Global health benefit costs set to rise 8 per cent
Employer-provided medical benefit costs in Canada are forecast to rise six per cent in 2020, outpacing general inflation by 1.9 per cent, according to the 2020 Global Medical Trend Rates Report released today by Aon.
“We expect the medical trend rate for 2020 to be similar to last year,” says Greg Durant, Aon’s Canadian chief actuary for health solutions. “However, with the federal election scheduled for October 2019, government subsidization of health care may be impacted as a national pharmacare program is under consideration.
“While there is no certainty around the scope of this program, we expect that it will provide coverage for certain pharmaceutical products at the national level. If the incumbent government remains, we could very well see some changes in this regard, which could result in a positive impact on the 2021 medical trend rate for plan sponsors, as prescription drug costs are the largest single cost driver for medical plans in Canada.”
Globally, costs for employer-sponsored medical plans in 2020 are forecast to increase eight per cent, up from 7.8 per cent growth this year. This is mainly due to expanded benefits and a slight increase anticipated in general inflation, says Aon.
In Canada, the leading medical conditions are: musculoskeletal/back, cardiovascular, mental health, diabetes and cancer/tumour growth.
And the leading health risk factors in Canada are aging, physical inactivity, bad nutrition, insufficient sleep and smoking.
"Many of these 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,” says 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 behaviours.”
The survey was conducted among 105 Aon offices worldwide and reflects the medical trend expectations of the Aon professionals based on their interactions with clients and carriers represented in the portfolio of the firm’s medical plan business in each country.
The full report can be seen at ADP report.