One of our primary benefits partners, Green Shield Canada, recently completed a study of health claiming patterns by age category. The results are very interesting and may have impact on how you, as an employer, view your health plan. Until recently, extended health care costs (excluding drugs) did not constitute a large percentage of overall costs. More recently, the average has increased to 1/3 of overall claim costs. Even within our block, we have seen a higher than ever incidence of extended health claims exceeding drugs!
Interestingly, plan maximums and plan designs haven’t changed much over the past decade yet the claim costs are on the rise. While the goals of keeping employees healthy and productive, reducing absenteeism and disability claims, and coverage for treatments of chronic disease are legitimate, it is interesting to see how claims actually fall out and whether these goals are being met. So if we want our health plans to improve plan member health, what kind of help do plan members need?
Let’s examine the data from the GSC 2014 Health Study and see what the facts reveal… on the health benefits front (NOT DRUG), HERE ARE THE HIGHLIGHTS:
0-10 YEAR OLDS:
Babies are getting chiropractic services—a lot of babies. Yes, you read that correctly, apparently your plan members’ babies “need” chiropractic services. Although some of the usage is driven by accidents and injuries, the single highest usage and cost for chiropractic services is for under one-year-olds. Why? Although in cyberspace (a.k.a. The Wild West) theories abound about various uses for chiropractic services, like for colic and ear infections, we wouldn’t exactly consider any of them scientific evidence.
11-20 YEAR OLDS:
Already by the early teen years, we see a claiming pattern emerge that continues throughout the age bands. It’s a pattern that we’re referring to as “the three amigos” of health claim volumes because, from here on in, three health benefits come together as an almost inseparable trio: massage, chiropractic services, and physiotherapy.
The three amigos team up to pack a serious punch in terms of both highest-usage and highest-cost health benefits. The impact of the three amigos is far reaching in that they appear to have set the scene for future generations of plan members who have become accustomed to accessing this trio of benefits. In fact, entering the teen years seems to signal the “need” for teenage girls to have massages with an increase of 543% in massage costs for girls (moving from the kids’ age band to the teens). That’s tens of thousands of teenage girls who “need” massage—interestingly, the massage usage suggests that boys don’t “need” nearly as many.
21-40 YEAR OLDS:
Now it’s the same old/same old; the three amigos are well entrenched with massage as the number one cost driver—it is the single most costly health benefit between the ages of 26 and 52. It is also during these years that female spend begins to radically outpace male spend. In their 20s, females spend over 80% more than men on health benefits. In the 30s, it is 73%, dropping to a still significant 47% in the 40s. While this is consistent with female-male trends in drug and dental spends, it is more pronounced in health benefits, and with the societal trend of a spa on every corner, females are being expressly marketed to for some of these services.
41-60 YEAR OLDS:
Now although it continues to be same old/same old with the three amigos leading the charge in terms of top health benefits usage, folks familiar with our Drug Study will easily predict the disease states that our drug data reveal are becoming more prevalent. Plan members are facing the complex challenges associated with managing chronic conditions whose seeds were sown during their 20s and 30s; however, the three amigos continue to dominate all age bands. And once again, massage continues to hold the top cost position in the 40s and 50s—just like the 20s… and the 30s… and the 40s.
In the 50s we see the Impactables—the plan members who are driving most of the drug costs— the 50s have the highest volumes and cost for drug claims. In fact, of all the drug costs, close to 70% are generated by plan members between 35 and 65 years old.
THE 60s AND 70s:
|3||HOME SUPPORT SERVICES||10.62%|
|4||LONG TERM CARE FACILITY||9.60%|
|7||FOOT CARE PROFESSIONALS||4.67%|
The disease states continue to look like a roll call of chronic diseases, and also like the 50s, chiropractic services and physiotherapy make the list of the top health benefits. We also see age-related benefits entering the scene in the 60s and 70s like home support services and long term care. The 60s is the first age group with a diminishing impact of massage; this is likely because massage is probably not ingrained in the lifestyle of this older generation— something we certainly can’t say regarding the younger generations where massage is king and may continue to be throughout their lives.
The bigger picture…
We never did say why we chose now to move from the famous GSC Drug Study to the broader Health Study. Well, we had a real sense that things in the benefits environment were changing. When we were doing our annual renewals for clients, what used to be a pretty traditional 70/30 cost split between drug and health benefits was moving to 60/40. A sustained drug-pricing “holiday” has been at play, but so has a rapid rise in the use of paramedicals like the three amigos—massage, chiropractic services, and physiotherapy.
And the data revealed in the study has driven home that the use of paramedicals, especially massage, is going to a place where we likely never would have imagined 10 or 20 years ago. We think it’s fair to say massage may have its place in health benefit plans—for example, it’s been shown to help alleviate aches and pains associated with soft tissue injuries—but the explosion in its usage—at younger and younger ages—suggests that plan members and their dependents don’t access it solely as a health care service, but often as a part of their lifestyle.
Next, we see the three amigos running wild throughout the age bands, often used in tandem with each other, especially in our highest-cost claimants. There are situations where this traveling in threes is medically warranted, but the large usage of this combination of benefits suggests that using all three may represent a savvy business model of cross-referrals more than evidence-based health care. It appears that good old-fashioned marketing is increasingly offering these services as a package deal.
In our Drug Study we always look at “The 5%”— this is what we call the plan members who are driving most of the drug benefit costs. Same thing is happening on the health benefits side. In this study, 5% of plan members are driving 36% of all the health benefits costs. The 5% supersizes up from accessing just one of the categories to then adding in a second… plus a third… and often even adding a fourth: orthotics.
The Challenge That Employers Face:
- Canadians believe they are healthy—we have the highest self-perceived health status in the world—nine out of ten of us rank our health as “good,” “very good,” or “excellent.”
- Say what? Reality check, Canada. Type 2 diabetes has doubled here since the year 2000. We rank third-worst behind only the USA and New Zealand.
- Up to 20% of Canadian youth can be considered obese—the adult population is no better.
- The highest percentage of drug volume and costs is still tied to chronic conditions like hypertension, diabetes, cholesterol, and depression.
- Over the past 12 months, the greatest strain in the group benefits world has been rising rates to cover the costs of new, expensive drugs for hepatitis C, rheumatoid arthritis, Crohn’s and colitis, and cancer.
And Right Here, Right Now, Is How Benefit Plans Are Meeting These Challenges (Not!):
- The 2014 study shows that GSC plan sponsors spent approximately $144 million on plan members’ glasses, orthotics, massage, and chiropractic services during the one-year study period.
- By contrast, over the same period, GSC plan sponsors only spent $100 thousand on dietitians, even with the type 2 diabetes numbers noted above and knowing eating habits are a significant contributor to the disease.
There are no easy answers in benefits plan design. We all like to get prescription glasses at least partially paid for…and, we admit it, even the team that analyzed the data and wrote the GSC Health Study like their massages. But our challenge to employers is to consider the long-term health challenges that face us—an aging population, the increase in chronic disease, and the entry of very expensive but very impactful new drugs into the marketplace.
Back to our original question—if we started from scratch in 2015, with all the best available information at our fingertips, what would a plan look like? If you are one of those plan sponsors looking for concrete health outcomes for your employee population, that traditional plan is not going to cut it.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.