Employers to add more financial Well-Being programmes

19 May 2016 Consultancy.uk

The total costs of non-communicable chronic diseases between 2012 and 2030 has been estimated at $47 trillion in lost economic output, on top of the individual misery the conditions bring with them. For employer-sponsored medical programmes, the costs from NCDs are projected to continue to push up rates. A new report considers the continued rate hikes and the kinds of conditions affecting different global regions, as well as explores further moves towards promoting prevention.

Employer linked health insurance remains a key benefit for many employees across the globe. For employers it means additional costs, but also coverage against loss of productivity from protracted illnesses. The cost of employer-sponsored medical plans globally has been on the increase in recent years, with a range of non-communicable chronic diseases (NCD) on the rise as societies embrace habits that promote long term negative health consequences, such as overweight and obesity through poor quality food and a lack of exercise, and their resulting health conditions, such as diabetes and cancer. These trends are compounded by an aging population, with the consequence of poor habits exacerbated by later life.

In a recently released report from Aon Hewitt, titled ‘2016 Global Medical Trend Rates’, the consultancy explores the employer-sponsored medical plan landscape, highlighting the costs as well as the moves employers can make to encourage employees to improve their lifestyles in ways that promote long term health – thereby also improving productivity and lowering medical costs. The research itself involves a survey conducted among Aon Hewitt offices that broker, administer, or otherwise advise on medical plans that are established and managed by employers in each of the 90 countries covered in the report.

Average Medical Trend Rates

Medical Trend Rates
Average trend rates for all regions are expected to exceed average regional inflation levels by at least 4%. The report finds that the average medical trend for coverage rates will increase at the same inflation adjusted rate in 2016 as in 2015, with a net 5.5% increase. Considerable variation exists between regions however, with North America seeing a net 0.7% bigger increase in 2016 than in 2015, while Europe sees only a 0.1% increase between the two years. The largest net decrease is in the Middle East & Africa, where rate hikes are down from a net increase of 6.7% in 2015 to a net increase of 5.3% in 2016. Latin America & Caribbean will too see a net decrease from last years’ 9.8% hike to a hike of 9% this year. 

Global causes for medical rates

Global Factors Impacting Medical Trend Rates
The biggest prevalent health conditions driving health care claims globally are, according to respondents, cardiovascular at 67%, cancer at 53%, Gastrointestinal at 43% and Diabetes at 42%. In terms of conditions indicated as a contributing factor to adverse claims in different regions, Asia Pacific and Europe both cite cardiovascular issues as the number one issue, at 76%, and cancer at number two with 65% and 59% respectively. Cancer is the most indicated condition in Latin America at 67%, followed by Cardiovascular at 62% and Respiratory 62%.

Top risk factors in healthcare

Future conditions
As the world’s population ages, and as poor quality food and a lack of exercise due in part to urbanisation and digitalisation continues, a range of conditions and their co-morbidities are expected to increase. Particularly high blood pressure (64% of respondents cited), obesity (44%), high-cholesterol (41%). Physical inactivity (38%) and poor stress management (38%) are cited as long term concerns that may come to place further pressure on employer-sponsored medical plan, as well as the organisation as a whole due to lower productivity and increased sick days. 

"We expect medical costs to continue to escalate around the world due to global population aging, overall declining health, poor lifestyle habits particularly in emerging countries, continued cost shifting from social programs and an increase in utilisation of employer-sponsored health plans," says Wil Gaitan, Senior Vice-President and Global Consulting Actuary at Aon Hewitt. "Regardless of the underlying medical insurance system, employers around the world are continuing to experience added organisational cost and lost workforce productivity as a result of these factors."

Wellness programmes

Future wellness
While a number of employers have started taking a proactive approach to health issues, by creating conditions in which NCDs are prevented by supporting a change towards healthier lifestyles, a considerable mismatch between forerunners and common provisions among all employers exist. Differences emerge between employers: progressive employers seek to take a preventative approach through a range of programmes, while common employers see the cure rather than the prevention as key. Programmes such as detection are offered by 80% of progressive employers, education programmes by 71%, coaching programmes by 69%, wellness interventions by 66% and advanced assessment programmes by 66%.

In a recent WEF and Bain & Company report the importance of creating an holistic approach to healthy lifestyles as prevention was highlighted, in part due to bring about an improvement in the productivity of employees. As it stands the total costs, between 2012 and 2030, because of the impact of NCDs and mental disorders are estimated by WEF and the Harvard School of Public Health at $47 trillion of cumulative output. Reducing this figure has been cited as a key priority for a wide range of stakeholders, including business. Bringing a wide range of wellness programmes offered by common coverage offerings in line with progressive employers may be one of the wider aspects of encouraging a healthy society and all the benefits that come therewith for individuals as well as organisations.

"Many of the factors driving global cost increases are directly linked to modern lifestyles and their incidence can be significantly reduced if individuals modify their behaviours," says Francois Choquette, Global Benefits Practice Leader at Aon Hewitt. "Employers in every country need to accelerate their efforts at helping employees both understand their own health risks and motivate them to take steps to improve their health."