Aon’s new report on worldwide medical trends is projecting employer-provided medical benefit costs to increase in 2020 – something the professional services firm suggests has something to do with the increased expenditure on drugs.
The report, “2020 Global Medical Trend Rates Report,” said that group health costs are expected to rise 6.0% next year, ahead of general inflation at 1.9%. Aon noted that the increase expected next year is due to a combination of higher costs from the increased spending in drugs in general.
By comparison, the costs for employer-sponsored medical plans in 2020 globally are forecast to increase 8.0%, up from 7.8% growth this year.
According to Aon, the jump in drug expenses is a reflection of the many risk factors Canadians currently face, and some of these risk factors can be managed through drug therapies and other wellness initiatives. As a result, employers are being forced to “look at the big picture” to determine how they want to tackle their employees’ health and mitigate costs.
Greg Durant – Aon Canada health solutions chief actuary – commented that while Aon expects the medical trend rate for 2020 to be similar to last year (which also forecast a health care benefit cost growth of 6.0%), the upcoming federal election this October could shake things up; a national Pharmacare program is under consideration, which could affect the government subsidization of health care.
“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,” Durant commented.
In Canada, Aon has identified the top five leading medical conditions:
The top global medical conditions are:
Aon also listed the leading health risk factors in specific countries. In Canada, the top five risk factors are:
Globally, the top five risk factors are:
“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,” explained Aon global chief actuary for health solutions Tim Nimmer. “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.”
