Employer Sponsored Health Plans costs to rise 8% in 2016: Report
From the state of the economy to the introduction and rapid growth of Biologic medication products covered by insurance plans, the average employer sponsored health plan is expected to cost you 8% more in 2016. That is according to a report published by Aon Hewitt last month. The report specifically suggests that in Canada, gross and inflation adjusted cost increases are set to outpace the North American Average, but also exceed the projected inflation target of 2% by more than 5 percentage points.
The article suggests the largest contributors to rising costs will be related to treatments such as obesity, physical inactivity and aging. But along with increasing costs associated with an aging workforce and unhealthy lifestyles come the high costs of new specialty and biologic drugs.
What are Biologic Drugs
Unlike most drugs, biologics are complex mixtures are genetically engineered proteins derived from human genes, designed for the treatment of chronic illnesses such as rheumatoid arthritis and Crohn’s disease. In 2015, according to the Aon Hewitt report, has seen an upward growth of newly marketed specialty biologics which offer treatment for chronic Hepatitis C. The rapid emergence of biologics is expected to continue driving up the costs of future claims; in 2016 and beyond.
Organizations will need to react to the new reality of medical cost inflation through sound plan management
| Shawn O’Brien, Vice-President, National Business Analytics Leader, Health & Benefits, Aon Hewitt Canada
Many plans have now started to realize that biologics costs are contributing more to employer sponsored drug plans in Canada and as a consequence insurers are hiking pools and premiums.
Tackling the Rising Costs of your Group Benefits Plan
Controlling the price of new medications might not be possible, due to global risk factors and the influence of lobbyists in the upcoming US election. But this does not imply you cannot be prepared to manage your cost increases. Consider a benefits plan which offers a multi-tiered formulary – a drug health plan which creates incentives to employees when choosing lower cost generic medications that will help you realize significant savings. Additionally, most drug manufacturers have created financial assistance programs to help subsidize the costs of their drugs for patients with low income. As a plan sponsor, we would encourage you to familiarize yourself and your employees of these programs. Visit RxHelp.ca or Innovicares.ca to learn more.
Along with introducing efficiencies in your plan, you can also educate your staff on living a healthy lifestyle. Creating a wellness program highlights the importance of a healthy lifestyle to your employees, while also helps lower the risks of common conditions such as high cholesterol, high blood pressure and obesity. If your employees are healthier, you can manage the risk of chronic illness, and the costs associated with treatments.
Managing Your Costs is Easier than you think
Our block at The Beneplan Employee Benefits Co-operative was hit hard in 2015 by several biologic drug claims. While drug companies are falling over themselves to acquire the rights of biologic drugs, plan sponsors and advisors are scrambling to react to this new normal.
Beneplan members have enjoyed the benefits of tiered formularies for quite some time now. Our research has shown that our members on a tiered drug formulary saw a decrease of 9% of direct drug costs while those not on a formulary saw an increase of 9% in 2015. That is an 18 point spread. Are you ready to learn how to manage your benefits plans rising drug costs? Contact a Beneplan advisor who can help you find savings in your plan today.