OHIP’s new under 25 drug coverage affect and private health insurance

The Ontario government has rolled out prescription drug coverage for people under 25 years which got us curious about how this new coverage may impact private insurance plans.

First, there is something known as “plan usage.” Usage is every time a policyholder files a claim under their plan. Higher usage causes higher rates. The government says that medication will be covered by the government plan before any private plans kick in.

One result may be that private plans see lower use and lower rates. Another aspect to consider is that the coverage targets young people who are in better health than middle aged folks and seniors. Young people will likely have to file fewer claims.

Overall, the recent prescription drug coverage can be seen as the first step toward universal coverage. Nevertheless, some gaps in coverage remain and private health insurance will remain relevant.

We may see private health insurance premiums decrease as people use less coverage on their plans because the public plan is handling some of their costs.

That being said, claims related to medication are a profitable space for insurance companies. Their profits may decline if Ontario residents begin filing more claims through the government’s coverage.

In fact, the health insurance space may undergo disruption if the market goes this direction. Some old players may leave and new ones enter the market. Others will adapt and find a way. Stay tuned and we’ll be sure to update you as more details emerge.