'These rising rates often bring unexpected or unbudgeted cost increases'
Medical plan costs per employee in the Asia-Pacific region is predicted to rise further in 2024 to reach levels not seen since 2015, according to the latest projections from Aon professionals.
Aon's 2024 Global Medical Trend Rates Report, which is based on insights from 113 Aon offices, said the average medical trend rate for 2024 is expected to be 9.7%.
This figure is an increase from the 9.2% in 2023, and the highest since 2015, according to the report. The top medical conditions driving the hike include:
Globally, the average medical trend rate for 2024 is expected to hit 10.1%, up from 9.2% in 2023 and the highest since 2015.
The increase comes amid a "period of volatility" in health care costs across APAC because of COVID-19, with claims utilisation returning to pre-pandemic levels in 2023 following a deep decline, according to Alan Oates, head of advisory and specialty for Health Solutions at Asia Pacific at Aon.
"The problem is that return in utilisation has come with higher cost products and services creating a two-fold effect," Oates said in a media release.
To mitigate the increasing costs, Oates said employers are utilising a "familiar set of strategies with wellbeing initiatives."
According to the report, employers are expected to carry out the following mitigation initiatives to prevent medical cost escalation:
"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," he said.
Another 32% of employers are offering restrictive employee medical plans, such as co-insurance, deductibles and limits or premium co-funding, to share medical claims costs, while 22% are exploring sharing these costs with their employees.
Meanwhile, about 20% of companies have an active financing or risk-sharing strategy in place for mitigation of increasing medical plan costs risk.
"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 said.
Tim Dwyer, chief executive officer, Health Solutions for Asia Pacific at Aon, also underscored the importance of realising various factors to navigate the volatility in health care costs.
"These rising rates often bring unexpected or unbudgeted cost increases and make affordability for employers and employees more difficult," 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."
