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BC: MSP Collection Costs Climb

December 15, 2016
BC: MSP Collection Costs Climb

Some good digging by Andrew MacLeod sparked this Tyee story on skyrocketing collection costs for Medical Service Premium (MSP) taxes and the Pharmacare program. From his piece:

The 10-year contract with Maximus B.C. to administer the Medical Service Plan and PharmaCare programs has cost British Columbia 50 per cent more than originally expected.

Critics say the ballooning payments are typical of privatization schemes, especially those involving large technology contracts, but a spokesperson says the government remain happy with the company’s performance.

When the provincial government entered the contract with Maximus in 2005, it had a “fixed-fee value of $324 million” for a transition period plus 10 years of operating Health Insurance B.C., which includes the MSP and PharmaCare programs.

But actual costs have soared over the original contract numbers.

“The total value of payments to Maximus over the same term is $489 million, an increase of approximately 50 per cent over the original 10-year cost,” according to a health ministry report dated July 28, 2016.

This comes as no surprise to CTF supporters. In April, we released a Freedom of Information request that showed MSP collection costs shot up 30% in one year:

The document shows taxpayers spent $77 million to collect MSP taxes in 2015, up 30 per cent from 2014, and up 45.6 per cent over the past two years.

“No wonder government keeps hiking MSP taxes year after year after year – it’s getting more expensive to collect them in the first place,” said Jordan Bateman, CTF BC Director. “It’s mind boggling to see collection costs jump that much in a single year.”

The documents show the government spent $189.1 million on MSP tax collection over the past three years:

  • $77 million in 2015 (including 25 full time equivalent staff)
  • $59.2 million in 2014 (including 24 full time equivalent staff)
  • $52.9 million in 2013 (including 24 full time equivalent staff)

We do quibble with one piece of that Tyee story. P3 or outsourcing contracts don’t necessarily guarantee higher costs – it all depends on how those contracts are negotiated. Blame the dealmaker, not the philosophy itself.

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