Slight dip in health-care plan increases in 2008

But costs still expected to be in 13- to 14-per-cent range

Canadian private health-care plans continue to face double-digit cost increases in 2008, according to a nationwide survey of insurers and Blue Cross agencies by HR consulting firm Buck Consultants.

The eighth annual Canadian Health-Care Trend Survey shows overall the trend has slipped slightly from last year but cost increases expected this year are still in the 13 to 14 per cent range, for combined prescription drugs, medical plans and hospital coverage. And they’re expected to be seven to 11 per cent for dental care, thanks to increased use combined with provincially set fee guides.

“Overall health-care cost increases continue to outpace other business cost increases as well as the consumer price index,” said Michele Bossi, practice leader in Buck’s health and welfare consulting practice. “We expect health-plan costs to increase at double-digit rates for the next five to 10 years, due to increased demand for medical therapies and the aging of the population.”

The 2008 survey analysed responses from 10 major Canadian group insurers that represent 84 per cent of the group health providers’ market in Canada. The increases result from several factors, including cost inflation, utilization of services, new technology and services, changes in the mix of services and shifting costs from the public to the private sector.

Although the 2008 cost increase for prescription drugs (14.09 per cent) dropped slightly from 14.26 per cent last year, prescription drug costs still represent the largest portion of employer health-care costs.

The cost increase for medical plans alone (excluding prescription drugs) has decreased to 13.09 per cent for 2008 from 13.43 per cent last year.

“The largest impact comes from the prescription drug trend,” said Bossi. “Generic drugs continue to gain market share as many of the leading brand-name products lose market exclusivity and growth in the pharmaceutical industry has slowed.”
In addition, increased focus on safety has lengthened the time required for drugs to enter the market and in some cases resulted in products being removed from the market.

Despite the slowed rate of growth in pharmaceuticals, the overall health- care trend (including prescription drugs, medical plans, hospital coverage and dental care) decreased slightly to 13.76 per cent for 2008 from 13.94 per cent in 2007.

While controlling health-care costs should be a priority, “in today’s competitive market, companies cannot continue to make the traditional benefit cuts of the past or they will be at risk of losing employees,” concludes the report. “There is an increasing need for employers to rethink their benefits philosophies and to be creative in addressing health costs.”

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