Escalating drug use has fuelled 75 per cent of the claims growth within private drug insurance plans, a study by Innovative Medicines Canada concludes. The report finds that higher drug costs account for only 25 per cent of this increase.
From 2012 to 2016, claims rose by an estimated 4.7 per cent on average, 3.5 per cent of which is attributable to higher utilization (number of claimants and number of claims per claimant) and 1.2 per cent to drug cost increases, says the study. In 2016, the total annual average cost per claimant was $596, versus $538 in 2012.
For the same period, the average rise in the number of claimants was 2.1 per cent, representing the biggest growth driver, at 45 per cent, the study says. The number of claims per claimant also rose by 1.4 per cent, and the cost of claims climbed 1.2 per cent, amounting to 30 per cent and 25 per cent of the total increase in costs.
Beyond the larger number of claimants, Innovative Medicines Canada pins these rises on several factors including age of claimants and effects of drugs for chronic diseases and the therapeutic class in particular.
Investing in prevention
“Even though growth is occurring mainly in and being driven by increased utilization of high-cost drugs due to increased incidence of chronic diseases in an aging workforce, payers need to pay attention to the fact that many of these are preventable and some even reversible diseases through lifestyle modifications,” the authors say.
They recommend that employee health benefit plans invest in wellness and prevention programs to encourage good habits in nutrition, sleep, exercise and stress management as a cost-containment tool.
The second part of the study, which deals with factors other than claims experience, has been critiqued, particularly by the Canada Life and Health Insurance Association. CLHIA President and CEO Stephen Frank told The Insurance and Investment Journal that some of the data used was “misleading.”
Read more from the interview with Stephen Frank on Aug. 20 on The Insurance and Investment Journal’s website.