Aon’s Global Medical Trend Rates Report Forecasts Increase in Employee Medical Plan Costs for Businesses in Asia Pacific, the Highest Since 2015
- Written by Viw Magazine
SINGAPORE - Media OutReach - 10 October 2023 - Aon plc (NYSE: AON), a leading global professional services firm, has released its 2024 Global Medical Trend Rates Report. The report is based on insights from 113 Aon offices that broker, administer or advise on employer-sponsored medical plans in each of the countries covered in the report.
The findings reflect the medical trend expectations of Aon professionals based on their interactions with clients and carriers represented in the portfolio of the firm's medical plan business in each location. In Asia Pacific, the report forecasted the average medical trend rate for 2024 to be 9.7 percent, up from 9.2 percent in 2023 and the highest since 2015.
The trend rate figures represent the percentage increases in medical plan costs per employee – both insured and self-insured. Knowing the estimated costs in advance helps organisations make better decisions to address projected price inflation, explore technology advances in the medical field, plan usage patterns and cost shifting from social programs.
"Health and wellbeing costs have become an important concern for companies as year-over-year medical plan costs continue to rise. These rising rates often bring unexpected or unbudgeted cost increases and make affordability for employers and employees more difficult," said Tim Dwyer, chief executive officer, Health Solutions for Asia Pacific at Aon. While macroeconomic instability is a big part of the story behind the medical trend rates, it is also important for businesses to understand the regional differences, the conditions driving the trend rate, and the ways in which these increases can be mitigated to better navigate volatility and make more informed decisions."
The top medical conditions driving medical plan costs in Asia Pacific are:
1. Cardiovascular
2. Cancer/Tumor Growth
3. Gastrointestinal and Digestive Issues
"The COVID-19 pandemic introduced a period of volatility in health care costs across Asia Pacific that we had not seen for a very long time with claims utilisation returning to pre-pandemic levels during 2023 after a deep decline. The problem is that return in utilisation has come with higher cost products and services creating a twofold effect." said Alan Oates, head of advisory and specialty for Health Solutions, Asia Pacific at Aon. "At the country level, companies looking to mitigate these increased costs are using a familiar set of strategies with wellbeing initiatives being the leading mitigation strategy. These strategies tend to modify costs over an extended period and current economic pressures mean we are seeing more clients than at any time in the past 10 years achieve cost containment through more direct plan design changes and network management."
Additional key findings from the study include:
· Wellness initiatives, plan design changes, cost containment, access and delivery restrictions, and flexible benefit plans are the top five mitigation initiatives expected for employers to undertake to prevent medical cost escalation and promote a healthy workforce.
· 32 percent of employers share the medical claims costs by offering restrictive employee medical plans for example co-insurance, deductibles and limits or premium co-funding, while 22 percent are exploring sharing these costs with their employees.
· Approximately 20 percent of companies have an active financing or risk sharing strategy for example hybrid insurance, multinational pooling, captive arrangement, etc., in place for mitigation of increasing employee medical plan costs risk.
· Chronic conditions, physical inactivity and poor stress management continue to be top risk factors driving medical conditions and future adverse claims experience.
"This is a time to be innovative when considering plan design solutions that deliver flexibility to support modern family needs within the cost constraints of the organisation. More money than ever is being invested in wellbeing initiatives and our work with clients has shifted since the pandemic to using more data to better identify population health risks and align financial and wellbeing incentives to build a more resilient workforce," Oates added.
Aon has forecasted the global average medical trend rate for 2024 to be 10.1 percent, up from 9.2 percent in 2023 and the highest since 2015. The top medical conditions driving medical plan costs globally are:
1. Cardiovascular
2. Cancer/Tumor Growth
3. High Blood Pressure/Hypertension
As employer-sponsored medical plans become a larger part of total rewards spend and pressure mounts to accurately forecast and manage costs, this report will serve as a valuable resource for organisations to plan global budgets and benefits strategies to build more resilient workforces for 2024 and beyond.
Read Aon's 2024 Global Medical Trend Rate Report here.
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