2024 Federal Budget Update

On April 16, 2024, the federal government delivered its 2024 federal budget (“Budget 2024”), titled “Fairness for Every Generation”. Although Canada currently is governed by a minority Liberal government, their previously announced “confidence and supply” agreement with the NDP will need to be relied upon for Budget 2024 to be passed. That said, the NDP have not yet formally committed their support for Budget 2024.

This update highlights the key items of interest for group benefit plans.

Roll-Out of Canadian Dental Care Plan

Budget 2024 lays out an explicit timeline for the roll-out of the Canadian Dental Care Plan to eligible Canadians. Essentially, by June 2024, seniors aged 65 and over, disabled claimants, and children under 18 who meet the eligibility requirements will have access. In 2025, all remaining eligible individuals will receive access.

Some key items remain unknown, such as:

• The expansiveness of dentist participation within the network.
• Administrative/adjudicative processes that will be required.

With the above in mind, it is still too early to truly comment on the potential impacts to group benefit programs as over the last few months details have continuously changed.

Launching of National Pharmacare

In February 2024, the government presented “Bill C-64, An Act Respecting Pharmacare”, which outlined the government’s foundational principles in implementing phase one of the National Pharmacare Program (“National Pharmacare”). The areas of coverage to be addressed under phase 1 are contraceptives and diabetes medications as well as diabetic supplies such as syringes and glucose test strips. The Bill is currently in its Second Reading within the House of Commons.

Budget 2024 provides additional details around its planned implementation of National Pharmacare. In particular:

• $1.5 billion has been budgeted over five years to support the launch of National Pharmacare beginning with $59 million in 2024/25.
• The federal government is intending to implement coverage through funding the expansion of existing provincial/territorial pharmacare programs.

At a high level, this budgeted amount appears to be only a fraction of what would be required for annual expenditures for diabetic and contraceptive medications and devices for Canadians.

As a drug program that is intended to build upon existing provincial/territorial pharmacare programs with such a low degree of funding, it remains unlikely that it will be built in a way that would fully displace employer-sponsored drug programs. Further, the impact would likely be less pronounced in provinces where comprehensive provincial Pharmacare coverage is already in place.

Some additional information we look forward to receiving includes:

• Provincial Uptake: At this point, Quebec and Alberta have already stated their intention to not participate, while B.C. appears interested to take part. Other provinces like Saskatchewan are awaiting further information before making a decision.
• Provincial Mandates: Any requirements of provincial pharmacare programs in order to be eligible for funding and how this could re-shape these provincial programs.
• Covered Drugs/Supplies: It is unlikely that a National Pharmacare Program will cover items such as Freestyle Libre or diabetic drugs such as Ozempic. It is more likely that it will cover a baseline formulary of drugs. Employer-sponsored plans need to understand this baseline formulary before being able to consider how the program could impact their plans.
• Expected Rollout Timeline: The timing of the rollout remains to be seen; however, an upfront priority of negotiating with the provinces was noted.
• Other Aspects of Bill C-64: The bill also stated the government’s intention to provide a new Canadian Drug Agency for bulk purchasing and developing of a national formulary. No additional information on this aspect of the bill was shared.

 Similar to the Canadian Dental Care Plan, there is a limited amount of information available to be able to comment on the impacts to employer-sponsored programs. However, based on the current annual spend on contraceptives and diabetes medications annually, for government and private plans, it is difficult to see $1.5 billion over five years fundamentally changing the prescription drug landscape.

Other Health-Related Items

The following additional items were noted in Budget 2024, which are health-related, but with less of a direct potential impact on group benefit plans:

• Health Care Agreements: Confirmation that new health care agreements have been signed with every province and territory.
• Foreign Health Care Credentials (Budget Allocation of $77 million over four years, beginning in 2025/26): Funding has been put towards additional resources to better integrate foreign health care credentials into the Canadian health care system.
• Canada Disability Benefit (Budget Allocation of $4.9 billion over five years): Funding has been put towards launching new disability benefit targeted towards low-income working age persons with disabilities. The specific plan design is still to be determined. Further, it still remains to be seen how this benefit will integrate with/offset against employer-sponsored disability programs. Early indications are that disability benefit advocates are concerned with the low annual maximum of $2,400.
• Disability Supports Deduction (Budget Allocation of $5 million over five years): The government is intending to amend the Income Tax Act to expand its list of eligible disability deductions.
• Essential Drug Accessibility (Budget Allocation of $3 million over two years): Funding has been put towards upgrading Health Canada’s supply management capacity for drugs and medical supplies to reduce the potential for future shortages.

Closing Comments

Budget 2024, while providing additional details around the Canadian Dental Care Plan and the National Pharmacare Program, remains vague to the point that there is a limited amount of action that can be taken at this point by plan sponsors.

For the Canadian Dental Care Plan, there is enough information available to anticipate that it will likely have minimal impact on most plans in the market, but could have a greater impact on Healthcare Spending Account-only plans, retiree dental plans or individual dental products.

For the National Pharmacare Program, more information around the drugs being covered, the provinces taking part, and how funding will be tied to changes to provincial pharmacare requirements will be required to come to an initial assessment of impacts to group benefit plans.

We will continue to monitor the roll-out of these programs. Should you have any questions on the above, please feel free to contact us.

Jojy Oommen
Principal