By Andrea Davis
June 23, 2010
Insurers in Canada are expecting overall health care costs for employers to rise 15% this year, the highest growth rate in five years.
This overall health care cost includes prescription drugs, medical plans, hospital coverage and dental care. Buck Consultants 2010 Canadian Health Care Trend Survey analyzes the health cost trend assumptions that factor into the premium rate setting of 13 major Canadian insurers.
Pharmaceuticals, which represent 60% to 70% of health expenditures, remain the fastest increasing expense paid by group insurance plans, with an expected increase of 15.8% in 2010. This is up slightly from last year’s increase of 15.6%.
“This is surprising considering the patents on several high-cost brand drugs are expiring this year, opening the door for lower cost generic drugs,” says Michele Bossi, practice leader of Buck’s Canadian health and productivity consulting practice. “We are also seeing a trend among provincial governments toward introducing legislation that will reduce generic drug pricing over the next few years.”
She says counteracting the downward trend is the increased risk to private plans caused by the explosion of expensive biologic drugs into the market. The world of biologics is uncharted territory, making future drug costs difficult to predict.
The biggest jump in cost trends was for medical services and supplies (excluding prescription drugs), which increased 13.5% from 12.8% last year. This reflects the continuing increase in utilization of paramedical services such as massage therapy, physiotherapy and chiropractic treatments.
Overall, the results of this year’s survey indicate that health benefit costs continue to rise at rates that easily exceed the cost of inflation for most other business expenses.
“There continues to be a gradual shift in focus to the broader concept of workplace wellness, not only to address benefit costs, but also as a tool to improve employee engagement and productivity,” says Bossi. “Employers are beginning to realize that an investment in a healthy workplace culture will yield significant returns, not just in reduced benefit costs, but in improved productivity and employee engagement.”
Source: Employee Benefit News article used by permission
