The Role of the Employer in the Future of Health Care
Disclaimer: The summaries and interpretations provided on this page are unofficial and have not been reviewed, endorsed, or approved by the Canada School of Public Service (CSPS).
Summary
- The presentation examines the historical evolution and future direction of employer-sponsored healthcare, delivered by Dr. Zayna Khayat, an Applied Health Futurist and professor at University of Toronto’s Rotman School of Management
- The origins of employer-sponsored healthcare trace back to 1933 in the United States when Henry Kaiser created an insurance scheme for construction workers building major infrastructure projects like the Hoover Dam
- Dr. Sydney Garfield, a young physician, partnered with Henry Kaiser to create a prepaid healthcare model where employees paid five cents per week and employers contributed $1.50 per week to fund medical services
- This early model evolved into Kaiser Permanente in 1945, which became a comprehensive health plan available to anyone, not just Kaiser employees
- In the United States, employer-sponsored healthcare became so expensive that by the 21st century, General Motors faced a $1500 per car cost disadvantage compared to foreign competitors due to healthcare expenses
- The cost of healthcare per vehicle exceeded the cost of steel, creating significant competitive disadvantages for American manufacturers
- Canadian employer healthcare benefits evolved differently, starting post-World War II as company perks to attract workers when women entered the workforce and industries were rebuilding
- Initially, employer benefits in Canada were crucial because the country lacked publicly funded healthcare, making private coverage essential for workers
- During the 1970s, as Canada’s population aged and medical needs became more complex, employer benefits expanded to include disability management and life insurance
- Union involvement in the 1970s helped shape comprehensive employee benefit programs as part of total compensation packages
- Modern employer healthcare costs range from $150 to $800 per employee per month and can represent up to 25% of an employee’s total compensation package
- The introduction of public healthcare in Canada in 1984 shifted the employer’s role from primary coverage provider to supplementing the universal system
- Recent developments include more flexible benefit options like health spending accounts where employees receive a budget to choose their own benefits
- Post-COVID trends have made telemedicine and comprehensive mental health services mainstream employer offerings
- The federal government led by example, offering $5000 annually for mental health coverage, which has become standard across other major employers
- Current healthcare operates on six fundamental design features that have dominated for 50-75 years but are now being challenged by changing demographics and technology
Actionable Advice
- Recognize that employer healthcare costs can represent up to 25% of total compensation when evaluating job offers or designing benefit packages
- Consider offering flexible health spending accounts that allow employees to choose how to allocate their healthcare benefits rather than predetermined coverage options
- Implement comprehensive mental health coverage following the federal government's example of $5000 annual coverage as it becomes table stakes for competitive employers
- Explore telemedicine options as a mainstream offering for employee healthcare benefits, especially for routine and non-emergency medical consultations
- Understand that preventative, proactive, and predictive healthcare approaches will be necessary to manage growing demand that exceeds supply capacity
- Prepare for a shift from one-size-fits-all healthcare models to more personalized and individualized approaches to employee health and wellness programs