The average medical trend rate for 2024 is likely to increase by .5% from 9.2% in 2023 to 9.7 % in 2024. This would be the highest average medical trend rate since 2015.
The trend rate figures represent the percentage increases in medical plan costs per employee – both insured and self-insured. According to the 2024 Global Medical Trend Rates Report by Aon, knowing the estimated costs in advance helps organisations make better decisions to address projected price inflation, explore technology advances in the medical field, plan usage patterns, and cost shifting from social programs.
The top medical conditions driving medical plan costs in Asia Pacific are:
- Cancer/Tumor Growth
- Gastrointestinal and Digestive Issues
The report further highlights that wellness initiatives, plan design changes, cost containment, access and delivery restrictions, and flexible benefit plans are the top five mitigation initiatives expected for employers to undertake to prevent medical cost escalation and promote a healthy workforce.
Among those surveyed, 32% of employers share the medical claims costs by offering restrictive employee medical plans for example co-insurance, deductibles and limits or premium co-funding, while 22% are exploring sharing these costs with their employees.
Approximately 20% of companies have an active financing or risk-sharing strategy for example hybrid insurance, multinational pooling, captive arrangement, etc., in place for mitigation of increasing employee medical plan costs risk, reveals the report.
Chronic conditions, physical inactivity and poor stress management continue to be top risk factors driving medical conditions and future adverse claims experience.
“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,” said Tim Dwyer, chief executive officer, Health Solutions for Asia Pacific at Aon.
While macroeconomic instability plays a significant role in influencing medical trend rates, it is equally important for businesses to grasp regional disparities, the underlying factors contributing to these trend rates, and effective strategies for mitigating the associated increases. This understanding can help companies navigate through volatility and make well-informed decisions.
“The COVID-19 pandemic ushered in a period of unpredictability in healthcare costs throughout the Asia Pacific region, a level of uncertainty not witnessed in a long time. Claims utilisation rebounded to pre-pandemic levels in 2023 after a significant decline. However, this resurgence in utilisation has been accompanied by an increase in the costs of medical products and services, resulting in a two-fold challenge. Alan Oates, the Head of Advisory and Specialty for Health Solutions in Asia Pacific at Aon, pointed out,
"At the national level, businesses seeking to curb these rising costs are adopting a set of familiar strategies. Leading the way is the implementation of wellbeing initiatives, which tend to gradually impact costs. Given the current economic pressures, more clients than in the past decade are achieving cost containment by making direct changes to plan designs and optimizing their healthcare networks."
“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 added.