Our colleagues at Mercer Marsh Benefits have released their fifth annual Medical Trends report which surveys over 200 insurers across 59 countries to learn the key trends in the industry around the world. Their aim is to help drive more cost-effective reward plans that are future-proofed; ensuring health coverage and care is affordable for employers and employees alike.

One of the main findings is that medical trends continue to outpace general inflation by close to three times! This year’s research explores how health conditions, supplier factors and consumer habits are causing medical costs to increase and that, perhaps unsurprisingly, employees are putting their health at risk by neglecting their metabolic, dietary and mental health. The highest medical costs remain the same as last year and relate to long-term diseases of the circulatory system and cancer. Bearing this in mind, organizations need to consider actively planning their health strategies ahead of time allowing them to better manage healthcare costs and stretch their reward budget further.

Mercer Marsh Benefits’ research also found:

  1. There’s no stopping medical inflation

As mentioned, medical costs continue to outpace general inflation by close to three times. Coupled with an expected global medical cost increase of nearly 10% for 2019 and 2020, organizations need to plan ahead for design, delivery and budget for the best healthcare they can offer. They should also be budgeting for higher costs and prioritize solutions that give their employees higher-quality healthcare. This can be achieved by looking for the insurers that aim to provide better quality healthcare, made affordable through plans that offer virtual healthcare consultations. 

  1. Shifting focus toward making plan members smarter healthcare consumers

Data analytics continues to be the top strategic focus for 33% of global medical insurers which we suspect is for a few reasons. Firstly, insurers are looking to drive new experiences, solutions and revenue streams by collecting many types of data. They also need to obtain actionable insights that are driven by real-time data from both providers and patients allowing them to better manage provider and control healthcare costs. Another top strategic investment area is in initiatives that enable quality-focused care (i.e. being able to provide the right care at the right time). The number of insurers focussing on this has more than doubled, with 29% of respondents indicating this as a priority for them.

As an organization make sure the benefits team, internal resources and insurers are all connected to maximize the knowledge and tools benefits teams can access, giving them everything they need to be able to promote providers and aid your employees healthcare decisions.

  1. Put your plans in action

Virtual health care is quickly becoming the norm, both to contain medical costs and to encourage consumer-based behaviour. In fact, 78% of insurers around the world are now considering or are already supporting virtual health consultations.

Ensure your organization is embracing this digital disruption to make healthcare accessible and affordable across a spectrum of service providers from mental health providers to physical therapists. Providers such as Aetna in the US and Babylon for the UK are focused on delivering accessible and easy healthcare for all patients. You can also maximize the take-up of the healthcare plan your offer by using continuous, engaging and personalized communications to keep employees aware of their options.

  1. Lifestyle factors continue to drive increases to medical costs

Circulatory and respiratory conditions, which are more often than not are related to lifestyle choices, continue to drive the top claims by cost and frequency. Promoting healthy choices should be one of your organization's key initiatives. This can be achieved by developing a holistic health and well-being strategy that supports employees across their physical, mental, financial and social health. All of your employees fit somewhere on a spectrum of the well to ill. By adopting preventative initiatives early enough to help employees stay in towards the ‘well’ end, you’ll be able to control future increases to their medical costs. In a recent article about this topic, our Director of Product Management, James Akers recently said ‘This makes sound business sense really; if employees are healthier, they take fewer sick days and are less likely to develop long-term health conditions that will result in high premiums for private health insurance’.

Mercer Marsh Benefits’ research makes it clear that employers need to take action. HR teams need to take control and plan ahead to help contain inevitable rising medical costs, whilst also taking preventative action to help employees remain well and this will lead to a happier and more productive workforce. Download the full report here to further explore how health conditions, provider factors and consumer habits are driving the rise of medical costs and what you can do about it.