National Pharma and Dental Care
News of a coalition between the federal Liberal and NDP has recently surfaced, with the NDP making demands to the Liberals to stay in power with a minority government. Two of which include the Liberals continue to push the national Pharmacare strategy and include universal dental care. Liberals have lightly been moving forward with a Pharmacare strategy but had not considered the dental care option.
I won’t go deep into what these each looks like as I think there has already been a lot of information shared on the details. Here is a link to reference.
Instead, I want to share some thoughts on this – as it pertains to advisors.
I think many Canadians can get behind this concept, even those of us in this industry that could be negatively affected at first glance. Access to basic healthcare is important to our country and is very Canadian. If someone cannot afford life-saving drugs or basic dental care, we want them to have access. How this is delivered is the most interesting part from our standpoint and it will leave a lot of unknowns until details are worked through. Do you only offer it to those without private medical benefits through an employer? For Pharmacare, is it only those rare disease drugs that come with the crazy high price tags and leave the reasonably priced drugs in the private or out-of-pocket market? Do you base either of these on household income? Dental care is being announced with an income-tested model (family income of under $90,000). These are really hard questions to answer, and each affects us in the industry in different ways. Some would bode well for our model, and some would be tougher on us. To be honest, I am not worried. However this rolls out, I know we are agile and can adapt, plus we already have options ready for different scenarios.
Another key thing that will likely not be considered is the huge price tags for both programs. I say this because of all topics – having people who cannot afford the lifesaving medicines is hard to argue against. Nobody will want to take a public stand against this type of program. However, companies, taxpayers or both will need to pay for these. Taxing either of these is not easy, as each constituent will push back. There are very strong lobby groups for companies and insurers. The large insurers will lose money on either of these programs—they charge premiums based on claims, so if claims decrease, then premiums go down, and so does revenue—so they will be pushing back on these or trying to minimize their effect on their business. I think this may be one area where you will see a national strategy actually work well with private benefits. Many argue that a functioning model of this already exists in Quebec and BC.
The hardest thing I think advisors need to deal with is what to do until anything happens. These will take YEARS to implement and roll out. COVID has put businesses in a real fight for talent, and the ability to attract and retain talent is crucial right now. So, you have to assess, tweak, and change current benefit offerings to make sure you are competitive in hiring right now. You cannot sit on your hands and wait for 3 or 5 years to see what comes from this. I do not think this is anything new and the need to think about this was already here. COVID has forced many benefits to go digital since workforces are no longer in a physical location. Also, with multiple generations in the workforce, the need for flexibility is at an all-time high. I am seeing a real increase in the need to meet mental health-specific issues as well as have a wellness spending account made available to meet the needs of employees, wherever they are. The use of HSAs, WSAs, Flexplans, mental health pool of $, telemedicine, and EAPs are all being heavily utilized and added to benefits right now. These are all strategies that come with a pretty stable cost structure (employer chooses what they spend) that can be tweaked as the government rolls out either strategy.
The other thing I think advisors should consider is if the premiums drop 30% due to offloading claims to the government, then you will also be taking a drop in income of the same amount. What other areas of the benefits industry are you adding or involved in that can make up this revenue? We have heard for many years that advisors do not see HSAs or WSAs as big money generators. We think this is a bit short-sighted as these have only grown over the years, and we do not see any slowdown. Many of our advisors are in high five figures of continuous revenue. This revenue comes with little to no renewal negotiations, and once set-up, the revenue is pretty passive due to our platform alongside the customer services we provide.
Advisors do not need to think the sky is falling and that life as we benefits professionals know it is ending. I think this is a time to be proactive, not stick your head in the sand, and stay on top of how this will potentially unfold, so you can be strategic in whatever the end result is. Continue to learn from those in the industry and find ways to expand your revenue, assuming that at some point, we will all see a decrease in revenue if this comes to light in any fashion.
COO & Co-Founder