Menu
Cost Containment News Proudly Sponsored By:

Increase In Cost Of Private Healthcare Stabilises But Remains Above Country Inflation Rates

In The iPMI Picture: Top claims driving costs. In The iPMI Picture: Top claims driving costs.

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*

*an example of this would be Darwin, the industry-leading global benefits platform offered by Mercer’s Thomsons Online Benefits.

 

The report asked insurers for information on the rising cost of medical care compared to inflation in each market as well as the types, costs and frequency of medical conditions that were claimed for by company employees in 2016. As Mercer’s research parameters for the two reports are different, US data has been excluded from this release; however according to the 2016 Mercer National Survey of Employer-Sponsored Health Plans, US employers experienced 2.6% increase in the cost of running company healthcare plans.   

 

Table 1:  Rates of Medical Inflation around the World: 2017 Survey Results

 

2016 Medical Trend Rate Experienced 1

2016 estimated inflation rate †

2017 Projected Medical Trend Rate 1

2017 forecast inflation rate †

 

Global (average)‡

9.9%

3.1

9.7%

3.6

 

Canada (average)

6.0%

1.4%

11.0%

2.0%

 

Canada

6.0%

1.4%

11.0%

2.0%

 

Asia (average)

10.7%

2.0%

10.2%

2.8%

 

China

10.0%

2.0%

11.0%

2.4%

 

Hong Kong

8.4%

2.6%

8.3%

2.6%

 

India

15.3%

4.9%

14.0%

4.8%

 

Indonesia

13.1%

3.5%

13.1%

4.5%

 

Malaysia

11.5%

2.1%

12.7%

2.7%

 

Philippines

11.8%

1.8%

11.1%

3.6%

 

Singapore

10.0%

-0.5%

9.4%

1.1%

 

South Korea

7.6%

1.0%

6.0%

1.8%

 

Taiwan

7.7%

1.4%

9.2%

1.4%

 

Thailand

9.4%

0.2%

9.5%

1.4%

 

Vietnam

12.5%

2.7%

7.9%

4.9%

 

Pacific (average)

6.4%

1.3%

6.8%

2.0%

 

Australia

6.4%

1.3%

6.8%

2.0%

 

Europe (average)

7.1%

1.6%

6.7%

2.6%

 

Belgium

4.5%

1.8%

4.4%

2.0%

 

Bulgaria

12.3%

-1.3%

13.5%

1.0%

 

Denmark

5.9%

0.3%

4.3%

0.7%

 

France

2.1%

0.3%

2.1%

1.4%

 

Greece

5.0%

0.0%

5.0%

1.3%

 

Hungary

7.4%

0.4%

7.2%

2.5%

 

Ireland

5.0%

-0.2%

5.5%

0.9%

 

Italy

2.0%

-0.1%

2.2%

1.3%

 

Netherlands

2.7%

0.1%

1.9%

0.9%

 

Norway

7.2%

3.6%

10.3%

2.6%

 

Poland

14.2%

-0.6%

12.9%

2.3%

 

Portugal

1.4%

0.6%

1.5%

1.2%

 

Romania

5.5%

-1.6%

6.0%

1.3%

 

Russia

10.2%

7.0%

9.3%

4.5%

 

Serbia

23.0%

1.1%

12.6%

2.6%

 

Spain

4.7%

-0.2%

4.6%

2.4%

 

Sweden

5.2%

1.1%

3.9%

1.4%

 

Switzerland

3.6%

-0.4%

3.9%

0.4%

 

Turkey

9.0%

7.8%

10.2%

10.1%

 

Ukraine

13.0%

13.9%

12.5%

11.5%

 

United Kingdom

5.9%

0.6%

6.1%

2.5%

 

MEA (average)

12.4%

3.7%

14.9%

6.1%

 

Bahrain

10.8%

2.8%

14.0%

1.3%

 

Egypt

26.4%

10.2%

37.3%

22.0%

 

Oman

6.7%

1.1%

5.6%

4.1%

 

Qatar

13.3%

2.7%

16.2%

2.6%

 

Saudi Arabia

5.6%

3.5%

5.5%

3.8%

 

United Arab Emirates

11.8%

1.8%

11.0%

2.8%

 

Latin America (average)

15.1%

8.6%

13.5%

5.6%

 

Argentina

50.3%

40.7%*

32.2%

21.5%*

 

Brazil

19.7%

6.4%

17.1%

4.1%

 

Chile

8.1%

2.7%

11.7%

2.7%

 

Colombia

10.0%

7.9%

12.9%

5.2%

 

Dominican Republic

4.5%

3.3%

4.6%

1.2%

 

Mexico2

13.0%

3.4%

12.1%

4.9%

 

Panama

9.7%

1.5%

11.1%

1.9%

 

Peru

5.8%

3.2%

6.5%

3.3%

 

         

 

1The above medical trend rates reflect insurer survey results and may not be MMB’s view.

 

2 Macroeconomic variables in Mexico are likely to impact stated trend rates

 

‡ Average of 48 participating countries with an acceptable number of responses

 

† Sources for inflation rates include:

     

• International Monetary Fund, World Economic Outlook Database, April 2017

 

• International Labour Organization, World Employment and Social Outlook - Trends 2016

 

Inflation rate information is strictly for general reference purpose; Mercer gives no guarantees as to their accuracy and will not accept liability for decisions based on them.

       

* Source, Mercer Argentina Spot Survey (March 2017). The source of the inflation data the source is LatinFocus Consensus Forecast.

 

back to top