Canadian Health Policy Institute

Canadian Health Policy Institute

April 01, 2014 08:30 ET

Canadian Health Policy Institute: Private Health Insurance Costs for Dental, Vision, Professionals, Hospitals and Administration Are Growing 2 to 5 Times Faster Than Spending on New Medicines

TORONTO, ONTARIO--(Marketwired - April 1, 2014) - A new study published by the Canadian Health Policy Institute (CHPI) challenges claims by the private health insurance industry that their costs for new medicines are not sustainable without government intervention. The study found that private insurance expenditures on dental, vision, professionals, hospitals and administration are growing 2 to 5 times faster than spending on new medicines. It concludes that the insurance industry's cost concerns are off-target and there is no justification for government to manage the private costs of the industry.

The Canadian Life and Health Insurance Association (CLHIA), which represents the private health insurance industry, is calling for increased government intervention in the market for patented pharmaceuticals (i.e. innovative or new medicines) because according to CLHIA, the cost of new medicines is threatening the sustainability of private drug plans in Canada.

The study published by CHPI used the most recent data available from the Canadian Institute for Health Information (CIHI) and the Patented Medicine Prices Review Board (PMPRB) to examine the drug costs of private insurers in Canada relative to other types of privately insured healthcare costs. The goal of the study was to test the validity of the insurance industry's claim that the cost of new medicines cannot be sustainably insured by the private sector without government intervention.

The data showed that over the five-year period, from end of 2006 to the end of 2011, private insurance spending on new medicines grew by only 11.7% compared to 22.7% for dental services and 32.2% for vision care services, 53.0% for other professionals, 30.8% for hospitals, and 35.0% for administration.

Based on the findings, the study argues that there is no justification for government intervention targeting the cost of new medicines in Canada's privately insured pharmaceutical market. Private insurance spending on dental, vision, professionals, hospitals and administration is growing much faster than spending on new medicines - yet the insurance industry is not demanding government intervention targeting these other types of privately insured healthcare expenditures.

The study, Private health insurance costs in Canada: Testing the insurance industry's claims about the sustainability of drug plans, was authored by Dr. Brett J Skinner (Ph.D.), Executive Director Health and Economic Policy at Rx&D and Founder of CHPI. It was published at CHPI's free access online journal, Canadian Health Policy and can be downloaded at:

About CHPI

Canadian Health Policy Institute (CHPI) is a non-profit think-tank funded by independent research grants and unrestricted operating grants from public sector, private sector and non-profit sector sources. CHPI is dedicated to conducting, publishing and communicating evidence-based socio-economic research on health system performance and health policy issues that are important to Canadians.

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CHPI grants open access permission to republish this news release in whole or in part for use in news articles including a reference to Canadian Health Policy Institute (CHPI) as the publisher.

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