Human Resources: Buck's Canadian Health Care Survey Finds Slight Slowdown in Cost Increases

TORONTO: March 26, 2008 – Canadian private health care plans continue to face double-digit cost increases in 2008, according to a nationwide survey of insurers and Blue Cross agencies released today by Buck Consultants.

Findings from the Buck 2008 “Canadian Health Care Trend Survey” show that while the overall trend has dipped slightly from 2007, cost increases expected this year for combined prescription drugs, medical plans, and hospital coverage are still in the 13 percent to 14 percent range. For dental care, increased utilization combined with provincially-set fee guides mean cost increases are in the 7 percent to 11 percent range, depending on the plan members’ province of residence. Combined total health and dental care cost increases are expected to continue at double-digit rates.

The 2008 survey, the firm's eighth annual study, analyzed responses from 10 major Canadian group insurers. Together, these companies represent 84 percent of the group health providers' market in Canada.

“Our survey results show overall health care cost increases continue to outpace other business cost increases as well as the Consumer Price Index,” said Michele Bossi, Practice Leader in Buck’s Health and Welfare consulting practice. “We expect health plan costs to increase at double-digit rates for the next five to ten years, due to increased demand for medical therapies and the aging of the population.” According to Bossi, Canadian employers can start controlling these costs “through longer-term wellness strategies, and plan design changes in the shorter term.”

Although the 2008 cost increase for prescription drugs (14.09%) dropped slightly from 14.26 percent last year, prescription drug costs still represent the largest portion of employer health care costs. The cost increase for medical plans alone (excluding prescription drugs) has decreased to 13.09 percent for 2008 from 13.43 percent in 2007.

“The largest impact comes from the prescription drug trend. Generic drugs continue to gain market share as many of the leading brand-name products lose market exclusivity and growth in the pharmaceutical industry has slowed,” said Bossi.

The overall health care trend (including prescription drugs, medical plans, hospital coverage, and dental care) decreased slightly to 13.76 percent for 2008 from 13.94 percent in 2007.

Conducted in December 2007, Buck Consultants' “Canadian Health Care Trend Survey” summarizes the trend factors used by major Canadian group insurers and Blue Cross agencies to project future health care plan costs for calendar year 2008. The survey compares current trends to results for the previous four years. The study provides trend factors by type of coverage: medical plans, hospital, prescription drugs, and dental care. Trend factors for each benefit are segregated into utilization and inflation components (except for dental care where, given the provincially-set fee guides, inflation factors were excluded).

The complete survey report is available at www.acsbuckcanada.com and click on Publications > Surveys.

Buck Consultants, an ACS 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 more than 35 years. Our Canadian suite of services includes health and welfare consulting, total benefit outsourcing services for traditional and flexible group benefit plans, capital accumulation plans, and defined benefit pension plans, retirement consulting (including actuarial services and tax and legal consulting), investment consulting, and communications services. News and other information about Buck is available at www.acsbuckcanada.com.

ACS, a global FORTUNE 500 company with 62,000 people supporting client operations reaching more than 100 countries, provides business process outsourcing and information technology solutions to world-class commercial and government clients. The Company’s Class A common stock trades on the New York Stock Exchange under the symbol “ACS.” Learn more about ACS at www.acs-inc.com.

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