2009 General Meeting ● Assemblée générale 2009 Ottawa, Ontario ● Ottawa (Ontario) 2009 General Meeting ● Assemblée générale 2009 Ottawa, Ontario ● Ottawa (Ontario) Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires Session/séance :Pooling Speaker(s)/conférencier(s) : Bryan Ferguson

3 Issues Metrics on high cost claimants Description of government programs for high drug expenses and how the dynamics can affect pooling costs How differences in formularies affect claims costs

High cost claimants 4/10,000 beneficiaries will have claims >$25K Fastest growing segment of the market

High Cost Claimants in Telus Book of Business Source: Telus Health Statistical Report 2008 *AMC Estimates

Provincial Coverage of High-Cost Claimants 10 provinces, 5 different approaches!

Universal plan model Province is first payer with deductible based on income – typically 2-5% Private plans cover costs under deductible and drugs not on formulary Provinces using this model BC Saskatchewan Manitoba

“Catastrophic” model Province is second payer – eligibility based on out-of- pocket cost with means test (typically 3-10% of income) Private plans cover costs until beneficiary is eligible for gov’t coverage (if they apply) Provinces using this model Ontario (Trillium) Nova Scotia Newfoundland

Mixed Public/Private Model Residents belong to either a public plan or private plan. Government sets minimum standards for benefits, copays, etc. Private plans can provide “better” than minimum. Pooling of large claims Provinces using this model Quebec

“Top up” Model Province offers supplemental plan on a voluntary basis – 3 month waiting period Government is second payer to private – this helps the beneficiary but not the plan sponsor Provinces using this model Alberta

No coverage ( May be some special consideration given on a case by case basis) Group plans have no government safety net – also cover many retirees with no government plan Provinces using this model New Brunswick PEI

Some Provinces provide Special Programs for Take-Home Cancer Drugs and other Conditions BC,AB,SK all cover the full costs of cancer drugs (provided they are on the cancer formulary), whether or not the patient has group coverage Some provinces have programs for MS, HIV/AIDS, Rare diseases. First payer in some cases

What your plan pays depends on where your beneficiaries live

How group and public plans deal with specific high-cost drugs affects costs as well Case study of 4 specific high cost drugs

Inter-Insurer Variations in Drug Coverage 4 Expensive drugs (>$10k/ yr) 95%+ of all group plan members included SA = Special Authorization or prior auth

Interprovincial variations in coverage Drug ADrug BDrug CDrug D BCSA Not a benefit Full benefit Not a benefit ABSA Not a benefit SA ONSA Not a benefit Full benefit Not a benefit QCSA Not a benefit Full benefit Not a benefit SA = Special Authorization or prior auth. Same 4 drugs on provincial plans

Summary A complex mix, both public and private Not just about high-cost drugs, although highest-cost claimants are probably consuming both high-cost and routine drugs Copayments, formularies, income levels all affect benefit eligibility Can pooling deal with these complexities?