TORONTO, July 24, 2012 /CNW/ - The overall trend in Canadian health
benefit plan cost increases showed significant slowing for a second
consecutive year. According to a survey released today by Buck Consultants, A Xerox Company (NYSE: XRX), insurers have lowered their expected inflation costs for
health benefit premiums from 14.4% in 2011 to 11.7% in 2012.
This overall trend includes prescription drugs, medical expenses,
hospital coverage, and dental care.
The 2012 "Canadian Health Care Trend Survey," the firm's 12th annual
study, analyzes the health cost trend assumptions that factor into the
premium rate setting of nine major Canadian insurers.
Insurers have dropped their inflation factors for prescription drugs —
the fastest-increasing expense paid by group insurance plans — from
14.2% in 2011 to 12.1% in 2012, a 15% drop.
"This is due to two important factors," said Sandra Pellegrini, leader
of Buck's Canadian Health and Productivity consulting practice. "In
2010, several provinces implemented generic drug pricing reforms that
reduce their cost. Also, the patents expired for several blockbuster
pharmaceuticals (such as the top-selling cholesterol drug Lipitor in
2010, Plavix in 2011, and Crestor, Advair and Symbicort in 2012),
opening the door for lower-cost generic substitutes."
"Despite this good news however, it is important to understand the
growing impact of extremely high-cost specialty/biologic drugs as a key
driver of costs," said Pellegrini. She cited a study by Express Scripts
showing that this group of drugs is projected to grow as a percentage
of overall drug spend from 19.5% in 2011 to between 25% and 30% by
The survey shows a downward trend in dental cost inflation across the
country (from 8.2% last year to 8.0% in 2012). Use of dental services —
a factor that is sensitive to economic conditions — has gone down,
perhaps reflecting increased employee confidence in job retention and
availability of benefits.
Hospital inflation factors have seen an overall decline in inflation
rate since 2008, but this year there has been a slight increase, from
8.2% to 8.4%. "This may represent the impact of an aging population and
the related incidence and duration of hospital stays, despite the
continuing shift from inpatient to outpatient care," said Pellegrini.
"Buck's 2012 Health Care Trend Survey has some good news for employers,"
said Joseph Ricciuti, Buck's managing director in Canada. "The drug,
health and dental cost trend factors are lower again in 2012. While
costs are still increasing more than inflation, it is important that
employers keep to the strategies they are starting to implement on the
supply side - through deductibles and claims management - and the
demand side - through wellness programs and work-life balance
initiatives - in order to continue to tightly manage the costs of
their benefits programs."
Buck Consultants' "Canadian Health Care Trend Survey" summarizes the
trend factors used by major Canadian group insurers to project future
health care plan costs for calendar year 2012. The survey compares
current trends to results for the previous four years. The study
provides trend factors by type of coverage: prescription drugs, medical
services and supplies, hospital, and dental care. Dental care trend
factors are provided by utilization, fee inflation, and a composite
The complete survey report is available for no cost at: http://www.acsbuckcanada.com/ENG/Portals/0/Documents/publications/surveys/HC-Trend-Survey-2012.pdf
About Buck Consultants
Buck Consultants, A Xerox Company, provides a full range of human
resource consulting and administration services, and has been providing
HR consulting and actuarial services in the Canadian marketplace for
almost 40 years. Our Canadian suite of services includes Health and
Productivity Consulting, Talent and HR Solutions, Global Benefit
Administration services, Retirement Consulting (actuarial services and
tax and legal consulting for Capital Accumulation Plans and Defined
Benefit pension plans), Global Investment Consulting, and
Communications Services. News and other information about Buck are
available at www.buckconsultants.ca.
With sales approaching $23 billion, Xerox (NYSE: XRX) is the world's
leading enterprise for business process and document management. Its
technology, expertise and services enable workplaces - from small
businesses to large global enterprises - to simplify the way work gets
done so they operate more effectively and focus more on what matters
most: their real business. Headquartered in Norwalk, Conn., Xerox
offers business process outsourcing and IT outsourcing services,
including data processing, healthcare solutions, HR benefits
management, finance support, transportation solutions, and customer
relationship management services for commercial and government
organizations worldwide. The company also provides extensive
leading-edge document technology, services, software and genuine Xerox
supplies for graphic communication and office printing environments of
any size. The 140,000 people of Xerox serve clients in more than 160
countries. For more information, visit http://www.xerox.com, http://news.xerox.com or http://www.realbusiness.com. For investor information, visit http://www.xerox.com/investor.
SOURCE: Xerox Canada
For further information:
Steven Laird, Buck Consultants, A Xerox Company, 416-865-0060,
Ed Gadowski, Buck Consultants, A Xerox Company, +1-201-902-2825,