for differences in health and socioeconomic characteristics, private prescription drug coverage would have a positive marginal effect on the use of publicly funded medications by Canadian seniors over age 65 with diabetes.

Drawing on linked survey and administrative data in Ontario, the authors found a positive association between possession of private insurance and medication utilization. There were increased direct costs (by 16%) to the public drug program for those with private insurance. This was assumed to be due to the fact that the average direct costs of medications were 6% higher for those with private insurance than those without private coverage. Anti-hypertensive drug claims were higher among those with private insurance (86%) than those without (75%). However, statin and anti-diabetic medication utilization was fairly similar in both groups.

Commentary

Evidence from the Canadian health care system is conclusive: wealthy seniors with diabetes who disproportionately hold complementary private insurance coverage for prescription drugs have a double advantage. These seniors tend to be healthier overall and also possess better access to and utilization of prescribed medications.

Thus, as the Canadian government continues to increase cost sharing by patients in order to balance the rising costs of health care, it should be noted that medication utilization rates by those unable to afford complementary insurance will be affected more than those who can afford complementary insurance.

Efforts to contain rising health care costs by imposing user fees could backfire if the health of a vulnerable low-income population is further compromised due to medication non-adherence.

Similar lessons can be expected for America’s Medicare program. Medicare supplemental plans may help seniors afford their prescriptions. However, if these plans are possessed overwhelmingly by higher-income individuals, health disparities for low-income seniors might be exacerbated. Adherence requires affordability.

Allin, S. et al. Health Policy. 2013; 110 (2): 147-155.

by

Jennifer Dyer, MD, MPH, FAAP