Canadian Health Care Cost Management

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Behavioural Shift.
Worb, Michael; Benefits Canada; v34 no1 pp 10-11, 13 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The economic upheaval of 2009 prompted both expected and surprising changes in employee benefits. Employers pulled in the financial reins, employee reaction showed as rising disability and absenteeism rates and aging continued to press the demand for health benefits. In response, plan sponsors are more focused on seeing strong return on their benefit investments, changing vendors for better arrangements, improving plan design and shifting more costs to employees. Likely changes for 2010 include more requests for benchmarking, increased cost sharing and higher expectations of advisors. Administrative service only arrangements and health care spending accounts are expected to increase, and changes in provincial drug plans will prompt drug cost shifting to private plans.
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Atlantic Canada Adaptations.
Kane, Cheryl; Benefits Canada; v33 no12 pp 22-23 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Statistics Canada projects 28 percent of the population in the Atlantic provinces will be age 65 or older by 2031. With more people staying in the work force, the numbers have serious implications for the region's employers. The rate of chronic conditions and the growing use of costly prescription drugs not paid from government funds are prompting the need for a strategic rethinking of employee health issues. Employers must become more proactive, promoting healthier behavior and better management of disease conditions. They must be ready to cope with pandemics such as the H1N1 virus. A growing number of employers understand the value of prevention and early intervention and of treating health management as an investment in their business rather than as a cost.
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91 Per Cent of Firms Offer Wellness Program.
Klie, Shannon; Canadian HR Reporter; v22 no19 pp 1, 12 Nov 2, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Though the prevalence of wellness programs has grown dramatically, few organizations are looking at the programs' effectiveness. Of 634 organizations surveyed in 2009 by Buffet and Company Worksite Wellness, 91 percent offered one or more wellness initiatives, but just 51.6 analyzed health claims data and about one in four did further assessment on a regular basis. Available data on disability claims, drug use, employee assistance plan (EAP) use and other indicators are valuable for making the business case, a common hurdle for getting funding and help tailor offerings to meet actual needs. While EAPs, first aid and CPR courses and flu shots are the most widely offered initiatives, prevailing health risks point to the need for assessments and subsidies for fitness, blood pressure screening and cholesterol screening.
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Cheap But Highly Valued Benefits.
Pallone, Greg; Canadian HR Reporter; v22 no19 pp 16, 20 Nov 2, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : HR managers are challenged to find innovative but meaningful ways to attract and retain good employees without increasing costs to the organization. A direct rewards program is relatively inexpensive but can be a good way to express recognition and gratitude. Employee assistance programs continue to be an effective benefit, especially for helping employees handle stress and remain productive. Peer recognition, monthly team events and recognition of anniversaries and birthdays reinforce support among coworkers. Employees appreciate the freedom to telecommute and work flexible hours. Health benefit costs can be trimmed by using a preferred provider network.
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Not So Quiet on the Western Front.
Middleton, Glen; Benefits Canada; v33 no10 pp 14-15 Oct 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Companies in Canada's western provinces are having to balance the competing interests of their finance and HR departments, pitting benefit costs against staffing, recruitment and retention. Cutting back creates problems and does not address long term problems. Employers are focusing on health cost control through demand management, wellness programs and risk management. Recommended strategies include examining workforce demographics, claims and utilization patterns, and use of disability benefits and employee assistance plans. Plan design adjustments might include flexible benefits tied to health risk assessment scores, flexible spending accounts and voluntary benefits. Retiree coverage might be changed to individual plans or a health care spending account.
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Open Wide: The Importance of Dental Care in the Workplace.
Tapp-McDougall, Caroline; Benefits and Pensions Monitor; v19 no7 p 19 Oct 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Like medical insurance, the cost of dental benefit coverage is rising, and employers shoulder most of the burden. In 2000, employers and individuals paid for 86 percent of the care delivered. Most appreciate the important part dental care plays in overall health. Those with dental coverage are 2.7 times more likely to get dental treatment than others. Compared with health benefits, employees use dental benefits more often and focus on diagnosis and prevention. They view the benefit differently and perceive it to have high value. Despite the rising costs, employers should appreciate the importance of dental care for their workers and ensure they understand the benefit and use it appropriately.
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The Buck Stops Here: Changing Times ... Time to Change.
Kesteris, Karen; Murphy, Sarah; Benefits and Pensions Monitor; v19 no7 pp 50-51 Oct 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Traditionally employees with company-sponsored health care have not seriously questioned the price of care or their need for treatment, since costs have been hidden. But the paradigm is changing, making personal accountability a key in containing expenses. Health plan participants must understand how a strong consumer orientation will help them save money and maintain their benefits. To promote a consumer focus, employers must explain how the plan works, with full cost transparency, how comparing costs serves all and how to use plan benefits effectively. Simple informative pieces on various topics can help convey the message.
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Stretched and Stressed: Use and Possible Abuse of EAPs and DM Programs.
MacArthur, Bob; Rickard, Emma; Lewis, Jack; Canadian Benefits & Compensation Digest; v27 no4 pp 10-13 Aug 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The tight economy is causing greater stress, anxiety and negative behaviors and more demand for disability management (DM) and employee assistance programs (EAPs). While employers may want to cut back on such programs to control costs, they are more necessary than ever and must be managed and used in a way to maximize their value. Employers should watch for trends in utilization of the programs that can suggest misuse. Analysis by age, occupation, position, location and other factors can suggest the need for special kinds of assistance or preventive programs. Design features including the definition of a case, amount of direct contact by care providers and care integration between providers reflect important value differences between programs.
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Tight Squeeze.
Hodder, Alyssa; Benefits Canada; v33 no8 pp 10-11, 13, 15, 17-18 Aug 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Pension and benefits consultants are feeling fallout from the economic pressures on pension plans. While some employers turn to consulting as a service vulnerable to cost cutting, many are relying on consultants even more for risk management and governance advice. They are looking for more creative solutions for cost management, employee engagement and retention and communications. Being in tune with the client's needs and working as a partner is essential for sustaining a strong, long term relationship.
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Health-Care Costs Maintain Dramatic Rise.
Dobson, Sarah; Canadian HR Reporter; v22 no13 pp 1, 14 Jul 13, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : After a four year downward trend, pharmaceutical costs soared up 15.2 percent in 2009, surpassing last year's increase of 14.1 percent. Data from 11 major Canadian insurers reflected an uncertain economy and the tendency for anxious employees to use health care benefits while they are still available. Other cost drivers are the aging of baby boomers, the lower overall health of generation X individuals and the growing use of medications for depression. Medical plan costs rose 14.1 percent, up from 13.1 percent in 2008.
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Best Advice: Consultants in the New Reality.
Coutu, Camille; Sorhaitz, Kevin; Laird, Steven; Benefits and Pensions Monitor; v19 no4 pp 23-33 Jun 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In the economic downturn, plan sponsors need different kinds of support from the pension and benefits consultants as they look harder for ways to control costs. Sponsor clients need help negotiating with insurance carriers, designing a benefits program with manageable risks, complying with regulations and encouraging responsible individual behavior. Consultants must use all resources available to help control costs, such as audits for claims, beneficiaries and overall eligibility. In addition to educating sponsors about design, administration and other factors influencing plans, they are increasingly expected to handle member education. Consultants must provide these services with an understanding of the corporation as a whole. A directory details 157 consultants and their specialty areas.
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Drug Watch 2009.
Cowan, Cory; Benefits Canada; v33 no6 pp 23, 25, 27 Jun 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : ESI Canada reports a 2.1 percent lower overall drug cost trend in 2009 compared to 2008, largely since 45 percent of filled prescriptions were generics. Despite representing under one percent of prescriptions filled in 2008, specialty drug spending is rising 17 percent annually, compared with three percent for others. Biologic drugs are the fastest growing segment. Generic versions of some biologics are promising but will not be available for some time. Some newer drugs are administered in nontraditional settings, resulting in a cost shift from the public sector to private health insurance. Plan sponsors must prepare for these changes by controlling costs where they can, such as by instituting mandatory generic substitution, encouraging generic biologics and establishing utilization management policies for high cost drugs.
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Small Spenders.
Sullivan, Mike; Benefits Canada; v33 no6 pp 29, 31, 33 Jun 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Reductions of four to eight percent on drug plan costs are possible, but not by using traditional superficial, aggregate level drug claims data. To see real savings, sponsors must procure and analyze transactional level data over the last three to five years for their own plan. Only this information can provide information on immediate savings opportunities, the effect of alternate designs and cost drivers for the specific plan. A case study illustrates how transactional level data led to discovery of employee subgroups' differing patterns of drug use and change and how modeling plan options demonstrated the effects of redesign choices.
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The Case for Wellness Programs in Challenging Times.
Pridham, Sue; Benefits and Pensions Monitor; v19 no4 pp 34-35 Jun 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In a tough economy, keeping health care costs in check is a high priority, and the best cost management opportunity comes through helping healthy individuals stay healthy. For others, modifying health risk behaviors such as smoking, poor nutrition and physical inactivity, which together account for 70 percent of health costs, generates savings. Workplaces must demonstrate support for wellness, including mental health, to encourage a pervasive attitude change. Easy steps include offering healthy snacks for meetings, sharing healthy recipes, offering counseling sessions with a dietician, sponsoring a walking or stair climbing challenge and promoting team building events.
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Class Action Settlement Reduces Retiree Benefits.
Smolkin, Sheryl; Employee Benefit News Canada; v7 no3 pp 1, 16 May-Jun 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Ontario Court of Justice has approved a class action settlement in the case of Smith, Heinman and Nother v. Labatt Brewing Company that reduces benefits to provide cost relief to the employer while still retaining important benefits for retirees. While Canadian employees have a vested right to nonpension benefits at retirement, collective agreements or employment contracts can include language that allows those benefits to be changed. Experts say that there is a trend for financially troubled companies to risk litigation and negotiate benefit changes to cut costs. In the Labatt case, the use of a class action was beneficial to both parties, allowing the employees as a whole to enter into negotiation and leading to compromise rather than an adversarial dispute.
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Distinct Benefits.
Brosseau, Johanne; Benefits Canada; v33 no5 pp 17, 21 May 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Quebec faces greater challenges in benefit cost management than other provinces. Provincial rules cover drug benefits, eligibility and benefits management, and payroll and sales taxes are complex. Drug costs are disproportionately high. Additional rules over private insurance add to the total cost of health benefits. Employers' best strategy to balance rising costs against sustaining their workforce may be to adopt flexible benefit plans, the Healthy Enterprise Standard promoting employee health and plan designs that encourage healthy behavior change, and to control drug costs through a formulary. Employers should also become active contributors in government decision making on health issues.
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What Can Employers Do to Curtail Benefit Costs?
Scappatura, Angela; Canadian HR Reporter; v22 no8 pp 18, 26 Apr 20, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : While the economic crisis of 2008 and following is leading employers to look at benefit plan design changes, many do not know what sort of information to collect from benefit providers. Once an employer has a measurement strategy and knows what data to collect, a two pronged approach to analysis, consisting of a broad examining of spending trends and a focus on the most expensive products and comparing costs of similar products, such as generic versus prescription drugs. Analysis of plan data can also uncover misuse of plans or products, such as the purchasing through a drug plan of medications that members could buy over the counter. Companies can achieve benefit plan savings by cutting back on services or shifting costs to members, without completely eliminating the benefit.
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Better Days.
Scott-Clarke, April; Benefits Canada; v33 no4 pp 32-33, 35, 37-38 Apr 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The insurance industry is hoping to make the best out of the financial downturn. Clients are looking beyond price to demand better products and higher service levels while reviewing their plan design. Seeking cost saving options, employers are shopping around for better deals. Some are considering administrative services only or shedding benefits, leading insurance providers to expect growth in individual insurance products. Providers who offer new solutions and top quality service will be the long term winners.
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Coalition's Purchasing Power Curbs Drug Costs.
Di Falco, George; Benefits and Pensions Monitor; v19 no2 p 13 Apr 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Atlantic Canada Healthcare Coalition Society has demonstrated that a group of health and welfare plans acting together can significantly reduce the increase of drug costs. The coalition encourages members to use its preferred network with negotiated drug savings, reduce administrative fees and premiums and create incentives in concert with its pharmacy benefit manager. According to Society president Fern Tardif, members with the complete package can realize five to 15 percent savings on drug costs. Tardif says he has met significant resistance, with potential members worried about losing their autonomy or confidentiality, but he says that participation is always completely voluntary and every group in the coalition maintains complete autonomy.
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Getting a Better Deal on Generics.
Smolkin, Sheryl; Employee Benefit News Canada; v6 no2 pp 1, 25-27 Mar-Apr 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Canada's Competition Bureau says private sector employers can get better prices for generic drugs by using mail order pharmacies, preferred provider networks and buyer incentives and insisting that pharmacies pass on manufacturer rebates. But plan sponsors and industry experts argue for greater pricing transparency along the supply chain to equalize costs for public and private plans. Drug plan administrators do not routinely provide a breakdown enabling companies to sort out costs, while public plans impose pricing caps and demand competitive pricing. Some of the cost strategies can make a dent in the pricing gap, but significant discrepancies remain without a reevaluation of cost models and plan designs.
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Obesity on the Job.
Park, Jungwee; Perspectives On Labour and Income; v21 no1 pp 37-45 Spring 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In 2005, 15.7 percent of Canadian workers were obese, a 3.2 percent increase in one decade. Self assessments of height and weight underreflect actual measurements of obesity. Excess weight is more common among men, older workers and those with low education. It is more prevalent among low income women and high income men. It is linked with long work hours and shift work. Obese younger men are more often absent from work, while presenteeism is more common among obese older women. Obesity is correlated with both physical and mental health conditions, including stress and depression, and it creates costs for employers as well as the society as a whole.
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Study Challenges Savings From Therapeutic Substitution.
Davis, Andrea; Employee Benefit News Canada; v6 no2 p 14 Mar-Apr 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A study by the Canadian Society of Intestinal Research shows that British Columbia's policy of therapeutic substitution, instituted in 2003, has led to an extra $43.5 million in health care costs. The policy requires substitution of four proton pump inhibitors for gastroesophageal reflux disease with a less expensive brand. The research found the switch led to more physician and hospital visits as patients tried to manage the change. Privately insured patients without a doctor's approval for the original medication are responsible for the extra out-of-pocket cost, but it does not count toward the deductible for the province's PharmaCare policy.
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HR Programs Evolving as Recession Deepens.
Klie, Shannon; Canadian HR Reporter; v22 no4 pp 1, 19 Feb 23, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Canadian employers are making judicious cuts in HR programs. A late 2008 Watson Wyatt survey of 138 organizations found 84 percent planned to make cuts, with travel budgets most vulnerable. Respondents were also trimming holiday celebrations, memberships, education benefits, subsidized meals and salary increases. Hewitt polled 192 employers in early 2009 and found the least likely to be cut were retiree benefits, health and disability plans, wellness programs, employee recognition, flexible work arrangements and support for adoption. Ambivalence toward training and development programs leaves them somewhat at risk.
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Scaling Back?
Scott-Clarke, April; Benefits Canada; v33 no2 pp 30-32 Feb 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Although employers are looking for innovative ways to cut costs heading into 2009, experts say they are largely avoiding cutting back on dental plans. According to the Canadian Life and Health Insurance Association, 54 percent of Canadian employers offer dental coverage, usually 80 percent on basic services and 50 percent for major services. The average yearly maximum for a dental plan is $1,500, a figure which has not changed much since the 1980s despite rising dental costs. Although dental plans have changed little in the opening decade of the 20th century, those who need more flexible coverage are getting some help from health spending accounts.
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Accounting for Health.
Jones, Dave; Benefits Canada; v33 no1 pp 21-23 Jan 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Health care spending accounts (HCSAs) enable users to make their own choice about health spending while keeping employer costs predictable. A 2008 LIMRA survey shows almost 40 percent of the 1,500 plan members polled view their HCSA as very important, and Mercer found HCSAs were the most popular flexible benefit program in 2007, chosen by 80 percent of those given a choice. Sponsors considering HCSAs should consider the consumer education needed for effective use, how they fit with organizational culture and individual decision making, the benefit tradeoffs that might be necessitated and how credits would be allocated among employees. Options that can be coordinated with an HCSA include the taxable personal spending account and the tax free savings account.
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