Ontario Proposes to End Out-of-Country Medical Coverage
Why Canadians Across the Country May Want to Pay Attention
Another winter is coming to an end in Canada. We know this because in addition to the blooming flowers, Canadian snowbirds are once again journeying Northward to warmer Canadian temperatures.
For claims examiners working throughout Canada’s travel insurance industry; however, a busy period is now in full swing. Canadian snowbirds may account for a huge chunk of private travel insurance premiums, but they also account for the biggest proportion of claims. Thousands of out-of-country medical claims are opened throughout the winter, and now the review of the bulk of those claims begins in earnest.
While the claims examiners are hard at work issuing payments on travel medical claims, it may be looking like a busier-than-usual Spring for the travel insurance lobby as well in their political activities, particularly at the provincial level.
On April 24th, 2019 the government of Ontario published a proposed amendment to the provincial Health Insurance Act, the legislation that speaks to the publicly-funded Ontario Health Insurance Plan (OHIP), which proposes to eliminate the out-of-country relief it provides.
The government under Ontario Premier Doug Ford, looking for savings in an effort to bring the provincial budget back to balance, has floated this proposal, citing the exorbitant cost to administer the program. The province spends $2.8 million in administration costs to pay out $9 million in medical claims every year.
We want to maximize value we get for people and we think that this is not an effective use of resources. (Robin Martin, Ontario MPP — April, 24, 2019)
Government officials charged with selling this proposed change to Ontarians are using a familiar refrain: that the claims payments aren’t going to Ontarians, but rather, to big travel insurance companies.
The province has opened a six-day consultation period, where Ontarians can provide their opinion on the proposal.The consultation period ends on April 30th.
HOW THIS WILL IMPACT ONTARIO TRAVELLERS
Residents of Ontario are some of the biggest travellers in Canada and make up a significant portion of the “snowbird” community — those who travel to the United States to escape frigid Canadian temperatures in the winter. My grandparents were among this group, and I spent a number of winters in Florida with them throughout my childhood.
For those who leave the country without travel insurance, especially if you are headed to the United States, you are risking financial disaster. A single visit to the Emergency Room in the United States could lead to bills of tens of thousands of dollars out-of- pocket.
Currently in Ontario, the OHIP Out-of-Country coverage provides very little relief for those expenses. For those without private travel insurance, OHIP will reimburse anywhere from $50 to $400 per day in medical expenses, depending on the level of care required to address any one medical emergency. That would still leave an uninsured person left with paying medical costs over-and-above that.
A travel insurance plan would go to cover these expenses, ensuring that you depart on your trip with some peace-of-mind.
The products travel insurance companies provide; however, are built with certain terms and conditions that are meant to keep any one insurer competitive in the insurance landscape. One such condition of these policies is the notion that a private travel insurance plan is “excess insurance”.
WHAT DOES “EXCESS INSURANCE” MEAN?
Having an policy that is “excess insurance” simply means that the policy is secondary to any other insurance a policyholder may have. In the context of a travel insurance, a medical policy would be excess to your provincial government health insurance plan. In other words, the public plan your tax dollars fund in Canada is the primary insurer. The travel insurance you purchase is a secondary, supplemental protection to your provincial health plan.
It is important to note that while every provincial health plan in Canada does provide some out-of-country coverage, the amounts they cover vary from province-to-province, based on their provincial schedule of fees. That means that a hip replacement surgery for an Ontario resident will be paid at a different rate than if the patient had been a British Columbia resident.
So in a typical out-of-country medical claim for an Ontario resident, the OHIP plan pays out what they would have paid for the same or similar services had those been performed in Ontario. The refund rate is roughly five percent of what the costs would be in the private, for-profit healthcare system in the US.
The balance of those out-of-country medical costs are eligible for coverage on a valid travel medical insurance policy.
YOU MUST BE WRONG, BECAUSE I’VE NEVER HEARD OF THIS
This is a common misconception many travellers have when they buy private medical insurance, and it exists because provincial reimbursements are often done behind-the-scenes.
The federal Canada Health Act is the legislation which governs the public nature of health care in Canada. It is known and studied by governments and scholars around the world as being a model for the provision of public health care.
The legislation stipulates five conditions a provincial government must meet in order to get federal tax dollars to fund their health care programs. One of those conditions is “portability” — the idea that provincial health plans must provide coverage through their health insurance regime to any insured person, even during temporary absences from the province.
This means that an Ontarian travelling to Alberta temporarily, whether for vacation or work, remains covered through OHIP should they need medical treatment. The same principle applies if that Ontarian decides to travel anywhere else in the world. This principle is applied by every provincial health care plan in Canada.
Most people with insurance coverage, save those who work in the industry, have little knowledge of how insurance companies operate once a claim has been finalized. Ordinary Canadians are not alone — many insurance brokers will tell you that travel policies are among the most confusing products available in the Canadian insurance landscape — and this is thanks in-part to socialized health care Canadians enjoy.
Just because Canadians rarely deal with the provincial health plans on travel claims, doesn’t mean your public insurance isn’t involved.
Travel insurance policies or claim forms will often come included with language that allows the insurance company to coordinate with the provincial health plan to recoup what the province would have covered under the provincial plan. Insurance companies know that governments often move at a slower pace than we’d like them to, which is why, in most provinces, the provincial settlements go directly to the insurance companies long after the medical claim has been paid either to the insured as a reimbursement, or directly to the medical provider.
SO WHAT IF ONTARIO KILLS THIS PROGRAM? WE STILL HAVE TRAVEL INSURANCE
Travelling without any sort of out-of-country medical insurance is definitely not advisable, especially if you are going to a country like the United States or Mexico, where the health care systems are of a for-profit nature.
The ability for insurers to coordinate with Canadian provincial plans; however, is critical to keeping the costs of insurance down industry-wide.
Private insurance companies are a business, and just like any business, insurers are out to make money for their shareholders. But unlike retailers or restaurants, insurers make money on providing a service that, for any single insured person, would cost the company more than the revenue they take in. The insurance industry was born out of the idea that many people sharing the risk of a calamity can more cost-effectively ensure that the victim of a calamity is made whole, while maintaining enough resources to adequately protect others who share in that risk.
Part of keeping insurance premiums accessible to the public requires private insurance companies use to minimize their own costs by coordinating and recouping some of the money spent on claims through other insurers, including provincial government health care plans.
Ontario eliminating its out-of-country medical program will not only lead to an increase in travel insurance premiums for Ontarians, but could also be challenged in court. The Ontario Snowbird Association, who opposed Ontario’s plan to eliminate the OHIP Out-of-Country program, said that travel insurance premiums for Ontario residents could rise by up to 7.5 per cent. That may seem insignificant for the 20-something year-old going cross-border shopping, but could very-well amount to hundreds of dollars in higher premiums for the older population of snowbirds that travel South of the border for the winter.
I DON’T LIVE IN ONTARIO. WHY SHOULD I CARE?
While this proposal is currently being floated in Ontario, this is something that Canadians in all corners of the country should be watching closely, especially if you like to travel outside of Canada.
The Canadian economy has had a good run in recent years, but every respected economist is beginning to conclude that a downturn is coming. Just this week, the Bank of Canada held its benchmark interest rate at 1.75 per cent amid concerns of a cooling economy. It also downgraded its economic growth forecast by 0.5 per cent.
News that the economy is beginning to stall is not welcome news to many of the provinces looking for ways to cut back on social spending. Health care and education, eating much of provincial budgets, are often the most susceptible to cuts. Cuts to programs that the electorate know little about, such as provincial out-of-country medical programs, are easy targets to eliminate. This is despite their purpose of ensuring your public dollars go to ensuring you have some of the medical coverage Canadians are proud of, no matter where in the world your travels may take you.
Doug Ford has the doubly-high-profile of being the premier of Canada’s most-populous province as well as having a profile in the media prior to his days in provincial politics. Whether you love him or hate him, he is a very influential political figure. Evidence of his influence has been proven in recent provincial election results, and as provinces are voting increasingly conservative, this influence is solidifying.
Out of the last five provincial elections held, all of them have led to the ouster of the incumbent government, replaced with a more fiscally-conservative approach to social spending. Manitoba, Quebec and New Brunswick have all booted progressive incumbents, and just this month Alberta and Prince Edward Island elected conservative governments. Saskatchewan’s conservative-minded government is incredibly popular as it approaches an election later this year, and Newfoundland and Labrador pre-election polls show a tightening race between the Liberals and Progressive Conservatives.
All of this doesn’t even account for a federal election in October, 2019 — one which could potentially see Justin Trudeau have no partisan allies in provincial legislatures East of British Columbia.
With an economy expected to stall, provinces are going to want to tighten-up on spending. If Ontario’s initiative to end OHIP out-of-country coverage becomes a reality, other provinces will take notice, and may be tempted to follow Ontario’s lead and cut health services for those who travel outside the country.