Medical necessity, Infertility, and the Taxpayer

Since Ontario’s announcement to fund one round of IVF treatment costs, there have been a number of articles written how this procedure is not medically necessary and should not be covered by taxpayers. There are things, though, that you should know before jumping on this band wagon.

The Canada Health Act provides for the transfer of funds to the provinces for their health care insurance programs for services that “are medically necessary for the purpose of maintaining health, preventing disease or diagnosing or treating an injury, illness or disability.” The Act, however, does not define what it means by medically necessary services. Instead, what is deemed to be medically necessary is defined in each province.

The medical community, backed by the World Health Organization, recognizes and defines infertility as a disease. Because it is defined as a disease, diagnostic and management of the disease is medically necessary in their opinion. This means that the failure to cover IVF is not a medical decision but rather a policy decision.

As we all know, Quebec considers IVF to be medically necessary and covers 3 rounds of IVF.

Ontario already considers IVF to be medically necessary; it just limits the procedure to some forms of infertility. In fact, Ontario used to cover IVF treatments until 1994. What happened was in 1993, the Royal Commission on New Reproductive Technologies showed that IVF was a medically proven treatment for women with blocked fallopian tubes and urged provinces to cover IVF treatment costs for these couples. It also recommended the IVF be provided for other forms of infertility and to continue to assess the effectiveness of this treatment in these cases. Ontario, in the face of sharp fiscal constraints at the time, used this decision to limit its coverage of IVF to only these women.

Of course, since 1994, IVF has been proven to be an effective treatment in the face of many causes of infertility. So much so that the Expert Panel on Infertility and Adoption recommended in its 2009 report that IVF be covered by the province. This recommendation, however, was ignored. The result is that Canada is one of few developed countries that does not fund infertility treatments. Currently, 15 US states have mandated fertility coverage by private sector providers and even providers not in these states will cover many fertility treatments, including IVF. You will find in their policies some statement that says that ART procedures such as IVF are considered both medically necessary for women with infertility and have been proven effective. The UK, Sweden, Australia, France, New Zealand, and Israel, to name a few, all provide IVF treatments to its citizens under a certain age. In fact, Israel is the world leader in IVF, with the highest rate of IVF in the world.

It is interesting that despite most provinces not funding IVF, it does fund many of the supporting costs associated with IVF, including diagnostics (like HSG, semen analysis, endometrial biopsy, various blood work, monitoring, etc.). In addition, many infertility treatments are already covered, including attempting to unblock fallopian tubes and embolization of varicocele. The result is that the out of pocket expenses from IVF is nowhere near as high as it is in non-mandated US states. In addition, it means an interesting state where some couples infertility is treated and managed through the provincial medical plan, whereas others are not. This leads to some interesting questions like: Why is varicocele embolization, the sole purpose of which is for fertility, considered medically necessary as a treatment for infertility, despite the lack of medical evidence as to its efficacy, but IVF is not, despite the abundance of medical evidence in support of its efficacy? Better yet, why is a vasectomy considered medically necessary? And more ironically, why is a woman with two blocked fallopian tubes allowed IVF access in Ontario but a women with one 100% blocked tube and the other 95% blocked, not?

The advantage of provinces considering IVF to be medically necessary as it means the treatment can be covered through the provincial health care plan. Something that Ontario has not yet actually committed to. The other route is to skirt the medically necessary debate and instead over financial support through the tax system. This is exactly what the Government of Canada and the Government of Manitoba does.

The Government of Canada allows the expenses incurred for IVF (actually all ART procedures) to be claimed through the medical expense tax credit, including both the procedure and fertility medications. This is a nonrefundable tax credit (valued at 15%), the caveat being that only expenses above a threshold are covered. The threshold is the lessor of $2,152 or 3% of net income. That is, if you earn less than $71733.33, you can claim a larger portion of your medical expenses. Median income in Canada is about $32,000. All medical expenses within a household can be pooled and claimed by just one taxpayer, preferably the one with the lowest net income but not so low that they are unable to benefit from the nonrefundable nature of the tax credit. Assuming that a round of IVF costs $10,000, the minimum level of taxpayer support for these expenses is $1,177.2. Since most claimants earn less than $71,733.33 it actually means most couples obtain much greater taxpayer financed support. I have yet to see those arguing against IVF under a provincial medical plan arguing against this taxpayer financed support.

The province of Manitoba also offers a Fertility Treatment Tax Credit. Manitoba covers 40% of the cost of IVF and related ART procedures to a maximum of $8000. Again, assuming that a round of IVF costs $10,000, Manitoba couples see an additional $4000 in support for their expenses.

The province of Quebec also have a medical expense tax credit but it is refundable. This means that those that obtain IVF treatments through the provinces medical plan get an added bonus of claiming the costs of the fertility medications through this tax credit.

The result is a rather curious, nonsensical, contradictory, and confusing landscape related to taxpayer support for IVF and related fertility treatments. Perhaps rather than another haphazard leap into the environment, Ontario and the other provinces should think clearly about the medical coverage and taxpayer support for infertility as a whole and bring a more cohesive response to this issue.


Ontario’s premature IVF announcement

On Thursday April 10, 2014 Ontario made the long awaited announcement that it was going to boost its coverage of IVF. I say long awaited because the Expert Panel on Infertility and Adoption recommended that it do so in its 2009 report.

What Ontario announced was that it will now cover the procedural costs of one IVF round for all infertile Ontario residents. An advisory panel will determine how much each ‘couple’ will receive as well as who is eligible. Other than that, little information has been provided. It is not known at this time if the funding will be through the provincial medical plan, through a tax credit, or other vehicle. It is also not clear if the province will require a single-embryo transfer in exchange for the funding in order to reduce the risk of multiple births.

Due to the lack of details, it is not clear what the policy rationale for this proposal is. In addition, given the lack of decisions made regarding the implementation, the proposal appears to be ill thought out and the announcement made prematurely. That is, it was an announcement for announcement sake. That is the kind of policy that I hate.

The overall live birth rate per IVF cycle started is 24% in Canada (note that the success rate for natural conception is 25% in fertile couples). So if the oft quoted figure of 4,000 couples that will benefit from this policy is true (assuming this is an annual figure, but again not clear), then we expect it to lead to 960 live births per annum. The Ontario government expects to pay out $50M annually, meaning, ceteris paribus, that each live birth will cost Ontario taxpayers $52,083.

Normally, we expect to see some tradeoffs on the part of infertile couples like was done in Quebec. In exchange for partial funding, the ‘couple’ must agree to transfer only one embryo. This quid pro quo reduces the costs associated with multiple births, thereby saving the province the cost of high risk multiple births. This was what was done in Quebec. Quebec funds three rounds of IVF in exchange for a single embryo transfer and its multiple birth rate dropped from 27.2% to 3.8% within the first three months of the programs implementation. The costs saved from lower multiple births exactly offset the cost of the program, meaning a zero sum game for Quebec taxpayers..

However, the industry itself has already been moving towards more single embryo transfers on its own, even without cost sharing, due to the medical risks. Canadian fertility clinics reported a decrease in the multiple birth rate from 32% in 2009 to 18.4% in 2012 (note the natural rate of multiple births is about 2%); however, how much of that drop is due solely to Quebec vs. adherence to the recommendation by the Canadian Assisted Reproductive Technologies Register (CARTR) of a single embryo transfer for women under the age of 35 is not reported.

So it is not clear if Ontario’s motivation for this policy is to reduce multiple births, but if it is it needs to mandate single embryo transfers (it also needs to better regulate the industry, but that is a whole other kettle of fish). But if it is, then why is it funding just one round of IVF treatment? The pregnancy rate from one round is low (equal to that of the natural rate among fertile couples). Most couples will need a second round and even third round (either a fresh round or transferring frozen embryos from a previous fresh round), and without regulation related to the number of embryo’s transferred in these subsequent rounds, the risk of multiple pregnancy rises with each round as each round increases the incentive to transfer more and more embryos to achieve a successful pregnancy. The recommendation from the Expert Panel on Infertility and Adoption was to fund 3 rounds, with the live birth rate from 3 rounds being 70% for women under 35 and about 60% for those between 35-40.

The policy is also not consistent with evidence related to achieving a successful pregnancy from IVF. Evidence shows that the highest success rate from IVF occurs in rounds where the frozen embryo’s are transferred and where the uterine lining has been ‘scratched’ in the cycle before the transfer. If Ontario wants to increase the live birth rate, thereby reducing the cost of each live birth, then it needs to focus on matching its policy to evidence on success rates.

How the funding will be delivered is also important. If the goal is to make fertility treatments for affordable to those who might not already be able to afford them, then a tax credit does not meet this test. A tax credit requires the participants to pay the costs out of their pocket and then seek partial reimbursement at tax time. They need to have the money on hand first and foremost and be able to carry that expense until they are able to obtain the tax refund, which can be more than a year and half from the time they incur those expenses. Given that the average cost of a single cycle of IVF is $10,000, including medications, this is no small sum to incur.

Which leads to the other cost problem. The Ontario policy will only cover the cost of the procedure and not the cost of medications. Typically, the procedure runs around $5,000 and the required medications amounting to around an additional $5,000. Most private health plans exclude fertility medication from coverage, the exception being many public sector workers for whom these expenses are covered (again, a whole other kettle of fish).

So it is not clear that the policy will help increase access to IVF treatments or whether it will subsidize the costs for those that are already willing and able to pay for the treatment.

While many are passing judgement on this policy as not being needed, saying there are more important costs to cover in Ontario, I will not jump on that band wagon. Infertility is recognized by the medical community as a disease of the reproductive system. This disease affects between 1/6 and 1/8 couples of child bearing age and most infertility is an exogenous condition. Our medical system happily treats, at taxpayers cost, diseases and conditions that are brought on by the behavior of the individual, such as smoking, drinking, obesity, and so on as well as the costs associated with tubal ligation and vasectomies that arguments such as these against IVF funding are repugnant. That said, Ontario’s policy needs much more thought and clarity before it can be assessed as being a good idea or a poorly thought out policy with good intentions.