This is part two of two-part series. Read part 1, Preparing for healthcare austerity.
Saskatchewan is the only province expected to run a budgetary surplus at the end of this fiscal year. Ontario’s deficit has been a potential concern for years, and now even oil-rich Alberta is showing signs of an imbalance between government revenue and expenditure.
Approximately half of provincial government budgets go toward healthcare so as provinces to balance their books, plan sponsors and members alike should prepare for change.
Read more
• Canadian healthcare: What works and what doesn’t
• Can Canada afford its healthcare?
While the likelihood of government change is high, the exact nature of that change is hard to predict. What should plan sponsors do now to prepare themselves and their plans for the future?
Here are four specific actions for proactive plan sponsors.
1. Optimize current healthcare spending
Plan sponsors need to ensure that their plans optimize their current spending through maximizing cost management features (e.g. mandatory generic provisions, drug formularies, strong disability management practices) that are readily available in the marketplace today.
A review of contract and booklet wording can also help plan sponsors understand how their plans may be impacted by future government cost shifting.
In addition, proactive plan sponsors will recognize the savings from recent low-inflation years, and reinvest these savings in health and wellness initiatives to keep their workforces healthy and reduce costs into the future.
When uncertainty and change is coming, it is good practice to ensure that you have a solid, well-managed plan to have the financial ability to respond to the changes.
2. Prioritizing our health plans
If governments were to even marginally reduce their own coverage of healthcare services, plan sponsors will need to re-assess their plans. Assuming that benefits budgets are not unlimited, they should begin prioritizing the elements of their benefits plan between employee needs and wants.
Plan sponsors should begin thinking now about which plan elements are not medically necessary that could be are easily cut back if cost pressures became unmanageable. This may require tough decisions about coverage for benefits such as eye glasses, semi-private hospital coverage or oral contraceptives.
While removing coverage may not be popular, if it frees up funds for more medically necessary care, they may be the best solution for balancing cost with employee needs. Prioritization is a key to spending the benefits budget wisely.
3. Prepare stakeholders for the coming changes
While HR and benefits departments will struggle to adapt to changes in government coverage, other stakeholders within the organization are largely unaware of the changes to come. It is incumbent on HR departments to educate executives within the company, along with employees and unions, about the potential for change and cost increases going forward.
Specifically, executives need to realize that costs may rise more rapidly in the next five years than they have in the recent past.
Employees need to understand that the benefits budget is not endless, and that when necessary the plan sponsor will prioritize medically necessary needs over wants.
4. Speak up
In most cases, when governments review their own health budgets, the impact of potential change on private health plans is not part of the decision process. This needs to change.
Governments and plan sponsors are both important parties in ensuring that Canadians have access to the healthcare services that they need. Plan sponsors need to find ways to be at the table when the future of healthcare is being discussed.
The last few years have been a unique point in history where the drug market and government regulation has reduced costs for Canadian benefit plans. This is about to change. Tomorrow will be the time to act upon these changes. Today needs to be the time to reinvest our recent savings and proactively prepare for an uncertain future.