The Quebec benefits landscape is evolving rapidly. In addition to an aging workforce—and, perhaps, in reaction to it—plan sponsors in the province are facing regulatory changes, growing pressure to increase access to private healthcare facilities through extended plan coverage and, simultaneously, pressure to reduce costs. In response to these challenges, many plan sponsors are reviewing their benefits programs with a view toward encouraging healthy workforce strategies and implementing programs that better align with their organizations’ business needs. Here is an overview of some of the recent legislative developments and trends in the province. Private Healthcare The Supreme Court’s Chaoulli decision in 2005 forced the provincial government to implement measures to reduce wait times for specific surgeries, and to increase investment in healthcare. While residents of Quebec were already able to purchase private diagnostic health services, a change in legislation now allows the purchase of supplementary private insurance for a limited number of medical services already insured through the province’s public medicare plans. Currently, the listed services are limited to total hip and knee replacements and cataract surgeries. However, the legislation empowers the government to expand this list of services through future regulation. The reaction to the Chaoulli decision by private plan sponsors and the insurance industry has been fairly muted, but the decision has opened the door to private medicine in Quebec. Numerous private clinics have opened in the past few months, and these clinics will test the scope and limits of what is permissible under the current legislative regime. If government efforts to reduce surgical and emergency room wait times and provide additional family health practitioners are insufficient or too slow, the desire for private care will likely continue to grow, and plan sponsors will face increasing pressure to cover the costs of these services. Short- and Long-term Healthcare Cost Inflation Financing a sustainable medicare system has become a major concern for the Government of Quebec. Last year, the government set up a task force, chaired by Claude Castonguay, to undertake a study of healthcare financing in the province. The Castonguay Report, released in February 2008, cautioned that increases to the rate of public healthcare spending should not exceed the growth rate of the provincial economy. However, as healthcare costs over the next decade are projected by the government to increase by 5.8% annually, meeting the threshold suggested by the report will be a formidable challenge. If nothing changes, the report anticipates a growing gap between costs and revenues over the next few years. Drug Plans and Compliance The Quebec government’s drug policy (Politique du médicament), adopted as part of its long-term strategy for managing the public drug program, involves a complex process of give and take between the province, drug manufacturers and pharmacists. To better control costs, the government is working to promote optimal drug usage and is negotiating with manufacturers to obtain the best possible prices, either directly or through rebates. To do this, it has unfrozen the price of drugs on the provincial formulary and is negotiating directly with manufacturers to obtain preferred-buyer conditions. Plan sponsors, as much smaller players in the drug-buying picture, should expect to see cost increases as manufacturers and pharmacists seek to regain profits lost on sales to the public system. The Government of Quebec has also stepped up enforcement efforts to ensure that all employers sponsoring regulated drug programs are in compliance with the law. The provincial regulator has issued a number of technical interpretations providing direction to plan sponsors on what is expected in relation to due diligence on plan participation (e.g., opt-outs), plan coverage (e.g., special non-listed drugs paid on an exception basis), plan members (e.g., coverage for the spouse and eligible children) and plan administration (e.g., notice upon cessation of coverage). A Hard Look at Retiree Benefits Many plan sponsors will be hard pressed to reduce the liabilities associated with retiree benefits, due to their long-term financial implications. Few plan sponsors are willing to commit to covering healthcare costs, without any control, for all of their current and future retirees—particularly with the expected cost increases in the future. Accounting rules also require recognition of these benefits in an organization’s financial statements. A number of Quebec employers are contemplating changes to retiree benefits, and several have already taken action. Possible approaches include revising plan design to better control long-term cost increases by shifting to a defined contribution approach and making use of new products developed by the insurance industry. Health care spending accounts designed to meet Quebec legislative requirements are gaining popularity, as are revised cost-sharing arrangements. Some organizations are also considering settlement options, offering retirees the ability to waive private coverage for an immediate lump sum cash payment. Retirees can use the funds as they choose. When retirees have benefits coverage elsewhere—for example, under a spouse’s plan—or are comfortable with the public coverage available, this option can be very attractive. More Than Just Benefits To remain competitive, employers must recruit and retain talented employees, boost engagement and productivity and, if possible, reduce or at least control benefits plan costs. To this end, plan sponsors across Quebec are taking a fresh look at plan design and delivery. While traditional methods may generate some cost reductions, they do not address the root cause of the cost increases: the health and healthcare decisions of employees. Properly addressing these issues involves managing benefits within a broader organizational health context—involving employees in the process, helping them with their healthcare decisions, promoting healthy behaviours, and doing all of this in a way that is operationally efficient and sustainable. With the overall goal of building a healthy organization, employers will need to look at key metrics used to measure results in three areas: financial performance, employee consumerism and overall workforce health. Using this model as a guide for designing and delivering benefits plans ensures that both employer and employee needs are met and that any resulting actions take into account both short- and long-term effects. A Framework for Change Plan sponsors in Quebec face challenges that are, in many ways, similar to those encountered in other Canadian jurisdictions. However, given the range of cultural, legislative and economic factors that uniquely characterize Quebec, sponsors should look at specific solutions with careful consideration of the provincial context. The growing gap between revenue growth and healthcare spending is as real for private plan sponsors as it is for the government. Plan sponsors—public and private alike—will continue to struggle if solutions are sought only through rationing services or injecting more funds into the system. As plan sponsors are beginning to realize, long-term solutions require a willingness to restructure and re-evaluate healthcare benefits programs. They will also require greater accountability from employees to more actively manage their own healthcare options. Ultimately, the goal for many organizations will be to encourage support for broader workplace health goals. This will require a commitment from management, a supportive work culture and a comprehensive approach—one that encourages employees to be healthy, to minimize risk factors that can lead to disability, and to choose appropriate healthcare services and use them wisely. Investing in Healthy, Wealthy Workers By April Scott-Clarke As an employer of 17,000 people, it’s in the best interest of the National Bank of Canada (NBC) to have happy, healthy employees. But NBC goes beyond just providing coverage for medical and dental expenses. Even further than short- and long-term disability insurance. In addition to these standard benefits, NBC has an extensive health and wellness program. In 1999, the company started noticing an increase in medical and short-term disability costs and looked for ways to control them. The bank began researching health-management options and proactive health measures. “It took us a year and a half to develop the program,” says Gisèle Desrochers, senior vice-president, human resources and corporate affairs, with NBC. With the help of a third-party consultant, NBC launched its health and wellness program in 2005. Here’s how it works. Employees who want to participate fill out a lifestyle questionnaire that includes questions about stress management, sleep patterns, nutrition and other health factors. Participants then undergo a health assessment that includes blood pressure and weight measurement, and blood analysis—all done on site by outside specialists. The assessment and questionnaire answers are then analyzed, and each person is given an individual diagnosis with advice on how to improve his or her health and life habits. From there, employees and management evaluate high-level breakdowns of the health concerns for each department, form committees and then implement activities to address these concerns. For example, results showed that one department had a high level of stress, so a yoga instructor was hired to hold classes after working hours. For another group, nutritional seminars were held to help improve eating habits. Additionally, the benefits package covers dietician/nutritionist services and smoking cessation programs, which rounds out this proactive approach to wellness. The health assessments are done every 18 months, so most new employees can’t get them done right away. However, they are still able to join any of the ongoing activities. “Our benefits are similar to the other banks, but our health program is quite unique,” says Jean Drouin, manager, pension and benefits, global compensation department, with NBC. There is also a follow-up component that measures if employees are actually benefiting from the health program. The follow-up is also used as a financial indicator for the company to see if it should expect lower healthcare costs. Desrochers says it’s too early to see any trend yet, but she is optimistic about the long-term results. In addition, NBC offers flexible working arrangements, which complement the health program. For instance, employees can work the regular workweek hours in four days rather than five or participate in job-sharing. Desrochers says these types of arrangements are ideal for people who have children or who look after an elderly relative. Employees are encouraged to assess what they need and discuss it with their managers to work out an arrangement that is suitable for both the employee and the company. “The employees love it,” says Desrochers, about the health program and the flexible hours. “For them, it’s confirmation that we’re trying to create an environment where they can manage their working life and personal life [and stay healthy].” With programs and benefits like these, it’s no wonder that NBC has been named one of Canada’s top 50 employers for the past four years in Hewitt Associates’ Best Employers in Canada study. “We are always trying to improve ourselves,” adds Drouin. |
Empowering the Future Workforce By April Scott-Clarke Another gold watch, another speech, another goodbye card…retirements are becoming more frequent, and employers need to be ready to fill the big shoes left behind by their long-time employees. “Our workforce is aging and the number of retirements is growing each year,” explains Flavie Côté, media and public affairs advisor, with Hydro-Québec. “To deal with this situation, we have a corporate succession plan that includes such measures as promotional campaigns, recruitment strategies, training activities and knowledge-transfer mechanisms.” The company is well positioned on the recruitment front. The Quebec utilities company helps fund the Institute of Electrical Power Engineering. The institute’s purpose is to encourage universities and the industry to work together in training the next generation of engineers. As part of the partnership, Hydro-Québec awarded 42 scholarships to students of the institute last year, for a total contribution of $83,650. Seventeen of the institute’s graduates joined the company’s ranks in 2007. Hydro-Québec has hired 78 graduates since the institute was formed in 2001. However, new graduates often can’t fill the senior roles that retirees are leaving open. To decrease the knowledge gap when an upper-level employee exits, Hydro-Québec has established a mentoring system. Six months to a year prior to the employee’s retirement, the person who will be taking over the role is put in place. He or she works closely with the soon-tobe- retired employee, ensuring adequate time for knowledge transfer and a smooth transition of responsibilities. As well, the benefits offered by the company are attractive and competitive. For example, employees can participate in a defined benefit (DB) plan. Côté notes that the normal DB pension benefit in the industry is around 2%, but Hydro-Québec pays 2.25%, indexed to inflation. “That is an important incentive and a great advantage compared to other companies,” she adds. The company also offers a fully paid benefits package including life insurance, health insurance, salary protection and post-retirement benefits. Côté adds, with pride, “When you meet someone in Quebec and you tell them you work for Hydro-Québec, most people are envious.” |
Christiane Bourassa is a principal with Towers Perrin in Montreal. christiane.bourassa@towersperrin.com For a PDF version of this article and the rest of the 2008 Quebec Report, click here. |
