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Employer Medical Benefit Costs Continue to Nearly Triple the Rate of Inflation Globally in 2020, Aon Survey Forecasts

CHICAGO (Sept. 12, 2019) – The costs of employer medical benefits across the world are forecasted to rise 8.0 percent in 2020, outpacing general inflation by 4.9 percent, according to the 2020 Global Medical Trend Rates Report released today by Aon plc (NYSE: AON).

The anticipated average annual increase for employer-sponsored medical plans is expected to be in line with 2019, with a 0.2 percent increase in 2020, due mainly to the rise of chronic diseases, expanded benefits, and a slight increase anticipated in general inflation.

“Rising medical costs and the prevalence of chronic conditions continue to be a focus of our clients around the world,” said John Zern, CEO of global Health Solutions at Aon. “Providing our clients with market-leading solutions that enable consumer choice, promote transparency and enable wellbeing in order to drive better financial and colleague outcomes will continue to be a priority for us at Aon in 2020.”

Aon’s survey found projected medical trend rates continue to 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 trend rate increase of 5.7 percent.

Health Care Benefit Cost Growth from 2019 to 2020

 

 

2019

2020

Global

 

7.8%

8.0%

North America

 

6.4%

6.4%

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%

Additionally, Aon's report confirms the increasing impact of non-communicable diseases on health care costs globally. The top five conditions that will drive health care claims are cardiovascular disease, cancer, diabetes, high blood pressure and musculoskeletal. The report also confirms the growing prevalence of risk factors from unhealthy personal habits such as high blood pressure, physical inactivity, high cholesterol, poor nutrition and inadequate stress management. The disease and risk rankings differ significantly throughout the world.

"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 wellbeing activities and better managing chronic conditions.”

To mitigate costs, Aon’s report revealed that more employers are turning to wellbeing programs--such as preventive strategies like physical check-ups, screenings, healthy eating and physical activity promotional programs--to reduce chronic conditions. Employers also continue to use traditional strategies, such as controlling unreasonable plan utilization, narrowing networks, adjusting plan designs and adding flexible benefit plans to cap overall benefit costs.

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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