Employer medical benefit costs to more than triple the rate of inflation globally in 2021

19 October 2020 — Andrei Victor
The costs of employer medical benefits across the world are forecasted to rise 7.2% in 2021, outpacing general inflation by 5.0%, according to the "2021 Global Medical Trend Rates Report" released by AON

"There is still a significant amount of uncertainty regarding Covid-19's impact on deferred treatments and long-term health care," said Tim NIMMER, AON's chief global actuary for Health Solutions.

"While countries navigate through different outbreak phases, the expectation is that medical plan utilization will return to normal levels during 2021 as medical services begin to reopen to the market."

Projected medical trend rates vary significantly by region. Costs are expected to increase the most in the Middle East/Africa regions, with average medical trend rates forecasted at 12%. In contrast, Europe is projected to see an average medical trend rate increase of 5.5%.



AON's report confirms the increasing impact of non-communicable diseases on health care costs globally, which also play a role in the severity of COVID-19 outbreaks. The top conditions that will drive health care claims are cardiovascular disease, cancer, high blood pressure and diabetes. The report also confirms the growing prevalence of risk factors from unhealthy personal habits such as high blood pressure, physical inactivity, poor stress management, high cholesterol and bad nutrition. The disease and risk rankings differ significantly throughout the world.

To mitigate costs, AON's report revealed that more employers are turning to wellbeing programs - such as preventive strategies like physical check-ups, screenings, healthy eating and physical activity promotional programs - to reduce chronic conditions. Employers also continue to use traditional strategies, such as controlling unreasonable plan utilization, adjusting plan designs, narrowing networks and adding flexible benefit plans to cap overall benefit costs.

"COVID-19 has demonstrated the need for better global governance around the management of medical programs," said Francois CHOQUETTE, executive vice president and leader of global benefits for AON.

"Multinational employers are still learning how to manage the pandemic and its effects and are using this experience to better understand and address employees' health care and wellness needs."

"Although a lower medical trend rate is expected for 2021 compared to this year, pressures on medical goods and services have never been higher," said Rui SILVA, vice president of global benefits for AON. "Governments and health care systems must prepare for the economic and social impacts of COVID-19."

To view the report, click here.


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