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Healthcare Costs Plateau

The increase in the cost of employer-sponsored health and dental benefits in Canada plateaued in 2012, says a survey by Towers Watson. It shows that for active employees, the overall employer healthcare spend increased just 2.1 per cent in 2012, down from 2.7 per cent the previous year and far below the double-digit increases seen not so long ago. Drug costs are trending at negative 0.2 per cent and the cost of dental care is up by only 1.3 per cent from 2011 to 2012. "This trend can be explained by a number of factors," says Wendy Poirier, its Canadian health and group benefits leader. "As many commonly prescribed drugs have recently come off patent, employers are seeing the results of increased use of generics at substantially lower costs. They are also benefiting from drug plan management strategies that mitigate waste and increase efficiencies and the effect of beneficial plan design features such as early exposure to preventative dental coverage." While the decrease in overall healthcare costs is good news for employers, one area to watch is high-cost specialty drugs. Its research shows specialty or biologic drugs are typically used by less than five per cent of the employee population, but account for 15 per cent to 25 per cent of the total drug spend. The upward trend on healthcare expenses, other than drugs covered by employer sponsored plans, is another area of concern for plan sponsors. For active and retiree plans, the cost of these healthcare claims, which typically include services such as physiotherapy, chiropractic, and naturopathic treatment, is up six per cent from 2011 to 2012.

Courtesy of Benefits and Pensions Monitor website News Alerts

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