Up until recently, federal Health Minister Mark Holland was circumspect about his government’s pharmacare legislation and what it would mean for those with employer-provided drug plans. Critics warned that the legislation’s commitment to single-payer insurance put private plans at risk. The minister insisted that it didn’t.

This week, he clarified his message. In a letter to the Senate which is now considering the legislation, he confirmed that “under [the federal pharmacare] program, the cost of these medications will be paid for and administered through the public plan, rather than through a mix of public and private payers.”

The minister’s comments are a big deal because although the legislation only covers diabetes medication and contraception in the short term, it envisions covering a wider range of drugs over time. The consequence therefore could be that private plans are effectively outlawed altogether.

Yet, like lunch, there is no such thing as free insulin. Almost every government policy—regardless of the denials of the government of the day (and this is true across the political spectrum)—involves tradeoffs. And in the case of single-payer pharmacare, there’s far too much diversity and unique forms of coverage, and these coverages are far too embedded in existing, negotiated relationships, for all Canadians to come off better. Unless the government is willing to institute a public insurance model that’s as gold-plated as that held by its own employees at the Palais de Congress, there are groups within Canada that will necessarily lose.

At this moment, drug coverage is one of the few areas in Canadian health-care policy that actually works. A supermajority of Canadians (67 percent) have drug insurance coverage through their work, associations, or private care, and another one in five are covered by existing government plans. While there’s no doubt that the government can play a role for the minority of Canadians who both have no coverage and can’t afford to pay out of pocket, the one-size-fits-all approach outlined by Holland is a poor solution.

Particularly for workers under a union contract. They’ll be among the biggest losers.

Why?

In almost all unionized workplaces, unions have gained hard-won agreements that include health benefits (also called “welfare” benefits) as part of workers’ total compensation package. In any given agreement, union negotiating teams consult with workers on the shop floor to determine the makeup of that total compensation. If, say, the total available money available for wages is $100 per hour, workers themselves choose to distribute that total package in different ways. Some workplaces opt to lean more heavily into pension contributions. Others choose health and welfare plans that contain a wide variety of options and substantial coverages.

The basic point is that existing collective agreements are both uniquely suited to the needs identified in that particular workplace because they were chosen by the people who work there, and because the cost of these health benefits, including drug coverage, comes out of a total compensation package.

This process realizes that there is a cost to providing benefits, and that money dedicated to drug coverage has to be traded off against some other good—retirement benefits, or an hourly wage. As one of us who has had experience negotiating collective agreements for working-class people can attest, this process takes time and is often hard fought. And while it’s not perfect, it has the benefit of being decided by the workers themselves according to their unique needs. A look at leading collective agreements in, say, the construction, and health-care sectors shows that these plans can amount to anywhere from the equivalent of $7,000-10,000 for each employee per year.

The government’s intrusion into pharmacare upsets the balance that has been struck by employers and employees through years of collective negotiations. Employers see drug insurance as a means of treating their workers well and attracting and retaining them. Unions see the widespread coverage in collective agreements as a value they offer workers (Google “looking for a union in Canada” and you’ll find plenty of examples of this).

Holland’s letter arguably snuffs a key value proposition for unions to their members. It is, as I have argued elsewhere when the Ontario government intervened in scheduling language most commonly found in a collective agreement, a policy intervention that will have long-term negative consequences for unions and one that ties the hands of unions in representing their workers. The history in Ontario showed that that type of intrusion into unions’ daily work actually caused chaos and left workers worse off.

The same will be true for unionized workers on the pharmacare front. While PSAC, one of Canada’s largest federal public sector unions, has come out in favour of pharmacare, this should be seen as yet another instance of the gap between the ideological commitments of public sector union executives and the interests of their rank-and-file (cf. CUPE Ontario). While it is true that PSAC or other public sector unions might gain a significant number of new members from the government administration needed to build and maintain this program, it is equally true that PSCAC’s membership would lose overall. Their situation is a case study for unionized workers writ large. These workers would lose in two ways.

First, any plan administered centrally by cash-strapped governments is almost guaranteed to offer fewer benefits with more administrative hassle. This is in large part because PSAC and other unions have such excellent benefit plans that offer an array of choices and administrative ease for workers; there is a reason the term “gold-plated benefit plans” is part of common parlance when we talk about public sector workers. It’s because they are, and unions should be proud of this!

We all know that governments across the country are short on cash for health-care costs. Health care is Canada’s leading budget item, representing nearly half of total provincial program spending, and we have not even hit the peak of the health expenditures that our aging population will require as they move into their most expensive (from a health-care costs perspective) stage of life. We are already seeing significant access and care issues in our existing state-run medical system, and there is no reason to doubt that the addition of a pharmacare plan to the state’s existing burden would result in decreased benefits to unionized workers, as compared to their existing plans.

Second, employers will simply consider the state’s absorption of pharmacare costs as a means of lowering their total payroll burden. Unions will have to start from ground zero to recover dollars that once accrued to a given worker’s unique health-care needs and to regain them or put them back into hourly wages or pensions. It’s highly unlikely that employers will simply agree to transfer a $3 per hour health premium onto the workers’ wages. It’s likely that unions—including PSAC—will find themselves at the bargaining table with workers who have been forced to accept a lower level of health and welfare benefits because of the government’s intrusion into an arrangement they had worked out at a local level, and yet will have to fight tooth and claw to get that compensation replaced.

And this highlights the most important fact: workers can negotiate with and exert direct leverage on their employers to find a mutually agreeable solution that works for all parties. But those same workers can’t collectively bargain with a federal government. Their only means of influence is with their votes. And it should surprise no one to see unionized workers, who stand to lose as a result of this program, refuse to offer the support for this program that their executives do.

• Brian Dijkema is President, Canada and Renze Nauta is Work & Economics Program Director at Cardus