Benefits

Employer-sponsored benefit plans at risk

By Anthea Gomez

The employee landscape continues to change, and because of our vastly improved health care, people are living longer lives. Companies are experiencing the period of the aging worker, and this time of social change is forcing employers to restructure and rethink the cost implications of providing wellbeing support and benefit plans to workers so that they can stay healthy and fit while on the job.

Recently, the World Economic Forum stated that Canadians will have to work longer, and with today’s younger generation predicted to have a life expectancy of more than 100, the retirement age will likely move up to 70 by the middle of the century.

The increase in longevity and resulting ageing population means a workforce that could be exposed to multiple chronic health conditions. And, if employers want to retain, engage and motivate this older employee demographic, they will need to provide forms of health benefits management while trying to keep benefits costs down. This could be a source of great challenge if companies don’t know where to look and what data to analyze that could help them restructure their benefit plan strategies to meet their workforce requirements and their business financial needs.

“Older workers have skills and lots of value, but employers are feeling overwhelmed by the strain of keeping these employees healthy while on the job,” said John Herbert, director of strategy, product development and clinical services for Express Scripts Canada, a provider of health benefits management services.  “Working to the age of 70 weighs heavily on employer-sponsored benefit plans; now more than ever, due to rising costs associated with prescription drugs, thought must be given as to how benefit plans are going to be delivered to employees.”

The financial truths of health care-related benefits

High-cost drugs and older, high-cost patients can create troubling work environments. A 2014 Sanofi study found that tensions are rising with 70 per cent of employers concerned about the sustainability of their drug plan. Some employers, unsurprisingly, are responding by looking at solutions that pass more of the cost burden along to their employees, and this approach can prove problematic, given the potentially negative message it sends and the implications it has on health and wellbeing, recruitment and retention.

Canadian employers spend more on prescription drug coverage than on any other benefit, and that’s not changing anytime soon, according to a 2015 study. The Canadian Institute for Health Information (CIHI) says that drug spending by the private sector has doubled from $8.8 billion in 2003 to $17.6 billion in 2015.

“Cost containment is always top of mind in this situation, and the solution is not to introduce annual minimums on prescription coverage or to ask employees to obtain individual coverage,” said Edwin Ho, Express Scripts Canada’s senior manager of pharmacy operations for Western Canada. “This can limit employee access to some necessary, life-changing, medical treatments, which could translate into an absent workforce that is not willing to give an employer their time and full commitment to the job.”

The Express Scripts Canada 2016 Drug Trend Report revealed that 14 per cent of plan members account for 72 per cent of total plan spending. Innovative solutions are required to help plan members make better decisions to manage their overall cost and to manage their overall health.

The Sanofi Canada Healthcare 2016 study also found that 59 per cent of employees require medication for one or more chronic conditions, such as high blood pressure, mental illness and arthritis. How employers use, fund and tailor prescription health benefit plans to support aging employees who are sick or have fluctuating or chronic health problems is more important now than ever.

One out of every five dollars spent on prescription drugs in 2016 paid for medication for diabetes or an inflammatory condition. Spending on high-cost drugs to treat complex, chronic conditions such as hepatitis C and cancer has grown from 13 per cent of total drug spending in 2007 to 30 per cent in 2016. It’s no wonder employers are seeing huge spiralling costs.

“Plans are not comprehensively managed and employees are consuming a large portion of their total prescription drug spending on high-cost specialty medications,” said Herbert. “Employers are feeling the pinch, with specialty drug spending on track to reach 40 per cent of total drug spending by 2022, threatening overall employee plan sustainability.”

The solution – data analysis and comprehensively managed plans

Effective intervention is required. Employers are overwhelmed by the costs and plan members don’t understand the various factors in treatment complexity. Sponsors need to implement effective plan management solutions before cost increases become insurmountable, and employees need expert guidance at key decision points.

Traditional approaches to plan management do not work. Informed plan members make better choices and refrain from using costly medications, without first asking about the more affordable alternatives. They also take their medications as prescribed by the pharmacist, which leads to better health outcomes. Through this process, they pay less for prescription drugs by eliminating the need for more expensive treatments.

“In this complex environment, it comes down to comprehensively managed plan controls that allow for targeted intervention, and provide support for members at key decision points along the treatment journey,” said Herbert. “When [employers] implement these measures, [they typically] witness between 10 to 15 per cent cost savings in drug expenditures.”

When plans are comprehensively managed, leveraging clinical expertise and data analytics, patient drug utilization aligns with clinical guidelines. It empowers plan members during critical decision-making periods, and provides comprehensive care to older members who may have multiple chronic conditions. While also incorporating synergistic management techniques and formulary, utilization and clinical management tools, the outcome will be healthier employees at a lower cost. 


Anthea Gomez is the director of human resources and corporate services for Express Scrips Canada.