Aon 2024 Report shows 10.1% increase Medical Plan Unit Costs – highest since 2015
Aon’s 2024 Global Medical Trend Rates Report, conducted across 113 Aon offices, provides insights into the anticipated percentage increases in medical plan unit costs. These projections account for factors such as medical price inflation, technological advancements in the medical field, and shifts in plan utilization patterns.
In the aftermath of the pandemic, the world has witnessed significant inflationary conditions and economic volatility. Despite signs of recovery, unstable economic conditions persist. Macroeconomic instability has influenced the medical trend in various locations. However, regional differences, underlying conditions driving the trend rate, and mitigation strategies adopted by companies are also crucial.
The global average medical trend rate for 2024 is projected at 10.1%, a rise from 9.2% in 2023. This is the highest since 2015. All regions are expected to see an increase in medical unit costs over 2023. Latin America and the Caribbean (LAC) and the Middle East and Africa (MEA) are the regions with the highest projected increases.
Key Drivers of recent Medical Trends
- Cancer/Tumor Growth: Predominant in all regions except MEA. Countries like Portugal, Turkey, Switzerland, and Israel consistently report cancer as the top condition.
- Cardiovascular Diseases: These have been impactful in the APAC, Europe, and LAC regions.
- High Blood Pressure/Hypertension: A leading risk factor for many conditions, especially in MEA.
Other significant conditions include Diabetes, Musculoskeletal/Back Pain, ENT/Lung Disorders, and Mental Health. Physical inactivity, poor stress management, and obesity are among the top risk factors driving these conditions.
Mitigation Strategies by Employers
With the continuous rise in medical plan costs, companies are adopting various strategies to mitigate these expenses:
- Wellbeing Initiatives: These are the primary mitigation strategy, promoting preventative care and employee well being.
- Cost Containment Measures: These include raising deductibles, using referrals, and introducing significant plan design changes.
- Flexible Benefit Plans: Approximately 60% of countries consider this a top initiative for 2024. These plans offer cost control for employers and adaptive benefits for employees, aligning with company policies on Diversity, Equity, Inclusion, and Belonging (DEIB).
Wellbeing and Corporate Integration
According to the 2022-2023 Aon Global Wellbeing Report, 83% of global employers have a well being strategy. Implementing a long-term health and well being strategy is essential for cost containment. Leading employers focus on long-term healthcare financing, healthcare analytics, and a broad well being strategy, integrating data from various sources.
The 2024 Global Medical Trend Rates Report underscores the importance of understanding and planning for rising healthcare costs. As these costs become a significant part of the total rewards spend, accurate forecasting and management are crucial.