Costs for Employer-Provided Medical Benefits to Rise in 2020

Costs for Employer-Provided Medical Benefits to Rise in 2020

It seems that insurance costs are increasing every time we look – whether it’s because of the nature of the market or because technology is making everything more expensive. From home insurance to auto insurance, we’ve covered the recent increases and the reasons for them. However, there is now a new increase – but is this different?

According to a brand new report published by AON, “employer-provided medical benefit costs in Canada are forecasted to rise 6.0% in 2020.” If this forecast proves to be accurate, it would mean a 1.9% outpacing of general inflation.

Why are these costs rising? The answer is twofold.

Firstly, the leading medical conditions faced by Canadians today are pointing towards a worrying trend. As of 2019, the top five conditions are as follows: musculoskeletal problems (to do with bones and muscles), cardiovascular, mental health related, diabetes, and cancer/tumour growth.

It becomes immediately clear that none of these conditions have any simple cures. Sure, muscle and bone problems can often be taken care of with medication; but most often this is relief of symptoms and is temporary. As with the other medical conditions, the symptoms are managed without any actual cure being made.

All of these medical conditions are most likely become chronic and ongoing – and that is where the increase comes in. Tim Nimmer, the Global Chief Actuary for Health Solutions at AON stated that these factors “lead to chronic conditions with long-term medical costs that make them difficult to treat and result in long-term medical cost increases.”

This brings about the second reason that costs are increasing – the risk-factors that lead to these medical conditions in the first place. According to this report, the top five risk-factors are: aging, physical inactivity, bad nutrition, insufficient sleep, and smoking.

Since the fountain of youth remains elusive, aging isn’t a factor that much can be done about. The other four though point to an increasingly stressed out workforce.

It’s no secret that the more stressed out someone becomes, the more likely they are to pick up bad habits and not take care of themselves. Physical inactivity, for example, could be from the fact that many spend extended periods of times behind desks; or it could be that, once someone has free time, they are far too worn out from working to do anything active.

That can create a cycle of eating unhealthy foods, not sleeping enough, and picking up harmful habits such as smoking to deal with the stress. It is quite telling that smoking is a leading health risk factor in Canada but not in the rest of the world.

Combing these risk factors with the chronic medical conditions they bring about demonstrates why these costs are rising. The report goes onto state that “the increase … is due to higher costs from the increased spend (sic) for drugs.”

However, the question posed at the start was whether or not these increases were all bad. It goes without saying that an increase in spending on drugs is less than ideal because of the implications it comes with; but there is another side to this story.

Take mental health related issues for examples. There has been a significantly brighter spotlight placed on this subject and, though that raises costs, this increased emphasis is crucial. We are understanding our conditions better and therefore dealing with them in healthier ways.

It is the job of insurer’s to guide employers to better understand the struggles that their workforce may be going through – and this increase in costs shows that employers are willing to put in the effort. Different wellness initiatives are being put in place to make sure that the workplace can be one that is healthy and productive.

To learn more about how to improve the workplace with health and wellness initiatives or to discuss your employee benefits plan, contact one of our licensed advisors today at This email address is being protected from spambots. You need JavaScript enabled to view it. or simply call us at 905-696-9090.

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