Will Private Medical Insurance Prices Skyrocket Along with the Rest of the Economy?

Visit the grocery store, you’re likely to get sticker shock. Gas pump? Gulp. Need a new toaster? Get ready for the burn. Will prices for private group health insurance follow suit?

In January 2022, Canadian inflation surpassed 5% for the first time since September 1991, rising 5.1% on a year-over-year basis and up from a 4.8% gain in December 2021.

Excluding gasoline, the Consumer Price Index rose 4.3% in January 2022—the fastest rise since the index was introduced in 1999. COVID-19 pandemic-related challenges continue to impact Canadians everywhere. Over time, shoppers paid more for groceries, as food prices rose at a faster pace in January 2022 (+6.5%) than in December 2021 (+5.7%) – the largest yearly increase since May 2009. Wage data from the Labour Force Survey found wages rose 2.4% during the same period, meaning that, on average, prices rose faster than wages. Canadians experienced a decline in purchasing power.

 

So, what’s ahead for private medical insurance? Will there be sticker shock ahead?

Gino Stirpe, Director of VUMI® Canada says, “With the unprecedented backlog our Canadian healthcare system is facing, international private medical insurance remains a strong value, and an important investment in your health and wealth. In fact, if you do see a slight increase (2% – 6% year over year has been the norm), the cause is not inflation-based. Rather, the belief that premiums go up exponentially each year is not factual.”

Rates are affected by these factors:
• Age and gender of employees
• Claims paid by the insurers
• Type of optional riders selected
• Medical inflationary rates

Consider this: if your group of employees remain with you, year after year, your insurer must adjust the plans demographics accordingly. Simply stated, as people age, their risk factors go up. You can even have a price decrease if older people who are leaving are replaced with younger people.

Next, did you realize that 80% of Canadian healthcare claims are for prescription drugs? A supplemental health plan can help you manage your drug costs and keep them from dramatically impacting your premiums.

“Ensuring your supplemental group insurance plan meets your company’s specific needs is a complex matter,” Stirpe concludes. “You’ll want to have an industry professional as your guide to ensure financial stability for your company – and the best health outcomes for your valued employees.”

Source: Statistics Canada, February 2, 2022