Aon survey forecasts: Canadian employer medical benefit costs to grow 6.0 percent in 2020, as lifestyle-related conditions increase risks
Employer-provided medical benefit costs in Canada are forecasted to rise 6.0 percent in 2020, outpacing general inflation by 1.9 percent, according to the 2020 Global Medical Trend Rates Report.
The increase for Canada employer-sponsored medical plans expected in 2020 is due to a combination of higher costs from the increased spend for drugs in general, reflecting the many risk factors facing Canadians today.
Many of these risk factors are manageable through drug therapies and other wellness initiatives and employers are increasingly looking at the bigger picture to determine the approach they want to take to mitigate costs.
For 2020, we expect the medical trend rate to be similar to last year. However, with the federal election in late 2019, government subsidization of health care may evolve as a National Pharmacare program is under consideration.
While there is no certainty of the scope of this program, we expect that it will provide coverage for certain pharmaceutical products at the national level. If the incumbent government remains, we could see some changes in this regard, which could result in a positive impact on the 2021 medical trend rate for plan sponsors, as prescription drug costs are the largest single cost driver for medical plans in Canada.
In Canada, musculo-skeletal is the most prevalent health conditions driving health care claims. Canadian employers are also increasingly realizing the rising individual and business risks presented by mental health issues.
| Top 3 Medical Conditions in Canada |
| 1) |
Musculoskeletal/Back |
| 2) |
Cardiovascular |
| 3) |
Mental Health |
Aon’s Medical Trend Rates Report confirms the growing prevalence of risks from unhealthy personal habits in Canada. Globally, high blood pressure is the leading health risk factor.
| Top 3 Health Risk Factors in Canada |
| 1) |
Aging |
| 2) |
Physical inactivity |
| 3) |
Bad nutrition |
Global health benefit costs set to rise
Globally, costs for employer-sponsored medical plans in 2020 are forecasted to increase 8.0 percent, up from 7.8 percent growth this year. This is mainly due to expanded benefits and a slight increase anticipated in general inflation.
Tim Nimmer, Aon’s global chief actuary for Health Solutions said that many of the risk factors lead to chronic conditions with long term medical costs that make them difficult to treat and result in long-term medical cost increases.
“Employers become more critical in helping individuals and their families to take a more active role in managing their health, including participating in health and well-being activities and better managing chronic conditions.”
Click here to view the report.