In our Canadian Health Care Trend Survey Results 2015 we see a small rise in the average factor insurers are using: 11.69% up from 11.56% in 2014. This isn’t big news. But after surveying major Canadian insurers, what caught our attention were the results by benefit – especially prescription drugs and the discrepancy between insurers and the Telus trend line.
Historically insurers’ projections have far exceeded the actual trends reported by Telus. The insurer numbers reflect a “worst-case scenario” of sorts which could happen in the event the new high-cost drugs and procedures were adopted by the maximum number of potential beneficiaries. This will of course be tempered in reality by plan design, public plans, patent expiry, market penetration and even human nature. The insurers’ position is somewhat understandable given the nature of their business and the need to hedge against risk. And we have to remember, the past does not always predict the future.
We are already seeing the impact of new Hepatitis C treatments on plans. While this will be a one-time hit for each patient, not a large recurring claim, as it is a cure, it does appear that this will have a noticeable impact on cost increases for 2015. The high-cost drugs are compounded by an aging population using drugs and paramedical practitioners to maintain good health.
So the right answer to the health trend question for most plans is probably somewhat lower than the insurers are projecting, but probably not as low as the numbers seen historically. Over the last few years plans enjoyed the benefit of aggressive government price negotiations and the patent cliff that saw generics enter the market for many blockbuster drugs. Sadly, these events will not be repeated for the foreseeable future.
We encourage you to monitor your claims patterns and ensure cost containment features including prior authorization for high cost drugs are included in your plan design. We would be happy to help.
Click here to read our Canadian Health Care Trend Survey Results 2015.
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