Canadian medical costs to surge past inflation rate

As drug costs continue to rise, endangering plans across the country, a new report doesn’t offer much hope

by Paul Lucas

Obesity, physical inactivity and ageing are set to drive up future healthcare claims across Canada, according to a new report.

Aon Hewitt has released figures showing increases in the average cost of employer sponsored medical plans around the world. Its projections suggest that there will be a rise in costs of 9.1 per cent during 2016 – that’s 5.5 points higher than the projected global average. Indeed there will be double digit increases in areas such as the Middle East and Latin America – with North American and European medical costs expected to greatly surpass inflation levels in the respective regions.

Canada is certainly no exception. The average cost increase here is projected to be as much as eight per cent: meaning it would surpass the predicted general inflation rate – estimated to be at two per cent – by as much as six percentage points.

According to Will Gaitan, a global consulting actuary and senior vice president for Aon Hewitt, medical costs are escalating for a host of reasons worldwide – including poor lifestyles, ageing populations and the general move away from social programs to employer-led health benefits. Indeed for Canada specifically, both inflation-adjusted and gross costs will greatly surpass the average in North America.

Around the world, it is cardiovascular and gastrointestinal issues, along with cancer, that are the most prevalent conditions driving up overall costs. However, in Canada it seems that lifestyle issues are playing the biggest role – with obesity, physical inactivity and ageing pinpointed as the leading cost drivers in the survey.

With added pressure being placed on expenses by the rush for new specialty drugs to treat chronic illnesses like heart failure, cancer and Hepatitis C, it is likely that the growth rate will continue well beyond 2016. As such, pressure is on organisations to implement solid plans without losing sight of long-term changes to the medical landscape, including an ageing population and a rise in conditions such as high blood pressure and obesity.