Alberta’s shift to making private and employer-sponsored insurance pay first for drug and related health costs could raise premiums for seniors and employers when the policy takes effect Oct. 1. Industry experts say some retirees could use up their private benefits and then face the cost-sharing charge under the government plan, adding expenses for people on fixed incomes. The provincial government says the change will help keep public coverage available to those who need it most.

The measure is part of Bill 11, legislation also known for allowing doctors to work in the public system while charging patients privately for the same procedures. That dual-practice provision has drawn controversy, while the bill’s changes to drug and other health coverage have received less attention. Alberta will become the payer of last resort for those costs, aligning its approach with provinces including Nova Scotia and Prince Edward Island.

Alberta’s two main public drug plans are Coverage for Seniors and the Non-group plan. Residents aged 65 and older are automatically eligible for Coverage for Seniors at no charge. The Non-group plan costs about $63 a month for one person and $118 for a family of four.

Both programs cover 70 per cent of the cost of eligible prescription drugs. Members pay the remaining 30 per cent, up to a maximum of $35 per bill. Working families often use workplace benefits to cover that share, while retirees without such workplace coverage may buy separate private insurance for the remaining cost or for drugs outside the public program.

Under the new arrangement, private insurers will pay first when a person has both private and government-sponsored drug coverage. The government plan will continue to support eligible Albertans when private coverage is unavailable or has been exhausted. The province said people who rely only on government-sponsored drug coverage will not be affected.

“Beginning Oct. 1, Albertans with both private and government-sponsored drug coverage will access their benefits through a coordinated approach that uses private or employer-sponsored plans first, with government coverage continuing to support eligible Albertans when private coverage is unavailable or exhausted,” the ministry said in an emailed statement. It said new protections will stop employers from changing or ending drug and health benefits solely because an employee turns 65, so people who continue working past that age can retain workplace coverage.

The province expects the policy to save between $35 million and $54 million a year. Industry representatives say the added costs for employers could be substantial. A report by Marsh, an insurance brokerage and risk management company, said employers could face millions of dollars in additional costs and billions in additional accounting expenses, with “carrying immediate and ongoing consequences on corporate earnings statements and balance sheet positions.”

Carolyne Eagan, president of the Smart Health Benefits Association, estimates health-care premiums could rise by five per cent for large companies. Smaller businesses could feel a sharper effect because higher costs would be divided among fewer employees. Workers may also share the premium increase through deductions from their paycheques.

“That will impact the company, but it’ll also impact all employees because often people are caught sharing the premium, maybe a 50-50 split on the premium off their paycheque,” Eagan said. She said the new payer order could affect the benefits employees receive as well as the businesses that provide them.

Bruce Fletcher, a principal consultant at Marsh, formerly known as Mercer, said some employers might cancel their programs in the most extreme cases. “The challenge facing these private plans is that they were designed with an understanding that the government plan would pay first,” Fletcher said. He added that companies are still trying to understand the financial effect and many have not yet made changes.

“I think a lot of effort right now is trying to understand the implications, and I don’t think many of (the companies) have enacted change yet,” Fletcher said. “I think they’re still trying to absorb what this change fully means for them.” He said the new rules will make employers reconsider what they offer: “I think they’re going to take a good, hard look at what they’re offering.”

Private insurance costs could also rise for individuals. Premiums have historically been low because private plans mainly covered the 30 per cent deductible left by the provincial drug program. Manulife, one of Canada’s largest insurance providers, said in a blog post that the new rules could affect costs and pricing for drug and health benefits.

“These changes may increase plan costs and may affect pricing for drug and health benefits,” Manulife wrote. “Changes in premiums and increases to claims experience will be based on the demographics of each group. We will review these changes at the time of renewal and answer your specific questions at that time.” Manulife did not respond to Postmedia’s request for clarification about potential premium increases.

The Federal Retirees Association of Canada also warned that moving the first payment responsibility to private plans would shift costs rather than reduce them. The association said the change could increase drug and health expenses for plan members and retirees as prescription costs rise, and argued that moving essential medication coverage from public to private plans does not address the underlying increase in drug costs.

Larry Mathieson, president and CEO of Unison at Kerby Centre, a non-profit supporting adults over 50, said many seniors may not know the change is coming. “This is not on the radar of a lot of seniors,” he said. “They probably don’t need an extra cost at this point.” Some retirees could exhaust their private benefits and then be left paying the government plan’s cost-sharing amount, according to industry experts.

Eagan said workers over 65 who need to re-enrol in their employer’s benefits may gain access to some services that were not part of the public program, including massage therapy or life insurance. She said employees should consult their human resources colleagues and complete a drug prior authorization form to make sure certain expensive medications are covered by the public system.

“It’s really up to the individual to have that shared accountability . . . in that you need to disclose all of your coverages (to the pharmacy),” Eagan said. The requirement for people to disclose their coverage is part of coordinating payments between private plans and government benefits under the new policy.

Based on reporting by Edmonton Journal.