Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has announced that the inflation rate of employer-provided medical plan costs in the UK is forecast to decrease one percentage point in 2021 to 5.5 percent, compared to 6.5 percent this year, according to its 2021 Global Medical Trend Rates Report. Globally, costs for employer-sponsored medical plans in 2021 are forecasted to increase 7.2 percent. This is mainly due to expanded benefits, higher unit costs for medical services and a decrease anticipated in general inflation.
This forecasted decrease in the inflation rate of UK employer-sponsored medical plan costs is due to a wide number of unknown outcomes that created a need to assume a non-novel coronavirus (COVID-19) scenario.
Rachel Western, principal, Aon, explained: “The UK rate of inflation is expected to fall in 2021, but the decrease in medical benefit costs comes with acute awareness that there are many unknown outcomes to the current COVID-19 situation that may impact medical inflation both short and long term. From a positive perspective, UK insurers are working hard to contain costs with their providers and specialists to pass better outcomes onto their customers.”
According to Aon, advances in medical technology can drive inflation costs up but the outcomes from more technological advances can drive inflation costs down longer term. This, along with increased and enhanced early health interventions and more awareness amongst individuals of the importance of managing their own health and wellbeing, can all help drive inflation lower.
Rachel Western continued: “The pandemic’s impact is yet to fully play out. This year, treatment levels in private hospitals dropped sharply because the NHS took control of all facilities in case they were needed to treat COVID-19 patients. The result has been that all private healthcare procedures were delayed. The pandemic’s effect also continues to impact diagnoses of countless other health conditions, delaying investigations and treatment. While private hospitals have now re-opened for procedures, there is a reduced capacity and increased cost because of the security measures required to manage treatment. The upshot of all of this is a need to catch up on an unknown level of claims deferred since the start of the first UK lockdown.”
Aon’s report confirms the increasing impact of non-communicable diseases on healthcare costs globally. In the UK, musculoskeletal/back, cancer, mental health and cardiovascular were the most prevalent health conditions driving health care claims.
Leading Medical Conditions in UK and Globally
|3)||Mental health||High blood pressure|
|5)||Gastrointestinal||Lung disorder respiratory|
Rachel Western added: “Musculoskeletal and cancer continue to be the most pressing conditions in the UK; they often sit as the top two claimed for conditions on a corporate medical plan. However, during the height of the pandemic, there was a shift towards mental health utilisation and spend rising, partly due to the accessibility of treatment and partly due to a rise in cases. Many corporates will see this as one of their top claimed conditions in 2020.”
Aon’s report also confirms the growing prevalence of risk factors from unhealthy personal habits in the UK, such as poor stress management, obesity, physical inactivity and smoking.
Leading Health Risk Factors in UK and Globally
|1)||Poor stress management||High blood pressure|
|3)||Physical inactivity||Poor stress management|
|5)||Excessive alcohol or drug misuse||High cholesterol|
Looking ahead, Tim Nimmer, Aon’s chief global actuary for Health Solutions, said: “There is still a significant amount of uncertainty regarding COVID-19’s impact on deferred treatments and long-term health care. While countries navigate different outbreak phases, the expectation is that medical plan utilisation will return to normal levels during 2021 as medical services begin to reopen to the market.”
To view the report, visit the Global Medical Trend Rates Report.