The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management

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December 2007

Confronting The Future

By: David Garner

Reaching 50 is often a time for reflection, personally and professionally. This year Green Shield Canada marked its 50th birthday, so it is an appropriate time to reflect on not just where we have been as a company and where we are headed, but to look at broader issues that face our entire industry. Where is our industry headed? What can we expect in the next 50 years and how should we prepare?

Increasing costs in virtually everything related to healthcare is a popular theme in the media and of great concern to Canadians. Elections are waged on healthcare issues, and we all know the impact of the aging Baby Boom generation will be felt for decades to come. We have to be ready. The changing demands and needs of an aging population are too great and complex to continue to address on an individual basis.

We must formulate strategies and tactics to deal with these changes as a cohesive industry. We need to collaborate with all stakeholders in both the public and private sectors to ensure that we remain accessible, that our products remain affordable, and that the outcomes are appropriate. We need a transparent healthcare system that adequately rewards contributors for proper behaviour while offering a cost-benefit approach to funding that has measurable results.

Follow Changes

We need to do more than just follow changes in society and customer demographics. If all we do is change with the times, then we aren’t really progressing. All of us in this industry have to do more than anticipate the needs of the future; we must actually be working as though we are already in the next decade and beyond, while remaining true to our core principles.

We must steer a course for the future that remains true to a commitment of enhancing the common good, being advocates for the healthcare industry, and being vigilant in reducing costs while recognizing that we also have a social responsibility. These are principles that can help guide our combined efforts to manage change and progress into the future. If we don’t, we can expect increased plan utilization without comparable improvements in either health or disability claim costs.

We are all facing like challenges and we should address them as an industry. Healthcare spending, the cost of pharmaceuticals, and extended healthcare benefits are all under siege and are major concerns not only for us as an industry, but for employers and employees alike.

Healthcare spending, according to the Conference Board of Canada, will increase from $142 billion in 2002 to more than $170 billion in 2020. Along with this increase, there is not necessarily a surge in positive health outcomes. There are indications of outcomes declining, increasing levels of chronic disease, and indicators of less healthy lifestyles as the population ages.

The Canadian Institute for Health Information indicates that Canadians have higher than average incidences of breast and lung cancer. It says that health is determined more by socio-economic and lifestyle factors than by the provision of healthcare. This is a clear indication that, as an industry, we need to be promoting preventive healthcare measures rather than paying even more for the solutions of unhealthy lifestyle factors.

The results of lifestyle factors means there is an associated increase in the need for prescription drugs. The 2006 IMS Canadian Market Survey shows the expenditure for these drugs is expected to increase from the 2005 level of $16.5 billion to more than $22 billion by just 2010. Green Shield Canada 2006 Drug Claims Research reveals that in just the past five years alone, the costs have risen more than 44 per cent. This trend can be slowed somewhat with better plan designs and cost management, but the increase will continue and we need to address it.

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