A study finds that employee health, drug and disability costs have risen significantly or are expected to increase, but only 15% of companies have considered a funding strategy to address the impact of future cost drivers such as an aging workforce, the expenses related to drug and disability plans, and legislative changes.
The Banking on productivity: Managing employee health costs study was conducted by the Canadian Financial Executives Research Foundation, the non-profit research institute of FEI Canada, and sponsored by Morneau Shepell.
“Canadian financial executives need to be aware of these emerging demographic and health trends that will have a substantial impact on the bottom line of Canadian businesses,” says Michael Conway, chief executive and national president of FEI Canada.
Fifty-three percent of respondents say health benefits costs were significantly increasing, and 37% say they’ve increased somewhat over the past two to five years, due to inflation and population changes.
Disability benefits costs are also seen as increasing, although not as quickly as health benefits costs. Twenty percent say they are significantly increasing, and 54% say they have increased somewhat.
From a cost perspective, health benefits were deemed of greatest concern to most respondents (62% ranked this issue as one or two on a scale of one to five, with one being most significant).
From a risk perspective, when survey respondents were asked to rate the risk of a series of health and pension issues, drug costs were identified as a leading concern by 64% of respondents, who deemed the issues to be a significant or very significant risk, indicating a concern that drug costs will rise in the future.