Plan sustainability—what is it and why does it matter
The employers and plan sponsors we work with balance two competing and critical priorities when thinking about their benefit plans:
- Employee health and wellness—employees are more and more engaged in their health, and benefit plans are a key part of this. Job hunters are looking for quality benefit plans and current employees value them . It’s also an important component of decreasing absenteeism and presenteeism and helping employees perform at their best.2
- Affordability and sustainability—the cost of providing a quality benefit plan is on the rise. As an employer, you may be stuck in the middle, trying to figure out a way to maintain a quality benefit program, but also ensure that your plan fits within your compensation budgets.
To help you feel confident in the future of your plan, we’ll be releasing a three-part sustainability series. We’ll talk everything sustainability and we’re going to focus on three key areas.
- What is Alberta Blue Cross® doing to manage your plan?
- What can you be doing to make sure your plan is sustainable?
- What does the future of benefits look like and what does that mean for your plan today?
We’re going to explain some of the cost pressures facing benefit plans, lay out options to optimize management of benefits, and ultimately, help you make informed plan sustainability decisions for your team and your business.
Plan sustainability—what is it and why does it matter?
Plan costs vary based on the benefit plan design, employee demographics and many other factors. This means that benefit plan sustainability doesn’t come from a precise calculation or equation that can be used for every group. But instead, building towards plan sustainability involves understanding your employees, the available benefit plans and the benefits landscape in general. When considering sustainability, we think about
- plan design and plan performance—are you and your employees getting the benefits you need and good value from your benefit plan?
- plan management features—are there some cost-containment measures that you could be using?
- industry trends—is your plan future-proofed? Is there a new technology or treatment that your plan design is well positioned to address? What is going on in the industry in terms of policies and technologies that might affect your benefit plan?
Plan sustainability means creating a benefits plan that remains viable into the future—taking into account your employees and your business today and ten years from now.
Rising costs of health care
So why are we talking about plan sustainability? Because benefit costs are rising. By talking about it, we can help you to find ways to support employees with high-cost treatments, implement cost-control measures to ensure next years’ employees have access to the coverage they need and consider overall wellness not just health.
Why are costs going up? Here are a few reasons:
- Increased drug spend—there are many factors affecting drug costs—some driving them up, others driving them down—but overall, prescription drug spend continues to be on the rise. Reasons include a higher prevalence of chronic conditions, an aging population and workforce, changes in clinical practice guidelines with earlier prescribing and tighter disease management and a growing market of specialty medications being used for common conditions like migraines, cholesterol, asthma and depression. See what the most common conditions and drugs used to treat them are.
- Growth in the use of paramedical services—extended health benefits continue to show increasing cost and usage, primarily driven by increasing acceptance of non-pharmaceutical remedies and the increasing scope of practice of health care providers. The continued rise in the use of massage therapy, chiropractic services and physiotherapy across all ages, sometimes used in tandem with each other, suggests that these are benefits highly valued by plan members and viewed as contributing to their overall wellness.
- Technological advances on medical devices—continuous developments are being made on medical devices that provide treatment for issues such as wellness, mobility, glucose monitoring, sleeping disorders and other conditions. These devices are being designed with variations of high technology, motorized elements and additional features which increase their costs.
- Increased prevalence of mental health claims—mental health claims are on the rise with increasing usage of psychology and Employee Family Assistance Programs (EFAP). We are seeing a trend with many plan sponsors considering or implementing plan design changes which facilitate increased coverage for psychological services, as well as expanding the types of providers who can offer the psychology service. Some are also increasing the scope of services through their EFAP. Remote delivery of these services using electronic communication technologies is also becoming more prevalent.
- Changes to government sponsored programs—the Alberta government continues to make changes to government-sponsored programs which have the potential to shift costs towards employer benefit plans.
- Dental fee increases—each year, the Alberta Dental Association and College (ADA&C) publishes a list of suggested dental procedure codes and their associated fees for Alberta dentists. Dental fee guide increases often contribute to a rising trend in the cost of dental services. There were no increases in 2021, but in 2020 the dental fee guide increased by 4.38 per cent.3
Now that you have an overall understanding of the cost-drivers, stay tuned for our next article in the series addressing what Alberta Blue Cross® is currently doing to protect the sustainability of our benefit plans. Our goal is to ensure that by the end of our sustainability series you will have the information, tools, options and understanding of the ways that Alberta Blue Cross® can help ensure that you and your team have continued access to a lifetime of valuable, sustainable and viable benefit coverage.
3Note: Dental providers are not required to follow the ADA&C dental fee guide. Currently in Alberta, approximately half of general dentists charge according to the current Alberta Dental Association and College (ADA&C) dental fee guide.