Employee medical plan costs in Asia to surge in 2024
Employee medical plan costs in Asia to surge in 2024 | Insurance Business Asia
Life & Health
Employee medical plan costs in Asia to surge in 2024
Costs will rise to their highest in years
Life & Health
By
Kenneth Araullo
A new report drawing insights from more than 100 offices involved in brokering, administering, or advising on employer-sponsored medical plans highlighted a projected increase in the average medical trend rate for 2024 in the Asia Pacific region, anticipated to be 9.7%. This figure marks an uptick from the 9.2% noted in 2023 and stands as the highest since 2015.
Aon has revealed its 2024 Global Medical Trend Rates report, with insights representing the medical trend rate expectations of Aon professionals, stemming from their extensive interactions with clients and carriers within the firm’s medical plan business portfolio in each location.
In the Asia Pacific region, the leading medical conditions driving the costs of medical plans include cardiovascular issues, cancer or tumour growth, and gastrointestinal and digestive problems.
Mitigation initiatives to curb cost rises
The study also revealed key findings, indicating the top five mitigation initiatives anticipated for employers to curb medical cost escalation and promote a healthy workforce, including wellness initiatives, plan design modifications, cost containment, access and delivery restrictions, and flexible benefit plans.
Furthermore, the report illustrated that 32% of employers opt to share the medical claims costs by offering restrictive employee medical plans, such as co-insurance, deductibles, limits, or premium co-funding. Twenty-two per cent are considering sharing these costs with their employees.
Approximately 20% of companies have an active financing or risk-sharing strategy in place to mitigate the increasing risk of employee medical plan costs, including hybrid insurance, multinational pooling, captive arrangement, among others.
The study highlighted chronic conditions, physical inactivity, and poor stress management as the top risk factors driving medical conditions and future adverse claims experience.
Aon’s global forecast for the average medical trend rate in 2024 stands at 10.1%, surpassing the 9.2% noted in 2023 and reaching its highest point since 2015. The top medical conditions globally influencing medical plan costs are cardiovascular issues, cancer or tumour growth, and high blood pressure or hypertension.
“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,” Aon Asia Pacific health solutions CEO Tim Dwyer said.
“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,” Dwyer said.
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