It’s safe to say that most Calgarians are happy to see 2015 in the rearview mirror; and while we are cautiously optimistic the economy will start to improve in 2016, it’s likely that our challenges are far from over. Reflecting on 2015 at the December 17th CPBI lunch session, Brian Lindenberg, Canada’s Health and Benefits Leader and Senior Partner in Mercer’s Calgary office said things weren’t all bad. It was “not a bad year for befits plan costs,” as most plan sponsors saw lower than average increases in plan costs due to inflation. Other positives were advancements in drug plan management and plan sponsors’ ability to aggressively manage drug costs. There were also tremendous advancements in the ability to do business on-line, capture data and make data-based decisions. And despite the sharp downturn in the Alberta economy, most plan sponsors were still reluctant to make significant reductions to benefits programs. The benefits industry continued to face several challenges in 2015, most of which can’t be pinned on the slumping economy. Biologic and specialty drugs continue to be a blessing and a curse. For many of those who have turned to these drugs as a last resort in their battles with severe and debilitating diseases, the results in countless cases are nothing short of miraculous. People who were unable to work and facing deteriorating quality of life are often able experience full remission and return to productive members of the workforce and society. The curse of course is the price tag, which for the most common biologic drugs are in the range of $20,000 to $30,000 per year and in excess of $100,000 for some drugs. Brian is optimistic, however, that the introduction of subsequent entry biologics (SEB) will provide some cost relief in the future. Not surprisingly, these costs have had a major impact on large amount pooling fees, which have seen double digit increases for the past few years. Brian’s concern is that insurers have generally been unwilling to negotiate on pooling fee increases but have not been transparent about sharing financial data which supports these increases. Brian said “we tend to manage risk the same way as we did five years ago and this needs to change,” as risk factors like pooling, biologics, etc., have changed. Another major challenge for employers is retaining good employees and keeping them engaged. A recent Mercer survey indicated that two out of five private sector workers in Canada are seriously considering leaving their current job. Three out of five who say they are satisfied with the type of job they do are still considering leaving. Base pay continues to be the most important reward element, followed by retirement and health care coverage. Other elements important to employees are paid time-off, flexible work schedules, type of work, incentive pay, career opportunities, organization respect and training. Wellness, surprisingly is at the bottom of the list. However, Brian believes this may have more to do with employee’s lack of awareness of these programs and that plan sponsors should not abandon their efforts in this area. Wellness is not a fad and it’s here to stay. Brian indicated several themes that employers need to pay attention to, which will impact benefits programs: - Demographic change – The labor force will become older. One in four Canadians could be age 55+ by 2021.
- Globalization – The new talent pool is the entire planet. Not only will employers continue to bring talent to Canada, technology is allowing employers to hire employees that may be physically located anywhere in the world.
- Changing nature of retirement – The concept of retirement is becoming more "phased-in," as employees look to keep one foot in the door and work on a part-time basis over a number of months or years until they exit the workforce completely.
- Risk – As organization risk tolerance continues to decrease, employers are transferring more risk to employees.
- Technology and communication – As more and more information is being made available for free, context will become the differentiator.
So, what does the future look like for benefit plan sponsors? Brian commented on the following ideas and emerging trends that will influence benefits programs in 2016 and beyond: - Big data - More data will be available to substantiate decision making. Progress has been made in recent years and will continue improve like cross-referencing drug data with disability and EAP data to determine the overall health of your workforce.
- Plan flexibility – We’ve seen incremental increases but need to be far more creative. We need to go beyond the traditional definition of benefits, as 43% percent of employees would be willing to pay more for improved benefits.
- Predictive benefits - We are not far away from being able to provide employees with decision support tools to help them choose benefits based on their individual data.
- Organizational wellness - Healthy people are present, more engaged, and in a nutshell, will help you better grow your business. Employers need to develop separate targeted wellness campaigns for healthy people, those at risk, and those with chronic disease.
- Mobile/wearable technology - Plan sponsors need to embrace it as the ability to track movement through sensors is advancing tremendously.
- Benefits exchanges – Canada will see the introduction of benefits exchanges in 2016.
- Canadian health care system - Plan sponsors are going to be asked to take a greater role in access to healthcare, specifically programs that allow employees to bypass wait times.
One thing is for certain – the future is coming whether we’re ready or not. Brian says “There needs to be lots more innovation. The industry at times has been a bit lethargic and we embrace the status quo way too much.” Employers who prepare for change before it fully arrives and implement innovative solutions that meet the needs of a diverse and aging workforce will be best positioned to not only survive but thrive in the new global marketplace. - Ken MacDonald
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