LONDON, Sept. 18, 2023 – Aon plc (NYSE: AON), a leading global professional services firm, today published its 2024 Global Medical Trend Rates Report, forecasting the global average medical trend rate for 2024 to be 10.1 percent, up from 9.2 percent in 2023 and the highest rate since 2015.
The trend rate figures represent the percentage increases in medical plan unit costs - insured and self-insured - that are anticipated to be required to address projected price inflation, technology advances in the medical field, plan utilization patterns and cost shifting from social programs.
The report is based on insights from 113 Aon offices that broker, administer or advise on employer-sponsored medical plans in each of the countries covered in the report. The findings reflect the medical trend expectations of Aon professionals based on their interactions with clients and carriers represented in the portfolio of the firm’s medical plan business in each location.
“We have been in a period of remarkable inflationary conditions and economic volatility. The series of shocks affecting economies around the world after the COVID-19 pandemic continue to create an unstable environment for the healthcare market, despite continued signs of improvement. Volatile conditions will persist,” said Rui Silva, vice president and medical trend leader in Health Solutions for Multinationals at Aon. “Despite uncertainty on how long global inflationary pressures will last, it is clear from the locations surveyed that the medical trend rate will see a sharp rise in 2024 among employer-sponsored medical plans.”
The top medical conditions driving medical plan costs are consistent with 2023 and include:
- Cancer/Tumor Growth: The most common cancers are breast, lung, colon and rectum, and prostate, which are a top condition in nearly all regions.
- Cardiovascular: Cardiovascular diseases include disorders of the heart and blood vessels, encompassing several different conditions. These diseases negatively impacted claims in APAC, Europe and the Latin America and Caribbean regions.
- High Blood Pressure/Hypertension: Considered a leading risk factor for other conditions, high blood pressure and hypertension is consistently reported as the top condition in the Middle East and Africa, as well as numerous countries across Latin America and the Caribbean.
“Although the leading conditions driving the trend rate are associated with risk factors like poor nutrition, air pollution and excessive drug and alcohol use, it is physical inactivity and poor stress management that continue to lead the list of risk factors,” Silva added.
Companies have turned to new cost mitigation strategies for health and wellbeing as year-over-year medical plan costs continue to rise. In 2024, 60 percent of companies are expected to use flexible benefit plans as a mitigation tactic. Wellbeing initiatives are also a leading mitigation strategy at the local level.
“In addition to giving employers a greater deal of cost control, flexible benefit plans enable change in employee’s behavior and work as an HR tool to deliver differentiated benefit packages. This allows organizations to attract and retain talent, while also offering adaptative benefits to meet individual needs and address diversity, equity and inclusion,” said Alex Wootton, executive vice president and global leader of Health Solutions for Multinationals.
As employer-sponsored medical plans become a larger part of total rewards spend and pressure mounts to accurately forecast and manage costs, this report will serve as a valuable resource for organizations to plan global budgets and benefits strategies, shaping better decisions to build more resilient workforces for 2024 and beyond.
Read Aon’s 2024 Global Medical Trend Rate Report here.
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