December 8 Benefits and Pensions Monitor Daily News Alerts

Medical Wait Times Hit New Record

Wait times for medically necessary treatment hit a new record in 2017 and eclipsed 20 weeks for a second year in a row, says a study from the Fraser Institute. The study, an annual survey of physicians from across Canada, reports a median wait time in 2017 of 21.2 weeks ? the longest ever recorded. By comparison, Canadians waited 9.3 weeks in 1993 when the institute first reported wait times for medically necessary elective treatments. "Excessively long wait times remain a defining characteristic of Canada's healthcare system," says Bacchus Barua, associate director of health policy studies at the Fraser Institute and author of ‘Waiting Your Turn: Wait Times for Health Care in Canada, 2017.’ Among the provinces, Ontario again recorded the shortest wait time at 15.4 weeks ? nearly four months ? and New Brunswick recorded the longest wait time (41.7 weeks). For the fifth year in a row, British Columbia saw an increase in wait times with the median hitting 26.6 weeks ? the longest ever measured in that province. Among the various specialties, national wait times were longest for orthopaedic surgery (41.7 weeks) and neurosurgery (32.9 weeks) and shortest for medical oncology (3.2 weeks). "Long wait times are not a trivial matter ? they can increase suffering for patients, decrease quality of life and, in the worst cases, lead to disability or death," Barua says. "It's time for policymakers to consider reforming the outdated policies that continue to contribute to long wait times in Canada."

Private Pensions Big Part Of Net Worth

Private pensions was the second-largest asset category at 29.2 per cent of assets, rising 17.7 per cent from 2012 to $3.5 trillion in determining the net worth of Canadian families, says Statistics Canada. The majority of this growth came from employer-sponsored registered pension plans which increased 17.4 per cent to $2.3 trillion in 2016. For those Canadians holding these plans, the median value rose 20.1 per cent to $156,200. The median net worth of Canadian families was $295,100 in 2016, up 14.7 per cent from 2012 ($257,200), the last time the survey was conducted. The 2016 median was more than double that of 1999 ($144,500). Housing is both the largest asset and the largest debt for Canadians. In 2016, 61.7 per cent of Canadian families reported a principal residence as an asset and 57.3 per cent of these families reported holding a mortgage on their principal residence. Housing accounted for more than one-third of the total value of assets. For those who owned their principal residence, the median reported value was $349,000, up 10.3 per cent from 2012 and double that of 1999. Overall, 29.6 per cent of Canadian families were debt-free in 2016. The share was highest among senior-led families, where 58 per cent were debt-free. However, this was down from 1999 when 72.6 per cent of senior-led families were debt-free. Mortgage debt, on principal residences and all other real estate such as cottages, remained the top debt incurred by Canadians in 2016. Total mortgage debt rose by $330 billion, up 30.4 per cent from 2012 and 196 per cent higher compared with 1999.

PMPRB Guidelines Update Proposed

Canada’s life and health insurers are fully supportive of the proposed amendments to the patented medicines regulations released by Health Canada. The industry believes that the regulations are an essential step in the process to update the Patented Medicine Prices Review Board (PMPRB) guidelines for the benefit of all Canadians. The amendments that are proposed in the consultation document are intended to reverse two trends ? the emergence of higher cost drugs such as biologics and genetic therapies that are putting increasing pressure on drug spending and a growing discrepancy between public list prices and lower actual market prices due to the increased use of confidential discounts and rebates. The regulations address this by introducing new, economics-based price regulation factors that would ensure prices reflect Canada’s willingness and ability-to-pay for drugs that provide demonstrably better health outcomes; updating the list of countries used for price comparison so that it is more aligned with the PMPRB’s consumer protection mandate and median OECD prices; formalizing a move to a complaints-based system of oversight for patented generics products that are at lower risk of excessive pricing, reducing regulatory burden for patentees; setting out the pricing information required of patentees to enable the PMPRB to operationalize the new pricing factors; and requiring patentees to provide the PMPRB with third-party information related to rebates and discounts on domestic prices. Based on international best practices, the proposed amendments would provide the PMPRB with new regulatory tools and information to better protect Canadian consumers from excessive prices while reducing regulatory burden on patentees.

Help Provided To Navigate System

Sun Life Assurance Company of Canada is partnering with Medical Confidence Inc. to assist clients across the country who receive disability benefits. For those who find themselves on disability leave, navigating the healthcare system and arranging the right treatment for their medical condition can be difficult. “Dealing with a medical issue and being on disability is stressful enough – getting treatment shouldn’t be,” says Jean-Michel Lavoie, assistant vice-president, product development, group benefits, at Sun Life Financial Canada. Medical Confidence works hand-in-hand with those on disability to understand their medical condition and needs. Healthcare professionals provide one-on-one support, arrange accelerated access to physicians and specialists, and guide individuals though their treatment and recovery. “Our goal is to help make our clients’ journey be as seamless as possible while guiding them on their road to recovery,” says Lavoie. Starting in 2018, this third-party service will be progressively available to all Sun Life clients receiving disability benefits.

Cost Constraints Could Affect Compensation

Asset management professionals are enjoying a strong year in terms of compensation, but these favourable conditions might prove a brief respite, says the ‘2017 Asset Management Compensation Study’ by Greenwich Associates and Johnson Associates. However, industry cost constraints are already starting to affect compensation and will impact many more asset management professionals in 2018. Asset management compensation is projected to increase approximately seven per cent from 2016 to 2017. On average, compensation is higher in equities than in fixed income. The pay gap between equity portfolio managers and fixed income portfolio managers widened from 2015 and 2016, with the latter group experiencing an average decrease in overall compensation of approximately 14 per cent. Despite strong markets and ? in many cases ? investment returns, many asset management professionals are in store for surprisingly tough compensation negotiations, whether they occur in 2017 or next year. Powerful secular trends are working against the industry including fee pressure driven in large part by the shift of assets from high-margin active products to low-fee index products.

Global Growth Likely To Persist

Global growth momentum is likely to persist into 2018, pushing up equity markets over the first part of the year, says Russell Investments’ ‘2018 Global Market Outlook.’ It suggests Japan, Europe, and emerging markets are likely to outperform the U.S. Similarly, the euro, Japanese yen, British pound, and emerging market currencies may offer investors more potential upside in 2018 than the U.S. dollar. “The scenario for global markets in 2018 is likely to be driven by the U.S., which still dominates and is further advanced in its cycle than other economies,” says Andrew Pease, global head of investment strategy at Russell Investments. “Second-hand growth from the global economy could drive a blow-out U.S. rally in 2018, but rising headwinds later in the year are likely to spoil this goldilocks scenario.” The timing of the next U.S. recession will be a critical issue for the global economy in 2018. Further out, the strategists see the risk of a recession in 2019 if additional policy tightening by the Fed causes the yield curve to become inverted. In contrast to the U.S., the eurozone is amid a mid-cycle renaissance and at the early stage of its exit from a very loose monetary policy, which the strategists believe may keep core eurozone bond rates rangebound through 2018. The strategists also expect another strong year for the Asia-Pacific region, buoyed by an accommodative policy at the Bank of Japan, although re-emergent wage and price inflation may cause the Reserve Bank of Australia to raise rates twice in 2018.

U.S. Managers Consider ESG

More U.S. asset managers are considering the incorporation of environmental, social, and governance (ESG) capabilities into their investment processes, as investor awareness of ESG issues increases and demand for products incorporating these issues is expected to follow, says Cerulli Associates. ‘U.S. Environmental, Social, and Corporate Governance Investing 2017: Assessing True Client Demand for ESG Criteria’ shows more than 70 per cent of managers report that they offer their clients ESG reporting. Brendan Powers, a senior analyst at Cerulli, says, "Across all major asset classes, firms are most likely to incorporate ESG factors into U.S. equity and international/global equity strategies." Incorporation of ESG issues for U.S. equity and international/global equity asset classes is not surprising given the relative ESG data availability for publicly traded stocks, though managers do express interest in building out other asset-class capabilities such as fixed income and emerging markets.

Canadians Miss Out On Coverage

While the majority of Canadians have access to prescription drug coverage through private or public plans, many do not take advantage of that coverage, says a Conference Board of Canada report. ‘Understanding the Gap: A Pan-Canadian Analysis of Prescription Drug Insurance Coverage’ found that over four million Canadians are not enrolled for either public or private coverage, despite being eligible. "While prescription drug coverage across the country varies from one province to the next, most Canadians are eligible for either public or private coverage making the uninsured gap very small," says Thy Dinh, director of health economics and policy at the Conference Board of Canada. "Where the gaps in prescription drug coverage may exist in Canada are among those who are not accessing insurance coverage programs when they need them and are eligible. The reasons might include a lack of awareness of their eligibility or out-of-pocket costs." Approximately five per cent of the total population (1.9 million) are not eligible for enrolment in either a public or private plan. Ontario residents represent a significant share of Canadians without insurance coverage, with just over 13 per cent of its population considered uninsured. However, once the expanded Ontario Health Insurance Program comes into effect on January 2018, an estimated 1.2 million Ontarians under the age of 24 currently without any coverage will be eligible for public coverage. This will lower the province's uninsured population to four per cent and to 1.8 per cent across the country.

Capital Launches Diversified Fixed Income

Capital Group has launched a globally diversified fixed income portfolio for Canadian investors. The Capital Group World Bond Fund (Canada) seeks to provide a prudently managed portfolio of bonds and other debt securities of global issuers and can act as a good complement to equity portfolios. With a focus on investment-grade bonds, it provides exposure to global bond markets ? with different economic cycles, yields, and currency valuations ? which can add an extra layer of bond diversification. It can invest in any country, currency, credit quality, coupon, or maturity, including a mix of government/agency, corporate, and mortgage- and asset-backed bonds from around the world.

Gerritse Joins Aon

Christine Gerritse is senior director, marketing and communications leader, Canada at Aon. She brings more than 20 years’ industry experience as well as marketing and commercial growth expertise. She provides strategic direction for all marketing, communications, media, and community relations across Aon Canada.

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