Report from Atlantic Canada – Atlantic Canada Adaptations

StatsCan research also indicates that 156,520 people in Atlantic Canada had diabetes in 2008—up from 129,123 in 2005. And, according to Canadian Cancer Statistics 2009, there will be an estimated 14,080 new cases of cancer in 2009—up from 13,200 new cases in 2006. Cases of other chronic conditions also continue to rise as the region’s population ages.

Prescription drugs, which represent the largest portion of employer healthcare dollars, comprise approximately 75% of employer healthcare costs in Atlantic Canada. In fact, according to The Canadian Rx Atlas, public and private expenditure on prescribed drugs in Atlantic Canada grew at an average annual rate of 6% (5% in Nova Scotia) from 1998 to 2007—one of the fastest-growing segments of health expenditure. And the private sector continues to pay the bulk of the cost. The Canadian Institute for Health Information finds that private expenditure per person annually in the Atlantic region varies from a low of $484 in P.E.I. (public expenditure: $253) to a high of $555 in New Brunswick (public expenditure: $256). The portion paid by private payers is growing at a faster rate as the medications used shift from intravenous (delivered in hospital) to oral therapies (used at home).

Overall, Atlantic Canada health plan sponsors are quite progressive in the prescription drug area. Drug cards have long been the preferred method of claims payment in the region. Employers have controls on ingredient costs and dispensing fees, and generics have been widely prescribed for many years. Most employers are optimizing coordination of benefits, and managed formularies—the most cost-effective drug treatments—are widely employed. Tiered or step therapy formularies (which begin with the most cost-effective and safest drug therapy, progressing to other more costly or risky therapies only if necessary) are a newer approach to formulary design.

However, some employers could still see improvements in integration with government programs. There are opportunities to create plan designs that offer greater control over which drugs are reimbursed, under which circumstances and in what supply.

While the cost of prescription drugs will likely continue to increase, many chronic conditions that require prescriptions are preventable with modifiable risk factors. As well, improved compliance with prescription instructions may avoid the need for more costly approaches and associated time off work. There is still room in many employer benefits plans to take a more proactive, preventative approach to employee health that focuses on programs to support sustainable positive behaviour change and an increased rate of medication compliance.

Retirement Concerns
Atlantic Canadian employers are facing new challenges, thanks to legislation changes affecting retirement. An Act Respecting the Elimination of Mandatory Retirement became effective July 1, 2009, in Nova Scotia. Since May 2007, the Newfoundland and Labrador Human Rights Code has offered protection from mandatory retirement. In New Brunswick, the Supreme Court decided in 2008 that employers may have a mandatory retirement policy as part of their bona fide benefits or pension plans. In P.E.I., this issue is before the Human Rights Commission in a case involving three University of Prince Edward Island employees who retired in accordance with the mandatory retirement policy in 2007.

According to the Sun Life Unretirement Index and other surveys, older Canadians (ages 60 to 65) are more likely than in the past to work longer than they’d planned. They’re also more concerned with their standard of living in retirement. These issues pose challenges for some employers, while for others, the availability and experience of the older demographic represents an opportunity to leverage the strengths of a mature workforce.

Employers continue to adjust to these changes. For most employers, disability coverage will continue to terminate at age 65, due to cost concerns and the bona fide exemptions permitted in most jurisdictions. On the other hand, even though the cost of benefits for this demographic will exceed that of the younger population, many employers want to offer benefits to those working beyond age 65 to attract and retain the value of a mature workforce in the face of a dwindling talent pool.

Pandemic Planning
Throughout the second wave of H1N1, Atlantic Canada has faced challenges similar to those experienced by other regions. With influenza pandemics able to spread rapidly, pandemic preparedness is—and will remain—an important part of any organization’s strategic health and productivity approach.

This new reality presents a number of questions for the benefits plan sponsor. What adjustments should be made to absence policies? On the risk side, should the plan make provisions for potential additional costs, particularly for short-term disability? What critical functions must be staffed? A significant number of employers in Atlantic Canada have not yet answered these questions or undertaken the comprehensive planning that will be critical to managing any protracted period of illness affecting large numbers of people.

Economic Challenges
This has been a difficult economic time for many Canadians. While there’s some consensus that Atlantic Canada has not experienced the recession as dramatically as other areas, the jobless rates remain high relative to other parts of Canada. StatsCan reports that for September 2009, unemployment was 15.3% in Newfoundland, 11.8% in P.E.I. (down from 13.7% in August), 8.1% in New Brunswick and 9.5% (remaining steady) in Nova Scotia.

While the economy shows signs of recovery and improved investor confidence, studies continue to show employees in Atlantic Canada and elsewhere curbing spending and expressing ongoing apprehension about financial and job security. Programs that help employees address workplace and personal stressors continue to experience increased utilization. Where ill health and disability can be reduced or avoided through access to preventive and early intervention programs and services, there is tremendous benefit to both employers and employees.

Strategic Employee Health
Concerns around aging, retirement, health conditions and prescription drug costs are shared by a large number of employers in Atlantic Canada. The 2009 sanofi-aventis Healthcare Survey shows that many Atlantic Canadians are willing to purchase new or additional coverage through their employee health plans to address these issues more comprehensively, including continued employee health benefits coverage into retirement (69%); critical illness insurance coverage (insurance that pays a lump sum benefit if you are diagnosed with a specific serious condition, such as cancer) (57%); and prescription drug coverage for expensive medications not included in employee health benefits plans (48%). It appears that what people really value is security.

The good news is that a number of employers in Atlantic Canada have made strategic health and productivity in the workforce a priority. In October, Mediacorp Canada’s 2010 Atlantic Canada’s Top Employers competition noted that for several years, they’d noticed employers in the region providing “exceptional benefits…that are a cut above others in their field.”

However, many employers in the region have yet to shift to a more strategic approach. In today’s challenging and evolving environment, employers in Atlantic Canada, along with those in other areas, will want to review the key health issues affecting their organizations as they set their priorities for upcoming planning periods to ensure that their benefits plans meet current and future needs.

The desire for change is evident. A strong incentive is the fact that the direct burdens of illness (including medical expenses and disability insurance), when combined with replacement costs and productivity loss, amount to 12% to 18% of payroll. Research finds that 25% of employers hope to change how they manage employee health in 2010 to be more effective. The Morneau Sobeco study, Compensation Trends & Projections, 2010, demonstrates that disability costs, healthcare costs and benefits design continue to be recognized by plan sponsors as their highest priorities, both in Atlantic Canada and across the country.

Employers that identify the issues affecting their workplace—and that support the physical, mental and social well-being of their employees—will see a direct impact on employee engagement and the bottom line. Their focus will be on prevention, early intervention and return to work: the keystones of a strategic approach.

Above all, being strategic about workplace health requires a shift from viewing employee health expenditures as a cost to perceiving them as an investment. Where ill health and disability can be avoided or shortened, there is great potential for return on investment. With proactive planning and investment now, plan sponsors can address the key issues that will continue to affect organizational health in Atlantic Canada in 2010 and beyond.

Cheryl Kane is a principal with Morneau Sobeco.
ckane@morneausobeco.com

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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the December 2009 edition of BENEFITS CANADA magazine.