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© Copyright 2000 Rogers Media. The following article first appeared in the March 2001 edition of
BENEFITS CANADA magazine.
E-Poll
By what percentage do you expect healthcare benefits costs to increase over the next year?
Vote at benefitscanada.com
Canada's private sector spent an estimated $27.5 billion on healthcare in 2000, an increase of 5% over 1999
expenditures, according to the Canadian Institute for Health Information.
This month's E-poll shows that plan sponsors are preparing for a hefty hike in healthcare benefits costs in
2001. The majority of respondents (42%) expect costs to increase by more than 15%, while 19% expect a more
modest 11% to 15% increase. Less than one-third of respondents (31%) expect an increase in their healthcare
benefits costs of between 5% and 10%. Only 8% expect an increase of less than 5%.
Larry Jackson, manager of health and welfare at the Toronto office of Buck Consultants, says the 18
Canadian insurance carriers his firm surveyed expect drug costs to rise by 15.6%, dental by 8.2% and other
medical by 15.2%. Jackson adds the aging population, government cost shifting and new technologies are
driving this trend.
"Health costs are increasing at a faster rate than all other benefits," says Maureen Premdas, a consultant
in the healthcare and group benefits practice of William M. Mercer Limited. "Expect a 15% increase in 2001.
And if you do nothing, your health benefits costs alone could double within four to five years."
The main driver of cost increases is drugs. Enbrel, a drug used in the treatment of rheumatoid arthritis
that was approved for sale in Canada in December, could cost up to $17,000 per patient per year. Rebetron,
used in the treatment of hepatitis C, is expected to be approved for use in Canada this year at an expected
cost of $19,000 per patient per year.
Joan Wade, manager of employee benefits, occupational health and safety and wellness with the Town of
Richmond Hill, says the Town's plan has incurred significant increases this year. Extended healthcare costs
have risen by 20% and dental premiums by 10% for 2001.
"The increase is due to two factors," she explains. "One is inflationary trends--the cost of drugs,
increases in dispensing fees. And the second factor is enhancements that have been made to our benefits
plans through working agreement negotiations [with employee groups]." --Young Um
Rising costs
Plan sponsors are bracing for rising healthcare benefits costs. Forty-two per cent forecast increases of
more than 15%.
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