Canada to cut $7B in subsidies to insurers over next two years
Canada is set to cut billions of dollars in subsidies for insurers over the next two decades, a move that could dent the health care industry’s bottom line.
The government announced Tuesday that it would stop subsidizing the cost of health insurance in 2017, starting in 2019.
“It’s a very, very difficult decision,” Health Minister Jane Philpott said in an interview with The Associated Press.
“But we’re looking at what we can do.”
The government’s decision comes after years of pressure from the medical community, which has warned that the health sector is already suffering from the recession, and after a recent ruling by the Supreme Court of Canada that ruled it was illegal for Canada to pay for insurance in the provinces.
Health insurance is currently subsidized by the provinces in a number of ways, including through government-run health plans and through an income-based tax credit for people making more than $80,000 a year.
However, the federal government has historically been reluctant to fund health insurance at a national level because it has a history of using federal subsidies as a tax break for corporations.
The province of British Columbia, for example, currently subsidizes insurance through the province’s health insurance plan, the New Brunswick government said in a statement.
Health Canada says it will not stop subsidising insurance costs until the end of 2019, and the government said that it will cut $8 billion over the course of the next decade, a decrease of $4 billion.
The new plan will be phased in over the coming two years, but Philptt said it’s not clear if the cuts will happen over the full term.
“The impact of this reduction will be felt by people in every province across the country,” she said.
“We’ve made significant progress over the past few years in terms of improving access to care.
This is another step in the right direction.”
The Canadian Association of Physicians for Health said the changes will affect 5.7 million Canadians, including about 6.5 million in Ontario and the provinces of Quebec and New Brunswick.
“This is a massive and costly subsidy that will hurt Canadians, but also the health of the people who rely on this support,” said Dr. Mark Blumberg, executive director of the Canadian Medical Association’s Health Care Council.
“In the short term, this will be devastating for the province of Ontario, which will need to close more hospitals, cut staff, and cut services, and that will be a major blow to the quality of care.”
A spokesman for the provincial health plan, which is managed by the province, said it is still working to come up with a way to address the impact on hospitals.
“Provincial hospitals are being forced to close as the result of this subsidy, and we will be working with our stakeholders to provide assistance to ensure that we do not lose our ability to provide services to Ontarians,” said spokesman Matt O’Brien.
The Ontario Health Alliance said it would provide more details on the impact of the change on its members on Tuesday.
“Our health care system will continue to provide quality care to patients and will remain competitive in a rapidly changing health care environment,” said a statement from the alliance.
The Canadian Medical Protective Association said it was not surprised by the decision.
“Canada’s health care sector is still struggling with its recent downturn, but our industry is one of the fastest growing in the world, and its ability to compete in a globalized marketplace is at risk if the government continues to subsidize health care,” said David Macdonald, the association’s executive director.
“While the government will continue subsidizing health care, it will also have to address its role in the health system, particularly for those with chronic conditions.”