Employers worry about healthcare costs, mental health
Controlling healthcare costs is the top benefits priority of Canadian employers for 2014—along with addressing mental health issues, a survey reveals.
This year, as many as 68% of companies worry about healthcare costs for 2014, up from 45% last year, according to Morneau Shepell’s annual survey on compensation trends and projections.
“This is a real jump off the page,” Joy Sloane, partner at Morneau Shepell, said, speaking at a seminar in Toronto where the survey was unveiled. This is the highest number on record, she added.
Another benefits priority for Canadian firms next year will be disability management (45% of respondents). This is followed by issues such as the competitiveness of benefits offerings (32%), benefits plan design (27%) and benefits plan administration (21%).
Specialty drugs When it comes to costs, one-field employers need to pay close attention to is the projected rise of specialty drugs—high-cost medications used to treat rare and complex conditions. Although specialty drugs are used by less than 5% of employees, they make up 15% to 25% of the total drug spend, according to research by Towers Watson.
In recent years, drug costs have plateaued due to the rise of generics, but pharmaceutical companies are not planning to issue them as much in the future, Sloane explained. “The drug markets are focusing on releasing specialty drugs because that’s where they get more return on investment,” she said.
To address the costs associated with specialty drugs, employers need to “focus on conditions that have modifiable risk factors” such as diabetes, high cholesterol levels and depression, Sloane said in an interview. Once they educate their employees about managing their personal risk factors through healthier lifestyles, companies will free up resources in their benefits plans for conditions whose risk factors are not modifiable, such as multiple sclerosis and arthritis, Sloane explained.
Although cost is an issue for Canadian companies, 15% have improved their healthcare programs over the last couple of years, and 10% plan to introduce improvements next year, according to the survey.
Mental health Another benefits priority that is receiving a lot of attention from employers is mental health—a leading cause of absenteeism in the workplace.
Figures by the Canadian Mental Health Association (CMHA) reveal that 20% of Canadians will experience some form of mental illness in their lives, and about 8% of adults will experience major depression.
But nearly half of those who feel they have suffered from depression or anxiety have never seen a doctor about their problem, according to the CMHA.
As a result of the growing awareness about the pervasiveness of mental illness, more than 40% of Canadian companies plan to train managers about mental health next year, according to Morneau Shepell’s survey. The goal of these training initiatives is to reduce the costs related to mental illness.
The Canadian private sector’s annual spending on mental health amounts to $180 billion for short-term disability benefits and $135 billion for long-term disability benefits, according to a 2010 report by the Institute of Health Economics, an Alberta-based non-profit. The annual absenteeism and presenteesm costs stemming from mental health illness are estimated to be $6.3 billion.
Apart from mental health training, some Canadian firms (one-third) plan to introduce mental health policies next year, according to the compensation survey. This is in response to the new voluntary National Standard for Psychological Health and Safety in the Workplace, a recommendation developed by the Mental Health Commission of Canada, a non-profit created by the federal government.
“It’s voluntary at this stage, but we do understand that it may not be in the future,” said Marilynne Madigan, managing partner at Morneau Shepell, speaking at the trends survey seminar. “Providing [mental health support] as a non-cash benefit is very relevant to today’s issues: attraction, retention and cost management.”
Conducted this summer, Morneau Shepell’s survey polled more than 300 Canadian organizations employing nearly three million people. The companies are mostly from the manufacturing, services and finance sectors.