The new drug plan for seniors promises to be dysfunctional right from the start.
One of the basic actuarial principles behind any health insurance, be it public or private, be it paid for by premiums or by taxes, is that everyone has to be participating all the time. People can’t refuse to pay premiums for years and then be expecting to have coverage when they get sick.
But this plan is proposing to do precisely that. It is sabotaging universality while taking a private sector approach that is actuarially unsound. The healthy seniors will not tend to opt in while the unhealthy seniors will tend to opt in. Only after becoming sick will there be an incentive to opt in, with a three-month waiting period.
For seniors that have managed to carry a private supplementary plan into retirement from their employment, there will be a domino effect as costs start cascading towards those plans. How will those private plans deal with some pensioners having opted in while other pensioners haven’t? Those plans will become diminished in one way or in another, through higher premiums or through lost benefits, while the unsoundness of the government plan will eventually become apparent. At that point, there will have to be an extremely large increase in premiums. This drug plan promises to give us the worst of both worlds.
Bill Bears, St. Albert
