The Covid-19 pandemic has transformed employer-provided healthcare, with many organisations struggling to cope with rising medical costs, according to MercerMarsh Benefits’ (MMB’s) Health Trends 2023 report. In addition, mental health gaps persist as employer plans often lack adequate coverage, leading employers to seek alternative ways to support employee wellbeing.
Insurers in Asia are anticipating a surge in medical trend rates (the annual cost increase for individual claims under medical insurance) of 11.5% this year, the highest since 2019. The rise is set to be driven by several factors, including the growing cost of medical care, increased use of healthcare services, and more expensive treatments due to later-stage diagnosis of illnesses.
Meanwhile, Aon has observed an increase in average treatment costs ranging from 15% to 40% (compared to pre-pandemic levels) across most markets in Asia-Pacific. While medical providers strive to maintain consistent fees for core services to ensure equitable access for all, Aon has observed double-digit growth in the costs of drugs, dental treatment, physiotherapy, and other auxiliary services.
Still, nearly seven out of 10 insurers see employers choosing to improve their plans instead of keeping costs low.
Amid these challenges, MMB advises business and HR leaders to continue engaging stakeholders on whether to prioritise plans that are competitive in either talent retention or cost containment terms. They should also plan for higher inflation rates and stay up to date on costing trends. Additionally, companies must focus on benefits and programmes that appeal to each employee segment and create a deliberate strategy to manage plan costs in the long run.
Read the full The Innovation Rules: How Compensation and Benefits Strategies are Evolving in 2023 report here.
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