How did we get here?
Whether important or not to know which privately owned company took the first step into the great divide and purchased an insured benefit plan for their employees, what is important to know is “why”. From the first policy purchased to now, one thing remains intrinsic; the benefit plan should bridge the ever-widening gap between what is offered to Canadians via our social network and their actual needs when it comes to medical care.
Trade unions were the first to represent, defend, and demand better working conditions. Such was the emergence of the Workmen’s Compensation passed in 1914 in Ontario. Western farmers, in the 1920-1930’s, were the first to organize healthcare cooperatives to finance additional health care costs in their communities without any government involvement.
Then, in 1947, Tommy Douglas, premier of Saskatchewan, brought the first publicly funded hospital insurance plan to Canada. What followed were introductions, refinements, improvements, and expansion to the web of our now elaborate social programs offered to each and every Canadian.
However, private companies always knew, “FAIR IS NOT EQUAL and EQUAL IS NOT FAIR”. No government-sponsored plan would ever be able to pick up 100% of the bill. And so they haven’t.
Hence the evolution to Employee Group Benefit Programs.
But have they evolved?
Via Section 6(1)(a) of the Income Tax Act, the Federal government determined it was in the public’s best interest to encourage employers to provide certain benefits to their employees through making health and dental non-taxable (outside of Quebec) and the employer costs of the plan a business expense. In the 1970’s-1980’s employers offering a comprehensive benefit plan included life insurance at typically 100% of salary, long term disability coverage, pharmacy, health, and dental care. Pharmacy and health care were offered at 100%, while vision may be subject to $200 every 24-months, and basic dental services subject to $1,200-$1,500 per person, annually.
Fast forward to current. In many cases, life insurance has been cut to $25,000. Pharmacy is typically offered at 80%, with loads of restrictions and definition limitations. Vision care—if it’s even offered—remains at the $200, perhaps $250 every 24-months. Dental, by and large is still offered with these very same maximums. Is that to say the costs of these medical services has remained the same the last four decades?
- One in ten Canadian’s can’t afford the medicines their doctor prescribes.
- 66% of doctor visits result in a prescription
- Canadian’s are four-times more likely to not fill prescriptions if they have to pay out of pocket
Granted, technology has enhanced the claims processing timeline, even if the coverage itself has not changes but often diminished. There are fresher options available, including Health Spending Accounts (HSA), Administrative Services Only (ASO) for the self-insured options. Employee Assistance Programs (EAP), Critical Illness can be added to the menu of available coverage. Still only about 30% of Canadian employers have “customized” their benefit plan, while still toting the benefits as a means to “attract and retain” employees, all the while not recognized the change in diversity which has eclipsed the previous workforce for which the original “idea” of benefits catered to.
Understandably, the hesitation comes from the expenditure presumption and an employer’s apprehension to take on these costs. They, like everyone else, know that private health-care costs in Canada have grown dramatically over the last forty years. Diversity, population growth, and inflation has meant an increase of more than 220% to the bottom line. No small figure. Yet, offering a flexible, customized original plan does not have to break the bank, often it is a means of controlling costs and achieving this does not mean the implementation has to be complicated or time-consuming to administer.
What may the culprit in the lack of dimension to the offering is the fact that practitioners—professionals selling employee group benefits are not specialized enough to recognize the very product they are placing is, by current definition, antiquated. These people place “set it and forget” plans. Yes, quickly forgotten and considered lacking by the employees.
Group Insurance is an industry saturated, in my opinion, by dabblers professing to be “experts”. Yet to be an expert, this professional must illustrate special skill or knowledge in the particular field and have the recognized credentials. Still, many of today’s Benefit “experts” hold employee group benefit clients at less than 30% of their overall professional block of business. When choosing a specialized doctor, would you pick one that only specialized in your area of concern less than 30% of the time?
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