Pension & Benefits News Employer medical benefit costs to nearly double the rate of inflation in 2020
Thursday, September 26, 2019

Employer medical benefit costs to nearly double the rate of inflation in 2020

By Pension and Benefits Editorial Staff

U.S. employer-provided medical benefit costs are forecasted to rise 6.5 percent in 2020, outpacing general inflation by 3.8 percent, according to the 2020 Global Medical Trend Rates Report from Aon. The increase for U.S. employer-sponsored medical plans expected next year is due to a combination of higher costs for specialty drugs, moderate price increases for care and flat or decreasing health utilization.

Aon found that medical costs in the U.S. will rise slower compared to other regions around the world. Globally, costs for employer-sponsored medical plans in 2020 are forecasted to increase 8.0 percent, up from 7.8 percent growth this year. This is mainly due to expanded benefits and a slight increase anticipated in general inflation.

Projected medical trend rates vary significantly by region, the report found. Costs are expected to increase the most in Latin America and Middle East/Africa regions, with average medical premium rates forecasted at 13.1 percent and 12.2 percent, respectively. In contrast, Europe is projected to see an average medical premium rate increase of 5.7 percent.

Aon confirms the increasing impact of non-communicable diseases on health care costs globally. In the U.S., musculoskeletal, cancer, cardiovascular, diabetes and high blood pressure were the most prevalent health conditions driving health care claims. The report also confirms the growing prevalence of risks from unhealthy personal habits in the U.S., such as physical inactivity, obesity, bad nutrition, ageing and excessive alcohol and substance abuse.

“Many of the risk factors lead to chronic conditions with long term medical costs that make them difficult to treat and result in long-term medical cost increases,” said Tim Nimmer, Aon’s global chief actuary for Health Solutions. “As a large portion of our waking hours are spent on the job, the workplace is a logical place to create a healthier culture and change behaviors.”


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