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U.S. Employer Medical Benefit Costs to Nearly Double the Rate of Inflation in 2020, Aon Survey Forecasts

Global health benefit costs set to nearly triple


CHICAGO – WEBWIRE

 U.S. employer-provided medical benefit costs are forecasted to rise 6.5 percent in 2020, outpacing general inflation by 3.8 percent, according to the 2020 Global Medical Trend Rates Report released today by Aon plc (NYSE: AON).

The increase for U.S. employer-sponsored medical plans expected next year is due to a combination of higher costs for specialty drugs, moderate price increases for care and flat or decreasing health utilization.

“Employers, insurance carriers and the medical industry have done a commendable job of moderating cost increases in recent years, considering the headwinds of an aging population, high drug prices and rising chronic conditions,” said Will Sneden, U.S. Health Solutions practice leader for Aon. “We will continue to bring innovative solutions that allow clients to tailor health benefits that promote wellbeing and encourage consumer behavior to identify the highest quality, most cost-effective providers.”

Medical costs in the U.S. will rise slower compared to other regions around the world. Globally, costs for employer-sponsored medical plans in 2020 are forecasted to increase 8.0 percent, up from 7.8 percent growth this year. This is mainly due to expanded benefits and a slight increase anticipated in general inflation.

Projected medical trend rates vary significantly by region. Costs are expected to increase the most in Latin America and Middle East/Africa regions, with average medical premium rates forecasted at 13.1 percent and 12.2 percent, respectively. In contrast, Europe is projected to see an average medical premium rate increase of 5.7 percent.

 
Health Care Benefit Cost Growth from 2019 to 2020
 
                                                                   2019                  2020
 
Global                                                         7.8%                  8.0%
 
U.S.                                                            6.5%                   6.5%
 
Latin America and Caribbean                   13.2%                 13.1%
 
Asia Pacific                                                 8.6%                   8.7%
 
Europe                                                        5.1%                   5.7%
 
Middle East/Africa                                     13.7%                 12.2%
 

Aon’s report confirms the increasing impact of non-communicable diseases on health care costs globally. In the U.S., musculoskeletal, cancer, cardiovascular, diabetes and high blood pressure were the most prevalent health conditions driving health care claims. The top five conditions that impact health claims in the U.S. are the same as those globally, but the disease rankings differ significantly.

Leading Medical Conditions in the U.S. and the World                      
               
         U.S.                                            Global

  1. Musculoskeletal                  Cardiovascular
  2. Cancer                                Cancer
  3. Cardiovascular                    Diabetes
  4. Diabetes                              High blood pressure
  5. High blood pressure            Musculoskeletal

Aon’s report also confirms the growing prevalence of risks from unhealthy personal habits in the U.S., such as physical inactivity, obesity, bad nutrition, ageing and excessive alcohol and substance abuse. The U.S. differs from the rest of the world with substance abuse ranked within its top five risk factors.

Leading Health Risk Factors in the U.S. and the World
               
U.S.                                     Global
1) Physical inactivity       High blood pressure
2)Obesity                        Physical inactivity
3)Bad nutrition                High cholesterol
4)Ageing                         Bad nutrition
5)Substance abuse        Poor stress management

“Many of the 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,” said 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 behaviors. Our goal is to guide employers as they become more critical in helping individuals and their families to take a more active role in managing their health, including participating in health and well-being activities and better managing chronic conditions.”

To view the report, visit https://healthresources.aon.com/reports-2/2020-global-medical-trend-rates-report.

Methodology
The survey was conducted among 105 Aon offices, each one representative of a country, that broker, administer, or otherwise advise on employer-sponsored medical plans in each of the countries covered in this report. The survey responses reflect 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.

About Aon
Aon plc (NYSE:AON) Aon is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.

 


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