The FINANCIAL — The cost for companies to provide medical and healthcare plans to staff continues to outpace inflation in most major economies but has stabilized to an increase of around 10% per annum, according to new research by Mercer Marsh Benefits, a partnership between global professional services firms, Mercer and Marsh.
Globally, medical inflation for 2017 (9.7%) is down from 9.9% in 2016 but is still forecast to be nearly three times the forecast 2017 inflation rate (3.7%). The picture varies by geography (Table 1). In the UK, for example, medical costs are set to increase 6.1% against a country inflation rate of 0.8%. The data also showed that globally the highest level of spend on medical costs was related to cancer, heart disease and respiratory diseases (Table 2); however the incidence of reported claims was more diverse and varied by region.
Mercer Marsh Benefits’ 2017 research Medical Trends Around the World, is based on a survey of 220 insurers across 63 countries (outside of the United States).
According to John Deegan, leader of Mercer Marsh Benefits, “The picture varies by geography but the most prevalent causes for increased medical spend was attributed to higher costs for medicines and technologies. Their introduction can offer new hope for better treatments but adoption introduces challenges – such as increased costs – for employers, payers, policy makers and regulators. What is clear though is that ageing workforces in many markets means that employers will continue to face cost increases. This can be overcome if companies analyse their workforce populations and provide targeted healthcare provision based on the workforce health profile.”
Graham Pearce, Mercer’s Global Consulting Group Leader, added, “With medical inflation again outpacing price inflation by a factor of nearly three, companies need to redouble their efforts to manage their spiralling healthcare plan costs. The quality of the claims reporting and loss prevention measures available varies significantly between the global insurance networks – both these factors are becoming key drivers in the choice of insurance providers at the local and global level.”
Mercer’s report also challenges employers to consider the following opportunities:
Question the ‘status quo’ of healthcare consumer choice options so that higher costs are also delivering better health outcomes
Drive better value by ensuring health benefits plan design addresses the precursors to top claims, with an aim to mitigate high-cost care that drives inflationary trends
Create incentives for health maintenance and prevention scenarios to positively impact the health of the workforce
Improve overall employee engagement with health benefits using modern, digital communication platforms and tools