Group health plan costs expected to rise in 2021: report

The costs of employer-provided health plans in Canada are expected to rise seven per cent next year, outpacing general inflation by more than five per cent, according to a new report by Aon Canada.

Contributing factors include higher drug prices, the impact of non-communicable health risks and the continued introduction of new and expensive therapies. Indeed, musculoskeletal, cardiovascular and mental health are the most prevalent conditions driving employer-sponsored health-care claims across the country, noted the report.

Globally, the report is forecasting the costs of employer-sponsored medical plans to increase 7.2 per cent in 2021, mainly due to expanded benefits, increased unit costs for medical services and a decrease in expected general inflation.

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The forecast was based on the expected 2020 claims levels and didn’t factor in the impact of the coronavirus pandemic. It also assumed the extent of lockdowns impacting the use of medical benefits will be limited in the future.

Based on the analysis, health per capita claims on an annualized basis were expected to be almost 10 per cent lower than 2020 expectations and dental per capita claims were expected to be more than 20 per cent lower, noted Greg Durant, Canadian chief actuary for health solutions at Aon, in a press release.

He cautioned that the ability to track claiming patterns accurately throughout 2020 was significantly impacted due to restrictions on both employees and providers of medical and dental services due to the pandemic, noting the relative fluidity, uncertainty and inherent limitations of projecting costs in this environment. “The questions we all want answers to are when will these claiming patterns recover and what will be the ‘new normal?’”

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Aon also predicted occupational risk will be one of the most significant factors to the rising costs of employee benefits plans in Canada, underscoring the need for protective gear such as personal protection equipment and plexi-glass partitions, as well as continuing social-distancing measures. Unhealthy personal habits such as poor stress management, excessive alcohol or drug use and insufficient sleep were also top health factors cited as growing risks to the cost of these plans.

Additionally, the report suggested that Canadian employers rethink how their employees perform their duties in workplaces, noting failure to address these issues, including employee fatigue caused by the disruption, may lead to real or perceived increases in the risk of infection, resulting in employee absences and the use of aspects of health plans that workers may not have used in the past.

“There is still a significant amount of uncertainty regarding COVID-19’s impact on deferred treatments and long-term health care,” said Tim Nimmer, Aon’s chief global actuary for health solutions.

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