Category Archives: The Issues

Caveat emptor, Finances, Issues, Provincial

Facts???? We’re the Government.

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The response (below) to my call for the provincial government to stop bedevilling British Columbians struggling to survive serious health challenges (and the poverty that so often goes with it) has me pondering whether the government pays attention to what you say or, spotting a few key words – Air Miles®, PharmaCare – reply using a rote response or form letter.

Nowhere in the reply were the facts or points I raised addressed.

Of course the reply didn’t contain any facts or evidence to support the government’s  assertion ‘the government was subsidizing the incentive programs’. Further, the government’s reasoning (more accurately what passes for reasoning in government and the bureaucracy) is based on multiple coulds.

Could. And based on the speculation of could, the government took a benefit from the seriously ill who practiced good fiscal management.

Although……basing policies on what government insists on believing, on the speculation of could, rather than facts, does explain the sad state of BC’s finances, healthcare, education, housing, deficit, debt, etc.

Those collecting points were maximizing the bang for the taxpayer buck. By collecting points they got the medications taxpayers paid for and through the collection of points they got $20 worth of food or gas to supplement their (inadequate) support (and if the politicians and bureaucrats feel it is adequate, I propose we set the salaries of MLA’s and bureaucrats at this ‘adequate’ level).

So, not only is the government’s incentive program policy not saving the taxpayers any money, it is wasting the cash value of the rewards that are no longer collected.

I also found myself wondering if, after the Bureaucratese of the reply had been slapped together, anyone had bother reading what had been written.

Take the lecture on the free market. While it might be suitable as an introduction to economics in middle school its simplistic view fails to capture the complexity of the free market as it functions in the real world.

Such as the difference in the economics of standalone pharmacies versus pharmacies contained within (or part of) a retail operation such as grocery stores or London Drugs; or the consequences of a pharmacy being part of a larger entity (Safeway) which has an incentive program that applies to the goods of the entire store.

So, we have government policy based on the speculation of could and economics and finances suitable to middle school but not for application in the real world.

Then we have this beauty:

” pharmacies set their drug prices and dispensing fees based on what they believe the market will bear – or more specifically on what they believe their customers will pay.”

“ While PharmaCare does not have the ability to “shop around” it does set maximum amounts for which government will pay.”

PharmaCare sets out what (the maximum) it will pay. Therefore the pharmacies have no need to base their prices on  “what they believe their customers will pay.” If the pharmacies know what PharmaCare will pay, then by the governments own assertion that is what the pharmacies will charge for medication for those on PharmaCare.

According to the government reply, the amount PharmaCare would have been paying when British Columbians in need were allowed to collect Air Miles® (or other incentive programs) was the maximum amount PharmaCare had set for each specific medication being taken.

According to the government reply, the amount PharmaCare is paying now that government  policy prevents the collection of Air Miles® etc is the maximum amount PharmaCare sets for each specific medication being taken.

So, according to the governments own rational it does not matter whether Air Miles® (or other incentive program points) are collected or not, knowing what the maximum amount PharmaCare will pay for any specific medication, means that (the maximum) is what pharmacies will charge.

By the governments own rational, changing the policy on incentive program points collection has not saved the taxpayers any money. Conversely the collection of incentive program points did not cost the taxpayers any money.

The effect of the change in policy is to fail to obtain the maximum bang for the taxpayer buck by not collecting the rewards that are available as a result of taxpayer dollars spent on medication.

And then::

“Rather than offering loyalty rewards, if a pharmacy sets its drug price or dispensing fee at a lower amount to attract customers, then customers, PharmaCare and all taxpayers will save money.”

Setting aside for the moment the fact that, according to the government’s own rational, the price charged to PharmaCare (loyalty rewards or no loyalty rewards) will be the maximum that PharmaCare has set out as the amount it will pay for a specific drug, consider the following points.

In the free market cutting prices to attract business leads to price wars. Incentive programs tend to be offered by large retail chains/organizations (such as Safeway Wal-Mart) who have the financial  wherewithal to win such a war.

When was the last time (if ever) you heard or read advertizing for pharmacies that was based on the prices for prescription drugs?

Even if a pharmacy does charge a lower unadvertised price how are people going to find it? Do you check around to find the lowest price ever time you get a prescription?

If you are on PharmaCare it makes sense to make an effort to fill your prescription somewhere you earn rewards that are useful to you or your survival. If you cannot collect rewards, are you not going to choose a pharmacy  based on convenience or cost savings realized by using that pharmacy?

Also affecting the decision as to which pharmacy to use – I always get my medication at the same place. They have my records and we have a year’s long relationship. As a safety measure I have no interest in going to a strange, unknown pharmacy. (I have had my pharmacy catch and correct what could have been a fatal error in medication prescribed).

Then there is the question of how people are suppose to check prices. Pharmacies do not quote prices over the phone – you have to go to the pharmacy. How reasonable is it to expect people living on extremely limited budgets to spend their gas budget driving from pharmacy to pharmacy to compare prices – particularly after you have taken away the $20 reward they used for gas at the end of the month? How reasonable is it to want people to compare prices  when market forces dictate that all pharmacies will be charging the same amount – the amount set out by PharmaCare.

I do not have the information to properly analyze how PharmaCare sets the maximum price it will pay for each medication it covers. However I would assume that PharmaCare behaves at least semi-rationally (I know – a dangerous assumption when referring to government). Meaning that PharmaCare would set its maximum rate based on the wholesale cost (the cost to pharmacies) of the specific medications.

Unless PharmaCare is allowing for a ridiculously large mark-ups (if it allows any mark-up at all), then pharmacies make little or no money on the mark-up over cost on filling PharmaCare prescriptions. Thus if PharmaCare is behaving in a fiscally responsible manner in setting the maximum it will pay for a specific medication, a pharmacy will need to charge the maximum PharmaCare will pay.

Once again,  incentive or no incentive program, the amount charged by a pharmacy is going to be the maximum amount PharmaCare has set out as what it will pay.

If the government has evidence to support its claim that the collection of points in incentive programs is costing taxpayers dollars they need to present that evidence.

Evidence based on facts, not the speculation of ‘could’ or fairy tales. Because, if the government of BC insists on making policy based on speculation and fairy tales, I want to know why the government hasn’t solved all its financial and service woes by having Rumpelstiltskin in the legislature basement spinning straw into gold?

The government needs to remember it is suppose to help, not persecute or hinder, the Wellness of citizens in need.

It should be maximizing the bang for the taxpayer buck, rather than wasting the rewards that accrue to the dollars taxpayers spend on medication by allowing the collection of reward/incentive points – points that cost the taxpayer not one additional cent.

Perhaps if the government ceased to waste time and resources chasing mirages of nonexistent savings or dreaming up ways or excuses to abuse British Columbians in need of help, the government COULD address major issues such as the rationing and cutbacks of healthcare.

Whether malice or maladroitness it is time the government ceased to tyrannize British Columbians suffering from serious health issues and a lack of personal resources by allowing them to collect Air Miles® (or participate in other incentive programs).

*************************************

Dear Mr. Breckenridge:

I am writing in response to your emails of July 11 and 18, 2011, regarding the restriction on incentive programs such as Air Miles®. I am pleased to respond on behalf of the Honourable Michael de Jong, QC, Minister of Health.

As you are aware, the British Columbia PharmaCare program is the publicly funded drug insurance program operated by the BC Ministry of Health. The purpose of the PharmaCare program is to assist British Columbians, particularly those with lower incomes, with the cost of eligible prescription drugs and designated medical supplies.

Community pharmacies in BC are retail enterprises that operate in a free market. A free market is defined as an economic system in which prices are determined by unrestricted competition between privately owned businesses. Like other retail businesses, pharmacies set their drug prices and dispensing fees based on what they believe the market will bear – or more specifically on what they believe their customers will pay.

There is a wide variation on what pharmacies in BC charge for prescription drugs. If people purchasing prescription drugs at the higher cost drug stores shopped around, they could save up to 25 percent on their annual drug bill.

For example, people taking commonly prescribed atorvastatin (generic Lipitor) 10 mg once daily could pay over $40 for a 30 day supply of the drug at the more expensive pharmacies in the province. The same amount of the same drug could cost less than $30 dollars at less expensive pharmacies. PharmaCare currently reimburses up to $31.56 for a 30 day supply.

Incentive programs encourage people to shop at a particular pharmacy or pharmacy chain by enticing them with such things as loyalty points, coupons, discounts, goods, rewards and similar schemes rather than with lower prices. Incentive programs cost retailers money, which they build into the price they charge consumers. Customers, particularly those where an insurer pays all or part of their drug costs, may become more concerned about the rewards they are receiving than the cost of the drug. Over time this can contribute to price escalation.

This new policy respects the right of pharmacies to offer incentive programs for customers, but takes government out of the business of subsidizing them.

PharmaCare is also a community pharmacy customer, spending as much as $1 billion annually on prescription drugs for its beneficiaries. While PharmaCare does not have the ability to “shop around” it does set maximum amounts for which government will pay.

While PharmaCare sets a maximum amount it will pay, not all pharmacies bill at the maximum amount. Rather than offering loyalty rewards, if a pharmacy sets its drug price or dispensing fee at a lower amount to attract customers, then customers, PharmaCare and all taxpayers will save money.

Please be aware that the restriction on inducements only affects the portion of a prescription paid by PharmaCare. You may still choose to get your prescription from a pharmacy that offers incentives so you can accrue points/rewards on the amount you pay out-of-pocket.

Further information on PharmaCare’s policy on inducements has been posted on the PharmaCare website. The Information can be viewed at:

http://www.health.gov.bc.ca/pharmacare/pdf/inducements.pdf.

I appreciate the opportunity to respond to your concerns, and trust that this explains the rationale for restricting incentive programs.

Sincerely,

Bob Nakagawa, B.Sc. (Pharm.), ACPR, FCSHP

Assistant Deputy

Finances, Municipal, Snafu

Insult to Insult to Injury

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Over the years many people have compliment me on my willpower for my dedication in swimming 5 – 6 days a week. The truth is that it is not so much willpower or dedication as it is being highly motivated. 

As the years have accumulated all the contact sports, injuries etc have come home to roost with a vengeance. To maximize, to maintain, mobility and minimize pain I need to swim those 5 -6 days a week.

Which is why the sizable surcharge imposed on the users of the Abbotsford Recreation Centre (and the City’s other facilities) to pay the multi-million dollar subsidy for a professional hockey team and a multi-million dollar subsidy to the well connected members of the Heat ownership group is so painful both as a citizen of Abbotsford and physically.

The surcharges have pushed the cost of a pass for ARC from affordable (with planning and frugality) to out of reach for the best part of Abbotsford’s citizens – as well as propelling the cost of using public facilities well past the cost of using private facilities. Only in Abbotsford would you end up with the public facilities affordable only for the well-to-do and the private facilities affordable to the general public.

The reason I have not followed so many others to the private recreation facilities is that I am a length swimmer and it is only the public facilities that permit 25 metre lengths.

The limitations on swimming imposed by being able to afford to swim only during toonie swim times means that since pool fees moved into the stratosphere my mobility has been decreasing and my pain levels have been increasing.

Struggling stiffly, slowly and painfully up to start the day serves as a daily reminder of city council’s practice of serving the needs of council’s egos rather than the needs of the taxpayers – with the notable exception of well connected taxpayers.

Adding insult to the injury of the usurious surcharge is the decision to abuse perfectly fine walls with paint to caricature a mural – as opposed to using the money frittered away on the mural to keep the cost of admission less extortionate.

A mural that seems to have a great deal in common with a Rorschach inkblot adds yet another layer of insult. Filling balloons with paint and having patrons throw them at the walls would have gotten much the same look, at a negligible cost.

Council, in typical council fashion, painted murals in a building where the cost of painting the murals pushes the admission cost up leaving people unable to afford to use the facility and see the murals.

The purpose of public facilities is not to fritter away money on murals or to provide funds to provide multi-million dollar subsidies to/for a facility for a professional hockey team or to provide multi-million dollar subsidies for an ownership group to buy themselves (themselves – not the city that is paying the subsidies) a professional hockey team.

The purpose of public recreation facilities is to provide amenities that all citizens can afford to access.

Consider, Federal

Lybia

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The media coverage of the HMCS Vancouver setting sail to Libyan waters to relieve HMCS Charlottetown, which has been in action off the Libyan coast since March, underscores Mr Harper and his Conservatives lack of an ethical base.

Mr Harper justified the involvement of the Canadian military in Libya by stating that the Canadian military was there to ‘protect the Libyan people from Mr Gaddafi.

According to Mr Harper Mr Gaddafi killing citizens of Libya is such a grievous offence that military intervention by countries from around the world is required to put an end to this killing.

Conversely Mr Harper is perfectly fine with Canadian business (with the approval and support of the Canadian government) to kill Libyans and citizens of any other country by exporting asbestos – a substance whose use is banned in Canada because it causes death, cancer and asbestosis – profiting from the export of death.

Obviously Mr Gaddafi’s mistake was that he should have used Canadian asbestos to kill his victims; Mr Gaddafi’s sin lay in his failure to contribute to the profitability of the Quebec asbestos exports and thus to the electability of Mr Harper’s Conservatives in the province of Quebec.

Municipal, Snafu

AESC Economic Impact Report

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Not really surprising that with an election only a few months away the mayor and council felt the need for an economic impact study on the AESC.

After all, with the AESC’s appetite for consuming taxpayer dollars, its multi-million dollar subsidy to a professional hockey team, its multi-million dollars subsidy for well connected local citizens to buy themselves said professional hockey team and the consequences of council’s decisions driving property taxes, facility admission costs, field rentals and other city fees and charges into the stratosphere – mayor and council were desperate for something – anything – that would allow them to claim the AESC was in some way good for the community.

In exchange for pouring tens of thousands more taxpayer dollars into the AESC’s black hole, mayor and council got a report with numbers they could point to and claim the AESC was positive for the community.

Of course……given that the methodology used to calculate the economic impact made it impossible not to get numbers that could be claimed to be positive, while ensuring no negative impacts would be recognized……means the report is meaningless in terms of assessing the impact of the AESC on Abbotsford.

Not much of a surprise that paying big bucks for an impact report resulted in the use of methodology that served mayor and council’s need for numbers that obscure and/or ignore actual impacts.

Methodology that resulted in an increase in economic impact in this second impact report on the AESC, over the first report prepared before the AESC opened.

Despite the fact that none of the promises made by council as to the financial performance of the AESC has materialized economic impact increased. Which is what happens when you use ‘multipliers’ to calculate economic impact – the higher the expenditure you apply the multiplier to, the larger the economic impact becomes.

In other words – the bigger a disaster, the more of a money sucking black hole the AESC becomes, the higher the number for economic impact becomes.

As to the report’s claim of the creation of 305 FTE jobs, the report did include the information that FTE jobs meant full time equivalent jobs.

What the report did not include was information on how the number 305 was arrived at. From the information contained in the report the number 305 appears to have been plucked out of thin air.

Even if 305 could be supported, what full time equivalent jobs means if that a lot of different people got a few hours of work here and a few hours of work there. As anyone who is looking for work or trying to survive in Abbotsford can tell you what is needed in Abbotsford is not full time equivalent jobs but full time jobs paying wages sufficient to live on.

Another non-surprise concerning the report is that the City’s news release as well as Mayor Peary’s comments omitted to note or draw the attention of taxpayers to the $15,208,000 Abbotsford portion of total AESC expenditures.

Or that – since if you read the report on economic impact you would discover the methodology used, the lack of any support for the claimed 305 FTE jobs and the $15,208,000 Abbotsford portion of total AESC expenditures – if you wanted to read the report it was not easily available on the City’s web site but required on to request a copy of the report from city hall.

Finally concerning mayor Peary’s statement “The critics of the sports centre either don’t understand, or choose not to understand, that there are some benefits.”

The question is not whether there are some benefits to the centre, obviously the ownership group and their businesses derive substantial benefits from the centre and from the pocketbooks of Abbotsford’s beleaguered taxpayers.

The question is about a) the benefits that the taxpayers should receive for their $15,208,000 portion of total AESC expenditures and b) how anyone with common sense, an understanding of fiscal reality and who behaves in a fiscally responsible manner could or would be expected to place any value on the expensive drivel contained in this new report on the economic impact of the AESC.

Municipal, Poverty, Snafu

‘Public’ facilities not very public accessible

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I ran into an acquaintance I had not seen in a while who, knowing how I feel about City council’s priorities and behaviours, felt I would provide a sympathetic ear to his need to vent.

Both he and his wife work and even though they are frugal it is difficult to make ends meet these days – a struggle an ever increasing number of Canadians and Abbotsford citizens share.

The fees the City of Abbotsford charges for the use of its athletic fields has pushed the cost of playing soccer (and other sports) to the level that, while they might be able scrimp enough to pay for one child, paying for two kids is not possible. Leaving, in fairness, none of the kids playing soccer.

I pointed out that council needed as many dollars as possible to pay the multi-million dollar subsidies for council’s ego/vanity projects – the ASEC and Abbotsford’s professional hockey team – and their subsidizing the purchase of a professional hockey team for a group of well connected citizens.

His reply involved several anatomically challenging, if not out and out impossible, suggestions. When he inquired as to how one qualifies for City subsidies to purchase a professional hockey team I had to inform him that since the makeup of the ‘ownership group’ was deemed knowledge to important (to damning?) to let the taxpayers (the people footing the bills for all the multi-million dollar subsidies) know, there was no way to know the relationship between councillors and the Heat ownership.

Sadly he is not the only person I know who has children that cannot participate in sports because of the cost Abbotsford charges to use its fields. Growing numbers of young people are being denied participation in sports activities because their families cannot afford the fees.

Ironic is it not? The airwaves are full of government advertisements about the fact children need 60 minutes of physical activity a day to be healthy and the City of Abbotsford is making it impossible for growing numbers of children to participate in physical exercise.

Personally, I think that a City’s priority should be the participation of young people in sports and activities. If we are going to give multi-million dollars subsidies to sports facilities it should be facilities for the young and other citizens – not for professional athletes and certainly not to subsidize the purchase of a professional hockey team by well connected citizens.

But then I also think that the purpose of public recreation facilities is to provide an affordable place for citizens to exercise. Unlike the current council which uses public facilities as another source of funds to subsidize (to the tune of several millions of dollars per year) a facility for professional athletes to use and to provide multi-million dollars yearly subsidies for the purchase of the professional hockey team.

Council talks about the need for amenities to attract new citizens to Abbotsford and to encourage young people to remain in Abbotsford rather than moving elsewhere. Yet the fee’s council charges for the use of amenities are prohibitive.

There is no difference between having no amenities and having amenities nobody can afford to use or can afford to use only infrequently.

That is why in Abbotsford, in the good old days before this spendthrift council, a monthly or yearly membership for the use of city facilities was the lowest (or among the lowest) in the city.

These days, under this spendthrift council, the prices at city facilities are the highest (or among the highest) and fewer and fewer families and citizens can afford to use city facilities.

I have been, until now, a pass holder and regular user of city pools to swim. I have watched as those I had shared the city facilities with over the years became members of private facilities (as I would have if one of them had an appropriately sized pool) – because membership at a private facilities is many $$$$$ less.

I have lost count of how often I have been told by other citizens and families how extremely limited their ability to use ‘public’ amenities have become because of admission costs.

In other cities, the city facilities ensure the general public access to regular exercise and the private facilities are the haunts of the better off who can afford higher fees.

In Abbotsford it is the private facilities that best ensure the general public’s access to exercise, while the city facilities are the haunts of those who can afford the fees at city facilities.

But then in other cities, city facilities are to serve the needs of citizens and not the need of council to pay for its ego/vanity projects.