Employer-sponsored medical benefits costs in Canada are on the rise, expected to increase six per cent in 2020, outpacing general inflation by 1.9 per cent.

According to the 2020 Global Medical Trend Rates Report from Aon PLC, costs globally are forecast to increase eight per cent, up from 7.8 per cent reported in 2019. While the global increase is mainly due to expanded plan benefits and a slight increase in general inflation, in Canada, the increase is due to higher costs from increased drug spending.

Greg Durant, Aon Canada’s chief actuary for health solutions says prescription drug costs are the single largest cost driver for medical plans in Canada. “We expect the medical trend rate (in Canada) for 2020 to be similar to last year. However, there is a federal election in late 2019 which may impact the implementation of a national pharmacare program that aims to provide coverage for certain pharmaceutical products at the national level. If the incumbent government remains, we could very well see some changes in this regard which will result in a positive outcome for the 2021 medical trend rate.”

Leading medical conditions around the world

The report looks at cost growth, leading medical conditions around the world, at estimated medical trend rates, risk factors that are driving medical cost inflation, at wellness and health promotion initiatives being undertaken around the world and at common employer practices.

It found that non-communicable diseases are increasingly having an impact on health care costs globally. In Canada, musculoskeletal and back issues followed by cardiovascular and mental health issues are the most prevalent health conditions driving health care claims.

Aon says it conducted the survey to help multinational companies budget premium costs for medical plan renewals, understand the factors driving medical plan renewals, understand the factors driving medical cost increases and devise wellness and cost-containment initiatives to respond to challenges.