Health care and retirement costs in North America spiralling uncontrollably: what are employers to do?

Abstract

This article addresses some of the issues related to the rising costs of employee benefits in the United States and Canada in terms of the cost of retirement pensions and employer-provided health insurance for employees and retirees. We examine various factors that affect the cost of these services for organizations as well as how these might affect the choices employers might be forced to make. We elaborate on how various factors might compel employers to shift the cost of benefits to employees. Specifically, we elaborate on various legislative, economic, and demographic constraints on these employee benefits and examine in detail two employer practices of concern, namely cash balance retirement plans and consumer-directed healthcare plans.

Keywords:

• Canada
• health care plans
• retirement plans
• uncontrollable costs
• United States

Notes

1. The World Health Organization reports that as of 2004, the total expenditure on health per capita was $6,096 for USA, representing 15.4% of GDP (www.who.int/countries/usa/en/). For the same year, Canada's total expenditure on health per capita was $3,173, representing 9.8% of GDP (www.who.int/countries/can/en/).