Buck Consultants Survey Reveals Second Straight Year of Slowing in Health Care Cost Increases for Canadian Employers

TORONTO, July 24, 2012 /CNW/ - The overall trend in Canadian health benefit plan cost increases showed significant slowing for a second consecutive year. According to a survey released today by Buck Consultants, A Xerox Company (NYSE: XRX), insurers have lowered their expected inflation costs for health benefit premiums from 14.4% in 2011 to 11.7% in 2012.

This overall trend includes prescription drugs, medical expenses, hospital coverage, and dental care.

The 2012 "Canadian Health Care Trend Survey," the firm's 12th annual study, analyzes the health cost trend assumptions that factor into the premium rate setting of nine major Canadian insurers.

Insurers have dropped their inflation factors for prescription drugs — the fastest-increasing expense paid by group insurance plans — from 14.2% in 2011 to 12.1% in 2012, a 15% drop.

"This is due to two important factors," said Sandra Pellegrini, leader of Buck's Canadian Health and Productivity consulting practice. "In 2010, several provinces implemented generic drug pricing reforms that reduce their cost. Also, the patents expired for several blockbuster pharmaceuticals (such as the top-selling cholesterol drug Lipitor in 2010, Plavix in 2011, and Crestor, Advair and Symbicort in 2012), opening the door for lower-cost generic substitutes."

"Despite this good news however, it is important to understand the growing impact of extremely high-cost specialty/biologic drugs as a key driver of costs," said Pellegrini. She cited a study by Express Scripts showing that this group of drugs is projected to grow as a percentage of overall drug spend from 19.5% in 2011 to between 25% and 30% by 2015.

The survey shows a downward trend in dental cost inflation across the country (from 8.2% last year to 8.0% in 2012). Use of dental services — a factor that is sensitive to economic conditions — has gone down, perhaps reflecting increased employee confidence in job retention and availability of benefits.

Hospital inflation factors have seen an overall decline in inflation rate since 2008, but this year there has been a slight increase, from 8.2% to 8.4%. "This may represent the impact of an aging population and the related incidence and duration of hospital stays, despite the continuing shift from inpatient to outpatient care," said Pellegrini.

"Buck's 2012 Health Care Trend Survey has some good news for employers," said Joseph Ricciuti, Buck's managing director in Canada. "The drug, health and dental cost trend factors are lower again in 2012. While costs are still increasing more than inflation, it is important that employers keep to the strategies they are starting to implement on the supply side - through deductibles and claims management - and the demand side - through wellness programs and work-life balance initiatives -  in order to continue to tightly manage the costs of their benefits programs."

Buck Consultants' "Canadian Health Care Trend Survey" summarizes the trend factors used by major Canadian group insurers to project future health care plan costs for calendar year 2012. The survey compares current trends to results for the previous four years. The study provides trend factors by type of coverage: prescription drugs, medical services and supplies, hospital, and dental care. Dental care trend factors are provided by utilization, fee inflation, and a composite trend.

The complete survey report is available for no cost at: http://www.acsbuckcanada.com/ENG/Portals/0/Documents/publications/surveys/HC-Trend-Survey-2012.pdf

About Buck Consultants

Buck Consultants, A Xerox 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 almost 40 years. Our Canadian suite of services includes Health and Productivity Consulting, Talent and HR Solutions, Global Benefit Administration services, Retirement Consulting (actuarial services and tax and legal consulting for Capital Accumulation Plans and Defined Benefit pension plans), Global Investment Consulting, and Communications Services. News and other information about Buck are available at www.buckconsultants.ca.

About Xerox

With sales approaching $23 billion, Xerox (NYSE: XRX) is the world's leading enterprise for business process and document management. Its technology, expertise and services enable workplaces - from small businesses to large global enterprises - to simplify the way work gets done so they operate more effectively and focus more on what matters most: their real business. Headquartered in Norwalk, Conn., Xerox offers business process outsourcing and IT outsourcing services, including data processing, healthcare solutions, HR benefits management, finance support, transportation solutions, and customer relationship management services for commercial and government organizations worldwide. The company also provides extensive leading-edge document technology, services, software and genuine Xerox supplies for graphic communication and office printing environments of any size. The 140,000 people of Xerox serve clients in more than 160 countries.  For more information, visit http://www.xerox.com, http://news.xerox.com or http://www.realbusiness.com. For investor information, visit http://www.xerox.com/investor.

SOURCE: Xerox Canada

Media Contacts:
Steven Laird, Buck Consultants, A Xerox Company, 416-865-0060,
[email protected]

Ed Gadowski, Buck Consultants, A Xerox Company, [phone],
[email protected]