While the budget was lacking in major policy shifts, Stephen Frank, senior vice-president of Policy at the CLHIA, thought it included some positive steps that will benefit both insurance providers and everyday Canadians.
In particular, Frank was positive on the government’s commitment to lowering drug prices through an investment of $140.3 million over five years for Health Canada, the Patented Medicine Prices Review Board and the Canadian Agency for Drugs and Technologies in Health.
“We were really pleased to see the reference to continued efforts to reduce drug prices in Canada,” he says. “The budget has committed funding to the three federal agencies that are accountable for regulating drug prices, as well as providing advice to payers on when to pay for a new drug, and when not to.”
Prescription drugs is an ongoing issue for health insurers and is a major cost in their plans. While Canada compares favourably to the US on this issue, that isn’t the case on a global basis, which the government appears ready to rectify.
“Drug prices in Canada are relatively high compared to other developed countries,” says Frank. “We believe there is a lot of scope to bring them down, so it’s good that the government feels the same way.”
On the life insurance side, the key section of the budget involved the soon to be formed Infrastructure Bank. This is a major component of Justin Trudeau’s mandate, as the government hopes to entice the private sector to spend on capital projects, using public funds as an incentive.
“Our industry is very interested in having access to a greater number of infrastructure assets that are a good fit for us from an asset-liability matching perspective,” says Frank. “The point of the Infrastructure Bank is to be a catalyst for more deals in Canada – to provide federal support to make deals that are considered marginal today, economic in the future.”
While a lot of the changes outlined in the budget may take some time to enact, this infrastructure plan is clearly a priority for the Liberals, and will likely be introduced in the coming months. This is good news for life insurers, in Frank’s opinion.
“The government say they want to accelerate this plan and want to have it in place by the end of 2017,” he says. “The pension funds and life insurers are the largest, long-term investors in the economy. Between us we have significant resources we can deploy in this area. We are both in close contact with the government for a while now on this, so we are happy they are pushing forward with this.”
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The second federal budget of Justin Trudeau’s administration has been welcomed by Canada’s main life and health insurance body.