Asia Pacific Employer Medical Benefit Costs to Grow 8.2 Percent in 2022: Aon Survey

• The
  2022 Medical Trend Rate for Asia Pacific is up slightly compared to last year’s
  8.0 percent and remains above general price inflation
• In the past year,
  utilisation of outpatient services dropped the most in Asia Pacific due to COVID-19
  pandemic-related movement restrictions
• Global health
  benefit costs to rise 7.4 percent as medical utilisation returns to
  pre-COVID-19 pandemic levels

SINGAPORE – Media
OutReach – 25 October 2021 – Employer-provided medical benefit costs
in Asia Pacific are forecasted to
rise 8.2 percent in 2022, outpacing general inflation by 5.8 percent, according
to the 2022 Global Medical Trend Rates Report recently released by Aon plc (NYSE: AON), a leading global professional services
firm.  

The utilisation
of medical plans has recovered from a low in April 2020 and is expected to exceed
pre-COVID-19 pandemic levels during 2022 as pandemic-related movement
restrictions are further eased. This, combined with rising inflationary
pressures and an expectation that more of the cost of COVID-19 healthcare will
transition to the private sector, is increasing cost expectations.

Tim Dwyer, Head of Health Solutions,
Asia Pacific, Aon said, “The pandemic caused overall lower utilisation levels
in 2020, which provided plan sponsors with some respite. However, the dual effect of higher
expected utilisation and inflationary pressures presents new cost challenges that
need to be managed. The normalisation in utilisation patterns, emerging risks
such as mental and musculoskeletal health and the potential for a greater
COVID-19 cost burden to fall on the private sector will require employers to
carefully analyse their medical plans as cost pressures increase over the next
two renewal cycles.”

According
to the report, over the last year there has been a significant increase in
musculoskeletal conditions likely brought about by increased work-from-home arrangements.
Furthermore, medication-related expenses have experienced some of the largest
inflationary increases. However, outpatient upper respiratory tract infection
claims were significantly lower than previous years, but these are expected to
recover during 2022 as social distancing and movement restrictions are lifted.

“The good news is that there are plan
design and behavioural interventions available to mitigate the cost increases.
The route will be uncertain and will vary by country, so it is important that
companies use data and insights to make better informed decisions to secure
commercial protections at their renewals to deal with the volatility,” Dwyer
added.

Globally,
costs for employer-sponsored medical plans in 2022 are forecasted to increase
7.4 percent, though projected medical trend rates vary significantly by region.
Costs are expected to increase the most in the Middle East & Africa, with
average medical trend rates forecasted at 11.1 percent. In contrast, Europe is
projected to see the lowest average medical premium rate increase, at 5.6
percent.

Forecasted Health Care Benefit Cost Growth from 2021 to 2022

Forecasted Health Care Benefit Cost Growth from 2021 to 2022 for
Select Countries
in Asia Pacific

Aon’s
report confirms the increasing impact of non-communicable diseases on health
care costs globally. In Asia Pacific, Cardiovascular disease, Cancer/Tumor
Growth, ENT/Lung Disorder/Respiratory, Diabetes and Musculoskeletal/Back were
the most prevalent health conditions driving health care claims.

Leading Medical Conditions in
Asia Pacific and the World Driving Medical Claims Experience

The report
also confirms the growing prevalence of modifiable risk factors from unhealthy
personal habits in Asia Pacific, such as High Blood Pressure, Physical
Inactivity, Poor Stress Management, High Cholesterol and Ageing, which directly
contribute to the emergence of non-communicable disease.

Leading Health Risk Factors in Asia
Pacific and the World

“Insurers
have responded to emerging needs created by the pandemic by delivering virtual
consultations, prescription delivery and support for employee physical and
mental wellbeing. While these services are likely to introduce short-term cost
pressures, they should – over time – have a controlling effect on medical trend
rates,” said Alan
Oates, Principal and Actuary, Asia Pacific, Health Solutions at Aon. “As we emerge from the pandemic, employee wellbeing is now,
more than ever, critical to controlling costs and boosting organisational productivity,
to build a more resilient workforce. Careful analysis of medical claims and population risk
factors can target interventions that modify behaviours to reduce the incidence
of non-communicable disease. Employers, both large and small, can take
immediate action in this area.”

To view
the report, visit https://insights-north-america.aon.com/research/2021-global-medical-trend-rates-report.

Methodology

The
survey was conducted among 108 Aon offices, each one representative of a
country that broker, administer or otherwise advise on employer-sponsored
medical plans. The survey responses reflect the medical trend expectations of
the Aon professionals based on their interactions with clients and insurance carriers
represented in each country.