Private health coverage enters benefits realm

To save money, some employers are paying for employees to get faster treatment
By Shannon Klie
|Canadian HR Reporter|Last Updated: 09/12/2005

At any given time eight to 12 per cent of the workforce is off on disability leave and a single disability claim costs Canadian firms an average of $80,000, according to the Conference Board of Canada. The majority of these costs come from the long wait times in the public-health system. To save money, some employers are paying for employees to get faster treatment.

A benefit program for all employees that covers access to treatment in the United States or in Canada’s small, but growing, private sector will become more common, said a leading HR consultant.

“We’ll start to see plans evolving in this direction in the next two years,” said Daphne Woolf, managing partner of the Collin Baer Group in Toronto. “We’ll see this as pretty standard, amongst larger employers, within five years.”

About a year ago, an Ontario Catholic school board approached a Barrie, Ont.-based company, known for helping Ontarians access private MRIs in the U.S., to set up a group benefit to help employees on disability access treatment faster. MediTours, through its soon-to-be released program Privileges, will help employees on disability find the best treatment that will get them back on the job quickly, even if that means travelling to the U.S.

Initially the company planned to offer the service as an insurance-based benefit, which would cover the cost of medical treatment in the U.S., but the premiums of $1,500 to $3,000 per employee were prohibitive. Employers told MediTours they would rather pay on a case-by-case basis. While insurance costs may be prohibitive at this time, Woolf said companies should lobby insurance carriers to provide affordable premiums.

Traditionally disability management companies help employees back to work faster, but once an employee needs treatment that relies on the public system in Canada, MediTours president Peter Burton said the process hits a bottleneck.

“Wait times cripple the disability management process,” said Burton. “It makes sense to spend less money upfront than what you would spend over the long term if you were to wait around in Canada.”

With the Privileges program, MediTours would work with a disability management company to determine the minimum cost that would justify sending someone to the U.S. — taking the decision out of the employer’s hands.

“Disability management companies have the experience to know what cases will have the potential to cost a lot of money,” said Burton. “If it costs $30,000 to send the employee to the U.S. but you’ll have them back within a month and a half as opposed to 12 months, it’s probably worthwhile because it’s going to cost you only $30,000 as opposed to potentially $80,000 or $100,000 while they’re off.”

But employers don’t have to send workers to the U.S. for faster treatment. A number of private clinics across Canada have been providing services to those exempt from the Canada Health Act for years. The RCMP, the military and workers’ compensation boards are exempt because they have a mandate to get workers back on the job as quickly as possible.

The Canada Health Act, which prohibits people from paying for a medical service covered by provincial health care, doesn’t apply to a non-resident in any given province. That is, an Ontarian can pay for a joint replacement at a private clinic in British Columbia, but a B.C. resident would have to wait in the public system. Employers are also taking advantage of a perceived loophole in the act that allows third parties to pay for a medical procedure usually covered under provincial health care.

Brian Day is the founder and medical director of the Vancouver-based Cambie Surgical Centre, where his staff perform orthopedic, plastic, eye and dental surgery for a fee. Day said as many as 50 Canadian companies sent up to 300 injured or disabled workers to his clinic for private treatment in the past year. Unlike Woolf, he doesn’t believe employers will try to set up formal insurance plans for staff. “They’ll just pay for it,” said Day.

Woolf said she’s seen many firms pay for private care either in Canada or in the U.S. on an informal, ad hoc basis. She said employers should open up the benefit to all staff, not just high ranking executives, and as such, these firms will need to implement a formal private health-care benefits programs.

A formal program serves three main functions, according to Woolf. First, it suits most companies’ desire to find innovative ways to update benefit plans. Second, employees will get better faster and return to work faster, reducing disability and lost productivity costs. Finally, these programs are good for employees who will get care sooner.

Woolf said there are three key concerns when creating such a program. First, firms need to look at program design; it needs to be cost efficient and free of any legal problems that surround the private-versus-public health-care debate.

Second, employers will have to do a thorough cost-benefit analysis.

Finally, companies must underwrite the program properly. They must decide if they’re going to pay for each claim out-of-pocket, if the insurance will pick up the entire cost or if there will be some kind of cost-sharing.

Woolf said companies first out of the gate on this issue will have the most control over what the standard program will look like. Those that hang back and wait a few years will have less flexibility because the standard will have been set.

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