Canadian insurers expect health costs to rise by 11.55 per cent this year, according to a new report by Accompass Inc.
The annual survey determines the anticipated year-over-year cost increase or decrease — or health trend factor — by asking insurers to examine their businesses and take various factors into account, including legislation and reforms, economic events and forecasts, demographic trends, risk margins and high-cost specialty drugs.
It found insurers have remained steady since 2012 with a weighted average health trend factor of 11.55 per cent for 2019, with rates ranging from between 10.5 and 13.5 per cent. The factors driving employee benefits renewal rates break down into five categories: 1.9 per cent inflation, 2.6 per cent salaries, 5.62 per cent dental, 11.57 per cent drugs and 11.55 per cent health.
The 11.55 per cent was a weighted average based on the group premiums, as reported by Benefits Canada’s 2018 Group Benefits Providers Report, says Chris Lee, vice-president of marketing and communications at Accompass, noting that’s in line with what the consultancy has seen since 2012 and historically, with a few exceptions.“With good advisors, you’re going to find the rates will typically be lower for a lot of employers. We’ve certainly seen that with our own block. The carriers themselves are playing a role to help employers with cost containment.”
For the modern drug plan in 2019, high-cost specialty medications are causing employers to consider strategies for alleviating the cost impact, while also maintaining high-quality coverage for their employees. According to the survey, the top drugs claimed on a cost basis are Remicade, Humira and Stelara. These can cost tens of thousands of dollars per patient per year.
While six in 10 insurers have negotiated special pricing for certain drugs, every major group insurance company in Canada offers additional review and oversight for new medications approved by Health Canada and existing medications for new indications, noted the report.
The report also drew from a plan sponsor survey conducted by Accompass’ parent company Arthur J. Gallagher & Co. It found two in three respondents have implemented mandatory generic drugs as a way to combat rising drug costs. As well, two in three benefits claims are submitted online. This increase in the number of online claims could be a contributing factor to incidences of benefits abuse and fraud, noted the report.
It also found less than five per cent of employers cover medical cannabis in their benefits plan. On the other hand, eight in 10 insurers have integrated pharmacogenetics testing into their plans.
A common perception among employers about how different generations value their benefits plans is the view that younger employees value their plans less, according to the report. Among a survey of 1,500 Canadian plan members, 48 per cent of millennials rated the importance of having an employee health and dental plan as extremely important, compared to 40 per cent for everyone else surveyed across all age categories.
“Millennials don’t necessarily see the benefits plan as being more or less valuable than their counterparts across other generations,” says Lee. ”I think it’s an important point to make that all generations value the importance of their benefits plan and the provisions within.”
Plan members cited dental as the most important benefits, followed by prescription drugs and paramedical services.