Three-fifths (60 per cent) of benefits plan sponsors say the costs of their health benefits plan increased in the past three years, according to the 2023 Benefits Canada Healthcare Survey.

It found this percentage decreased from 66 per cent when the question was last asked in 2016 and was unchanged from 2015 (60 per cent). Only three per cent of respondents indicated costs decreased and five per cent said they didn’t know.

Mid-sized employers (50 to 499 employees) were more likely (70 per cent) to report higher costs than employers with up to 49 employees (53 per cent). Among eight possible causes of increased costs, plan sponsors most often selected the increased overall cost of drugs (52 per cent), as they did in 2016 (54 per cent). Increased claims for biologics and other higher-cost specialty drugs ranked last (nine per cent), down from No. 7 in 2016 (18 per cent).

Read: U.S. employers’ health benefits costs projected to increase 8.5% in 2024: survey

More than three-quarters (78 per cent) of plan sponsors agreed they’re satisfied with how their insurance carrier is responding to claims for higher-cost specialty drugs, unchanged from when this question was first asked in 2015 (79 per cent).

However, 85 per cent agreed they’d like their carrier to provide additional coverage options to plan members, up from 78 per cent in 2015. Roughly eight in 10 (77 per cent) also agreed they’re concerned about their plan’s ability to continue covering higher-cost drugs. Nearly all (88 per cent) plan sponsors agreed (36 per cent strongly) more needs to be done to reduce the cost burden of these drugs on private drug plans, such as more coverage by public plans.

“While insurers leverage existing mechanisms such as prior authorization to help manage claims for high-cost drugs, the pipeline of specialty medications is robust,” said Jeff Boutilier, vice-president of pharmacy business development at Rexall Pharmacy Group and a member of the survey’s advisory board, in the report. “In particular, the pipeline for medications to treat rare diseases is one to closely monitor. With the upcoming national strategy for drugs for rare diseases, it will be equally interesting to see how these life-changing medications will be funded.”

Read: An update on Canada’s national strategy for drugs for rare diseases

The survey also found plan sponsors benchmark their health benefits plan to check its competitiveness every 2.1 years, on average, including nine per cent of respondents that never benchmark. The 91 per cent that do benchmark was unchanged from 2017 and up from 2014 (87 per cent).

Those that benchmark indicated doing so once every 2.4 years, on average, compared to three years in 2017 and 2.6 years in 2014. Nearly two-fifths (38 per cent) of plan sponsors said they did so in the past year and almost half (45 per cent) said they did so within the past two to three years. The remaining 17 per cent benchmarked four or more years ago.

“We’re doing more benchmarking than ever before,” said Shannon Darvill, group benefits consultant at People Corporation Inc. and a member of the survey’s advisory board, in the report. “Not only to validate the competitiveness of the plan, but also to act as a tool for people leaders to be able to present the gaps and the opportunities for improvement internally to executive teams, both for attraction and retention. It has definitely become an important tool for decision-making.”

Read: 74% of employers say cost is most important part of benefits plan design, review: survey

More than a quarter (28 per cent) of plan sponsors added or improved their current benefits or coverage levels in the past year, similar to 2022 (30 per cent) and well ahead of 2021 (11 per cent). However, 14 per cent reported removing or reducing benefits or coverage levels, double the result from 2022 (seven per cent). More than half (59 per cent) of plan sponsors made no changes, compared to 62 per cent a year ago.

Plan sponsors with flexible benefits plans (38 per cent) were more likely to make improvements than those with traditional plans (22 per cent), as were employers in Atlantic Canada (37 per cent) and mid-size employers (50 to 249 employees, 34 per cent).

When presented with a list of eight options to improve their health benefits plan, half (49 per cent) of plan sponsors indicated the most important option would be increased coverage levels to keep pace with inflation, followed at some distance by improved coverage options for higher-cost specialty drugs (29 per cent) and more benefits/services to manage chronic diseases (28 per cent). Only five per cent responded that none were important.

Read: How Bill Gosling used pandemic conditions to redesign its benefits plan