Reasons and Solutions to the Increase in Costs of Group Benefits Insurance and Medical Benefits

Employers in Canada and around the world are facing a significant challenge due to the rising costs of their group plan medical benefits. In fact, according to Benefits Canada, the cost of employer-sponsored medical benefits is to rise between 7.5% and 10% in 2023, which is a faster increase than the general rise of inflation. COVID-19 has impacted both the deferment of medical treatments and long-term health, more specifically, health concerns related to musculoskeletal issues, which has subsequently prompted employers to try to better manage benefit plans for their employees despite the rise in cost. The affordability of these healthcare increases remains a top concern for both employers and their employees. However, it is essential to recognize that there are options available to help keep these group benefits insurance plans sustainable.

Learn more about the reasons behind the increase in costs of Canadian group plan medical benefits and discuss potential strategies that employers can utilize to mitigate these expenses in an effective manner.

Understanding the Rising Costs of Medical Benefits in Canada

Several factors contribute to the increase in costs of global group plan medical benefits. As of 2023, the major factors influencing the rising costs include the overuse of care (74%), in part due to medical professionals recommending too many medical services and overprescribing, which is followed by the poor health habits of plan members’ (52%), and the underuse of prevention services (50%). The top three medical conditions that can also affect the rising costs include cancer, cardiovascular conditions, and musculoskeletal issues that have been further exacerbated by the pandemic, where more sedentary working conditions have increased the rate of musculoskeletal issues.

Additionally, the aging population in Canada has led to higher healthcare utilization rates and an increased prevalence of chronic health conditions. As employees age, they require more medical attention and services, which results in higher costs for employers providing group plan benefits. Moreover, regulatory changes and compliance requirements, such as those related to the Canada Health Act and provincial health insurance plans, can add complexity and additional costs to the administration of group plan benefits.

Steps to Mitigate Costs

To address the increasing costs of group plan medical benefits in Canada, employers can mitigate costs through programs and strategies such as promoting and encouraging physical annual physical checkups, healthy eating and physical activity, regular screenings, and promotional programs that can aid in reducing physical ailments and conditions. More steps that employers can adopt to mitigate costs can include:

1. Cost-Sharing Arrangements: Implementing cost-sharing arrangements, such as increasing deductibles or co-pays, can help shift some of the financial burden on employees. This approach encourages individuals to make more informed choices about their healthcare utilization while reducing costs for the employer.
2. Wellness Programs: Investing in wellness programs can have long-term cost-saving benefits. By promoting healthy lifestyles and preventive care, employers can help reduce the occurrence of chronic conditions and lower overall healthcare expenses. Wellness initiatives such as fitness programs, mental health support, and health education can contribute to healthier employees and lower healthcare costs.
3. Telemedicine and Virtual Health: More than half of global insurers have turned to virtual health solutions, with 37% in 2022 identifying the addition of virtual and telemedicine as the biggest modification to their medical portfolios and benefits plans. In Canada, virtual health services, including telemedicine, have gained popularity as a way to provide convenient and accessible healthcare. These services enable employees to consult with healthcare professionals remotely, reducing the need for in-person visits and potentially lowering costs.
4. Prescription Drug Management: Prescription drug costs are a significant contributor to overall healthcare expenses. Implementing effective prescription drug management programs, such as formulary restrictions, generic drug promotion, and negotiation of lower drug prices with pharmacy benefit managers (PBMs), can help control pharmaceutical costs for employers and employees alike.
5. Flexible Benefits Plans: Offering flexible benefits plans allows employees to choose the coverage options that best suit their individual needs. This approach empowers individuals to take responsibility for their healthcare decisions and potentially reduce costs by selecting coverage options based on their specific requirements.

Conclusion

The rising costs of group benefits insurance in Canada present challenges for employers and employees in terms of affordability. However, it is crucial to recognize that options are available to help mitigate these costs and keep the plans sustainable. By implementing cost-sharing arrangements, investing in wellness programs, embracing virtual health solutions like telemedicine, optimizing prescription drug management, and offering flexible benefits plans, employers in Canada can proactively address the increasing costs of group plan medical benefits.

At Health Risk Services, we help managers of benefits plans make strategic decisions to craft cost-effective personalized plans that can assist you and your organization in finding solutions to combat the vast increase in costs for employers in relation to their group plan medical benefits. Whether the solution of preference for your company is adding additional support programs, renovating your existing coverage, or crafting intentional messaging, Health Risk is here to help! 

To schedule your Complimentary Consultation with Health Risk Services, please call 403-236-9430 OR email: [email protected]